Vilro Pty Ltd (In Voluntary Liquidation) v Roads and Traffic Authority NSW [2010] NSWLEC 234 | Case summary

Vilro Pty Ltd (In Voluntary Liquidation) v Roads and Traffic Authority NSW [2010] NSWLEC 234 | Case summary | Zoe

[5]

Adelaide Fruit & Produce Exchange Co Ltd v Adelaide City Corp (1961) 106 CLR 85 Bennett v Commissioner for Railways (1952) 12 The Valuer 169 Besmaw Pty Ltd v Sydney Water Corporation [2001] NSWLEC 15; (2001) 113 LGERA 246 Bowden v Housing Commission of NSW (1948) 17 LGR (NSW) 34 Brandi v Mingot (1976) 12 ALR 551 Caruana v Port Macquarie-Hastings Council [2007] NSWLEC 109 Commissioner of Highways v George Eblen Pty Limited (1975) 34 LGRA 207 Cook v Roads and Traffic Authority (NSW) [2007] NSWLEC 136 Davey v Minister for Agriculture (1979) (1) SA 466 (N) Gilmour v The Crown (1981) 7 QLCR 160 Girlock (Sales) Pty Ltd v Hurrell [1982] HCA 15; (1982) 149 CLR 155 Holloway v McFeeters (1956) 94 CLR 470 Jones v Dunkel (1959) 101 CLR 298 Housing Commission of New South Wales v Falconer [1981] 1 NSWLR 547 Illawarra Local Aboriginal Land Council v Minister Administering the Crown Lands Act (No 2) [2010] NSWLEC 124 CASES CITED: Kenny & Good Pty Ltd v MGICA (1992) Ltd [1999] HCA 25; (1999) 199 CLR 413 March v E & MH Stramare Pty Ltd [1991] HCA 12; (1991) 171 CLR 506 Minister Administering the Crown Lands Act v Illawarra Local Aboriginal Land Council [2009] NSWCA 289; (2009) 168 LGERA 71 Minister for Army v Parbury Henty & Co Pty Ltd (1945) 70 CLR 459 Mir Bros Unit Constructions Pty Limited v Roads and Traffic Authority of NSW [2005] NSWLEC 467 Mir Bros Unit Constructions Pty Limited v Roads and Traffic Authority of NSW [2006] NSWCA 314 Roads and Traffic Authority of NSW v Collex Pty Limited [2009] NSWCA 101; (2009) 165 LGERA 419 Roads & Traffic Authority of New South Wales v Peak [2007] NSWCA 66 Serbian Cultural Club "St Sava" Inc & Serbian Cultural Club Limited v Roads and Traffic Authority of New South Wales [2007] NSWLEC 673 Spencer v the Commonwealth of Australia [1907] HCA 82; (1907) 5 CLR 418 Spicer v Valuer-General (1963) 10 LGRA 319 Toohey's Limited v Housing Commission of NSW (1952) 20 LGR (NSW) 236 Turner v Minister of Public Instruction (1956) 95 CLR 245 Vickers v Minister for Business and Consumer Affairs & Ors (1982) 43 ALR 389 Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2008] HCA 5; (2008) 233 CLR 259 Willis v Commonwealth (1946) 73 CLR 105

[12]

3 Lot 40 continues to be owned by the Applicant after the acquisition. Both the acquired land (lot 41) and lot 40 are shown in DP 1094314. The acquired land (lot 41) has an area of 16.08 ha running diagonally across lot 40 and severing the northern section of lot 40. Lot 40 has an area of 201.7 ha. The Applicant also owns land being lot 6 DP 1105610 (formerly lot 32 DP 809231) known as Maher's Headland adjoining lots 40 and 41 to the east which is also the subject of the Applicant's claim. It is referred to as lot 32 in this judgment. It is also the area of land the RTA argues has increased in value as a result of the public purpose. 4 The parties' valuers took a different approach to the area which should be considered as residue land. The Applicant considered this was lot 40 only while the RTA considered this was lot 40 and lot 32. The area of the acquired and residue land, if lot 40 and lot 32, is 316.35 ha. The acquired land and the residue land are located to the south-west of the existing township of Port Macquarie, with rural and rural/residential land use characterising the immediate locality. At the date of acquisition, the acquired land was zoned rural 1(a1) under the Hastings Local Environmental Plan 2001 (the Hastings LEP 2001). 5 All of the land described in these proceedings has been owned by the Charley family since 1906. The Applicant became the registered proprietor of the land in 1967, and is a company controlled by members of the Charley family. For most of the period of ownership, the land has been used for the business of logging. 6 In the course of the hearing the Court conducted a view of the acquired and residue land and surrounds, and some of the comparable sales referred to by the valuers. Compensation claimed 7 The Applicant claims compensation as follows: (i) Market value of the acquired land: s 55(a) $2,785,925 (ii) Injurious affection to claim areas A, B, C and D: s 55(f) $3,102,014 (a) claim A $4,381,651 (b) claims C and D $7,500 (c) claim B (iii) Injurious affection: noise barriers s 55(f) $2,093,000 (iv) Disturbance: legal costs s 55(d), 59(a) (agreed) $8,599

[13]

8 The RTA contends that the Applicant is entitled to nil compensation as follows: (a) s 55(a) market value of acquired land: $485,000; (b) s 55(d) disturbance: (agreed amount of legal costs); (c) s 55(f) less the increase in value of other land: $9,143,000. This increase comprises two separate components: (i) the increase in the value of other land (lot 32) by reason of it being "upzoned" from rural 1(a1) to residential 2(a1) in 1989; and (ii) the increase in the value of other land by reason of the Applicant being relieved of the requirement to construct a roundabout at the intersection of the old Oxley Highway and Philip Charley Drive as part of the subdivision and development of other land of the Applicant. Land Acquisition (Just Terms Compensation) Act 1991 9 Section 3 of the JT Act provides: (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 (c) to establish new procedures for the compulsory acquisition of land by authorities of the State to simplify and expedite the acquisition process, and (d) to require an authority of the State to acquire land designated for acquisition for a public purpose where hardship is demonstrated, and (e) to encourage the acquisition of land by agreement instead of compulsory process. 10 Section 54 "Entitlement to just compensation" provides: (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. … 11 Section 55 "Relevant matters to be considered in determining amount of compensation" provides: 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, (b) any special value of the land to the person on the date of its acquisition, (c) any loss attributable to severance, (d) any loss attributable to disturbance, (e) solatium, (f) any increase or decrease in the value of any other land of the person at the date of acquisition which adjoins or is severed from the acquired land by reason of the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired. 12 Section 56 "Market value" provides: (1) In this Act: 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 (b) any increase in the value of the land caused by the carrying out by the authority of the State, before the land is acquired, of improvements for the public purpose for which the land is to be 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.

[15]

14 The only disturbance claimed is legal costs and the amount of these is agreed. The public purpose - Oxley Highway Upgrade (OHU) 15 The public purpose of the acquisition was under the Roads Act, in particular the construction of a new alignment of the Oxley Highway between Wrights Road and the Pacific Highway, west of Port Macquarie. The carrying out of the Oxley Highway upgrade (OHU) will result in the declassification of the old Oxley Highway so that it becomes part of the local road network and vested in the Hastings Council, General valuation principles 16 The task before the Court as reflected in the s 56(1) JT Act definition of market value, is to ascertain the price that a hypothetical (willing but not anxious) buyer would have paid for land, and a hypothetical (willing but not anxious) seller would have accepted, as at the date of acquisition. Both parties to this transaction are "willing to trade, but neither of them so anxious to do so that he would overlook any ordinary business consideration". Further, both parties are "perfectly acquainted with the land, and cognizant of all circumstances which might affect...[its] value": Spencer v the Commonwealth of Australia [1907] HCA 82; (1907) 5 CLR 418 at 441 per Isaacs J; Kenny & Good Pty Ltd v MGICA (1992) Ltd [1999] HCA 25; (1999) 199 CLR 413 at [49]-[50] per McHugh J specifically adopted by the High Court in Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2008] HCA 5; (2008) 233 CLR 259. 17 Market value of land is also to be valued according to its "highest and best use": Turner v Minister of Public Instruction (1956) 95 CLR 245; Spicer v Valuer-General (1963) 10 LGRA 319. The Court will therefore approach the task of determining compensation in this matter by determining what was the "most profitable potential use" of the land. 18 The parties agree that the before and after method of compensation in this case captures compensation for market value under s 55(a) and under s 55(f) for the Applicant's claim based on injurious affection. Under s 55(f) any increase or decrease in value of other land which adjoins or is severed from the acquired land as a result of the public purpose must be considered in determining compensation. The Applicant claims that both "the proposal to carry out the public purpose for which the land was acquired", and "the carrying out of … the public purpose for which the land was acquired" have caused a decrease in the market value of both the residual and resumed land within the meaning of s 55(f) and s 56(1)(a) (as it informs s 55(a) of the JT Act) for which it must be compensated.

[19]

25 The parties have called expert planners to give evidence as to what effect the proposal has had on the residential development potential of the Applicant's land. Their evidence is discussed below. Claim B 26 After acquisition claim B is 5.47 ha from which 1.45 ha was (notionally) resumed for the OHU. It is common ground that the land in claim B is low lying and constrained from development. Nominal compensation is sought in relation to claim B. Claim C and resumed land 27 After acquisition claim C is 43.2 ha from which (notionally) 8.56 ha was resumed for the OHU. Claim D 28 Claim D is in the southern section of Lot 40. The southern boundary of claim D is below the line of the boundary of the floodplain which extends in a west-east direction: exhibit H. Claim D is 16.3 ha. The parties agree that for the purposes of these proceedings the floodplain map of the Council in evidence shows that 70-80 per cent of claim D is subject to 1:100 flooding. None of the acquired land was taken from claim D. It is common ground that the land south of claim D in the remainder of lot 40 is not affected by the acquisition and is not the subject of this claim. 29 Claim areas C and D are accepted by the Applicant as being zoned rural at the date of acquisition in the before and after scenario. It submits that compensation should be assessed in the after scenario on the basis these areas have potential for rezoning for residential development in the near future. Whether events after the date of acquisition can be taken into account? 30 The issue of whether matters after the date of acquisition can be taken into account in relation to what a hypothetical vendor and purchaser would consider as at the date of acquisition arose in relation to several matters raised, the most substantial of which is whether the claim areas A, B and C became landlocked as a result of the acquisition. Applicant's submissions 31 The Applicant argued that events after the date of acquisition should be ignored except in very limited circumstances where these confirm a foresight, as held in Housing Commission of New South Wales v Falconer [1981] 1 NSWLR 547 at 557-558. In the present case the hypothetical purchaser would only know what was contained in the OHU Review of Environmental Factors (REF) at the date of acquisition. Subsequent events might be relied upon to confirm the foresight that at some future time some arrangement of some description might be forthcoming. Subsequent events can do no more than confirm this and cannot be relied upon to establish the nature of any arrangement. Respondent's submissions 32 The RTA argued that authorities suggested matters after the date of acquisition could be taken into account and also relied on s 54 of the JT Act as supportive of this submission. The Applicant's approach is wrong in law and valuation principle. In Willis v Commonwealth (1946) 73 CLR 105 at [116] (per Dixon J), Bowden v Housing Commission of NSW (1948) 17 LGR (NSW) 34, Bennett v Commissioner for Railways (1952) 12 The Valuer 169 at 172 (per Sugerman J), Toohey's Limited v Housing Commission of NSW (1952) 20 LGR (NSW) 236 at [240] (per Sugerman J), Adelaide Fruit & Produce Exchange Co Ltd v Adelaide City Corp (1961) 106 CLR 85 at [90], Gilmour v The Crown (1981) 7 QLCR 160 at [165], Commissioner of Highways v George Eblen Pty Limited (1975) 34 LGRA 207 at [216] (per Wells J) and Falconer at 558 (per Hope JA), it has been variously said that the Court may take into account events subsequent to the date of acquisition in determining compensation. 33 More recently, in Roads & Traffic Authority of New South Wales v Peak [2007] NSWCA 66, Beazley and Tobias JJA held, in respect of the admissibility of expert noise evidence which was formulated upon material that was not available at the date of acquisition of the acquired land, at [14] and [15]: 14 … The underlying objection to this evidence was that it related to events which post-dated the date of acquisition. 15 As Basten JA points out at [128] of his reasons, the procedure at trial in Class 3 proceedings is governed by s.38 of the Land and Environment Court Act. In particular, the Court is not bound by the rules of evidence and may inform itself on any matter in such manner as it thinks appropriate. The availability of a challenge on the basis of error of law in such issues will inevitably be limited and is most likely to be on the basis that an irrelevant consideration was taken into account, or that there was some denial of procedural fairness. The latter has not been suggested in this case.

[21]

36 Falconer is often referred to on this issue where Hope JA held that events after the date of acquisition which confirm a foresight can be considered, at 558 (noting that case also predates the JT Act but continues to be a useful authority). 37 The RTA referred to numerous authorities as identified in par 32 above. All predate the JT Act 1991, and not all concern compulsory acquisition in any event. They are not relevant authorities in this statutory context and do not support the RTA's broad submission that events after the date of acquisition should be considered. 38 The RTA's reliance on [14]-[15] in Peak on this issue is misplaced as there the Court of Appeal was considering what kind of expert advice the hypothetical purchaser would be likely to have access to, which involves the Court considering material prepared by experts after the event. That is a different circumstance to whether certain events after the date of acquisition ought be considered as able to be taken into account by a hypothetical purchaser. The authorities otherwise relied on by the RTA do not support the liberal approach it urges to considering events after the date of acquisition. The consideration of events after the date of acquisition is limited in the statutory framework of the JT Act. 39 The decision of Hope JA in Falconer was recently considered by the Court of Appeal in Minister Administering the Crown Lands Act v Illawarra Local Aboriginal Land Council [2009] NSWCA 289; (2009) 168 LGERA 71, an appeal against the refusal of a claim for Crown land under the Aboriginal Land Rights Act 1983. Basten JA discussed Falconer in relation to the consideration of post claim material after the Minister's decision refusing a land claim. He found at [80] that Hope JA was distinguishing in Falconer between evidence relating to a foresight and that constituting merely a hindsight. He further observed that the question to be addressed at the date of claim is inherently speculative and that the use of future events must be subject to reasonable time constraints ([77]-[78]). 40 While Basten JA was in the minority in the appeal, as observed on the remitter hearing by Sheahan J in Illawarra Local Aboriginal Land Council v Minister Administering the Crown Lands Act (No 2) [2010] NSWLEC 124 at [19] he usefully traces the evolution of the principle in Falconer, particularly in light of the circumstances of that case. Sheahan J set out the judgment of Hope JA from 558-559 and emphasised the finding that events after the date of acquisition can be looked at as confirmation of what a hypothetical purchaser properly advised at the time of resumption would have foreseen. Sheahan J also referred to Glass JA in Falconer at 563F stating that in relation to market value inter alia, events after the date of acquisition are irrelevant except to the extent that they provide some evidence of what was foreseeable by the owner in calculating what he would have accepted or offered at the time of resumption; Minister for Army v Parbury Henty & Co Pty Ltd (1945) 70 CLR 459. This authority confirms the limitations placed on considering events after the date of acquisition. 41 My finding will need to be applied in relation to whether a prudent hypothetical purchaser should be presumed to have knowledge of the statements of Mr Nash which referred to negotiations for access with one of the directors of the Applicant after the date of acquisition (considered in relation to access at par 191-194 below); the grant of development consent for residential subdivision in Maher's Headland in December 2009 after the date of acquisition which had as a condition of consent that a roundabout was required at the intersection of Philip Charley Drive; and a subsequent application by the Applicant under s 96 of the Environmental Planning and Assessment Act 1979 (the EP&A Act) for an extension of the time for the completion of the Maher's Headland subdivision development from 10 to 15 years (considered at par 61 below). Knowledge attributed to hypothetical vendor/purchaser 42 Whether expert evidence would be obtained by parties seeking to test market value is a question of fact; Cook v Roads and Traffic Authority (NSW) [2007] NSWLEC 136 at [12]-[13]. Given the large area of the potential redevelopment on the residue land the Court considers it is likely that the parties would obtain expert evidence. The issue remains what kind of expert evidence would the hypothetical purchasers obtain and the level of detail that is likely to contain. 43 Before considering the substantial further expert evidence placed before the Court it is useful to reflect on the Spencer test concerning the knowledge of matters that might affect the value of land which must be attributed to the hypothetical parties, also as reflected in the opening words of s 56(1). Spencer refers to both being "perfectly acquainted with the land, and cognizant of all circumstances which might affect its value" per Isaacs J at 441. The Applicant referred to the need for there to be a realistic and practical interpretation of the fully informed hypothetical parties, per Davey v Minister for Agriculture (1979) (1) SA 466 (N) to support a submission that the evidence of the RTA in the proceedings was more detailed than prudent hypothetical parties would obtain. The RTA submitted that the parties to the hypothetical sale must be "perfectly informed" suggesting its reliance on four experts on flora, fauna, koalas and soil was justifiable in the context of these proceedings. Planning issues/advice to hypothetical purchaser/vendor 44 The Applicant submits that the planning and development history of the acquired and residue land and other land owned by it is relevant to its claim. The Applicant owns and (owned) land in an area known as Mill Hill which adjoins Maher's Headland to the east.

