Legislation Cited: Blacktown Local Environmental Plan 2015 (NSW)
Land Acquisition (Just Terms Compensation) Act 1991 (NSW) ss 54, 55, 56, 59, 66
State Environmental Planning Policy (Sydney Region Growth Centre) 2006 (NSW) (repealed)
Uniform Civil Procedure Rules 2005 (NSW)

Wenkart v Blacktown City Council (No 2) [2025] NSWLEC 138 | Case summary | Zoe

NSWNSWLEC

Wenkart v Blacktown City Council (No 2)

[2025] NSWLEC 138

Land and Environment Court (NSW)|2025-12-03|Before: Pritchard J

View on NSW Caselaw

General information, not legal advice.

At a glance

Source facts

Court

Land and Environment Court (NSW)

Decision date

2025-12-03

Before

Pritchard J

Catchwords

COMPULSORY ACQUISITION — Objection to compensation for compulsory
acquisition pursuant to s 66 of the Land Acquisition (Just Terms Compensation)
Act 1991 (NSW) – determination of public purpose within s 56(1)(a) –
determination of market value of land

Source

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Catchwords

COMPULSORY ACQUISITION — Objection to compensation for compulsoryacquisition pursuant to s 66 of the Land Acquisition (Just Terms Compensation)Act 1991 (NSW) – determination of public purpose within s 56(1)(a) –determination of market value of land

Judgment

Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.

Medium Neutral Citation: Wenkart v Blacktown City Council (No 2) [2025] NSWLEC 138

Hearing dates: 1, 4, 5, 6 and 7 November 2024 and 14 March 2025

Date of orders: 3 December 2025

Decision date: 03 December 2025

Jurisdiction: Class 3

Before: Pritchard J

Decision: The Court makes the following orders:
(1) Compensation under Part 3 Division 4 of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) (Just Terms Act) for the compulsory acquisition of the freehold interest of Mr Thomas Richard Wenkart and Ms Christine Wenkart of land known as Lots 12, 13 and 14 in Deposited Plan 1238820 and Lot 5 in Part 28 of Deposited Plan 1459, located at Edmund Street, Riverstone, now Grantham Farm, is payable in the amount of $8,644,370.
(2) Statutory interest payable under ss 49 and 50 of the Just Terms Act.
(3) The respondent, Blacktown City Council, to pay the applicants’ reasonable costs of the proceedings as agreed or assessed unless the respondent files a notice of motion seeking an alternative costs order within 28 days of judgment.

Catchwords: COMPULSORY ACQUISITION — Objection to compensation for compulsory acquisition pursuant to s 66 of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) – determination of public purpose within s 56(1)(a) – determination of market value of land

On 24 March 2023, by Class 3 application, Mr Thomas Richard Wenkart (the first applicant) and Ms Christine Wenkart (the second applicant) (together, the applicants) commenced proceedings pursuant to s 66 of the Land Acquisition *(*Just Terms Compensation) Act 1991 (NSW) (Just Terms Act) against Blacktown City Council (Council) (the respondent) in relation to the amount of compensation payable for the acquisition of land known as Lots 12, 13 and 14 in Deposited Plan 1238820 and Lot 5 in Part 28 of Deposited Plan 1459 (the acquired land). The acquired land, which is a total area of 3.22966ha, is located at Edmund Street, Riverstone, now Grantham Farm.
On 26 March 2021 (the date of acquisition), Council acquired the land for the purpose of “SP2 – Infrastructure Drainage” (the public purpose) as gazetted in NSW Government Gazette No 121.
Prior to 26 March 2021, the applicants were the registered proprietors of the whole of Lots 2, 3, 4, 5 and 16 of DP1459 (the parent parcel). The parent parcel had a total area of at least 8.0592ha. [1]
Following the acquisition, the applicants remained the registered proprietors of Lots 17, 18 and 19 in Deposited Plan 1238820 and Lot 4 in Deposited Plan 1459 (the residue land).
As at the acquisition date, the parent parcel was zoned a combination of SP2 Infrastructure and RE1 Public Recreation pursuant to State Environmental Planning Policy (Sydney Region Growth Centres) 2006 (the Growth Centres SEPP), and RU4 – Primary Production Small Lots pursuant to the Blacktown Local Environmental Plan 2015. [2]
In accordance with Appendix 4 (Alex Avenue and Riverstone Precinct Plan 2010) to the Growth Centres SEPP (Appendix 4), the acquired land was located in the Riverstone precinct. Appendix 4 was gazetted on 17 May 2010.
On 3 March 2023, Council offered the applicants compensation for the compulsory acquisition of the acquired land in the amount of $5,136,696.97, as determined by the Valuer-General in accordance with Division 3 of Part 3 of the Just Terms Act.
In their further amended points of claim filed on 5 November 2024, the applicants claim compensation in the following amounts:
$12,044,003.00 for market value pursuant to s 55(a) of the Just Terms Act;
$86,953.62 for disturbance pursuant to s 55(d) of the Just Terms Act (for legal costs and valuation fees); and
$6,930.00 for replacement of fencing pursuant to s 59(1)(f) of the Just Terms Act.
The hearing was conducted on 1, 4, 5, 6 and 7 November 2024 and 14 March 2025 before me and Acting Commissioner Kempthorne, and included an inspection on 4 November 2024 of the acquired land and other properties relied on by the parties as comparable sales. I thank Acting Commissioner Kempthorne for his considerable assistance. This decision is, of course, my own, acting as judicial valuer.
During the course of the hearing, the parties reached agreement in relation to the compensation payable pursuant to s 55(d) and s 59(1)(f) of the Just Terms Act for loss attributable to disturbance. It was agreed that the Court should award the applicants compensation in the sum of $93,883.62 pursuant to s 55(d), comprising:
$86,953.62 (s 59(1)(a) and (b)) for legal costs and valuation fees reasonably incurred in connection with the compulsory acquisition of the land; and
$6,930.00 for replacement of fencing pursuant to s 59(1)(f).
The outstanding issue for determination is the amount of compensation payable to the applicants pursuant to s 55(a) and s 56 of the Just Terms Act, that is the market value of the acquired land as at the date of its acquisition.