[22]

45 The chronology below identifies the planning history and instruments of the general locality, Mill Hill, Maher's Headland and the resumed land and residue land the subject of this claim. Area 13 Thrumster surrounds the Applicant's land on the northern and western boundaries. Date Description 1906 Charley family acquire the "Original Holdings" lands described in the applicant's points of claim 1946 to 1963 Logging of the lands conducted by NG Charley Pty Ltd 1969 Ten year logging licence sold to Roy McMillan and Son (later acquired by Herons Creek Pty Ltd) 1980's to date Logging carried out by K Cooper and Sons, and various other mills 1967 The Applicant (Vilro) becomes the owner of all relevant land (the subject land) 26 May 1967 Gazettal of Interim Development Order No. 1 - Shire of Hastings. Subject land zoned non-urban A and partly non-urban B September 1983 Hastings Coastal Development Strategy and Residential Release Program 1986 Upgrade for Oxley Highway with new alignment through Vilro's lands first proposed 2 October 1987 Gazettal of Hastings LEP 1987. Subject land zoned as rural 1(a1). This is still the zoning for lot 40 DP 1094314 (previously part of lot 3 DP 8262421) and lot 41 DP 1094314 (the acquired land for the purposes of the Oxley Highway upgrade) Subdivision limited to 40ha - cl 14 15 January 1988 Gazettal of North Coast Regional Environmental Plan 15 June 1988 Development application (DA) No 248/88 lodged by Charley Brothers (for Vilro) for 231 residential allotments plus golf course (part of the "Mill Hill" residential development and golf course). 28 September 1988 Vilro's DA No 248/88 for "231 residential allotments, golf course and residue allotments" approved by Hastings Council for "lot 5 and subdivision of lot 3, DP 630179; lot 1 DP 589082; lot 11, DP 255991; lot 1, DP 256447, Oxley Highway, Port Macquarie" (Mill Hill residential development and golf course). 8 September 1989 Lot 32 in DP 809231 (now lot 6 DP 1105610) rezoned from rural to residential 2(a1) under Amendment No 8 to the Hastings LEP 1987. Map for Amendment No 8 shows "Proposed Arterial Road". 4 April 1989 Department of Planning letter re rezoning of lot 32. Lot 3 DP 630179 subdivided (in accordance with DA No 89/368) in conjunction with lot 1 DP 589082 and lot 1 DP 256447 to create: 8 May 1990 o lot 1 DP 801087 o lot 2 DP 801087 (contains recent Maher's Headland residential subdivision (see below)) o lot 3 DP 801087 (north-western corner of Vilro land holdings, now part lot 41 DP 1094314) 8 February 1991 Hastings Council amends DA 248/88 (Mill Hill residential development and golf course). Lot 2 and 3 DP 801087 subdivided (in accordance with DA No 89/561) to create: o Lot 31 DP 809231 16 April 1991 o Lot 32 DP 809231 (contains Maher's Headland residential subdivision) Lot 33 DP 809231 (north-western corner of Vilro land holdings) The purpose of the subdivisions was to create lot 31 DP 809231 which the National Parks and Wildlife Service had shown interest in acquiring for addition to the Lake Innes Nature Reserve. 18 March 1992 Hastings Council amends DA 248/88 (Mill Hill residential development plus golf course). 30 April 1992 Hastings Council amends DA 248/88 to approve, inter alia, 247 residential allotments in lieu of 231 (Mill Hill residential development plus golf course). Lot 3 DP 813808 subdivided into: 13 November 1992 o Lot 1 DP 826241 o Lot 2 DP 826241 Lot 3 DP 826241 (north-western corner of Vilro land holdings) 1995 North Coast Urban Planning Strategy: Into the 21st Century 15 December 1995 Hastings Council amends DA No 248/88 to approve 233 residential allotments (Mill Hill residential development plus golf course). 8 April 1998 Hastings Council amends DA No 248/88 to approve 250 residential allotments in lieu of 233 (Mill Hill residential development plus golf course). 11 March 1999 Hastings Council amends DA 248/88 to approve, inter alia, 251 residential allotments (Mill Hill residential development plus golf course). 17 July 2000 DA 1999/0775 part lot 238 DP 1009629, 94 lot residential subdivision 30 August 2001 Hastings Urban Growth Strategy 2001 ("HUGS") adopted by the Director-General of Department of Urban Affairs and Planning (Draft endorsed by Hastings Council on 25 October 1999, and HUGS adopted by Council on 30 October 2000). Subject land identified as an "Urban Investigation Area" - Map 4 - Area 13, page 16 8 June 2001 Gazettal of Hastings LEP 2001. 15 May 2002 Hastings Council amends DA No.248/88 to approve, inter alia, 254 residential allotments (Mill Hill residential development plus golf course). 23 August 2002 Commitment for upgrade of Oxley Highway announced by Minister for Roads 7 October 2003 Final route of Oxley Highway upgrade announced (nearly identical to original route proposed in 1986 with adjustments at western area) September 2004 Review of Environmental Factors (REF) for Oxley Highway upgrade 2005 Area 13 - Structure Plan and Local Environmental Study 2005 March 2005 Revised decision report for Oxley Highway 1 August 2005 Development application 2005/547 lodged by Vilro for "a 291 lot residential subdivision (plus residue lot) and associated infrastructure" on lot 6 DP 1105610 (then lot 32 DP 809231), lot 31 DP 809231 and lot 40 DP 1094314 (the "Maher's Headland residential subdivision") September 2005 Area 13 Thrumster Water Cycle Management report for Council March 2006 Biolink study for Local Environmental Study Area 13 Urban Investigation Area Draft Area 13 KPoM May 2006 Revised draft Area 13 Thrumster Local Environmental Study December 2006 Draft North Coast Regional Strategy May 2007 Area 13 and Sancrox Traffic Study Final Report February 2008 Koala Plan of Management (KPoM) for Maher's Headland residential subdivision submitted to Department of Planning. 6 March 2008 Department of Planning grants conditional approval under Clause 13 of State Environmental Planning Policy (SEPP) 44 to the KPoM for the Maher's Headland residential subdivision - see letter from Department of Planning to Port Macquarie Hastings Council dated 6 March 2008. 12 June 2008 Area 13 Thrumster DCP approved by the Council pt 1-4 22 October 2008 DCP Area 13 Thrumster North Oxley Neighbourhood adopted 10 November 2008 Lot 6 in DP 1105610 created. The majority of lot 6 was lot 32 in DP 809231 except for a strip of land containing a powerline easement which has been acquired by Council. 24 December 2008 Gazettal of Port-Macquarie-Hastings (Area 13 Thrumster) LEP 2008 30 January 2009 Gazettal of date of Acquisition. Lot 41 in DP 1094313 (zoned rural 1(a1)) created for the proposed Oxley Highway upgrade. March 2009 Mid North Coast Regional Strategy published. Subject land identified for future urban release - see Growth Map 7, page 56 9 March 2009 RTA s 42 Compensation notice to Vilro offering compensation in the sum of $3,888,500.00 9 June 2009 Class 3 Application filed 19 October 2009 Final draft KPoM conditionally approved by the Department of Planning for the Maher's Headland residential subdivision - see letter Department of Planning to Port Macquarie-Hastings Council dated 19 October 2009. 16 December 2009 Development consent granted by the Port Macquarie Hastings Council to DA No 547/2005 for the Maher's Headland residential subdivision for a "291 Lot Residential Subdivision (plus Residue Lot) and Associated Infrastructure", to be carried out in accordance with, inter alia, a KPoM dated July 2009 and an Ecological Assessment dated April 2006 (and amended as at 2 September 2009) 3 June 2010 Hastings Council approves s 96(1A) amendment to DA 547/2005 (Maher's Headland residential subdivision) 29 July 2010 Draft Port Macquarie-Hastings Urban Growth Management Strategy

[23]

46 The chronology refers to four processes referred to in the evidence and submissions, namely: (i) the planning instruments for the mid north coast region, Port Macquarie generally and the Thrumster area in particular (ii) an area of the Applicant's land was dedicated on 10 February 1984 as Lake Innes Nature Reserve and the Applicant received development consent from Port Macquarie Council (the Council) for a large residential subdivision in Mill Hill on 28 September 1988, subsequent numerous amendments of that consent have been approved by the Council (iii) the development of the Maher's Headland area including the rezoning of that land for residential 2(a1) in 1988, the application for development consent for residential subdivision in 2005 and the grant of development consent in 2009 (after the date of acquisition) (iv) the announcement of the OHU in 2002 and the approval and compulsory acquisition process for it. (i) Planning instruments (a) Hastings Urban Growth Strategy 2001 (HUGS) (exhibit A vol 2 tab 15) 47 On 30 October 2000, Hastings Council resolved to adopt the Hastings Urban Growth Strategy (HUGS) and referred the document to the Department of Urban Affairs and Planning for endorsement. The primary purpose of HUGS is to outline expected future urban development in the Hastings Area, and how this development will occur and be serviced. At par B2 of the foreword to HUGS (exhibit A p 551) it states that at a meeting on 28 May 2001 the Council resolved: That a statement and map be incorporated in the document to the effect that the land which has been excluded from the modified HUGS 2001 (ie Vilro Pty Ltd land south of the Oxley Highway realignment and a small section of land owned by Lewis/Wilson at Bonny Hills) can be reconsidered for inclusion within the HUGS Strategy at a later point in time, subject to the owners undertaking appropriate environmental studies which demonstrates, to the satisfaction of the Department of Urban Affairs and Planning, that the land is not constrained for urban development.

[25]

49 HUGS identifies that the Hastings area has experienced rapid population growth since the late 1960's particularly focussed in Port Macquarie (exhibit A p 555) with an expectation of continued population growth with a need to explore opportunities for increased housing densities. Usable residential land reserves excludes land which, from preliminary analysis, appears to have constraints which may prevent urban development, such as indications of core koala habitat, threatened species, or flood risk (exhibit A p 555, 558). The Thrumster locality (Area 13) is one of three areas which will accommodate the bulk of population growth due to proximity and access to Port Macquarie, largely clear of major physical constraints (noting the northern boundary is in the 1:100 year flood line), and allows space for compact urban areas and other non-residential land uses (exhibit A p 558). HUGS identifies the medium projection for the future growth for Area 13 to 2021 at a constant 12 dwellings/ha (exhibit A p 571). Some infrastructure limitations, particularly regarding water supply and waste water/sewage capacities, are identified for Area 13 (exhibit A p 559-560) (b) Hastings LEP 2001 50 The Hastings Local Environmental Plan 2001 (the LEP) applies to all land in the Hastings local government area, except land identified on the zoning map as deferred. It provides the zoning objectives for rural zone 1(a1) and various residential zone 2 classifications. Clause 25(2)(a) states that flood liable land is land likely to be inundated in the 1:100 year flood, as identified on mapping held in the office of the Council. The Applicant's land is zoned rural 1(a1) under the LEP. Lot 32 adjoining the subject land was rezoned residential 2(a1) by Amendment No 8 of the earlier LEP 1987. (c) Area 13 Thrumster Structure Plan and Local Environmental Study 2005 51 Following HUGS, the Area 13 Thrumster Structure Plan and Local Environmental Study 2005 was drafted using the urban investigation area identified in HUGS (that is, Area 13). This document was amended to become the Revised draft Area 13 Thrumster Local Environmental Study. (d) Revised draft Area 13 Thrumster Local Environmental Study March 2006 (Thrumster LES) 52 The purpose of the revised Thrumster LES is to provide a comprehensive understanding of the site and its environmental capacity to accommodate future urban growth (exhibit A p 671). It is the culmination of background reports and studies variously commissioned for the Area 13 urban investigation area and is intended as a comprehensive analysis of the constraints and opportunities presented by the investigation area to establish a sustainable urban community (exhibit A p 671). The requirements of a KPoM developed by Dr Stephen Phillips of Biolink Pty Ltd were taken into account in the development of the Thrumster LES and Structure Plan (exhibit A p 675). The Thrumster LES concludes with a table identifying constraints and opportunities for the entirety of Area 13. The environmental constraints include koala habitat protection, waterway and drainage corridors, wildlife corridor linkages, noise (proposed motorway and airport), endangered ecological communities, and old growth trees (exhibit A p 728). (e) Area 13 and Sancrox Traffic Study Final Report May 2007 53 The Area 13 and Sancrox Traffic Study Final Report (May 2007) was commissioned by the Council and included Area 13 and land to the west known as Sancrox. The project was undertaken to enable Council and the RTA to make informed decisions in relation to the development of the road network for the study area. Figure 1.1 is the proposed traffic network plan and shows the Sancrox future rural residential area with existing and planned new roads. The Applicant's land is also shown. Future road networks have been developed for the next 30 years. The existing road network and the new road network planned for 2026 is shown. A road running along the northern boundary of the Applicant's land is shown. A connector road running down the western boundary of the Applicant's land is also shown. (f) Area 13 Thrumster Development Control Plan 2008 Parts 1-4 General Provisions 54 The Area 13 Thrumster Development Control Plan (the Thrumster DCP) was adopted by Port Macquarie-Hastings Council on 12 June 2008 and came into effect upon gazettal on 24 December 2008 (exhibit 8 p 294). The Thrumster DCP applies to the land identified in map 1.1 (at exhibit 8 p 291) and excludes the subject land. It identifies that Area 13 will play a major role in accommodating projected urban growth in the Port Macquarie-Hastings local government area over the next two decades creating a new inland coastal township (exhibit 8 p 296). Part 3 of the Thrumster DCP identifies five residential and one business neighbourhood that comprise the Thrumster area. Paragraph 3.1 - 3.2 provide for the preparation and content of neighbourhood DCPs to establish a clear implementation strategy of the delivery of all major infrastructure that requires coordination to provide for development in that neighbourhood. Paragraph 4.4.2 identifies objectives and development criteria to be adopted in the individual neighbourhood DCPs (exhibit 8 p 324). The relevant development criteria provides standards for arterial roads, collector roads (neighbourhood avenues) and perimeter roads. Paragraph 4.5.1 of the Thrumster DCP provides the target dwelling and population yield for the area, identifying the target yields/ha in medium density residential subdivisions.

[26]

(g) Area 13 Thrumster DCP Part 5 North Oxley Neighbourhood 55 As foreshadowed in par 4.4.2 of the Thrumster DCP, the Area 13 Thrumster DCP Part 5 North Oxley Neighbourhood DCP was adopted by the Council on 22 October 2008. This area is immediately to the north of the Applicant's land. Although drafted as a separate document, it is part of the structural framework of the Thrumster DCP and came into effect at the same time that instrument was gazetted (24 December 2008). The Oxley Neighbourhood DCP relates to the whole of the land identified as North Oxley Neighbourhood in the Thrumster DCP. It identifies environmental management principles specific to core koala habitat (exhibit 8 tab 8 p 9) and potential koala habitat (exhibit 8 tab 8 p 10) as required by the Thrumster DCP (at exhibit 8 p 308-309 indicating koala habitat and habitat corridors). It also includes a section on connectivity and street networks relevant to the neighbourhood, and provides an indicative street hierarchy relative to the planned Oxley Highway deviation (exhibit 8 tab 8 p 27-28) following the development requirements in the Thrumster DCP. Map 5.4.1 shows a collector road on the northern boundary of the Applicant's land as well as other neighbourhood avenues across the neighbourhood. (h) Port Macquarie-Hastings (Area 13 Thrumster) Local Environmental Plan 2008 56 The Port Macquarie-Hastings (Area 13 Thrumster) Local Environment Plan 2008 was published in the government gazette on 24 December 2008. The land zoning map (exhibit U) for the Area 13 Thrumster LEP includes land immediately adjacent to the north and west of the Applicant's land. Predominantly, the Area 13 land at the boundary of the Applicant's land is zoned general residential with some pockets zoned environmental conservation. (i) Mid North Coast Regional Strategy (Draft) 57 A draft Mid North Coast Regional Strategy was released in December 2006 for public display (prior to the date of acquisition). Notice of the proposed Oxley Highway upgrade was provided in this draft document. The Applicant's town planning expert contends that the release of this draft document provides confirmation of the future rezoning potential and proposed future urban release areas. (j) Mid North Coast Regional Strategy 2009 58 The Mid North Coast Regional Strategy 2006-2031 was published by the NSW Department of Planning in March 2009. It identifies the environmental challenges for the entire region as the protection and enhancement of environmental assets, including biodiversity, wetlands, littoral rainforest, threatened species habitat, estuaries and landscape values (exhibit K p 142). It also identifies the mid north coast as one of the faster population growth regions of NSW (exhibit K p 142). The legend to the Regional Strategy Map (exhibit K p 148) states that new urban release areas will be developed at Thrumster and Bonny Hills.

[36]

72 Mr Sanders stated that claim A would have still been zoned for rural 1(a1) purposes as at the date of acquisition absent the proposed Oxley Highway deviation, and that he has seen no evidence that it would have been otherwise. Mr Sanders opined that the entire area was sufficiently remote from the then built up areas of Port Macquarie. As there would have been no residential rezoning without the road in relation to the land to the south of the alignment, therefore it follows that there would have been no residential rezoning on claim A (TS 26.08.10 p 33, 35). He agreed in cross-examination that there was no geographic or environmental feature of the claim A area which would warrant the boundary being identified in the zoning plan. (ii) Whether lot 32 in DP809331 (now lot 6 in DP1105610) would have remained zoned as rural 1(a1) under the Hastings LEP 1987, instead of being rezoned residential 2(a1) under Amendment No 8 on 8 September 1989, but for the proposed Oxley Highway deviation 73 In Mr Sanders' opinion lot 32 was only able to be rezoned from rural 1(a1) to residential 2(a1) by reason of the proposal to carry out the public purpose as the realignment meant the authorities would be satisfied that existing road congestion in the locality would be relieved in due course. This opinion was supported by the Hastings Coastal Development Strategy (September 1983) which refers to the substandard roads in Port Macquarie requiring improvement and realignment to support continuing urban development (see exhibit A vol 1 p 421, particularly par 5.2(iii)). He also considered the site was isolated in 1989 from other developed areas of Port Macquarie. 74 Ms Hollis did not agree with Mr Sanders and considered that the rezoning of Maher's Headland was justified on town planning grounds, regardless of the proposal to carry out the public purpose, because of the westward expansion of Port Macquarie. The need to expand residential development westward is emphasised in the Council's planning instruments. (iii) What the zoning/development potential of the lands identified as claims B to D in the Applicant's points of claim would have been at the date of acquisition but for the proposed Oxley Highway deviation 75 Ms Hollis stated that at the date of acquisition the land had been identified in HUGS as part of a future residential area. HUGS identifies high growth in Port Macquarie, that Port Macquarie is a major centre and that the Hastings area will be accommodating additional urban release areas. All these things point to the fact that the Council is open to additional urban release areas, and on this basis Ms Hollis stated that there was significant potential for rezoning and development of the land in claims B, C and D (TS 26.08.10 p 78, 96). In oral evidence she was cross-examined about whether any application for rezoning of the claim areas supported by environmental investigations had been made to the Council by the Applicant. She was unaware of any such application being made. 76 She considered claims A to D were landlocked as a result of the acquisition which was a significant impediment to their development for residential purposes as the land would not be rezoned without access to a public road.

[38]

79 Mr Sanders stated that in the event that the claim A area had potential for urban development it would have the potential development density of 7 lots/ha reflecting its environmental constraints. Insofar as claims C and D are concerned it would be a much lower density, maybe in the order of 4 or 5 lots/ha (TS 26.08.10 p 91). Applicant's submissions (i) Claim A- likelihood of residential rezoning in 1989? 80 The Applicant argues in relation to claim A, including the resumed land, that the proposal has caused a large decrease in the market value of that land because rather than being zoned rural at the date of acquisition, it would have been zoned residential. At the date of acquisition, it would have been seen by prudent parties to a hypothetical sale as having potential for a further 152 lot residential development (discussed below) as a continuation of the approved Maher's Headland subdivision. 81 The Applicant submitted that there did not appear to be any other reason, but for the Oxley Highway deviation, which would have prevented rezoning of the claim A land as residential with lot 32 in Amendment No 8 to the Hastings LEP in September 1989. There does not appear to be any ecological, topographical or geomorphic differences between the claim A land and the other land which was rezoned (par 32 written submissions). Mr Sanders agreed that there is no "geographic feature" or "environmental feature" which warranted the boundary for the September 1989 residential re-zoning being where it was (TS 26.08.10 p 40 L 24-35). 82 The Oxley Highway deviation proposal was used as the physical boundary for the lot 32 residential rezoning and this prevented the claim A land from being rezoned (par 45 written submissions). Further, DA 248/88 was granted consent in September 1988 for the Mill Hill subdivision. The letter from the Council dated 4 April 1989 referred to in the report of Ms Hollis refers to the Council advising of its resolution to prepare a draft LEP to facilitate the development of the Applicant's land. There is no evidence that the Applicant made any application to anyone for rezoning. This was not required by the EP&A Act as it applied in 1988-89. 83 The proper inference to draw is that the Council made the application for rezoning. The only inference available from the proven facts is that the proposed highway upgrade was chosen as the physical boundary of the residential rezoning of lot 32, there being no proper planning reason why the residential zoning would not have extended to the northern boundary of the Applicant's land, namely claim A. 84 Applying a "common sense" or "but for" causation test (March v E & MH Stramare Pty Ltd [1991] HCA 12; (1991) 171 CLR 506 applied in Caruana v Port Macquarie-Hastings Council [2007] NSWLEC 109 at [52]), there is no reasonable inference that can be drawn on the evidence other than that the proposed highway upgrade has caused the residential zoning boundary of lot 32 to stop where it did. This is not only Ms Hollis' view, but (putting aside his betterment argument), Mr Sanders agreed (TS 26.08.10 p 42 L 49 - p 43 L 6). 85 Jones v Dunkel (1959) 101 CLR 298, a case on which the RTA seeks to rely, only has proper application in circumstances where a competing inference "is open from facts proved by direct evidence": Menzies J p 312. The RTA has not proven any fact to suggest that the boundary for the residential zoning of lot 32 had anything to do with some (unproven) rezoning application it says was made by the Applicant. What is proven instead is that the Applicant lodged a development application, which was consented to by the Council in September 1988, following which the Council resolved to prepare a draft LEP to facilitate this development. (ii) Lot 32 rezoned because of OHU 86 Contrary to Mr Sanders' opinion, lot 32 was not rezoned because of the proposed OHU. Mr Sanders based his view on a 1983 report, the Hastings Coastal Development Strategy, which refers to substandard roads in the Port Macquarie area and his view that the Applicant's lands were then isolated from Port Macquarie. As referred to by Ms Hollis, ongoing western expansion of urban development from Port Macquarie had been planned by the Council for some time. Her evidence is that Port Macquarie had experienced strong growth for years and the upgrading of the road network is but one of the requirements for the opening up of land to urban release. Major urban release areas in Port Macquarie have been developed without reliance on the RTA (joint planners' report exhibit C par 4.21). Ms Hollis strongly disagreed in oral evidence that lot 32 was rezoned because of the proposed OHU due to the high growth rates in Port Macquarie and that road infrastructure was planned for that purpose. The OHU does not facilitate development as it is not a local access road and it will not therefore service the development of lot 32, which relies on access through Philip Charley Drive. 87 Further Mr Sanders does not refer to any traffic evidence to support his view that rezoning could not take place without an upgrade of the OHU. Nor is lot 32 isolated, being located in the western area of Port Macquarie where urban expansion is expected. Thrumster has been identified as such an area for more than 20 years. 88 The language of causation used in s 55(a) ("as a result of") and s 56(1)(a) ("caused by") of the JT Act cannot be satisfied by a finding that the residential boundary on lot 32 when rezoned from a rural zoning was caused by anything other than the presence of the OHU at that place. This requires no more than a "common sense" consideration: see generally the comments of Biscoe J in Caruana [52] regarding similar language of causation in s 59(f) of the JT Act, and the "common sense standards in determining what is a proximate cause" as outlined in the High Court in March v Stramare at 509-510 per Mason CJ. Clearly, but for the identification of the proposed Highway upgrade across the Applicant's land, the boundary for the residential zoning would not have been that proposed road, but the northern boundary of the Applicant's land. (iii) likelihood of claims B to D being rezoned residential 89 As Ms Hollis stated in her evidence there is a high likelihood that the Applicant's lands would have been rezoned for residential use since LEP Amendment No 8 in relation to claim A given the planning instruments which provide for the westward expansion of Port Macquarie. Claim areas C and D may also be suitable for some form of residential development (see Hollis report exhibit B par 105).

[39]

Respondent's submissions 90 If the Applicant's contention is that the residue land has potential for residential use there can be no compensation for injurious affection under s 55(f) as a result of the public purpose. Ms Hollis' evidence is that in her opinion the Council will rezone the land given its capacity for residential development. This highlights a fundamental contradiction in the Applicant's case. (i ) Claim A - likelihood of residential rezoning in 1989 91 The public purpose was not the cause of claim A retaining its rural zoning. The assertions of Ms Hollis in the absence of any evidence as to why the rezoning application for lot 32 in Amendment No 8 to the Hastings LEP was limited to the land south of the Oxley Highway deviation never rises above speculation, which is not permissible (see Serbian Cultural Club "St Sava" Inc & Serbian Cultural Club Limited v Roads and Traffic Authority of New South Wales [2007] NSWLEC 673 at [112]; Mir Bros Unit Constructions Pty Limited v Roads and Traffic Authority of NSW [2005] NSWLEC 467 per McClellan CJ at [28], and on appeal in Mir Bros Unit Constructions Pty Limited v Roads and Traffic Authority of NSW [2006] NSWCA 314 at [73] and [77]). There is no documentary evidence to support the argument that claim A was not rezoned because of the road proposal. Nor did the Applicant call anyone with direct knowledge of the rezoning application. Ms Hollis has no knowledge of it. Her career as a planner did not commence until 1991. Claim A has been used for selective forestry and it is possible that the Applicant required this land to be maintained as an existing and future forestry resource. 92 There has been detailed consideration in various studies of the future planning direction for Port Macquarie. There has been and continues to be pressure for urban land release around Port Macquarie to accommodate its growing population. Studies dating back to 1983 have been prepared for stakeholders and the Council and the NSW Department of Planning. Area 13 - Thrumster, west of Port Macquarie, has been identified for future development (and an "inland coastal town") (exhibit A, page 674). The Applicant's land has been included in these studies/urban investigations. It has been consistently identified as constrained land with respect to development for urban purposes.

[42]

95 The forested land refers to the entire parcel of the Applicant's land. Therefore, even as late as 12 June 2008, about six months before the date of acquisition, the Applicant's land remained designated as land requiring further investigation because of its ecological constraints. 96 Accordingly, a prudent party to a hypothetical sale of the land could only have assumed the parent parcel would remain zoned as rural land. He or she may foresee some prospect of rezoning of part of the property one day but it was certainly not imminent. The most recent planning study which was undertaken for the Area 13 Thrumster LEP 2008 gave an enquirer no indication if and when any part of the land might be rezoned. 97 The following observations concerning Ms Hollis' evidence are made: (a) There is no relevant difference between claim areas A, B, C and D in terms of ecological constraints. All areas are similarly significantly constrained as set out in the evidence of the RTA's ecological experts and any residential rezoning and development of this land would not, at least on the date of acquisition, have been envisaged by a hypothetical prudent vendor or purchaser pending further investigations. Ms Hollis did not accept that proposition, despite clear evidence of it including in publicly available documents; (b) Importantly, under cross examination, Ms Hollis (eventually) conceded that, with or without the carrying out of the public purpose, if ecological investigations are done and submitted to the Council, the residue land might be rezoned as residential if those studies supported rezoning. On this basis, it is not the proposal to carry out the public purpose that prevents the land from being rezoned; and (c) Under cross examination, Ms Hollis revealed that while the Applicant has commissioned ecological reports in respect of the parent parcel over time, no application has been made to the Council to rezone the residue land as residential. Counsel indicated that there had been an agreement made to withdraw the Applicant's land from the Area 13 Thrumster LEP 2008. Ms Hollis did not know of that agreement. As a result, the parent parcel has not been considered for residential release in any of the Council's planning strategies. (ii) Lot 32 rezoned because of OHU 98 The evidence of Mr Sanders is that lot 32 was rezoned residential only because of the OHU proposal which opinion he has formed based on statements in the Hastings Coastal Development Strategy (par 73 above) concerning the inadequate roads at that time limiting further residential development but for the proposed realignment of the Oxley Highway which would relieve traffic from the old road. The existing road network in 1989 would not have been able to cope with the additional traffic that would be generated by a residential subdivision of the adjoining land. The Council had undertaken a study to identify land suitable for urban release in 1983. That study did not identify the Applicant's land as suitable for urban release because roads in the locality were at or near capacity. This resulted in a substantial increase in value of lot 32 as a result of the public purpose of the acquisition. (iii) likelihood of claims B to D being rezoned for residential use 99 The Applicant's land has been consistently identified as constrained land with respect to development for urban purposes (see HUGS 2001 B2 resolution of the Council), and there has never been a decision to include the acquired land or the residue land (with the exception of Maher's Headland) in a residential land release area (par 29(j)-(k) written submissions). Various planning strategies carried out over time show that the parent parcel has never been included in any residential land release strategy due to ongoing, unresolved ecological constraint issues and the need for further investigations (par 33(a) written submissions). 100 Further Mr Sanders' evidence is that claim areas C and D would not ultimately be landlocked because access would be provided as part of the residential development processes on the neighbouring land in Thrumster. This is confirmed by the DCP (traffic) which shows the location of roads immediately adjacent to or nearby claim areas B to D in the Thrumster area that have been rezoned for residential development. 101 The Court has no evidence from the Applicant as to why the Applicant did not include claim A in the 1989 rezoning application and when the Applicant would apply to rezone the land to the north of the highway. A party can be reasonably expected to call a person as a witness who is likely to be able to speak on some relevant fact or issue. Failure to do so suggests that an adverse inference may be drawn by that failure per Jones v Dunkel at [308] - [312], Brandi v Mingot (1976) 12 ALR 551 at 559-560. Finding on planning issues 102 The planning issues are relevant to the Applicant's claim of injurious affection under s 55(f) of the JT Act as it argues that other land (the residue land) owned by it has decreased in value by reason of the proposal to carry out the OHU. The loss in value arises because it argues claim A would have been rezoned before the date of acquisition for more valuable residential use but for the OHU. "by reason of" 103 The RTA submitted that s 55(f) operates differently from s 56(1)(a) and s 55(a) of the JT Act which are concerned with market value. The focus of s.55(f) is the words "by reason of". "By reason of" has been considered in Vickers v Minister for Business and Consumer Affairs & Ors (1982) 43 ALR 389 where Morling J at 407 referred to the words as requiring a relationship of cause and effect. The RTA submits that the term means that while there must be cause and effect, it need not be direct cause. The Court will apply that approach in this matter. (i) Claim A - likelihood of residential rezoning in 1989 104 Under Amendment No 8 to the Hastings LEP in September 1989 part of lot 32 was rezoned residential 2(a1) with the northern boundary identified as the proposed new highway. Evidence about Amendment No 8 is minimal. Apart from the actual amendment plan of the rezoning there is no other evidence about the Council's or Minister's consideration of it. The process for the making of such amendments in 1989 specified that the Council may resolve to make such an amendment under s 54 of the EP&A Act as then in force. The Minister may make the plan under s 70 of the EP&A Act. The Department of Planning letter dated 4 April 1989 which refers to the Council resolution to make the amendment reflects the relevant statutory process (see annexure 4 to exhibit B). It provides no assistance as to what the Council's reasons were for the resolution. Essentially the Applicant submits that because the claim A land has similar characteristics to the area of lot 32 that was rezoned, there was no planning reason why the claim A land was not rezoned. In written submissions the RTA submitted that the Applicant must have made an application to the Council for the rezoning but accepted in oral submissions that there was no such evidence.