In determining the market value of the acquired land as at the date of the acquisition, the issues for determination are:
The relevant areas of the acquired land that would have been zoned R2 Low Density Residential and that which would have been zoned E2 Environmental Conservation under the Growth Centres SEPP in May 2010, absent the public purpose. This turns on a resolution of the competing opinions of the town planners, Mr Haskew for the applicants and Mr Chambers for Council.
Whether part of the acquired land that would have been zoned R2 Low Density Residential is undevelopable. This turns in part on a consideration of the mapping of flood risk by Council’s hydrologist Dr Martens in a conceptual flood mitigation scheme, and a tripartite classification by Council’s valuer Mr Hollinshead of the land to be valued by reference to those parts that are generally unconstrained developable land (developable), those parts that are potentially developable but would require filling (developable with fill), and those parts that are constrained by flooding and are not developable (undevelopable). This approach differed from that of the applicants’ hydrologist Mr Bewsher who opined that these matters would have been determined well before the acquisition, at a strategic planning level, when the Riverstone precinct was gazetted on 17 May 2010. The applicants’ valuer Mr Phippen proceeded on the basis of a classification of the land as R2 Low Density Residential and E2 Environmental Conservation, and not on a tripartite classification.
The monetary rates per m2 to apply to the R2 Low Density Residential and to the E2 Environmental Conservation areas of the acquired land, absent the public purpose. This turns in part on a consideration of whether R2 zoned land transacts only on an R2 and E2 division, or whether the Court would apply a tripartite characterisation of the land to be valued as in part developable, in part developable with fill, and in part undevelopable. It also requires consideration of the comparable sales relied upon by the parties’ valuation experts, and the adjustments to be made to those sales.

The Court has determined as follows:
As at the date of acquisition, as opined by Mr Chambers, 12,594m2 of the acquired land would have been zoned R2 Low Density Residential, and 19,702.60 m2 of the acquired land would have been zoned E2 Environmental Conservation, absent the public purpose.
Absent the public purpose, a regional floodplain management scheme would have been developed at the strategic planning stage, that is prior to the gazettal of the Riverstone precinct on 17 May 2010. I have preferred the evidence of the applicants’ hydrologist Mr Bewsher in relation to the development of a regional floodplain management scheme at the strategic planning stage over that of Council’s hydrologist Dr Martens who gave evidence in relation to a standalone development and a conceptual flood mitigation scheme which sought to determine pre-development flows onto the acquired land, and involved a classification of part of the acquired land as developable with fill. The consequence of preferring the opinion of Mr Bewsher is that I have disregarded Mr Hollinshead’s tripartite classification of the acquired land, and disregarded the two sales relied upon by Mr Hollinshead, namely sale GH3 (134 Cranbourne Street, Riverstone) and sale GH4 (Lot 2, Moon Crescent, Schofields), which sales Mr Hollinshead opined provided the most appropriate market sales evidence for the developable parts of the acquired land that required fill. I have also made adjustments to the comparable sales having regard to the evidence of the hydrologists.
Adopting an R2 land value rate of $480/m2 for the area of the underlying R2 zoned component of 12,594.0m2, and an E2 land value rate of $150/m2 for the area of the underlying E2 zoned component of 19,702.6m2, minus 5% for “in one line components” (as explained below at [242]), produces a total of $8,550,485.50 for the market value of the acquired land as at the date of acquisition.
I have determined that including an agreed amount of $93,883.62 for losses attributable to disturbance, the applicants are entitled to total compensation in the sum of $8,644,369.12, rounded up to say, $8,644,370.

Mr Haskew justified his reliance on the biodiversity conservation order on the basis that:
non-certified land is a significantly more reliable predictor of non-urban zoning than flood liable land;
the starting position for precinct planning would be to “sterilize non-certified land for [biodiversity conservation order] conservation or replacement” as part of the requirement to comply with the biodiversity certification order; and
there is a strategic planning incentive to maximise the use of certified land for the provision of dwellings and associated supporting land uses (urban purposes).
Mr Haskew concluded that non-certified land is a reliable predictor of the boundary between urban zoning and environmental zoning. The analysis upon which Mr Haskew relied showed that flood prone, certified land is zoned for urban purposes 10.5 times more often than flood free non-certified land.
Mr Haskew took the Court to the map reproduced at [37] above in Figure 4-1 of the exhibition precinct planning report to demonstrate that a drainage scheme could be designed and delivered in many ways. The map in in Figure 4-1 shows changes to zoning following public exhibition between 26 November 2008 and 6 February 2009, including land that was zoned SP2 Infrastructure or RE1 Public Recreation pursuant to the Growth Centres SEPP at exhibition on 26 November 2008, and changed to be zoned residential following public exhibition, and land that was zoned residential at exhibition and changed to be zoned SP2 Infrastructure or RE1 Public Recreation pursuant to the Growth Centres SEPP. Mr Haskew’s evidence was that, in a counterfactual scenario absent the public purpose, the intensification of water onto the acquired land would not have taken place because this would have been prevented by town planning controls.
As set out in the joint town planning report, Mr Chambers’ view was that absent the public purpose, the boundary between the E2 zone and the R2 zone on the acquired land is delineated by the 1 in 100 flood line shown on the SEPP Development Control Map. This was on the basis that:
the land coloured blue on the SEPP Development Control Map encompasses the riparian protection area associated with the First Ponds Creek, the flood affected land presented in the Growth Centres SEPP, a native vegetation retention area, and originally non-certified land;
the E2 zone is an appropriate zone for the 1 in 100 flood liable land on a third order watercourse; and
where the precinct wide drainage regime is disregarded as part of the public purpose, there would be less appetite on the part of precinct planners to zone flood-affected land alongside a third order watercourse for residential development. Mr Chambers considered it more likely that the “1 in 100 ARI flood-affected land would be zoned other than for residential development to maintain existing flood affected land for flood conveyance and to minimise risk to property from flooding.”
In Mr Chambers’ opinion, limiting development on flood liable land is an important part of precinct planning and, in the absence of a precinct wide publicly owned stormwater management regime, existing flood prone land would have a determinative role in the zoning of land for residential purposes. His advice to a hypothetical prudent purchaser or seller of the parent parcel would be that they should obtain expert advice from a hydrological engineer on the ability to develop any part of the parent parcel. However, Mr Chambers accepted that if the boundary between the R2 and E2 zones was not where he opined it would be, it would very likely be as Mr Haskew opined. Mr Chambers also agreed with the proposition that disregarding the public purpose, the zones would have been locked in, and a boundary imposed between R2 and E2 land by May 2010. Mr Chambers accepted that on a strategic planning level, drainage, as an alternative to the actual public purpose, would have been dealt with by “because it better ensures that an effective and efficient trunk drainage system can be provided which when the trunk drainage system uses riparian corridors, it best ensures that the riparian corridors are protected, and well managed, and are more efficient use of land through a publicly owned trunk drainage system, as has occurred.”