[46]

"But the law which this passage attempts to explain does not authorise a court to choose between guesses, where the possibilities are not unlimited, on the ground that one guess seems more likely than another or the others. The facts proved must form a reasonable basis for a definite conclusion affirmatively drawn of the truth of which the tribunal of fact may reasonably be satisfied". 106 The authorities relied on by the RTA are examples in this Court of where a judge has held that expert opinion was speculative. In Mir Bros on appeal from this Court the Court of Appeal accepted that the evidence in question did not rise above the level of possibility and upheld the finding that the evidence did not rise above speculation, per Spigelman CJ at [77] (Handley, Tobias JJA concurring). 107 As held in Girlock set out above, the drawing of inferences in the absence of specific evidence requires that there be adequate facts on which to base such inferences other than simply that there is a probability of events occurring. The evidence must do more than give rise to equally probable outcomes. In the absence of adequate facts which can found an inference, the Court and any experts are otherwise speculating on what the position was in 1989. The Applicant's counsel submitted that the only available inference was that the proposed highway upgrade boundary was the northern boundary of lot 32 because there was no other planning reason why the residential zoning would not have extended to the northern boundary of the Applicant's land. There is nothing in the evidence to support that statement other than the fact of what appears on the plan. Essentially the Applicant relies on the opinion of Ms Hollis that she considers that was the position. The Court does not consider that Ms Hollis' evidence on this matter amounts to more than speculation on her part. As submitted by the RTA, the Applicant used and has continued to use the land in claim A for selective logging purposes. It may have wished to continue that use. Alternatively the boundary of the rezoned area may have been further to the south. 108 The Applicant's submission that the rezoning of lot 32 facilitated the development of DA 248/88 is misplaced as that DA relates to the Mill Hill land not Maher's Headland. While the development plans for DA 248/88 included Maher's Headland as part of an overall development strategy, the DA for Mill Hill did not permit development on Maher's Headland. Maher's Headland (lot 32) the subject of Amendment No 8 to the LEP in 1989 was not the subject of a DA lodged with the Council seeking approval for residential development until 2005. It is not appropriate that the Court concludes that but for the OHU proposal (the public purpose) claim A would have been rezoned for residential development in 1989. The commonsense consideration the Applicant contends for by reference to Caruana referring in turn to March v Stramare (par 84) cannot fill gaps in the evidence. 109 The Court is confirmed in that opinion by the additional consideration that if any party could cast any light on this issue it is the Applicant, but it has not provided any evidence. The Applicant submitted that the RTA had failed to bring forward any evidence to suggest that there was any reason that claim A had not been rezoned and simply submitted that there was not any. The observation can also be made that the Applicant has not brought forward evidence to support its submissions or the opinion of Ms Hollis. The family of the directors of the Applicant (a family controlled company) have owned the acquired land and Maher's Headland since 1906. There is no statement from the Applicant's directors about any of the history of the acquired land, Mill Hill or Maher's Headland. Ms Hollis was asked in cross-examination if she made any inquiries of the Applicant's directors about the circumstances of the rezoning and she had not. 110 The Court does not need to make a finding as the RTA urged in reliance on Jones v Dunkel that the inference should be drawn that any evidence called would have been adverse to the Applicant's case. A conclusion based on Brandi v Mingot, a personal injury claim, concerning the directions about adverse inferences that can be drawn in the absence of evidence given to a jury by a trial judge also need not be drawn. The principle the Court is applying is that the party most likely to be able to fill a gap in evidence which does not do so cannot expect a court to speculate on what that evidence might be in order to draw an inference in that party's favour. 111 The Applicant raised in final written submissions that part of its case included that since 1989, but for the OHU, the land in claim A would have been rezoned for residential purposes. That was not the case alleged in the points of claim par 7. In any event the reasons given below in relation to when claims B, C and D would be likely to be rezoned for residential purposes apply to claim A since 1989. (ii) Lot 32 rezoned because of OHU? 112 As observed in relation to the previous issue, there is virtually no information about the rezoning of lot 32 apart from the Amendment No 8 plan. In the same way that the Court has not accepted Ms Hollis' opinion in relation to claim A the Court does not consider that it should accept the opinion of Mr Sanders that lot 32 was rezoned because of the OHU. The information on which he bases his opinion are broad statements made in overarching planning documents about inadequate road infrastructure. These are not specific to the Applicant's land but are considering development in Port Macquarie generally, albeit in this general locality. They provide no relevant information to assist in drawing an inference in relation to the 1989 rezoning of lot 32 without the claim A land. 113 Even accepting the RTA's counsel's submissions of the proper approach to "by reason of" in cl 55(f), identified in par 103, that the cause of the increase or decrease in value as a result of the public purpose need not be direct, the evidence does not establish that the OHU caused directly or indirectly the residential zoning of lot 32 in 1989. This finding means that the RTA's contention of betterment to the Applicant as a result of a substantial increase in value of lot 32 when rezoned residential 2(a1) in 1989 cannot be pursued (identified in par 8(c)(i)). (iii) Likelihood of rezoning of Applicant's land (claims B, C, D) for residential development 114 The planners gave their evidence well in advance of the hearing. The planning instruments referred to by them were the broader regional planning documents such as HUGS 2001, the North Coast Regional Strategy and the Mid North Coast Regional Strategy. The Hastings LEP was referred to. Curiously, the detailed planning instruments for the immediately adjoining area, the Area 13 (Thrumster) and Oxley Neighbourhood DCPs made in June 2008 (identified in par 54-55 above) were not referred to by the planners at the time they gave evidence. The Thrumster DCP includes plans of the road network proposed for Thrumster which shows collector roads on the northern boundary of the Applicant's land and close to the western boundary. These planning instruments played a significant part in the later valuation evidence and submissions of the parties. It is unfortunate that these documents were not the subject of evidence from the planners. This means the planners' evidence on the issue of the likelihood of rezoning of the residue land in whole or part for residential development has been of somewhat limited assistance to the Court. 115 Mr Sanders' opinion that the Applicant's land could be rezoned for residential use on the basis that access would be provided as part of development of land to the west and north of the site in Thrumster, already rezoned for residential purposes, is supported by the content of the DCPs for the Thrumster area. 116 When the planning instruments for the development of the Thrumster area commencing with HUGS 2001 Area 13 Structure Plan and LES adopted May 2006, the Area 13 LEP 2008, the Thrumster DCP, and the North Oxley Neighbourhood DCP (summarised above at par 47-52, 54-56) are considered, the principal reason why the acquired and residue lands have not been rezoned residential is the need identified by the Council to undertake further environmental investigations. The detailed submissions of the RTA to this effect set out above at par 90-95 are accepted as these reflect the planning instruments prepared by the Council commencing with HUGS 2001. The Thrumster DCP (exhibit 8 tab 5) shows, consistent with Mr Sanders' evidence, at p 323 a map of the proposed road network and intersections in the Thrumster area once the area is realised for residential development. A map of the proposed road hierarchy shows a road on the north western boundary of the Applicant's land with a road abutting the boundary to the north west of the Applicant's land. The proposed location of cycleways, shareways and bus routes, which will abut the boundary to the north west of the Applicant's land are also shown (p 334 and 335). 117 The North Oxley Neighbourhood DCP reveals at p 8 an indicative neighbourhood design framework showing a proposed collector road abutting the north western corner of the Applicant's land; at p 28 an indicative street hierarchy showing a neighbourhood avenue abutting the north western corner of the Applicant's land; and at p 29 an indicative public transport map with a proposed collector road abutting the north western corner of the Applicant's land. The Court does not consider the subject land is therefore landlocked for future residential development as a result of the carrying out of the public purpose.

[47]

118 Ms Hollis gave evidence that the land in claim areas A to C was landlocked and there could be no approval for residential development until that was rectified. That could only be achieved by acquiring land to the north of the Applicant's land to enable access to the Oxley Highway (TS 26.08.10 p 77 L 27-33). That evidence was not informed by the May 2007 Area 13 and Sancrox Traffic Study or the DCPs referred to above. The 2001 decision by the Council to take the Applicant's land out of the Thrumster Area 13 LEP pending further investigation does not appear to be linked to the implementation of the OHU (Land Use Map Thrumster Area 13 LEP, exhibit U). As submitted by the RTA (at par 97 written submissions), once the issue of landlocking of the northern residue land is set aside there is no other reason why an application to rezone the northern residue land cannot be made. Ms Hollis agreed with that proposition in cross-examination and Mr Sanders holds that view. 119 The development application for the Maher's Headland development (DA 248/88, see exhibit K and exhibit B Hollis report) identifies the location of the public purpose and identifies the Applicant's land as "Future Residential and Recreation". The public purpose has not been the cause of the Applicant's land retaining its rural zoning. This finding undermines the Applicant's submission that the substantial demand for residential development would have resulted in rezoning of the northern residue land but for the OHU, based on the evidence of Ms Hollis to that effect. The Court concludes later at par 262-264 in relation to the valuers' assumptions that the likely time frame for future residential development is medium to long term, meaning 10-15 years. 120 Further, as submitted by the RTA, the adjoining Area 13 was rezoned in December 2008 for residential development relieving pressure to develop in this area. That there is no overwhelming demand for residential development is also supported by the fact that Maher's Headland was rezoned residential in 1989 yet no development application was lodged by the Applicant until 2005. No development consent had been granted at the date of acquisition in 2009, suggesting limited demand for residential development in this area. 121 The Court accepts that the development plans of the Applicant for claims A, B and C have had to change from that shown in the Mill Hill DA 248/88 due to the loss of access of the northern residue land to Philip Charley Drive. The future development of these lands in the medium to long term is not precluded by this. The Court has held above that access for residential use in the future is likely to be forthcoming when the land between the Applicant's land and the original Oxley Highway is redeveloped.

[48]

Conclusion on whether rezoning affected by OHU 122 Based on the planner's varying evidence, three scenarios emerged for the valuers to consider. Scenario 2 is the approach of Mr Sanders that lot 32 was rezoned residential in 1988 as a consequence of the new road. The Court has held above that it does not consider it should adopt Mr Sanders' approach. Scenario 3 is based on Ms Hollis' evidence that but for the OHU the resumed land in claim A would have been rezoned residential. The Court has not accepted her approach for the reasons given above. 123 Scenario 1 considered by the valuers is based on existing circumstances whereby the zoning of the resumed land and the residue land is rural in the before and after scenarios. In terms of the definition of market value it is not necessary to consider in zoning terms whether there has been an increase or decrease in the value of the land caused by the public purpose. My finding on the planning issues also means that the Court has not accepted that "the proposal to carry out the public purpose for which the land was acquired" and the carrying out of the public purpose for which the land was acquired have caused a decrease in the market value of the acquired residue land within the meaning of s 55(f) and s 56(1)(a) of the JT Act. Lot yields 124 While claim A is to be valued on the basis of a rural zoning, the planners' evidence on lot yield may remain relevant to the valuers' consideration of rural sales with residential development potential. Ms Hollis considered that a yield of 10 lots/ha was the yield achievable on claim A applying the lot layout achieved on the approved Maher's Headland DA 547/2005. For claims C and D, Ms Hollis considered 7 lots/ha was appropriate. Mr Sanders considered a yield of 4 lots/ha for claim A was more likely. For claims C and D he considered 0-2 lots/ha was the most likely yield. 125 The Applicant also relied on the Thrumster DCP 2008 identifying core koala habitat in the residentially zoned land immediately to the west and north west of the Applicant's land showing lot yields of 6 and 9 lots/ha where core koala habitat was identified. The Court understood the yield to the west of lot 40 was 5 lots/ha. On the view the area to the west was seen to be largely cleared and used for agricultural purposes, unlike the Applicant's land.

[51]

Flight path clearing 129 For completeness the Court notes that there was reference in Dr Wotherspoon's report on ecology to the need for compliance with height limits imposed by the Obstacle Limitation Surface (OLS) requirements for safe aircraft navigation over part of claim C due to the proximity of Port Macquarie airport. The requirement is that the heights of trees must be kept to a certain level. On the view the area was seen to be cleared of trees, which appears to be more than the airport requirement. While noting this was referred to in the Applicant's evidence and submissions as another reason why claim C was not constrained from residential development, the valuers did not refer to this at all. The Court does not consider it is a material matter in this case. Advice on fauna issues to hypothetical purchaser/vendor 130 A joint ecology (fauna) expert report was prepared by Dr Wotherspoon (for the Applicant) and Dr Jacqueline Coughlan (for the RTA) dated 5 February 2010 (exhibit Q). Dr Wotherspoon and Dr Coughlan undertook independent site inspections. On fauna habitat, Dr Wotherspoon and Dr Coughlan agreed that the forest vegetation on the subject land is mature in the sense that trees on site have reached reproductive age, some are very large, some show signs of senescence and some are hollow bearing. They agreed that previous studies on and in the vicinity of the subject land have identified the presence of threatened fauna species (including the spotted-tail quoll, grey-headed flying fox, koala, greater broad-nosed bat, little bentwing bat and glossy black cockatoo) and their habitats on the subject land. Further, detailed fauna surveys would be required to establish the extent to which development would be constrained by those issues. Areas not constrained by threatened species or their habitats, if any, would provide opportunities for development subject to an approved management plan that would ensure the persistence of threatened species in protected areas of the site and the provision of adequate buffers to protect threatened species and their habitat. It is possible that offsets would be required with a further possibility that they could be obtained within the locality.

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132 For the purpose of his evidence Dr Wotherspoon states (at p 3 exhibit M) that he reviewed various fauna reports specific to the subject land (and adjoining lot 32) prepared by the Applicant. He did not prepare a report dealing exclusively with broader fauna issues (cf his expert koala report - exhibit N). He also undertook two site inspections for the purpose of reviewing the accuracy of the material provided to him and to form his own conclusions about the land and any opportunities or constraints to the development of the land. During oral evidence Dr Wotherspoon stated that he visited the land a number of times primarily to establish the presence of individual koalas. As a secondary activity he looked for fauna of various sorts in both day time and night time surveys (TS 8.09.10 p 188). As a result of long term logging, he opines the fauna habitat is disturbed and lower quality compared with old growth undisturbed vegetation. Few hollow trees remain so that there is no constraint on development by the presence of ecological community or other flora or fauna matters. For claim A (and B) that advice would have been: (a) there is little ecological difference between the land at "Goat Hill" (claim A land) and the Maher's Headland subdivision land; (b) a test of significance under s 5A the EP&A Act would probably not find a significant effect for any threatened species or community. Claim B is constrained from development by the presence of an endangered ecological community (EEC). 133 Dr Wotherspoon states (at p 6 exhibit M) that in relation to claim A there is "no constraint to development by ecological community or koalas or other … fauna matters". Claim B is the EEC of swamp forest where koala feed trees grow. Development design would need to be consistent with a KPoM. In relation to claims C and D he states there "is habitat for some threatened species of plants and animals but that is not an impediment to development as such habitat occurs across the Applicant's lands beyond the area under consideration".

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136 The evidence of Dr Coughlan, summarised at par 70 of the RTA's written submissions, is that: a. In order to advise a hypothetical prudent vendor or purchaser on the date of acquisition of the fauna constraints for the Applicant's land, she would firstly get database records for the Applicant's land and plot them, secondly, she would review all available reports for the Applicant's land in terms of ecological issues and thirdly, she would visit the site to make observations (noting that she would not expect to see all threatened species on the land, because they are, by their threatened nature, rare); b. Both State and Commonwealth-listed threatened species are known to occur on all of the claim areas A, B, C and D and nearby lands (including glossy black-cockatoo, koala, square-tailed kite, spotted-tailed quoll, grey-headed flying-fox, greater broad-nosed bat and little bent-wing bat). The extent of the affection of the Applicant's land is set out at TS 8.09.10 p 197-200; c. The Applicant's parcel supports dense vegetation with mature native forest the majority of which is weed free and is highly constrained for the purposes of urban development because of the presence of those species and their habitats. Dr Wotherspoon says the quality of the vegetation is "low" whereas Dr Coughlan says it is "high" (Exhibit Q par 4.3); d. The logging of the Applicant's land has been selective, well managed and conducted in accordance with good practice for many years. Therefore fauna habitat on the land remains of high value despite the logging; e. Rezoning of the parent parcel for any purpose that involved habitat destruction would be unlikely to be approved if there was a significant adverse impact on any threatened species as a result, which there would be. The fauna constraints on the Applicant's land are so widespread that they could not be protected by way of compensatory habitat or otherwise should some form of development be envisaged. The issue has more to do with the availability of habitat on the Applicant's land, and not so much the presence of faunal species. Scattered habitat locations, in the event development was permitted on the Applicant's land, would isolate threatened species and would cause a lack of ecological functioning; and f. The parent parcel is highly constrained by the presence on the land of threatened fauna species. The Applicant's land supports known threatened species, contains areas that provide important habitat and has high potential to support others (such as greater use by the powerful owl). The weight of information in many forms confirms unequivocally that threatened species occur across the entire parcel of the Applicant's land and government would have strong objection to rezoning on ecological grounds. Applicant's submissions 137 The Applicant submitted that the level of detail in the various expert reports was greater than a prudent hypothetical purchaser would be likely to obtain. Such a purchaser would be likely to obtain a general report such as that provided by Dr Wotherspoon. His report suggests that with appropriate management the claim areas A, C and D can be used for residential development. Dr Coughlan's evidence refers to the use of the residue land for foraging purposes so that species would move on and off the site. The nearby larger areas of habitat in the Lake Innes Reserve and the other two-thirds of the site in the southern section of lot 40 beyond claim D needs to be considered as part of the assessment of the significance of this site. Respondent's submissions 138 Threatened species and their habitats including foraging habitat are present on the Applicant's land. Detailed surveys would be necessary to establish the extent to which development or rezoning would be constrained by the presence of those species and habitats. Hollow-bearing trees are located throughout the Applicant's land. If rezoning of the land was to occur for residential purposes compensatory offsets would be required as a condition of rezoning and/or development. The RTA submitted that Dr Wotherspoon acknowledges that fauna species present on the Applicant's land may potentially be affected by any proposed rezoning or residential development of that land including the east coast freetail bat, the eastern false pipistrelle, the greater broad-nosed bat, the grey-headed flying fox, the koala, the large-footed myotis, the large bent-winged bat, the little bent-wing bat, the powerful owl, the square-tailed kite and the glossy black-cockatoo (see also Exhibit Q p 30-32). 139 Dr Wotherspoon's evidence is contrary to, and insufficiently considers, the significant weight of publicly available evidence proving that the Applicant's land is highly constrained in terms of fauna, and on that basis, his evidence that government would entertain rezoning and/or residential development is so remote and so insupportable on the evidence that it should be rejected. Dr Coughlan's evidence should be preferred. The prudent hypothetical purchaser would not assume in the before and after scenario that the land could be developed in the short term.

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Finding on fauna 140 The first consideration in relation to the knowledge to be attributed to a hypothetical purchaser and vendor is what planning or other statutory instruments or relevant information in the public domain they would consider is relevant when considering constraints on development. Dr Coughlan identifies the inquiries of State and Commonwealth databases she would make if she was inquiring on behalf of a hypothetical purchaser. Dr Wotherspoon did not refer to these. Dr Coghlan's views of the potential constraints on development due to the presence of threatened species and their habitat are supported by her interrogation of publicly available State and Commonwealth government data collections. This data was applied to support her conclusions, suggesting these are soundly based. Her opinion that selective logging has not destroyed the environmental values of the native vegetation as important habitat is relevant. Given the differing expert opinion which a prudent hypothetical purchaser is likely to obtain the approach the RTA contends for is correct, namely that a prudent hypothetical purchaser would consider that serious investigation was needed which may not result in rezoning in whole or part of the residue land for residential purposes. 141 As identified above at par 127, the parties to the hypothetical sale of the Applicant's land would be aware that the land is yet to be rezoned for residential use and environmental investigations to support rezoning must be undertaken. Dr Wotherspoon's investigations and opinions appear focussed on the development consent stage but the initial question the hypothetical parties will ask themselves is what is the likelihood of rezoning of the residue land for residential purposes. 142 The Thrumster Urban Investigation Area (UIA) (Area 13) is identified in HUGS (see HUGS 2001 map 4 - Area 13 at exhibit A vol 2 p 565). The Area 13 Urban Investigation Area Local Environmental Study (Ecological Constraints) (Biolink) March 2006 was prepared by Biolink Pty Ltd and reports on both flora and fauna issues. The report states (at exhibit A p 769-770) that: Approximately 55% of the Area 13 UIA supports native vegetation in the form of at least 16 distinct vegetation communities, three of which (Broad-leaved Paperbark/Swamp Mahogany/Swamp Oak Open Forest, Swamp Oak Open Forest, Flooded Gum Open Forest) are Endangered Ecological Communities for purposes of the Threatened Species Conservation Act 1995. The study area abuts SEPP 14 Wetland No. 507 in the north; key elements of which extend into the study area but are not currently gazetted under SEPP 14. At least 4 discrete populations of the threatened plant Melaleuca biconvexa also occur within the study area … At least 20 Amphibian, 18 Reptile, 167 Avian and 49 Mammal species have been recorded from the study area; 13 of which are listed for purposes of the Threatened Species Conservation Act 1995 (NSW) and/or Environmental Protection and Biodiversity Conservation Act 2000. … Overall, the Area 13 UIA supports a diverse assemblage of threatened flora and fauna species and a number of significant vegetation communities. In order to effectively protect, conserve and manage the biodiversity of the Area 13 UIA in perpetuity, the habitat needs of threatened species and threat abatement protocols for the retention of important vegetation communities form the basis of the recommendations contained in this report.

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143 The report recommends that conservation and maintenance of significant vegetation communities (SVCs) should be incorporated into planning uses, all SVCs must be afforded buffers of minimum 30 m, retention of all eucalypts of a certain size, and a greater level of investigation and further study of the area to achieve integrated development/conservation outcomes. Neither parties' flora or fauna experts referred directly to the LES or the ecological constraints appendix, not surprisingly, given that the Applicant's land is not referred to in it. The Court has done so as it considers this is the kind of instrument that is likely to be made in relation to the Applicant's land in the event that the Applicant's land is rezoned for residential development in the future. Such an instrument confirms the likely presence of threatened species and/or habitat would be considered as a potential constraint on the rezoning and subsequent development of the land by a hypothetical purchaser. Advice on koalas to hypothetical purchaser/vendor 144 As the evidence and submissions in relation to koala ecology refer to core koala habitat and potential koala habitat it is appropriate to provide these definitions at the outset. Clause 4 of the SEPP44 provides that core koala habitat is defined as "core koala habitat" means an area of land with a resident population of koalas, evidenced by attributes such as breeding females (that is, females with young) and recent sightings of and historical records of a population. and potential koala habitat defined as "potential koala habitat" means areas of native vegetation where the trees of the types listed in Schedule 2 constitute at least 15% of the total number of trees in the upper or lower strata of the tree component. 145 The Council instruments available at the date of acquisition are relevant for a prudent hypothetical purchaser to consider. The Area 13 Urban Investigation Area Koala Plan of Management (Area 13 KPoM) (Biolink) March 2006, Appendix 5 to the Area 13 Thrumster LES was drafted in 2006 by Biolink Pty Ltd and adopted by the Council on 12 June 2008. The Area 13 KPoM states that koala activity was widely distributed throughout the study area with approximately 50 per cent of the sampled sites returning koala activity levels consistent with the presence of core koala habitat, and elsewhere substantive areas of potential koala habitat that did not currently support resident koala population(s) (at exhibit A p 923). The study area was Area 13 UIA with plotting of koala data beyond Area 13 UIA to include the northern sections of the Applicant's residue land (claims A, B and C), the acquired land, and the northern part of lot 32.

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Koala experts 148 Dr Wotherspoon prepared his first report dated 28 October 2009 which covered a number of ecological matters (fauna, flora), including koala use of the site. That report reviewed data from 2003-2005 on koala sightings generally undertaken at Maher's Headland and made some criticism of the Area 13 KPoM and the application of SAT methodology to define boundaries of koala habitat in that plan. He concluded that there was potential for subdivision utilising a KPoM for claims A, B, C and D. 149 Dr Wotherspoon prepared a further report dated 24 December 2009 (after Dr Phillips report dated 9 November 2009 was received) which set out the results of a spotlighting and call feedback survey undertaken across the claim areas on two days in November and two days in December 2009. He surveyed the land intensively over four nights and days in November and December 2009 (p 3 exhibit N). A total of eighteen hours of nocturnal koala spotlighting (seven hours total in claims A and C only) and koala call playback (eleven hours total in claims A, B, C and D) is reported (p 7 exhibit N). 150 A small number of koalas were found, consisting of a family group on the western boundary and some individuals in claim D and the adjacent resumed land. A female with independent joey was found in the swamp forest ecotone in the resumed land south east of claim C. No koalas were found in claim A or claim B (p 3 and par 4.1 exhibit N). Based on his observations Dr Wotherspoon opines that claim A and claim D have some occupation by koalas as core habitat under SEPP 44, and that the 2009 KPoM for the Maher's headland subdivision (Maher's KPoM) is directly applicable and relevant as a guide to potential design and yield for development of the subject land. He summarises that claim A is unconstrained for residential subdivision development; claim B has residential subdivision development capability; claim C is constrained by core koala habitat on the western boundary and the rest has residential subdivision development capability; and claim D land beyond the swamp forest is unconstrained for residential subdivision development.

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152 Dr Phillips states in his report that the subject lands contain areas of potential and core koala habitat, endangered ecological communities hollow-bearing trees and are known habitats for a number of threatened species including koalas. The Council already recognises the need for further detailed studies to be undertaken in order to determine the suitability of the site for residential development. He states (at p 6-7 exhibit 4) that: [t]o further guide a prudent party to a hypothetical sale of the Subject Lands I would advise the need for a reassessment of the Subject Lands in order to determine the current distribution of Core Koala Habitat and that its presence will impose constraints as to how it could be developed. I would also advise that a Koala Plan of Management would need to be prepared and that amongst other things retention of preferred koala food trees Tallowwood Eucalyptus microcorys, Grey Gum E. propinqua, Swamp Mahogany E. robusta and Forest Red Gum E. tereticomis would need to be effected. Based on the plot data from 11 vegetation quadrats provided in the report by Wotherspoon (2009) I would advise that the density of koala food trees in the Subject Lands is very high (122.73 76(SD) preferred food trees ha -1 ). In keeping with the "best practice" approach adopted for purposes of the Area 13 Koala Plan of Management, a detailed and precise survey of preferred koala food trees would be required to subsequently inform the planning process and that notwithstanding application of the dbh (diameter at breast height)-based threshold for tree retention as applied for purposes of the Area 13 Koala Plan of Management, it could be expected that the density of preferred koala food trees coupled with the need to retain them would likely preclude development for residential purposes throughout much of the Subject Lands but particularly in Claim B and in lower lying areas of Claim C, D and the Acquired lands where highest densities of preferred koala food trees are to be found.

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154 A joint expert koala report was prepared by Dr Wotherspoon and Dr Phillips dated 11 February 2010 (exhibit R). This included evidence in reply from Dr Phillips to the further report of Dr Wotherspoon dated 24 December 2009. Dr Phillips and staff undertook a survey of the acquired lands, permission not being granted to access the Applicant's land and the methodology and results of that survey are set out in the second joint report. These results and associated interpolations of koala activity caused Dr Phillips to infer that all of the claim areas will contain core koala habitat to varying degrees, the exact measure which cannot be determined beyond the estimate in the results (approximately 54 per cent of available habitat). He considered there had been an increase in the extent of significant koala activity since the original models of Phillips & Forsman (2003) and (2005) were produced which is consistent with a prediction of gradual recolonisation since the 1994 fire event destroyed habitat in claim areas A, B, C and D. Dr Wotherspoon did not consider this was a realistic or full portrayal of actual koala movement or occupation on the Applicant's land. 155 Dr Phillips also responded to the criticisms of the merits and methodology used to quantify aspects of koala ecology including koala density, population estimates and application of SAT methodology. Specific criticism is made of various statements and factual findings made by Dr Wotherspoon in his report including in relation to the preparation of the Maher's KPoM, use of SAT methodology (scat survey technique) and various other matters. Dr Phillips considered that Dr Wotherspoon displayed a poor understanding of koala ecology, population dynamics, experimental design and sampling methodologies. Dr Phillips did not consider the Maher's KPoM provided an acceptable standard to apply in terms of assessing the development potential of the claim areas. 156 Their respective conclusions on the claim areas was that for claim A, Dr Wotherspoon did not consider there was any constraint on development. Dr Phillips considered 50 per cent should be regarded as core habitat with a further 10 per cent reserved as part of potential habitat. For claim B, Dr Wotherspoon considered the potential koala habitat is developable under a KPoM similar to Maher's Headland, Dr Phillips considered it was constrained in any event as an EEC. For claim C, Dr Wotherspoon considered areas on the western boundary were core koala habitat, which is affected by clearing required for the airport flight path (Port Macquarie Airport OLS). (On the view it was clarified that the airport requirements do not require clear felling but pruning of trees to a certain height. The area has been cleared.) Development can occur in accordance with a KPoM similar to Maher's Headland. Dr Phillips considered the area is constrained and would not support 5 lots/ha. The area is part of a sub-regional wildlife corridor identified by the NSW Government's Biodiversity Conservation Lands (BCL) mapping. Working on the basis that 50 per cent is core koala habitat suggests that area is undevelopable. For claim D, Dr Phillips considered the area was highly constrained for residential development given the vegetation present. Dr Wotherspoon considered it could be developed under a KPoM similar to Maher's Headland. 157 The experts gave concurrent evidence and addressed the issues of whether claim areas A, B, C and D contained core koala habitat, potential koala habitat, and what was the existing and estimated population of koalas. They also addressed whether the koala food tree density precluded residential development and what was the advice likely to be given to a hypothetical purchaser at the date of acquisition. The experts were asked, as at January 2009, was the advice to be given in the context of a sale of the land that with further environmental investigations it is likely to be more or less constrained from development 158 Dr Phillips confirmed his view that the bulk of habitat within the claim areas is potential habitat for koalas given the presence of koala food trees, sometimes at very high densities. Dr Wotherspoon agreed that claim B was potential habitat but did not record any resident or transient koalas there. Dr Wotherspoon was cross-examined about his statement that "no koalas had been found to use the area in spite of repeated surveys in claim B". He was aware of the Area 13 KPoM when he did his report which shows sightings in this area. He could not explain why he did not refer to it. He agreed the statement was misleading if read as there being no studies in the public domain recording the presence of any koalas in claim B. He explained that he was intending to establish whether home ranges for koalas existed. He agreed he did not spotlight in claim B where he used the call playback, a very unreliable technique according to Dr Phillips. Dr Phillips considered that by excluding claim B, Dr Wotherspoon is likely to have underestimated the number of koalas. Dr Wotherspoon agreed that claim B has a higher density of preferred koala trees with a potentially high carrying capacity. 159 Dr Phillips undertook a six month extensive ecological study of koalas and their habitat on the Innes Peninsula on behalf of the Applicant. That enables him to conclude that spotlighting consistently under recorded and underestimated the true number of koalas, the error so big as to render the method unreliable. He derived a figure of 0.63 koalas per hectare from that study, applicable to claims A, B, C and D. He did not consider the spotlighting by Dr Wotherspoon was reliable because, for example, it did not adopt a fixed grid approach but relied on using logging tracks located across the claim areas. He did not consider the Maher's Headland KPoM was a good guide as it was not sufficiently protective of koala habitat and population. Dr Wotherspoon considered a KPoM for claim C would be necessary and prudent for claim A. 160 Dr Phillips considered there were 24 to 30 koalas in the claim areas. He considered there was a high density of koala food trees, acknowledging there has been timber removed as part of a working forest over time. Even if 50 per cent were removed there are about 60 food trees per hectare needing to be retained within areas of core koala habitat. Dr Wotherspoon estimated 4 to 6 koalas. Applicant's submissions 161 SEPP 44 requires the preparation of a KPoM where there is core koala habitat. Claim A has no core koala habitat as defined in SEPP 44 cl 4 according to Dr Wotherspoon. No koala has been sighted there since 2003 and Dr Wotherspoon did not see any when he spotlighted on four days in November and December 2009. Prudent parties to a hypothetical sale would be likely to conclude no KPoM is needed if no core koala habitat is present. Dr Wotherspoon accepts that there is some core koala habitat on claim C but none in claim A. 162 Dr Phillips observed in 2003 that approximately 50 per cent of the land in claim C and part of the land in claim D was core koala habitat in his report of 9 November 2009. His expectation of a large core area of koala habitat developing over time is not supported by observation. Dr Phillips has expressed an opinion of about 50 per cent in each claim area being theoretically core koala habitat but that does not satisfy the definition in SEPP 44. 163 Dr Wotherspoon agreed in the joint report that a KPoM for the whole of claims A, B and C was appropriate given that there is some core koala habitat in claim C. The approval of the KPoM for the Maher's Headland subdivision by the Department of Planning on 6 March 2008 would be a primary guide for a prudent hypothetical purchaser. Respondent's submissions 164 Dr Phillips has identified the extent of potential and core koala habitats as defined in SEPP 44 on the claim areas which are part of a wider area of significant koala habitat and population (Joint report Fig 1). Dr Phillips considers that about 54 per cent of claim areas A B C and D is likely to support koala habitat. He considers 50 per cent of claim A is core koala habitat and 10 per cent is potential koala habitat. Fifty percent of claim C is also core koala habitat and 20 per cent is potential koala habitat. The presence of koala food trees is particularly important. Residential development will potentially require extensive clearing of preferred koala food trees and their presence is an important constraint on development. The SAT method is suitable to apply for determining the number and presence of koala on the Applicant's land. 165 Dr Wotherspoon has far less expertise than Dr Phillips on koala ecology. He has not published any works on koala ecology. He has expertise in herpetology. He admitted in cross-examination that he did not do spotlighting in claim B despite his report suggesting that he did. He agreed it would be prudent to prepare a KPoM for claim A. His advice is based on a few hours of spotlighting. He failed to acknowledge in his report but conceded in cross-examination that there were publicly available documents on which advice could be based that koalas had been found on claims A, B, C and D. 166 The Maher's KPoM is not a guide to what would be required for claims A, B and C as it does not accurately reflect the content of an earlier KPoM prepared by Dr Phillips for the Applicant for that development application. Finding on koalas 167 Given other environmental constraints in claims B and D prevent residential development on all or most of these areas, the Court does not need to consider constraints on development which might arise from the presence of koala habitat and populations in those areas. A prudent hypothetical purchaser would be interested in considering the extent to which there are likely to be constraints on residential zoning and development in claims A and C. The potential for the application of SEPP 44 where core koala habitat is identified would be considered to be highly relevant. Before development consent can be granted over land where core koala habitat is located a KPoM is required. 168 Additional instruments which a prudent hypothetical purchaser and vendor would consider relevant are any council planning instruments which applied to, or would potentially apply to, the subject land at the date of acquisition. The Area 13 KPoM includes a detailed study of Area 13 and claim areas A, B and C by Biolink in 2003 and identified core koala habitat in claim C, and secondary potential koala habitat in the remainder as identified above at par 147. The DCP identifies measures that must be taken if implementing residential development where koala habitat is located in Pt 6 and Pt 7. A purchaser and vendor would expect that similar restrictions on development would apply, assuming that a rezoning for residential purposes was considered possible. Such measures would reduce the potential for residential development.