As a result of the modelling exercise he undertook, Dr Martens concluded that the advice he would give a hypothetical purchaser/vendor of the residue land (ignoring the effect of the public purpose) would be that:
“[t]he flood liability of the land is an inherent feature of the land that would be apparent and anticipated by a prudent hypothetical purchaser given the presence of First Ponds Creek on the land and the low lying nature of land adjoining First Ponds Creek”;
residential land would need to be located at a level at or above the flood planning level; that is, land above the 1% AEP flood level, but below the flood planning level, may be able to be developed if “compensatory cut and fill were undertaken in the nearby floodplain” (as set out below at [66(8)(a)]);
any land below the flood planning level to be developed would likely need to be filled to the flood planning level;
any proposed filling of land below the 1% AEP flood level would present a significant risk in terms of obtaining consent, and the hypothetical purchaser should not assume that such land would be developable or could be developed as readily as unconstrained land (above the 1% AEP flood level);
any earthworks proposed on the land within the 1% AEP flood extents would need to be assessed through a detailed 2D model that would need to be submitted to Council, the model needing to demonstrate that the “proposed works do not detrimentally impact on flood behaviour and extents on adjoining land or impact the environment”;
First Ponds Creek is a major watercourse “where any proposed realignment or significant earthworks within or near to its bed or banks would not likely be supported by a consent authority or NRAR”;
without the cooperation of adjoining landowners to the north and south of the land, it would be very difficult in his experience to significantly reduce the flood affectation of the land because of the large area of flood waters on adjoining land, and obtaining and coordinating any adjoining landowner cooperation would be much more difficult than proceeding to develop the land without reliance on neighbours, and would introduce significant additional risk and likely delay to a development project;
a conceptual flood mitigation scheme for the residue land (including schemes for both the residue land and the acquired land) based on the more recent Mott Macdonald report 1% AEP existing flood mapping could be as sketched in Figure 11 of his report, noting the following:

In the joint hydrology report, Mr Bewsher and Dr Martens agreed that as at the date of acquisition:
the acquired land was bounded by First Ponds Creek in the east;
First Ponds Creek was a third order watercourse; and
First Ponds Creek flowed in a general northerly direction.
Mr Bewsher and Dr Martens agreed that as at the date of acquisition, the flood information available to a hypothetical purchaser of the parent parcel would have included:
flood mapping in the Growth Centres SEPP based on floor modelling originally documented by GHD in 2008–2010 (the GHD SEPP flood mapping);
flood mapping provided online on Council’s mapping portal (Council**’s** flood mapping); and
flood mapping provided in the Mott Macdonald report.
The Mott Macdonald report recorded that some urbanisation in the Riverstone precinct had already taken place as at the date of the report (28 April 2015), as set out at [40] above.
In relation to flood affectation, Mr Bewsher and Dr Martens agreed that the Mott Macdonald “Existing Flood Depth” map relied on by Dr Martens showed greater overland flows from the west compared with the GHD flood mapping prepared in 2008–2010 (also known as the SEPP flood mapping) and the Council flood mapping available online. They agreed that:
the flood mapping provided in the Growth Centres SEPP and Council’s flood mapping for the 1% annual exceedance probability averaged around 18,600m2 on the acquired land;
the flood mapping in the Mott Macdonald report indicated that around 30,000m2 of the acquired land was affected by the 1% AEP (as set out in Figure 10 in the Martens report):
the larger area of affectation was due to the inclusion of overland flows arriving from the west of the acquired land (land to the west of Edmund Street).
Mr Bewsher and Dr Martens agreed that a flood management scheme could be developed within the parent parcel to reduce flood affectation by way of cut and fill within the floodplain. They also agreed that a regional floodplain management scheme spanning the parent parcel and adjacent properties both upstream and downstream could have been developed as at the date of acquisition.
In cross-examination, the following areas of disagreement were drawn out between the hydrologists:
the width of the riparian corridor – Mr Bewsher 65m, Dr Martens 85m;
to capture the 1:100 flood, Mr Bewsher opined that the existing watercourse would need to be altered;
Dr Martens opined that the likelihood of the existing watercourse being altered would be low because the existing creek systems would be “preserved” and “retained”;
Mr Bewsher agreed that any alteration to the existing watercourse would require approval from NRAR;
Mr Bewsher opined that the depth of the flows from the west of Edmund Street would vary from 0mm to 0.25mm, that is, they would be shallow;
Dr Martens opined that the overflow of water from the west of Edmund Street would be significant;
Mr Bewsher suggested that the 1% AEP flow would be in the order of 3.5m3/second;
Dr Martens suggested that the 1% AEP flow would be in the order of 20m3/second;
Mr Bewsher opined that the overflow of water from the west of Edmund Street would more than likely be handled by road drainage systems and piped under the acquired land to the existing watercourse; and
Dr Martens opined that the overflow of water from the west of Edmund Street would flow across the acquired land via a channel to the existing watercourse as piping would be too expensive.
Consequently, Mr Bewsher and Dr Martens held different opinions in relation to the following:
the size of overflow of water from the west of Edmund Street, Mr Bewsher’s estimate of 3.5m2/second versus Dr Martens’ estimate of 20m2/second;
Mr Bewsher’s opinion that the overflow of water from the west of Edmund Street would be dealt with by the road drainage systems and piping under the acquired land versus Dr Martens’ opinion that the overflow of water from the west of Edmund Street would be significant and would flow over the acquired land; and
Mr Bewsher’s opinion that First Ponds Creek could be altered to accommodate the 1% AEP with some minor overflow of water versus Dr Martens’ opinion that First Ponds Creek would most likely be retained in its existing form with the overflow of water onto the acquired land.

After joint conferencing, the parties identified the following agreed list of comparable sales although they disagreed on the adjustments to be made to the sales, and Mr Phippen rejected the residential subject to filling sales. The amended adjustments to the sales relied upon by each party arising from the valuers' evidence given on 7 November 2024, and the amount of compensation for market value pursuant to s 55(a) of the Just Terms Act provided to the Court by the respondent by email on 21 March 2025 is reproduced in the table below (the parties’ amended adjustments table).
Mr Hollinshead opined that the two residential en globo sales GH3 and GH4 represented the most appropriate market sales evidence for the developable parts of the acquired land that required fill. Mr Phippen considered that sales GH3 and GH4 were irrelevant because he assumed that the R2 portion of the acquired land would not require any fill or at worst, very minimal fill.
Mr Hollinshead relied on the so called “Box Hill Sales”, sales GH7, GH8 and GH9, introduced in joint conferencing, as representing the most appropriate market sales evidence for the environmental parts of the acquired land.
The valuers disagreed on the land value rate for the following sales which they agreed to be comparable:
The valuers’ disagreement in relation to the value of sale PP20 (43–51 Box Rd, Box Hill) was the result of disagreement between them as to the 12 month delayed settlement of the property, and whether to include the cost of removing the two dwellings on the land.
Mr Hollinshead valued the three additional environmental sales selected by him, sales GH7, GH8 and GH9 (14 Thorpe Way, Box Hill, 18 Thorpe Way, Box Hill, and 102 Longerengong Avenue, Box Hill) on the basis of the portion of the land which was unconstrained; that is, flood free R2 zoned residential homesites which in his opinion provided a value of $1,725/m2. He deducted that value from the sale price to derive the value of the E2 zoned buffer land.
Mr Phippen disagreed with the method adopted by Mr Hollinshead on the basis that it imported the sale price of three other R2 “building blocks” in Box Hill to determine the land value of a large parcel of en globo land. Mr Phippen contended that the correct value for the E2 land was calculable having regard to:
the application of $600/m2 rate to the residential portion of the land and deducting the resultant value from the comparable sale price, producing a value for E2 land of between $143 and $168/m2. Since those comparable sales were more remote than the acquired land, he would increase that rate to $180/m2; and
the determination of the value of land zoned partially E2, being more remote than the acquired land. In Constantine v Blacktown City Council [10] (Constantine), R2 land value was determined at $250/m2, and E2 land value at $80/m2. Mr Phippen then applied a 140% increase to the value of R2 land in the 8 years since Constantine.
The valuers also disagreed in relation to how the selected environmental sales should be adjusted. Mr Hollinshead considered a -15% downward adjustment to be appropriate because the selected comparable sales were of finished residential lots, whereas the acquired land – an en globo lot – would appeal to a smaller market. Mr Phippen did not adopt such an adjustment. He considered the fact that the E2 and R2 zoned land on the acquired land were adjacent created an opportunity for the incorporation of the E2 land into the R2 land, adding considerable value and development potential to the acquired land.
For the location of the selected sales, Mr Phippen adopted an upward adjustment of between 5-10%, and Mr Hollinshead a downward adjustment of between 0 to -5%. This difference was explained by Mr Hollinshead on the basis of statistical data from CoreLogic suburb statistics reports dated March 2024 annexed to Annexure 3 of the joint valuation report and his broader experience that properties situated to the north of Windsor Road in the Hills local government area are considered superior to those located to the south in the Blacktown local government area. Mr Phippen adjusted the sales according to what he considered to be their inferior proximity to existing infrastructure and services.
The CoreLogic suburb statistics reports in Annexure 3 to the joint valuation report concern the annual change in median value of house prices in Riverstone and Box Hill between March 2015 and March 2024, and were summarised by Mr Hollinshead in a table as follows:
Mr Phippen disputed Mr Hollinshead’s reliance on statistical data, and adjusted the sales according to what he considered to be their inferior proximity to existing infrastructure and services.
In relation to the size of the selected sales, Mr Phippen adopted an upward adjustment, and Mr Hollinshead adopted no adjustment. Mr Phippen justified his adjustment on the basis that a smaller parcel of land has a higher land value, and that when a property has an area of more than 30,000/m2, an adjustment is required.
Mr Phippen and Mr Hollinshead agreed that sales PP12, PP20, PP21, GH1 and GH2 represented the most appropriate sales for the developable parts of the acquired land.
Mr Hollinshead was of the opinion that sales GH3 and GH4 represented the most appropriate comparable sales for the developable parts of the acquired land requiring fill. Mr Phippen was of the opinion that sales GH3 and GH4 were irrelevant as the R2 part of the acquired land would not require any additional fill (or at worst minimal fill).
As noted, following the finalisation of his report in chief, Mr Hollinshead introduced sales GH7, GH8 and GH9 as those he considered to be the most appropriate sales for the environmental parts of the acquired land.
Mr Phippen and Mr Hollinshead provided the following table which identified possible land value ranges for each of the adopted land areas:

The applicants’ position was that:
disregarding the proposal to carry out the public purpose, the land would have been zoned a combination of R2 and E2;
that would have occurred at a strategic planning stage and would have been made public on the gazettal of the Riverstone precinct in May 2010;
all the matters then known would have informed that strategic planning approach and zoning (that is, all that pre-dating May 2010); and
the alternate regional or developer-led drainage solution would have been part of the strategic planning so that when the R2 and E2 zones were “locked in”, there would have been no consideration as to any part of the R2 zoned land being “undevelopable”.
The applicants submitted that the town planning, hydrology and valuation evidence supported this position. On the applicants’ case, the key issue for determination in the town planning evidence was what would have been the strategic planning influence in the imposition of the likely zone boundary on the subject land between that which would have been zoned R2 and that which would have been zoned E2, in relation to which question Council’s planner Mr Chambers deferred to the opinion of Council’s hydrologist Dr Martens. This meant that on Council’s case, the key issue from a planning and hydrology perspective was what Dr Martens “thinks”, given Mr Chambers’ deference to him in this respect. The applicants’ position was that when the statutory disregard in s 56(1)(a) is properly applied, these matters would have been determined at a strategic planning level.
The applicants’ case was that when the Riverstone precinct was gazetted on 17 May 2010, the strategic planning for the area would have been determined correctly applying the statutory disregard in s 56(1)(a), and the boundary between the R2 and E2 land would have closely resembled the boundaries of the certified land, as contended by Mr Haskew. If that is correct, there would be no factual basis for the conclusions reached by Dr Martens, the strategic planning for the area having been determined in 2010, and there being no foundation for the non-zoned based divisions set out by Mr Hollinshead in his valuation evidence. The certified land boundaries would have been established by 2010 with the zone boundaries of R2 and E2 “locked in”, and the valuation would be carried out placing a value on the R2 and E2 land, and not on the basis of the threefold division undertaken by Mr Hollinshead (“developable”, “developable with fill” and “undevelopable”).
The applicants referred to Mr Chambers’ agreement that disregarding the public purpose, the zones would have been locked in by May 2010. Mr Chambers also agreed that drainage could preferably be dealt with by carrying out the drainage work as part of the public purpose because it would better “ensure[s] that an effective and efficient trunk drainage system can be provided”, and that “when the trunk drainage system uses riparian corridors, it best ensures that the riparian corridors are protected and well managed”. If this were accepted, then the applicants’ case was that the R2 land would be considered by the market to be developable.
The applicants relied on Mr Haskew’s opinion in relation to “a strong relationship” between the boundaries of the certified land and urban zoning imposed at the conclusion of the strategic planning process which would have culminated in May 2010. Mr Haskew referred to the original biodiversity certification order map as a strategic planning tool which significantly influences zone boundaries given that in the counterfactual, 17 May 2010 would represent the completion of precinct planning when the Riverstone precinct would have been gazetted, absent the public purpose. Given that there would be a strong strategic planning incentive to maximise the use of certified land for residential housing, that would have reliably indicated the boundary between urban zoning and environmental zoning.
The applicants submitted that Mr Chambers’ position was less robust and more speculative than that of Mr Haskew. In any event, in his oral evidence, Mr Chambers did not dispute that for which Mr Haskew had contended could have occurred in the relevant counterfactual. The applicants submitted that the evidence analysed by Mr Haskew demonstrated that land that is certified is 10.5 times more likely to be zoned for urban purposes. That was put to Mr Chambers, and he agreed that the “appetite” for urban zoning shown by strategic planners could well be measured by zoning land that may have been flood liable, but was certified for urban purposes. Accordingly, even on his “less statistical and more basic assessment”, Mr Chambers agreed that the analysis by Mr Haskew was demonstrable of “an appetite” to zone some flood liable land for urban purposes in circumstances in which it had already been through the process of being certified.
In the face of those “reasonable concessions” by Mr Chambers, the applicants submitted that there was no reason for the Court not to accept Mr Haskew’s evidence in relation to the quantum of land zoned E2 and R2 as at the date of acquisition, namely that disregarding the public purpose the area zoned R2 would be 14,832m2, and the area zoned E2 17,465.6m2.