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169 The two koala experts gave conflicting evidence on what koala habitat may exist in claim A in particular. Dr Wotherspoon considered that the whole of claim areas A, B and C did not have substantial constraints to residential development due to the presence of koalas. In relation to koalas he considered that a KPoM such as that approved for Maher's Headland in 2008 would be likely to be required by the Council in the event that a DA for a residential subdivision was lodged. The evidence of Dr Phillips is that there would be substantial constraint on residential development due to the presence of koala habitat across most of the claim areas given the high density of koala food trees. While there was substantial dispute between the koala experts it is not necessary for the purposes of this judgment to resolve all the issues outlined in the experts' evidence summarised above at par 148-160. 170 Dr Phillips has substantially greater scientific expertise in relation to koala ecology than Dr Wotherspoon whose area of specialty is herpetology. Both had their CVs attached to their reports and were cross-examined about these. Both experts were asked about their respective expertise in relation to koalas. Dr Phillips has spent 35 years working in the area of koala ecology, with numerous, including peer reviewed, papers published in this area. Dr Wotherspoon's experience is far more limited. He has been involved in the preparation of one KPoM which was not implemented as the development did not go ahead. He has given one conference paper on a topic related to koalas. Dr Wotherspoon appropriately stated in oral evidence that he is not in the same league on koalas as Dr Phillips. Dr Phillips' firm prepared the studies which were included by the Council in the Thrumster Area 13 LES and is familiar with the local koala population in claims A, B and C. 171 The Applicant sought to cross-examine Dr Phillips extensively about the scientific basis for the SAT methodology that he used with a view to undermining the efficacy of that approach. While the Applicant's counsel attempted in cross-examination to undermine the basis for the SAT methodology employed by Dr Phillips the Court does not consider the cross-examination to the extent it was allowed was effective in doing so. Nor does the Court consider that a Class 3 compensation appeal is the appropriate place for Dr Phillips' scientific methodology to be subject to such criticism. The Council has adopted Dr Phillips' work in its planning documents for Area 13 and its acceptance should be a given in these proceedings, not least because that is how a prudent hypothetical purchaser and vendor is likely to view it. 172 Dr Wotherspoon's spotlighting survey undertaken on a few hours on four days in November and December 2009 did not impress the Court as a sound approach scientifically to the identification of koala population. As identified by Dr Phillips, it did not apply a systematic grid survey but was undertaken from logging tracks. Further, reliance by Dr Wotherspoon on data from koala surveys taken in Maher's Headland, while on nearby land, is not the same as the subject land. 173 Dr Wotherspoon agreed that a KPoM would be required for claims A and C and that one modelled on the Maher's Headland KPoM would be appropriate. Dr Phillips did not agree that was a suitable guide. The Applicant has not established that a prudent hypothetical purchaser would consider the Maher's KPoM a guide as to the likely requirement for a condition of residential development for claim areas A and C. While approved by the Department of Planning it relates to a different area of land, albeit adjoining. The claim areas are heavily vegetated and likely to be considered by a prudent hypothetical purchaser as potentially containing core koala habitat or potential koala habitat in claims A and C. There is no specific evidence of what Maher's Headland was like at the date of acquisition. On the view the Court could see Maher's Headland was clearly far less vegetated with tall trees interspersed by grassland with little low to medium mid storey vegetation compared to claims A and C. The claim areas are well vegetated with native forest with the low, mid and tall understorey vegetation characteristic of such forests. In the absence of any evidence suggesting that it was of similar level of vegetation to claims A, B or C this submission of the Applicant is not accepted. Further, the Court is guided by Dr Phillips' view that the Maher's KPoM would not be appropriate on the Applicant's land given the latter's environmental characteristics in relation to koala habitat and population. 174 The Court does not need to resolve the different evidence on the likely numbers of koalas in the claim areas. When assessing the development potential for the land, prudent parties would consider advice about the quality of the habitat, the size of the population and the presence of food trees and whether or not food trees could be retained. A prudent hypothetical purchaser would consider that claim areas A and C are potentially constrained for residential development due to the presence of core and secondary koala habitat and koalas. The extent to which there is likely to be a constraint is essentially undetermined in the absence of environmental investigation studies identified as necessary by the Council at the time the HUGS strategy was made in 2001. The form of any KPoM required by SEPP 44 is also undeterminable. Lot yield 175 The Applicant submits that as there is no core koala habitat on claim A then 10 lots/ha is a reasonable yield a prudent hypothetical purchaser would expect, as occurred for the Maher's Headland development. The Applicant contends for 4 lots/ha in claims C and D (as per Wotherspoon and Sanders). The Thrumster Area 13 neighbourhood to the west of claims C and D achieved 6-9 lots/ha. That area identifies core koala habitat in the Thrumster DCP (map 4.4). 176 There is too much uncertainty concerning constraints from the presence of fauna, particularly koalas, given the range of expert opinion for the Court to conclude that a specific lot yield would be applied by a prudent hypothetical purchaser. Advice on flora issues to hypothetical purchaser/vendor Dr Wotherspoon 177 In his statement of ecology evidence prepared for the Applicant (exhibit M) Dr Wotherspoon identifies that he commissioned and designed a vegetation survey for the subject site which was carried out by Darkheart Pty Ltd in 2009. Dr Wotherspoon states that there is little constraint to development by ecological communities, and that the long term intensive logging history has resulted in a simplified age structure of the forest and reduced the fauna habitat value in that very few hollow-bearing trees are present (exhibit M p 8). 178 Regarding claim C and claim D Dr Wotherspoon states (at par 2.3 exhibit M) that dry hardwood forests of various types occur in this area. No EECs occur in the area, and Dr Wotherspoon states that the Flooded Gum species has been closely described and is not an EEC. Dr Wotherspoon is critical of previous vegetation mapping undertaken by Australian Museum Business Services (AMBS) and states that the AMBS mapping gives an incorrect understanding of fauna and flora habitat potential for threatened species and the swamp forest EEC (at par 2.3.1 exhibit M). Dr Clements 179 In her report on potential flora constraints prepared for the RTA dated 30 October 2009 (exhibit 2), Dr AnneMarie Clements advises that any clearing of the acquired or residual claim lands is likely to require compensatory habitat for impacts on key habitats for threatened species, including threatened species habitat and EECs. She identifies the presence of an EEC swamp sclerophyll forest listed under the TSC Act, and Melaleuca biconvexa listed as a vulnerable plant species under both the TSC Act and the EPBC Act (Cth). The EEC and habitat of Melaleuca biconvexa recorded on the acquired and residual claim lands are on Cairncross soil landscape and associated with a coastal floodplain. 180 Dr Clements provided a table, at p 5 exhibit 2, identifying soil landscapes and percentage of land with development potential based on flora constraints. Any potential development is likely to require the retention of the endangered community and vulnerable listed species as well as a 20 m managed bushland buffer. Her table, which the Applicant accepts for the purposes of these proceedings, is reproduced below: Land Soil landscape Approximate area Potential developable land area = approximate area minus 20m buffer to Cairncross soil landscape Acquired land Cairncross (0.34 + 0.82 + 1.77 + 0.42) = 3.35ha 0ha Thrumster (6.84 + 5.82) 12.66ha (2.6 + 6.84 + 4.51 + 0.50) = 14.45ha Percentage developable 90% Residual land Thrumster Claim A 9.17ha Percentage developable 99% Claim B Cairncross 4.21ha 0ha Thrumster 1.08ha 0.51ha Percentage developable 10% Claim C Cairncross 3.68ha 0ha Thrumster 39.32ha 38.2ha Percentage developable 89% Claim D Cairncross 14.52ha 0ha Thrumster 0.36ha negligible Thrumster 1.93ha 1.11ha Percentage developable 7%

[69]

Applicant's submissions 183 The Applicant accepts the areas of developable land identified by Dr Clements. The experts agreed that the land had been selectively logged and is not old-growth forest, that swamp sclerophyll forest EEC is a constraint on development and is on Cairncross soil. RTA's submissions 184 The RTA raised a number of issues which it considered the Court must determine in order to resolve the issues raised by the experts' evidence. It submits the logging history does not affect the significance of flora on the site. There is no doubt that the acquired land and the residue land are significantly constrained from further development by virtue of the presence of threatened flora, for example Maleleuca biconvexa, swamp sclerophyll forest, numerous threatened animals and koala. Finding 185 While the RTA submitted that the Court must determine a number of issues in order to resolve the flora issues raised, that does not appear to be the case given the acceptance by the Applicant of the table in Dr Clements' report (see par 180 above). This provides a guide to the developable areas from a flora perspective for each of the claim areas a hypothetical purchaser would be advised of were this kind of advice to be sought. Were Dr Clements consulted she would identify a number of constraints within claims A and C due to the presence of certain flora types and communities. Her evidence and Dr Wotherspoon's vary in this respect. This conflicting expert evidence suggests that a prudent hypothetical purchaser would approach the development potential conservatively, particularly as there are other environmental constraints identified above in relation to fauna. Advice on soil to hypothetical purchaser/vendor 186 A joint expert report on soil dated 8 February 2010 was prepared by Dr Wotherspoon (for the Applicant) and Dr Pam Hazelton (for the RTA) (exhibit O). Dr Wotherspoon relied on site inspections and a third party soil survey report prepared by Dr Col Bale dated 30 November 2009 and appended to the joint report. Dr Hazelton relied on her own soil survey and report. The soil experts did not give oral evidence. 187 Dr Wotherspoon and Dr Hazelton agree that the EEC swamp sclerophyll forest occurs on Cairncross soil landscape and that the soil of the EEC is generally on flat land. They agreed that the Cairncross soils for EEC swamp sclerophyll forest occur predominantly on the areas of claims B and D, and was also identifiable on smaller areas in claims A and C on level land. They also agreed that Thrumster soil occurs across the site. 188 Dr Wotherspoon and Dr Hazelton disagreed on the relationship between Cairncross soil and the EEC swamp sclerophyll forest. Dr Hazelton linked Cairncross soils to occurrence of the EEC swamp sclerophyll forest. Dr Wotherspoon says that the vegetation at Dr Hazelton's site number 1 is not the EEC but is a dry sclerophyll forest. Thus Dr Wotherspoon does not see a necessary link between EEC vegetation and Cairncross soil. The relevance of this disagreement to issues in the evidence is in relation to the location of an area of EEC identified in a low lying area of claim C. 189 The Court does not need to resolve this debate in the evidence. Rather the different opinions which a prudent hypothetical purchaser would be provided with suggest that there could be an area of EEC in claim C which would be a potential constraint on development.

[70]

Access in the after scenario 190 In the before scenario the residue land and the acquired land enjoyed access to Philip Charley Drive, a public road. The acquisition has resulted in the severance of the northern residue land (claims A, B and C) from previous access it enjoyed to Philip Charley Drive (the after scenario). There is no separate claim for compensation based on severance under s 55(d) of the JT Act. The Applicant argues that the northern portion is landlocked as a result of the acquisition as it no longer has access to a public road as it is entitled to under s 6 of the Roads Act. That approach underpins the reasoning of the valuer Mr Wotton in assessing the substantial loss in value (90 per cent) of the Applicant's land, claimed as injurious affection under s 55(f) of the JT Act. Nash statements relied on by RTA 191 The RTA relied on statements of Mr Nash, senior project manager with the RTA, dated 7 September 2010 to the effect that the NSW Minister for Roads announced a decision to construct a new alignment of the Oxley Highway in Port Macquarie in August 2002. A REF for the purposes of Pt 5 of the EP&A Act was prepared dated September 2004. Section 6.5.8 of the REF refers to local access arrangements for those properties severed by the construction of the new road alignment. The REF also states that alternative access would be provided for the properties landlocked by the proposal. The Decision report was then prepared dated March 2006 which recommended approval subject to various conditions. The Decision report provides that the approval for the road is subject to all environmental safeguards identified in the REF. 192 Mr Nash's understanding is that the RTA is obliged given the conditions of approval for the new highway to ensure that there is access to the northern and southern parts of lot 40. Discussions with a representative of the Applicant commenced in November 2008. These are further detailed in his affidavit but include negotiations from 1 March 2010, which material in par 16-22 of Mr Nash's statement dated 7 September 2010 was objected to because it is after the date of acquisition. The Court's decision whether it should allow that evidence was reserved during the hearing until final judgment. The Court rules now that par 16-22 of Mr Nash's statement dated 7 September 2010 cannot be relied upon by the RTA for the reasons given above at par 36-40. 193 In a further statement dated 15 September 2010 Mr Nash stated that the REF was placed on public exhibition over four weeks commencing in September 2004 and copies were placed on display in several locations in the local area inter alia. The concurrence report of the Department of Environment and Conservation for the project would have been provided if requested by a member of the public. Following completion of the OHU Mr Nash understands that it will be dedicated as a public road under s 10 of the Roads Act, declared a controlled access road under s 49 of the Roads Act and will vest in fee simple in the Council under s 145 of the Roads Act. 194 A further statement dated 16 September 2010 of Mr Nash refers to the Area 13 and Sancrox Traffic Study prepared by SMEC (engineering and development consultancy) dated May 2007 which he states would have been provided to the public on request. 195 Mr Nash gave oral evidence to the effect that access is being provided during the construction period at all times and simply requires that 24 hours notice be given so that access can be arranged with the contractor. The northern and southern access points from the OHU to lot 40 were seen on the view. This information was not available at the date of acquisition. Applicant's submissions 196 The Applicant submits that the value of the residue northern and southern land is badly affected by the loss of access to Philip Charley Drive as reflected in the evidence of Mr Wootton. Further any access that may be provided is only for existing use of the land as rural, including logging. Any access provided will not be sufficient for any residential development of the area. The Applicant will be forced to purchase a property to the north of claims A - C to enable access to the Oxley Highway. 197 A prudent party to a hypothetical sale in the "after" scenario would have little confidence regarding access to the Applicant's land in January 2009. The access is: (a) temporary; (b) "licensed" (a license being a permission, and revokable); (c) only left/in and left/out movements would be permitted; and (d) The access points would be removed with the future development of the area. Left in/left out arrangements are inconvenient. At the date of acquisition no alternative access was in place.