Council submitted that for the purpose of the statutory disregard required by s 56(1)(a) of the Just Terms Act, the natural features of the land, namely its location at the bottom of a sub-catchment and it being traversed by First Ponds Creek were not matters that would be ignored. Council relied on Mr Chambers’ opinion that absent the public purpose, having regard to typical strategic planning considerations and the natural features of the acquired land, the most likely outcome of the strategic planning exercise would have been for the boundary of the E2 and R2 zones to have followed the 1:100 flood line on the SEPP Development Control Map. Mr Chambers’ opinion was that limiting development on flood liable land was an important part of precinct planning (and was in the case of the Riverstone precinct), and that in the absence of a precinct wide publicly owned stormwater management regime, existing flood prone land would have a determinative role in the zoning of land for residential purposes.
Council submitted that Mr Haskew undertook an imperfect statistical analysis in the joint report to determine whether zoning in the Riverstone precinct was more likely to be determined by certification of land or by flood prone designation. Council submitted that Mr Haskew appropriately conceded that whether or not land is certified is not a perfect predictor of urban zoning, and that the statistical analysis undertaken by Mr Haskew:
was based on an analysis of zonings that were actually applied in 2010, which was necessarily infected by the public purpose; and
did not respond to the particular features and constraints that applied to the acquired land.
Further, it was unclear on the applicants’ case whether Mr Haskew’s statistical analysis would yield the same or a similar result if an analysis were undertaken absent the public purpose, and if the unidentified alternative drainage solution were applied in its place. This was unable to be tested given the applicants’ “failure to identify the alternative drainage solution it relied on so heavily to found its case”.
While Council accepted (as Mr Chambers did in his written evidence and in cross-examination) that an alternative drainage solution would have been in place that would have allowed the zoning of the acquired land as R2 and E2, the question that arises here was more fine grained, turning on how water would have been dealt with on and in the vicinity of the acquired land. For Mr Haskew to conclude that the zone boundary on the acquired land would have followed the original certification map boundary was to ignore the attributes of the acquired land and to apply the zoning boundary “as though strategic planning is a mathematical exercise”. Mr Chambers’ approach was submitted to be orthodox and responsive to the conditions on the ground.

The applicants submitted that at the heart of Council’s case was that notwithstanding that some of the acquired land would be zoned R2, it would have little value because of flood affectation, and that Dr Martens’ evidence for Council was predicated on a series of assumptions that did not address the fact that the zoning of the land would have been imposed, and the zone boundaries known, in May 2010 when Appendix 4 (Alex Avenue and Riverstone Precinct Plan 2010) to the Growth Centres SEPP was gazetted. The applicants submitted that there was no evidence to support Council’s contention that R2 zoned land would not have been able to achieve its full urban potential.
Despite the evidence of the town planners (with a relatively minor difference of opinion as to the quantum of the difference of R2 and E2 zoned land, disregarding the public purpose), Council’s valuer Mr Hollinshead did not utilise those figures, and instead adopted a figure (Figure 11, reproduced at [63] above) from Dr Martens’ evidence, and set up his own categorisation of land to be valued as “developable”, “developable with fill” and “undevelopable”. The evidence of the applicants’ experts Mr Bewsher and Mr Haskew was that these matters would be determined at a strategic planning level, and Council’s planner Mr Chambers did not appear to disagree. The planners agreed that this would have occurred well prior to the acquisition when the Riverstone precinct was gazetted (on 17 May 2010). Rather than taking a conventional approach and valuing land by reference to zoning, and then adjusting as appropriate for site-specific considerations, Mr Hollinshead divided the acquired land into “developable” and “non-developable” areas. The sole consideration that Mr Hollinshead applied in determining what parts of the acquired land he said would be “developable” or “non-developable” was flood risk as mapped in the conceptual flood mitigation scheme created by Dr Martens, and set out in Figure 11 in Dr Martens’ report (reproduced above at [63]). Mr Hollinshead adopted the conceptual flood mitigation scheme provided by Dr Martens in Table 3 of his report (reproduced above at [67]).
The applicants submitted that Dr Martens’ conceptual flood mitigation scheme was infected with the public purpose, lacked any proper basis, and was not put forward by Dr Martens as anything more than a concept of what could happen, in contrast to a regional scheme which Mr Haskew, Mr Bewsher and Mr Chambers said would be likely to happen and which Dr Martens also conceded “could” happen.
The applicants also pointed to the agreement of the hydrologists in the joint report in relation to the disregard of the public purpose, namely, that a “regional floodplain management scheme spanning the parent parcel and adjacent properties both upstream and downstream could have been developed at the DoA”. This was submitted to be consistent with the decision of Jagot J in Cassidy v Sydney Water Corporation [11] where her Honour accepted that applying s 56(1) did not mean that the Court must disregard the possibility of a regional scheme. Her Honour considered submissions in relation to an alternative hypothetical trunk drainage scheme, and said at [68]:

The applicants submitted that Mr Haskew made this point, opining that there was sufficient non-certified land that would allow for compensatory cut and fill. Hence, it was not speculative to consider that the land which Mr Haskew considered R2 (and with which Mr Chambers agreed, but for the 2,000m2 difference) would be rendered flood free and available for development. The applicants also referred to Mr Chambers’ evidence in relation to the strategic planning priority for the delivery of housing in the North West Growth Centre; namely, that Riverstone would have been rezoned in 2010 regardless of the public purpose, that drainage would have been considered at the time of rezoning, and that trunk drainage delivered by Council was the best approach and would have been the most likely approach.
The applicants further referred to Mr Chambers’ evidence that the hierarchy of preference for drainage from a strategic planning perspective is drainage by Council, then drainage by Sydney Water, then a regional scheme, and lastly an individual landowner (go it alone) scheme. The applicants noted that Mr Bewsher’s evidence for the applicants was that absent the public purpose, a regional scheme (rather than a site-based scheme) would have been developed at the strategic planning stage. This was submitted to be consistent with Mr Chambers’ evidence that a regional scheme is preferrable to an individual “go it alone” scheme from a strategic planning perspective. Dr Martens and Mr Bewsher agreed in the joint hydrology report that “[a] regional floodplain management scheme spanning the parent parcel and adjacent properties both upstream and downstream, could have been developed at the DoA”. Mr Chambers agreed that any regional scheme would “probably” have been shown in the indicative layout plan for Riverstone.
The applicants referred to the map reproduced at [37] above in Figure 4-1 of the exhibition precinct planning report to demonstrate that a drainage scheme could be designed and delivered in many ways, as set out at [55] above. Having regard to Mr Haskew’s evidence, the applicants submitted that in any regional scheme, there is a principle that each sub-catchment upstream cannot adversely impact on any sub-catchment downstream. Mr Bewsher’s evidence was that absent the public purpose, Council controls would ensure that water would not be concentrated onto downstream land, but the public purpose meant that flows would have been concentrated onto the acquired land. Both Dr Martens and Mr Chambers confirmed the general principle of not creating adverse downstream impacts in the development of land. However, the applicants submitted, this general principle did not apply in the circumstances of the public purpose here because the public purpose meant that flows from the west have been intensified onto the acquired land in anticipation of the trunk drainage scheme of which the basin on the acquired land forms part. Here, the public purpose intensified the flows onto the acquired land, including as at the date of acquisition when more water was being directed onto the land in anticipation of the basin to be constructed as part of the public purpose.
The applicants referred to what they described as Dr Martens’ initial (and erroneous) assertion that the Mott Macdonald 1% AEP existing flood depth map that he used as the starting point for his conceptual scheme shows a predevelopment scenario, that is, without urbanisation and without a precinct drainage scheme. They submitted that Dr Martens walked back this evidence, and said that the Mott Macdonald “Existing Flood Depth” map was on the basis that the area west of the First Pond Creek was “essentially” non urbanised and “certainly without the detention basins”. Whilst the applicants accepted as correct that certain detention basins were not included in the Mott Macdonald 1% AEP existing flood depth map, they said that that map was created in 2015/2016 after the release of the Riverstone precinct in 2010 and the urbanisation in Riverstone that followed. It did not attempt to remove the impact of that existing urbanisation, the Mott Macdonald report itself confirming that some urbanisation in Riverstone had already taken place as at the date of the report (28 April 2015). The applicants also referred to the acknowledgement by Dr Martens in oral evidence that the public purpose, being the drainage scheme adopted by the post-exhibition precinct planning report, intensified the flows onto the acquired land.
The applicants also referred to the explanation in the Mott Macdonald report of this effect as follows: “Urban catchments generally experience higher discharge rates than rural ones due to the increase in impervious areas and the reduction of hydraulic resistance to flow paths.” The applicants submitted that Dr Martens’ conceptual model was infected with the public purpose. The map from the Mott Macdonald report on which Dr Martens relied incorporated the effect of the public purpose, being public drainage infrastructure (albeit not all constructed), and intensification of flows onto the acquired land due to the existing, and in anticipation of further, public drainage infrastructure, including the basin to be constructed on the acquired land. While Dr Martens acknowledged that the public purpose had concentrated the flow of water onto the acquired land, he attempted to suggest that this would have occurred anyway in the event of a regional scheme. [12]
Even if it might be convenient or efficient for a regional scheme to make use of a channel through the acquired land, the applicants submitted that a regional scheme of private landowners does not have the powers of an acquiring authority to acquire land for the purposes of a channel. Any use of the acquired land for that purpose would need to be privately negotiated for value. In the hypothetical scenario of a regional scheme, either the applicants would be compensated (via commercial negotiation) for loss of the use of the land that was dedicated to the regional scheme or, if the applicants were unwilling to part with the land, they would have retained the land as developable R2 land (without a channel and without intensified flood affectation arising from trunk drainage).
Further, the applicants submitted, the problems with Dr Martens’ evidence were not limited to the fact that his conceptual model was infected with the public purpose, his evidence also failed to meet the requirements for expert evidence set out in Makita *(*Australia) Pty Ltd v Sprowles [13] (Makita) at [85], per Heydon JA. The applicants submitted that Dr Martens provided no geometric or other calculations, no reference to contours or flows, or any other sort of measurements or underlying data to show why he estimated a pink area in Figure 11 set out at [63] above of this shape, size and location to be “capable of development … if filled”, the areas marked in pink in Figure 11 being the areas estimated by Dr Martens to be capable of development, outside of the riparian corridor and unlikely to cause off-side impacts if filled and compensatory cut and fill were undertaken in the nearby floodplain. Curiously, they submitted, part of the area outside Dr Martens’ pink triangle was coloured white, meaning that that area was subject to 0.0m of flood affectation; that is, no flooding. Dr Martens did not explain why such white coloured non-flood affected areas were said to be incapable of development, whether with or without fill. It was not explained whether Dr Martens used “GIS calculations, or a scale ruler, or a thumb-suck”.
Further, whilst Dr Martens stated that the conceptual scheme assumed that at least a 10m wide corridor would be required along the northern boundary of land west of First Ponds Creek to capture and divert flows to First Ponds Creek, the calculations giving rise to the requirement for a corridor of this width were not provided. He referred to the requirement for evacuation routes, without revealing what those routes might be or what would be required for such routes, or how he determined that the provision of those routes accorded with the pink triangle in his model. Likewise, his reference to a requirement for 5% of land above the AEP flood level to be allowed for on-site stormwater detention.
Dr Martens’ conceptual scheme was submitted to be little more than a “concept”, and there was no basis for it to be adopted wholesale by Mr Hollinshead. This was clear on the face of Dr Martens’ report where he stated that “a conceptual flood mitigation scheme for the Acquired Land based on the more recent MM Report 1% AEP flood mapping could be as I have sketched at Figure 11.” Dr Martens repeated this formulation of what “could be” in the joint report where he stated: “At Figure 11 in the DM Report I have outlined a conceptual scheme that I would expect could be viable for the site.” Dr Martens did not say that his conceptual model “would be” viable or, more importantly, “would be” likely.
The applicants submitted that in accordance with Cassidy v Sydney Water Corporation, disregarding the public purpose, the strategic planning in imposing a zone boundary would also have accounted for the regional scheme. By the gazettal in mid-May 2010, disregarding the public purpose, the zone boundaries would have been imposed and the alternative drainage scheme realised. The quantum of R2 and E2 zoned land would then be the subject of the relatively minor disagreement between the planners. There was no basis to consider any en globo subdivision land, that would have R2 zoned land “undevelopable”.