[76]

204 Secondly, if the land is rezoned for urban development in the future a road will be provided through Thrumster Area 13, as can be seen in the Council's structure plan, the LES and the Area 13 and Sancrox Traffic Study Final Report May 2007 and the Thrumster DCP (summarised above at par 51-54). Finding on access Claims A, B and C 205 The parties did not refer me to any cases where there has been a claim for compensation based on removal of access to residue land resulting from road acquisition. The RTA submits that this is an issue which will be assessed by a hypothetical purchaser in the usual way, that no reduction in value of the residue land occurs because of the information available to the prudent hypothetical purchaser including negotiations after the date of acquisition that the Court has ruled is inadmissible. Alternatively, the RTA submits that any reduction is relatively small. The Applicant had immediately before the date of acquisition the right under s 6 of the Roads Act to access a public road, namely Philip Charley Drive. That right was lost at the date of acquisition for the northern residue land in claims A, B and C, and the Applicant at that date had and still continues to have no enforceable legal right to access any public road including the OHU from these claim areas. The OHU is not a public road until so declared under s 10 of the Roads Act and in the meantime is RTA owned and controlled. That factual circumstance suggests the Applicant has lost a fundamental right relevant to the enjoyment of the northern residue property in claim areas A, B and C which loss it claims as injurious affection. 206 The Court has held above at par 36-40 that events after the date of acquisition can be taken into account to a limited extent in light of the principle in Falconer as encompassing events which a hypothetical purchaser properly advised at the time of acquisition would foresee. A prudent hypothetical purchaser may consider that some access may be available at the date of acquisition in light of the general details in the approved REF which states that access will be provided to landlocked land through licensed points as identified by the Applicant's submission at par 202-203. Additionally an officer such as Mr Nash would provide certain advice to an inquiring purchaser. Nevertheless, there was no legally enforceable right to access the OHU or any other public road at the date of acquisition so that access is not guaranteed, a matter accepted by the RTA. 207 The RTA submitted the approach of Jagot J in Serbian Cultural Club at [126]-[127] ought be adopted where her Honour was satisfied that conditions attached to the approval of the M7-motorway would overcome any flooding concerns on the residue land for a hypothetical purchaser. 208 A relevant case to consider is Besmaw Pty Ltd v Sydney Water Corporation [2001] NSWLEC 15; (2001) 113 LGERA 246. Besmaw concerned compensation for the compulsory acquisition of an easement for access. Besmaw claimed compensation for disturbance under s 55(d) and 59(f) for the cost of providing alternative access to the land. It argued that the loss of the easement would give the acquiring authority the right to deny them physical access across the land. Sheahan J held that the easement seriously impeded Besmaw maintaining its access arrangements. Further, assurances given by the resuming authority to Besmaw that the difficulties it anticipated would not eventuate could not be relied on in lieu of compensation. Sheahan J at [56] held: The rights taken away from the landowner must be measured, not by what the acquiring authority at any given time might plan to do, or what its policies are, or what assurances or understandings may be given or communicated about the way its rights may be exercised, but by what its enabling instrument allows it to do.

[77]

209 The RTA argued that Besmaw was different inter alia because the acquisition notice specifically resumed the relevant interest (an easement) in land, whereas here the access issue arises in the context of a claim for injurious affection not because of any acquisition of an interest in land. 210 The loss of access to a public road, a statutory right under the Roads Act, while not the same loss as that of an interest in land acquired compulsorily is nevertheless significant. Once the Court determines compensation, subject to any appeal the Applicant cannot come back in the future to seek further compensation in the event, hypothetically, the RTA decided that access would not be provided to the OHU for the current use of the land. As held in Besmaw the loss is not ameliorated by assurances from the acquiring authority that access will continue. 211 The loss of guaranteed access to a public road is a matter a hypothetical purchaser would closely consider in relation to its impact on the residue land, in light of the information in the public domain at the date of the acquisition. Such loss would not be considered to be non-existent or minimal in my view and would not be assuaged by the content of the approved REF from December 2006 or the advice a prudent hypothetical purchaser would obtain from an officer of the RTA such as Mr Nash. The present circumstances are not to be equated with the circumstances in Serbian Cultural Club. The general reasoning in Besmaw while directed to assessing the market value of the loss of an interest in land is applicable by analogy to the significance to the Applicant of the loss of a statutory right for which it should be adequately compensated. A prudent hypothetical purchaser would attribute a substantial loss of value due to the loss of access to the northern area of the residue land for the rural use of the land. 212 Whether another matter raised by the RTA in relation to access should temper that finding should be considered. That is the availability of access for the use of the land in claim A - C for residential development in the future. The RTA submitted that access for such purposes would be provided in the future through the planning process being undertaken in the Thrumster area. The Court held above in relation to planning issues that the OHU is not the cause of the current rural zoning of the Applicant's land. The rural zoning is related to the need to undertake further investigations of the land's capabilities for residential development such as has occurred in the neighbouring Thrumster area. 213 The Council and RTA had the Area 13 and Sancrox Traffic Study Final Report prepared in 2007. This identified potential road networks in the area around the Applicant's land (par 53 above). The two Thrumster DCPs which were adopted by the Council as part of the Area 13 Thrumster LEP 2008 were adopted on 22 October 2008. The Area 13 Thrumster DCP (Parts 1 - 4 General Provisions) and the Area 13 Thrumster DCP (Part 5 North Oxley neighbourhood) are discussed in detail above at par 54-55. As identified above in planning issues at par 116-118, these planning instruments and studies suggest that there will be road access available to claims A - C for residential development. While taking into account the Applicant's submission that access will depend on when the areas to the north and west of the claim areas A, B and C are developed, the Applicant's land has yet to be rezoned for residential development. This finding means in my opinion that the substantial loss of value based on access having been lost in the short term is reduced because a reasonable hypothetical purchaser would consider in the medium to long term that access for residential use in the event of rezoning will be available to the northern residue land. In light of these matters, the appropriate reduction in value which a prudent hypothetical purchaser would apply in the after scenario is 60 per cent. Claim D 214 The southern portion of the resumed land (claim D) is not landlocked as a result of the acquisition in that access to Philip Charley Drive across Maher's Headland (lot 32) also owned by the Applicant is available. A new access road has to be constructed to enable that to occur. The access is across low lying and swampy land in claim D. The cost of constructing a new road from Maher's Headland to claim D to enable access to Philip Charley Drive should be allowed. This has been costed in the GHD engineering advice and construction costs report (dated June 2010) annexed to Mr Lunney's report at $85,828 plus GST ($94,410). Valuation issues 215 The Applicant relied on the expert valuation evidence of Mr Wayne Wotton in a report dated 13 July 2010. The RTA relied on the expert valuation evidence of Mr David Lunney in a report dated 28 June 2010. The valuers prepared a joint report dated 3 September 2010 which addressed the three town planning scenarios. The second joint report dated 13 September 2010 addressed questions raised by the Court principally concerning flood affection, noise barriers, cost of a roundabout at Philip Charley Drive, net present values and discount for loss of access.

[82]

The Court notes that Mr Wotton did not provide an assessment for injurious affection for claim A in the table. There was amendment of Mr Lunney's case to reflect some reduction for loss of access of the residue land of 10 per cent and putting aside the RTA's argument that betterment would result in nil compensation. The value of the land in the corridor is $482,400 being 16.08ha at a value of $30,000/ha. Including claim A (9.2ha), claim B (5.47ha) and claim C (43.2ha), a total area of 57.87ha at a rate of $30,000 times 10 percent, a total of $656,101 is arrived at, rounded up to $660,000. Comparable sales 220 In determining their valuations of rural land the valuers had regard to the following sales. Some of these were viewed by the Court. Rural sales viewed by the Court on 9 September: (i) Lunney sale 1 (rural with development potential) (first sale visited on view) 221 Mr Lunney's sale 1 was 3 Fernbank Creek Rd, Port Macquarie (RPD Lot 102 DP 1106752), a land area of 35.36ha showing $81,323/ha. The sale date was 7 November 2006, and sale price was $2,900,000. The land was zoned rural 1(a1) under HELP 2001 business 5, business 4 and environmental 3 under Thrumster LEP 2008. 222 Mr Lunney comments: Irregular shaped lot adjoining the Pacific Highway at the western extremity of the Thrumster urban release area. Northern part of site is timbered. Bulk of the land is Zoned rural and adjoins residential zoned lands. In my opinion the sale price was influenced by business / commercial usage available on southern sections which were rezoned post the sale but the potential for which was in the public domain as at the date of sale. In this regard I note that the Local Environmental Study for Area 13 was publicly exhibited in May 2006. 223 Part of the southern section of this sale was zoned R1 general residential by the Area 13 Thrumster DCP in 2008. Mr Lunney considers this sale has more readily identifiable development potential than the Applicant's land (TS 15.09.10 p 588) in both the before and after scenarios. 224 Mr Wotton considers claims C and D in the before scenario have better (or equivalent) development potential to Mr Lunney's rural sale 1 in the before scenario. He considers claims C and D can be totally developed for urban purposes or zoned to allow urban development in the foreseeable future (TS 15.09.10 p 590). Claims C and D have a potential yield of 4 lots/ha in the before scenario and would have a similar value to sale 1. (The Court notes this view is not based on a comparison of the relevant features of this sale and the Applicant's properties, but on his calculation based on a residential potential of 4 lots/ha at $20,000 to $22,000 per lot, which equates to $80,811/ha. That the two approaches have a similar result is a coincidence). (ii) Lunney sale 3 Wotton sale 6 (rural some potential) 225 Mr Lunney's sale 3 was 107 Muscio Road, Sancrox (RPD Lot 38 DP754434) with a land area of 19.43ha showing $24,189/ha.The sale date was June 2008 and the sale price $470,000. The land was zoned part rural 1(a1) and part rural 1(a3). This is a regular shaped parcel of undulating land in an area supporting good quality hobby farms with larger dwellings. The property is about 30 per cent cleared. The valuers agreed that this property has no potential for urban rezoning. Mr Lunney considered that the sale had lower potential than claims C and D in the before and after scenarios. (iii) Lunney sale 4 (rural with potential) 226 Mr Lunney's sale 4 was a property at the corner of Oxley Highway and Rawdon Island Road, Sancrox a land area of 46.4ha showing $45,832/ha (RPD Lot 462 DP 754434 and Lot 9 DP 1029887). The sale date was 5 May 2005 and the sale price $2,150,000. The land was zoned rural 1(a1). 227 Mr Lunney comments: Two titles comprising mostly cleared and undulating land with limited environmental constraints. Located west of the Pacific Highway. The northern lot is elevated and enjoys good views to the north east. The western lot is a good quality parcel with extensive road frontages. The land is located adjacent to a rural residential estate and has some potential for further subdivision into smaller lots subject to an appropriate rezoning.

[83]

Mr Lunney considers that land has more identifiable development potential than the subject land (before and after). Mr Wotton considers claims C and D have better potential in the before scenario than sale 4 (TS 15.09.10 p 589). 228 Additionally the valuers listed the following sales that were not viewed by the Court. (i) Lunney Sale 2 Wotton Sale 5 Mr Lunney's sale 2 and Mr Wotton's sale 5 was 483 Burrawan Forest Road, Lake Innes, a rural parcel with no urban potential showing $14,022 to $14,026/ha (ii) Wotton Sale 7 Mr Wotton's sale 7 was 185 Huntingdon Road, Huntingdon, largely cleared agricultural land, without improvements, used for hobby farming showing $20,199/ha. (iii) Wotton Sale 8 Mr Wotton's sale 8 was 145 Huntingdon Road, Huntingdon, largely cleared quality agricultural land, without improvements, used for hobby farming showing at February 2007 $14,364/ha. The property was resold in March 2010 at a rate of $22,108/ha. Valuers' conclusion on rural land value rates based on comparable sales 229 Based on these sales the valuers agreed that rural land with rezoning potential shows a range from $45,832 to $81,323/ha. The valuers agreed the rural sales without rezoning potential show a range from $14,022 to $24,189/ha. Residential sales 230 Residential sales viewed by the Court included Mr Wotton's sale 1, Ocean Drive, which had a yield of 12 lots/ha, a total of 51 lots. He relied on this sale in making his assumption that rezoning would be likely to occur in three years. In oral evidence he agreed that the land was substantially cleared, and that he was not aware of the presence of any threatened species or other ecological constraints. He considered the relevant reports on any ecological constraints would be done as part of the application for rezoning. He did not further investigate whether there were environmental constraints for this sale. He did not agree that the rezoning period for that sale was not comparable to claims C and D given the latter has threatened species and known koala habitat. Residential sales quoted by the valuers revealed rates of $22,839 to $75,000 per lot. 231 The valuers agreed the following englobo residential values (see exhibit T p 7): Number of lots Lunney value/lot Wotton value/lot 443 lots $30,000/lot $30,000-$32,000/lot 400 lots $30,000/lot $30,000-$32,000/lot 291 lots $32,000/lot $32,000/lot 152 lots $35,000/lot $35,000/lot

[84]

Other issues relevant to valuation 232 In addition to the consideration of comparable sales the valuers applied a number of assumptions to their valuations. Residue land 233 Mr Wotton considered the residue land was lot 40. Mr Lunney considered the residue land was lot 40 and lot 32 in DP 809231 comprising a total area of 316.35ha. Mr Lunney includes the Maher's Headland subdivision of 42ha and a residue adjoining the subdivision of 56.57ha. In their calculations both valuers had regard to the entire southern residue of lot 40 (which includes the large area south of claim D) and Mr Lunney also included lot 32, including the Maher's Headland subdivision which is part of that lot. As both valuers adopted the before and after method of valuation these calculations based on different areas did not affect their assessment from the Court's perspective. To the extent it affects lot yield this is considered below in par 238 and following. Whether claims A, B, C landlocked in after scenario 234 Mr Wotton assumed that the land in claims A, B, C and D in the after scenario had very limited potential for future rezoning for residential development because the land was landlocked without legal or physical access. Further, the affection impeded the likelihood of obtaining a residential zoning. It would therefore not be zoned in the foreseeable future. 235 Mr Wotton applied a two step process to calculate the after value. Firstly, he applied a rural rate of $12,000 to $15,000/ha (compared to a residential rate of $80,811/ha (claims C and D) to reflect the loss of future rezoning potential due to lack of access. Secondly, he applied a 50 per cent reduction to the after value to reflect the lack of road access of claims A, B, C and D. In cross-examination when shown the road hierarchy document in the Thrumster DCP he stated that his advice to a hypothetical purchaser would be that there is no guarantee that will result in road access as the Applicant does not own land to the north, a significant risk in his view.

[86]

238 Mr Wotton in claims C and D adopted a conservative yield of 4 lots/ha compared to Ms Hollis' assessment of 7 lots/ha. Mr Lunney did not assess a lot yield for claims C and D because the likelihood of rezoning for residential purposes is too uncertain or subjective in his opinion. Both valuers agreed that claim B has no potential for residential development. Time frame for redevelopment 239 In Mr Wotton's opinion redevelopment of the claim areas would occur in three years. He based his opinion on recent rezoning applications before the Council, particularly the rezoning that occurred for the sale at Ocean Drive which took three years to conclude from the date of sale to rezoning approval (sale 1, p 18 exhibit S, TS 15.09.10 p 594). He also considered urban development in the before scenario would move to the west from claim A which adjoins claims C and D (no such detail was included in his valuation report, exhibit S). 240 Further, at the date of acquisition the Maher's Headland DA had been before the Council since August 2005. Mr Wotton understood from the Applicant that there were discussions over that whole period with the Council about reports and information required. At the date of acquisition the Maher's Headland development consent had not been granted. 241 Mr Lunney considered that any potential the Applicant's land may have for future rezoning and development (both before and after the RTA acquisition) is limited, uncertain and potentially very distant; exhibit 15 p 6. Before valuation - Scenario 1 Claim A - Mr Wotton 242 Mr Wotton did not provide a before valuation of scenario 1 for claim A however in his original report (exhibit S) he stated that he used comparable sales as his primary method of valuation and a hypothetical development model as his secondary method of valuation. He deduced a rate of $80,811/ha for rural land with residential rezoning potential by calculating the potential lot yield/ha and adopting a rate of between $30,000 and $35,000 per lot, applying the lot yield of 10 lots/ha. Mr Wotton calculated the before value of claim A, assuming that the property may shortly be rezoned for residential development within two years and that the required ecological reports have been completed and do not seriously affect the property. The valuation was based on residential development site sales as 152 potential lots at a rate of $32,000 to $35,000 per lot which results in a figure of $4,864,000 to $5,320,000 which he rounded to $5,250,000. Mr Wotton's discounted cash flow calculation confirms the original calculation in the before scenario. Claim A - Mr Lunney 243 Mr Lunney adopted, from comparable sales (rural with potential, sales 1 and 4), a rate of $30,000/ha for land with slight rezoning potential. Mr Lunney's before valuation included all lots 40 and 41 land as rural in one combined holding. Mr Lunney did not apportion the valuation into the four claim areas. Mr Lunney's calculation for claim A based on rural values, is summarised as rural land including acquired land, 15.27ha at a rate of $30,000/ha resulting in a figure of $458,100 Claim B - Mr Wotton 244 Mr Wotton calculated the before value of claim B on the basis that it is severely effected by ecological constraints. On this basis he adopted a rate of $5,000/ha, arriving at 6.92ha at a rate of $5,000 resulting in a figure of $34,600.