Council submitted that the applicants’ contention that the market would only look at the zoning and nothing more could not be sustained because if the market operated in such a way, there would be no need to adjust sales prices at all. There would be a single unitary rate applied to all E2 and all R2 zoned land. Rather, the applicants took issue with the approach of Mr Hollinshead on the basis that he took a general rate informed by the zoning of the land, and then adjusted that rate based on the developability of the acquired land. This, Council submitted, was an orthodox method of valuation.
Council submitted that Dr Martens’ advice to the hypothetical purchaser, summarised at [63] and [66] above, was to be contrasted with the evidence of Mr Bewsher whose primary report did not address what advice he would give a hypothetical party to a transaction at the acquisition date. Mr Bewsher simply addressed whether various assumptions Mr Haskew had made to determine the underlying zoning of the acquired land were sound. It was only in the joint hydrology report that Mr Bewsher considered the position of the hypothetical purchaser, and concluded that:
the width of a riparian corridor required along First Ponds Creek would have been determined during strategic planning;
a conceptual plan like Dr Martens' would not be needed as it is most likely that a floodplain management scheme would already have been planned before the acquisition date, and the land required and engineering concepts (including a regional scheme) would likely have been embodied in a development control plan;
Dr Martens’ advice in relation to a site based scheme was unrealistic because it assumed both the need to prepare such a scheme and that the scheme would be located solely on the site; and
options for a regional scheme would have been included in Council’s development control plan and coordinated as development applications were assessed. Options for a coordinated scheme with northern and southern neighbours were available and would divert floodwater to culverts in the road system that would have been upgraded prior to the development of the acquired land, or if the roads were not upgraded through temporary transitioning work on the acquired land.
In short, Council submitted, Mr Bewsher’s evidence was that all issues would be resolved at the strategic planning stage, and that if a regional scheme were developed in stages (presumably by private developers), then Council would coordinate it. If Council did not, then temporary arrangements would be needed to manage the flood water on the acquired land until the land to the south was developed. Mr Bewsher did not explain how or at what (if any) cost to the acquired land, or by whom a regional scheme would be developed. He did not explain how or at what cost to the acquired land any temporary solution would be provided, or at what cost or by whom the road network would be upgraded to accommodate the flood water.
Further, Council submitted, Mr Bewsher conceded in cross-examination that even if the riparian corridor had been considered in the strategic planning process, a controlled activity approval would have been required from NRAR before the acquired land could be developed and that his anticipated works to the channel would not comply with the prescribed outcomes in the NRAR guidelines for controlled activities on waterfront land, introducing an approval risk that he had previously ignored.
While Council accepted that the nature of Class 3 proceedings does not absolve a witness of discharging their obligations as an expert, the applicants were holding the advice that Dr Martens would give a hypothetical party to a transaction of the acquired land at the acquisition date “to a counsel of perfection”. By its nature, the advice given in that context would be conceptual as it would be given at the due diligence phase of a sale or purchase of land. Any lack of precision that could be attributed to Dr Martens was a result of the applicants’ failure to identify the alternative drainage solution that was essential to their case. At various times during the hearing, the suggested options included a scheme by Sydney Water, a regional scheme by individual developers, and site alone water management. Even if the scheme were likely to be a regional scheme, the Court did not have the benefit of any detail as to what that alternative drainage solution would look like, how it would be implemented, by whom and at who's cost. This was in contrast to the facts before Jagot J in Cassidy v Sydney Water Corporation.
Further, Mr Bewsher’s evidence was that temporary solutions for water management might be required on the acquired land depending on the implementation of any scheme. He did not explain what that would look like or how much land would be unable to be developed pending a permanent solution being found. Accordingly, it was entirely reasonable for the valuation task to be completed assuming that parts of the acquired land would not be available for development regardless of its zoning. Council submitted that it was routinely the case that R2 zoned land cannot be “entirely” developed for housing because of its natural constraints.
However, Council submitted, even if the Court is not satisfied in relation to the conceptual model prepared by Dr Martens, he also provided the “rule of thumb” advice that he would give a hypothetical party if stormwater facilities were required to be provided for the development of the acquired land. That advice would be that around 5% of the land above (and outside) the 1% AEP flood line should be allowed to accommodate any stormwater detention and water quality treatment structures, internal and external batters to such structures, accommodation of freeboards to top water, levels and an allowance for service vehicle access.

In relation to the issue of whether part of the R2 zoned land would be “undevelopable”, I have concluded that Dr Martens’ opinion that the channel width of First Ponds Creek should be 20m to 25m does not correspond with what the Court observed on the site view. On the view, the Court observed a channel width in the order of 5m. It is true that the view took place more than three years after the acquisition. However, there is nothing in the evidence to suggest that the width of the channel would have changed so significantly in that period.
It is also clear that Figures 11A and 11B in Mr Chambers’ report, being Council’s Flood (Aerial View 2020) Map and Council’s Flood (Lot View) Map, differ significantly from Figures 10 and 11 in Dr Martens’ report, being flood depth and levels (Appendix D to the Mott Macdonald report), and Conceptual Flood Mitigation schemes in the acquired and residue land (based on Mott Macdonald report 1% AEP flood). The Growth Centres SEPP and Council flood mapping have areas of flood affectation ranging between 17,100m2 and 19,423m2, as opposed to the Mott Macdonald model which shows some 30,052m2 of the acquired land as subject to 1-in-100 year or 1% AEP flood affectation.
Notwithstanding the applicants’ criticism of Dr Martens, I find him to have been a diligent and considered expert who sought to have his evidence conform with the Expert Witness Code of Conduct pursuant to schedule 7 to the Uniform Civil Procedure Rules 2005 (NSW) and with the requirements for expert evidence set out in Makita. However, whilst I do not accept the applicants’ criticisms of Dr Martens’ evidence, I find that he has adopted a worst-case scenario approach, and placed weight on the Mott Macdonald report which is not warranted, especially when regard is had to the three other sources of flood mapping referred to in Table 1 of his report “Summary of 1% AEP flood affectation based on available flood mapping”, reproduced at [67] above.
In relation to flood affectation and the Mott Macdonald report mapping of overland flows arriving from the west, I prefer Mr Bewsher’s opinion that the depth of these flows is shallow, varying from 0.00m to 0.25m, with minimal constraint on the development potential of the acquired land. I accept, as opined by Mr Bewsher, that overland flows are routinely addressed by drainage during subdivision. I also accept, as submitted by the applicants, that flood mapping by Council does not map inundation from such overland flows in the 1% AEP. As depicted in Council’s flood mapping and reproduced in Figure 9 of Dr Martens’ report reproduced at [61] above, Council maps the inundation as a low flood risk precinct. I accept as opined by Mr Bewsher that the channel for First Ponds Creek is about 5m wide, with the total riparian width being 30m on either side of the watercourse, hence a total width of 65m.
It follows, in relation to issue 2, that I prefer the evidence of Mr Bewsher. I accept as Mr Bewsher opined in the joint hydrology report that the depths of the overland flows arriving from the west onto the acquired land varies from 0.00m to 0.25m. These flows are shallow and have minimal constraint on the development potential of the acquired land. I accept, as opined by Mr Bewsher, that such overland flows are routinely addressed by drainage during subdivision. Further, the Council flood mapping does not map inundation from these overland flows in the 1% AEP.
The consequence of preferring the hydrology evidence of Mr Bewsher is that I find that the overland flows from the west onto the acquired land are shallow, and have minimal constraint on the development potential of the acquired land, and that overland flows are routinely addressed by drainage during subdivision. In valuing the acquired land, I will make adjustments to the comparable sales in light of the flood prone nature of some of the R2 land. However, those adjustments will not be in the magnitude of those suggested by Mr Hollinshead. In addition, a consequence of preferring the hydrology evidence of Mr Bewsher is that the Court in the valuation exercise has not had regard to sales GH3 (134 Cranbourne St, Riverstone) and GH4 (Lot 2, Moon Cr, Schofields) which Mr Hollinshead considered represented the most appropriate market sales evidence for the developable parts of the acquired land that required fill.