[89]

247 Mr Wotton also undertook a discounted cash flow calculation as a confirming calculation for claims C and D. This resulted in a residual land value (target margin) of $5,678,075 or a residual land value (based on net present value (NPV)) of $3,720,484. Whilst the discounted cash flow (DCF) calculation confirmed Mr Wotton's calculation on the lots/ha basis, the NPV calculation of $3,720,484 revealed a major inconsistency. This shows a big discrepancy between his two methods of calculation. 248 There was disagreement between the valuers in the second joint report and in oral evidence regarding which DCF basis should be used. The second valuers' joint report annexure 1 was an extract of the user manual for the DCF program. Page 20 concludes: The RLV [residual land value] based on the Development Margin is suitable for projects of approximately 2 years or less. The RLV based on the IRR/NPV is suitable for longer term projects of approximately 2 years or more. As this calculation was assessed over an 11 year period the Court accepts Mr Lunney's evidence which indicates that Mr Wotton's calculation of the before value of claims C and D may be overstated by approximately $1.96 million ($1,959,516). Claims C and D - Mr Lunney 249 Mr Lunney applied a rate of $30,000/ha to all the Applicant's land in both the before and after scenarios. Mr Lunney calculated the before value of claim C (51.76ha) at a rate of $30,000/ha resulting in a figure of $1,552,800. Claim D (16.3ha) at a rate of $30,000/ha results in a figure of $489,000. After valuation - Scenario 1 Claims A, B, C - Mr Wotton 250 In his written report, Mr Wotton's calculation for the after scenario was undertaken on the basis that the retained land and the acquired land were zoned rural 1(a1) and included claims A, B and C. He considered that the retained land to the north of the acquired land is landlocked and has no road frontage to which access is available. The Court notes his oral evidence that he valued claims C and D jointly but that is not reflected in his written report.

[90]

251 Mr Wotton considered that a rural lot on claims A, B and C would attract a value based on $12,000 to $15,000/ha. He calculated the 57.87ha residue of claims A, B and C to have a value between $723,375 and $868,050 (table p 33 exhibit S). He then reduced this value by 50 per cent to reflect the landlocked nature of the property and adopted a value for this land in the after scenario of $375,000. After further reducing the value for claim B he calculated the following values: the after value claim A, 9.2ha is $61,047, the after value for claim B, 5.47ha is $27,350, and the after value for claim C, 43.20ha, is $286, 603. The total after value of claims A, B and C is $375,000. Claim D - Mr Wotton 252 In exhibit S, par 159 Mr Wotton calculated the value of the whole of the southern portion of the land, 143.59ha, south of the OHU based on $8,000 to $10,000/ha. On a proportional area basis he determined the value of claim D in the after scenario at $140,000. He considered (in oral evidence for the first time) that this should be further reduced by 50 per cent to reflect the fact that access to claim D is now across the southern portion of claim B which is floodplain. Claims A, B and C - Mr Lunney 253 Mr Lunney relied on four rural sales some with potential and some with no potential for residential development with no adjustments for date, size or location, to derive $14,022 to $81,323/ha (this reflects the valuers' agreement set out in par 231-232). Mr Lunney did not provide details of any adjustments for date of sale, land size position or other factors and adopted, without detailed calculations, a rate of $30,000/ha for the acquired land and the residue land with a rural 1(a1) zoning. 254 In both his before and after valuations Mr Lunney included the 291 lot Maher's Headland subdivision. As this was a constant figure in both the before and after valuations it does not affect the compensation assessment and has been disregarded. Mr Lunney applied this rate to lot 40 (258.27ha) without differentiation between the claim areas and with no discount for restricted access.

[91]

255 On this basis his assessment was claim A (6.07ha) at a rate of $30,000/ha resulting in a figure of $182,100; claim B (1.45ha) at a rate of $30,000/ha resulting in a figure of $43,500 and claim C (8.56ha) at a rate of $30,000/ha resulting in a figure of $256,800. The total is $482,400, rounded to $485,000. Claim D - Mr Lunney 256 Because there was no change in the before and after scenarios for claim D Mr Lunney considered there was no change in value as a result of the acquisition. He assessed compensation as nil. Conclusion 257 Mr Wotton considered that under scenario 1, compensation of $5,681,651 was payable for market value and injurious affection (plus the noise barrier claim of $2.093 million). The Court could not arrive at that figure based on the evidence because no figure was provided by Mr Wotton for injurious affection for claim A. Mr Lunney's calculation of the before value ($18,400,000) and after value ($17,950,000) resulted in compensation of $450,000 (plus $125,000 for disturbance). However when calculated piecemeal, above, a rough figure of $485,000 was arrived at. Finding on rate/hectare in before and after valuation 258 The Court must determine what a hypothetical purchaser and vendor would do as at the date of acquisition when determining compensation, calculated here on the before and after approach . (i) lot yield/development constraints 259 The majority of the land (claims A, C and D) is timbered compared to the majority of the comparable sales, which are largely cleared. Part of claim C is identified as core koala habitat on Council's Area 13 - Thrumster LES. Generally the land the subject of the claim is considered to be highly constrained as identified in the RTA's evidence on fauna, particularly in relation to koalas, and flora to a lesser extent. It is agreed that 70-80 per cent of claim D is within the Council's 1:100 year flood plain mapping. A large proportion of claim D is low lying and therefore constrained from development. 260 The Applicant submitted that the relevance of the ecological issues was to determine dwelling yield rather than whether or not there can be development consistent with the finding in relation to fauna at par 177. The ecological constraints raise more fundamental questions for a prudent hypothetical purchaser and vendor than simply what yield a prudent hypothetical purchaser might apply. The Court accepts the RTA's submission that the vendor and purchaser would, after negotiation, consider that the land had some development potential in the future in the medium to long term, not the short term (see next section). 261 Having regard to the uncertainty of when the claim areas may be rezoned given the level of environmental constraint, and the range of opinions expressed on lot yield, the lot yield basis of assessment (a hypothetical development calculation), is considered to be too subjective and unreliable at this stage of the planning process of the Applicant's land. For example, for claim C Ms Hollis applied a lot yield of 7 lots/ha, Mr Wotton 4 lots/ha because he considered a conservative approach was warranted and Mr Sanders 0 to 2 lots/ha. That approach is rejected in favour of the direct comparable sales method of valuation for rural sales with future development potential which Mr Lunney adopted as his planning approach. (ii) time frame for development 262 The valuers applied different time frames for the redevelopment of the residue land assuming it is zoned as rural with development potential. Mr Wotton assumed zoning within three years, and Mr Lunney within 10-15 years. An environmental study must be prepared before rezoning of the Applicant's land will be considered by the Council as identified in HUGS. 263 The Court agrees with the RTA's submissions that the sale at Ocean Parade relied on by Mr Wotton is not comparable and clearly had far less environmental constraints on development than the Applicant's land. It provides no useful guide that rezoning is likely to occur in three years on the Applicant's land. Having regard to the development history of the Applicant's land on Mill Hill and Maher's Headland set out above at par 59-61 and the difference in the ecological evidence of the parties' experts, the Court does not consider the land will be rezoned in two to three years. The time frame is more likely to be considered by the hypothetical purchaser as mid to long term (10-15 years). 264 Further, by virtue of the Council's planning process in Thrumster Area 13 large areas of land adjoining the Applicant's land are zoned for residential use. Timing for residential development in stages is provided for in the DCP. Secondly, in order to develop the northern areas of the Applicant's land, the land to the north and west must be developed first. All these factors suggest that a prudent hypothetical purchaser would consider 10-15 years was a reasonable time frame for development. (iii) Access in after scenario 265 The Court has considered the issue of access above (par 205-214). The acquisition did result in claims A, B and C losing access to Philip Charley Drive, a public road. The Court also considered access for these northern claim areas was likely to be obtained in the future as part of rezoning for residential use of the land to the north and west of the site in the Thrumster area based on the Council's planning instruments in force at the acquisition date. These matters suggest that Mr Wotton's substantial reduction (90 per cent) in value for loss of access is too great. Mr Lunney considered a reduction of ten per cent was appropriate. The Court held above at par 213 that the appropriate amount which a prudent hypothetical purchaser would apply in the after scenario for loss of value due to lack of access to a public road for claims A and C is 60 per cent. Claim D has not lost access to Philip Charley Drive but a new road needs to be constructed to enable this to occur. Should Applicant's claim areas be applied? 266 The Court considers that no logical explanation has been provided by Mr Wotton or any other person called by the Applicant as to why the claim areas have been so defined. In particular, there appears to be no logical basis for valuing claims C and D together, Mr Wotton simply adopting the claim as presented to him by the Applicant. The Court does not agree that the approach to the topographical, environmental and ecological features of the varying claim areas is dealt with entirely appropriately by either valuer. As already noted above the claim areas chosen are artificial. The large area of claim D that is flood affected needs to be reflected in a lesser value for that area than either Mr Wotton's approach (because he aggregates it with claim C) or Mr Lunney's approach (because he arrives at one value for the whole of the land, not with separate values for constrained areas). 267 Large parts of claim D have the same environmental constraints as claim B and should be valued accordingly. Claim D should be valued similarly to claim B which it adjoins and with which it shares greater physical similarity given that both are largely flood prone. 268 The Court considers that the following rates are applicable to the Applicant's land having regard to the following considerations. Claim A 269 Claim A should be valued as rural land with mid to long term potential for residential development. Mr Lunney's sale 1 was not relied upon by Mr Wotton in his report. This sale indicates that the $80,811/ha adopted by Mr Wotton for land zoned rural with some potential for urban zoning is too high. The most comparable sale to claim A is Mr Lunney's sale 4 which showed a rate of $45,832/ha. After adjusting this sale to reflect the Applicant's land's superior location, closer to Port Macquarie, and inferior development potential due to ecological constraints, the Court adopts a rate of $40,000/ha. The before value of claim A is $610,800 being 15.27 ha at a rate of $40,000/ha.

[99]

279 The cost of providing all weather gravelled access to claim D is also allowed, as identified by GHD Engineering, in the amount of $94,410. Injurious affection - Noise barriers 280 Mr Wotton assessed compensation for injurious affection as including noise barriers being (i) a 690m wall along the northern boundary of lot 32 ($483,000) and (ii) along the northern OHU boundary of claim A for 200 m, a soil mound and noise barrier ($490,000 plus GST). Noise barriers are also claimed (iii) to protect the land to the south and north of the road corridor in claims A, C and D ($1.12 million plus GST) and likely to be needed in the short to medium term, 10 - 15 years. 281 Mr Wotton was of the opinion that notwithstanding the severance of the land by the OHU, the claim areas A - D will have long term potential for residential potential (the proposal having destroyed the short term potential) of some 10 years or more. Any purchaser in the future who purchases the land with residential development in mind would recognise that noise barriers would have to be constructed as part of any residential development to shield the land from the OHU noise. That would be factored into the price that a hypothetical purchaser would be prepared to pay. Although this may be some time in the future, when those mounds and barriers are to be constructed the cost will be that applicable at the time of the future value. Additionally, such noise barriers might need to be more effective than the standards for such noise barriers required today. For these reasons Mr Wotton has assessed the decrease in value on the residual lands by reference to the costs at 2009 values. 282 Further he considers that as a busy highway is now to be adjacent to residential land that will create additional noise in lot 32 with a consequential loss of value. There is a claim for a noise barrier adjoining lot 32 which will ameliorate these impacts. 283 The RTA argues part of this claim (items (ii) and (iii) in par 280 above) is illogical and shows a serious defect in the Applicant's valuation. If Mr Wotton's evidence (and Ms Hollis' evidence) is accepted, that is to say, that the residue land ought to be valued on a rural basis in the after scenario, it is wrong as a matter of valuation principle for the Applicant to claim the cost of noise barriers which are used to attenuate noise impacts for neighbouring residential development. The claim is inconsistent with the valuation position. Such flawed logic may be considered in the context of an extended version of the "commonsense" check postulated by Hodgson JA in Roads and Traffic Authority of NSW v Collex Pty Limited [2009] NSWCA 101; (2009) 165 LGERA 419 at [186].

[100]

284 In Mr Lunney's view parties to the sale would not allow for noise barriers along the claim A boundary with the OHU given that the Applicant's main claim is that the residue lands have lost 90 per cent of their value due to being landlocked (TS 15.09.10 p 629). The time frame of 10 - 15 years identified by Mr Wotton also does not support the full amount of the cost of implementing the barriers being paid now. Finding 285 The Applicant is claiming, based on the valuation of Mr Wotton the cost of noise barriers along the OHU (items (ii) and (iii) par 280 above). There are some difficulties with Mr Wotton's approach. For example, (TS 15.09.10 p 627) if no rezoning was to occur then there would be no need to build any barriers suggesting the full cost should not be awarded. Further, as identified by Mr Lunney, the time frame of 10 - 15 years for future residential development does not support the full cost of implementing the barriers being paid now. Contrary to the RTA's submissions relying on Hodgson J in Collex, the Court considers an amount for the construction of noise barriers in the future along the OHU at claims A and C is payable in light of compensation being awarded in the after scenario based on rural land with potential for residential development in 10 - 15 years. The Court does not consider this approach is contrary to commonsense. The RTA accepts that noise barriers are needed next to lot 32. If the claim areas on the residue land are developed for residential use in the future it is reasonable to expect that the hypothetical parties would consider the same need for noise barriers along the OHU would arise in the future. 286 The amount of compensation should be calculated by taking the cost of items (ii) and half of (iii) of $1.05 million plus GST ($1,155,000), adding CPI of 3 per cent for 10 years and discounting that figure by 6 per cent per year, resulting in $867,400. This should be reduced by 50 per cent to allow for the risk factor that these barriers might not be required, to arrive at a total of $433,700. 287 The RTA accepts lot 32 will require noise barriers (item (i) par 280 above). The noise barriers required for lot 32 should be paid ($483,000 plus GST). Betterment - Roundabout for lot 32 288 Mr Lunney considered there was a benefit under s 55(f) to lot 32 as the RTA is constructing a roundabout at the intersection of Philip Charley Drive and the old Oxley Highway (identified in par 8(c)(ii)). Condition 27 of the Maher's Headland development consent requires that no more than 50 lots can be released until the proposed roundabout at the corner of the intersection and Philip Charley Drive had been fully constructed. 289 Mr Lunney's contends that a prudent purchaser as at 30 January 2009 would be aware that the intersection would have to be upgraded before a 291 lot subdivision would be permitted to have access from the existing poor intersection; exhibit 6 p 64 par 2.1(a). He sought the advice of GHD Engineering on the likely cost of an intersection benefiting lot 32 at the corner of Philip Charley Drive and the old highway and the advice was the cost was likely to be $869,000. This represents a saving to the Applicant because it does not have to construct the roundabout required by the development consent. 290 The Applicant submitted that as the grant of development consent for Maher's Headland was after the date of acquisition this betterment claim could not be considered. The condition of development consent relied on by the RTA could not have been known to a prudent hypothetical purchaser. 291 The Court considered above at par 36-40 the extent to which events after the date of acquisition can be taken into account when assessing compensation as at the date of acquisition. The circumstances are limited to matters which would be foreseeable to a prudent hypothetical purchaser or vendor. Development consent was not granted until several months after the date of acquisition with numerous conditions imposed and it is not appropriate in these circumstances to attribute betterment to lot 32 in terms of the roundabout as a result of the events after the date of acquisition. 292 Before finalizing orders in this matter the Court will confirm with the parties the final figures that should appear in any orders. A draft of possible orders will be provided for consideration. The parties must also advise the Court of the amount of interest payable.

Vilro Pty Ltd (In Voluntary Liquidation) v Roads and Traffic Authority NSW

At a glance

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Judgment (102 paragraphs)

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Cases Cited (33)

Cited By (19)