The applicants identified two matters which they submitted directly affected the valuation methodology. First, a division between R2 and E2 land would have been in place since May 2010, disregarding the public purpose. For nearly 11 years, by the date of acquisition in March 2021, the zoning would have been known and established. The R2 land would have been so zoned, and would not have been considered “undevelopable”. They submitted that there was no evidence of any other en globo R2 zoned land considered to be undevelopable which was the subject of any reference to or analysis by Council. Second, there was no market evidence to support the proposition that en globo land transacts on the Hollinshead tripartite classification. To the contrary, the applicants submitted, all the evidence of en globo sales was analysed by Council by reference to its zoning. An acceptance of those two matters, the applicants submitted, means that the Court ought to apply rates to the two areas identified by their town planner Mr Haskew (R2 14,832m2, and E2 17,465.6m2). Critically, they submitted, Council had advanced no evidence of “undevelopable” R2 en globo subdivision land, despite the North West Growth Centres being the subject of significant residential subdivision “over the last decade and more”.
The applicants emphasised [201] in the decision of Sheahan J in Marroun v Road and Maritime Services [14] (Marroun) where his Honour said that “[t]he sales chosen as potentially comparable are analysed to provide a common basis of measurement and comparison, for example a unitary rate (rate per square metre, rate per hectare, etc), or notation whether improved or unimproved (through allowance for the absence or existence of improvements, etc), and so on.” The applicants submitted that there was no evidence of sales of R2 land analysed in a dichotomy of “developable” and “undevelopable”.
While Mr Hollinshead justified his approach on the basis that he was taking into account “the time, cost, and risk associated with developing the land for urban purposes”, the ultimate consequence of his approach was that he discounted the value of R2 zoned land from $480 per m2 (“developable with no fill”) or $400 per m2 (“developable with fill”) to a “non-developable” rate of $40 per m2 meaning that he discounted the value of the R2 land by 90% or more to account for the time, cost and risk of development. Mr Hollinshead did not provide any justification for such a substantial discount, either by reference to comparable sales or by reference to a hypothetical development model showing how the time, cost and risk was quantified to justify the discount.
The applicants submitted that the market evidence available to Mr Hollinshead was that en globo subdivision land transacts on an R2 and E2 division, and nothing else. This was another reason the Court ought not accept the Hollingshead tripartite classification and should value the land on a two-fold basis: R2 and E2.

The applicants identified the following fifteen concessions said to have been made by the valuers in their oral evidence:
Mr Hollinshead’s concession that there was no market evidence that en globo R2 sales transact or exist, or have been analysed on the basis of a division between “developable” and “undevelopable”;
Mr Hollinshead’s concession that there was no evidence in his original report to justify the $40/m2 rate for E2 land;
Mr Phippen’s concession that the starting point for his sale PP20 should be $513/m2;
Mr Phippen’s concession in relation to sale GH2 that a development approval increases value;
Mr Hollinshead’s concession in relation to sale GH2 (with the development approval) that the adjusted rate could be $490/m2;
Mr Hollinshead’s concession that the adjustment for time for sale GH4 should be zero, not 5%, and so the range is $400 to $415/m2 for R2 (with fill);
Mr Hollinshead’s concession that there is not zero risk of having to build an Indicative Layout Plan road, but that it was so negligible such as not to warrant an adjustment to sale GH3;
Mr Phippen’s concession in relation to sale GH2 that 5% is an appropriate allowance for a development approval;
Mr Hollinshead’s concession that he did not analyse the Box Hill sales (GH7, GH8, GH9) on the basis of those sales having 500m2 building envelopes (presumably a reference to the building platforms);
Mr Hollinshead’s concession that no “brag factor” was reflected in any adjustments;
Mr Hollinshead’s concession that E2 land has value for flood mitigation works;
Mr Hollinshead’s concession that a developer would value the E2 land for its range of permissible uses;
Mr Hollinshead’s concession that Mr Phippen made “a good point” that E2 land adjoining R2 land would have benefit and value for ancillary uses (referred to incorrectly in the transcript as “auxiliary” uses);
Mr Hollinshead’s somewhat qualified concession that he would defer to this Court’s previous judgments in the absence of comparable sales for guidance in terms of methodology, not market value; and
Mr Hollinshead’s concession that his 15% adjustment in relation to the Box Hill sales, GH7, GH8 and GH9, was not based on any sales analysis.

Again, the applicants submitted that there was no basis to accept the Hollinshead tripartite classification, and that the land should be valued on an R2 and E2 basis alone. There was no market evidence that any R2 en globo land ever attracts an E2 or “undevelopable” rate. There were submitted to be a number of other inconsistencies in the approach adopted by Council in applying an “undevelopable” rate to land which both town planners accepted would have been zoned R2:
Even relying on Dr Martens’ advice, Dr Martens described his scheme as “conceptual” with “estimates” and “assumptions”, and based on Mott Macdonald he made an “allowance on a guess that it may be too expensive to pipe, without those costings available”. These would all be directed to an individual scheme, rather than a regional scheme (and the evidence established that disregarding the public purpose, there was more likely to be a regional scheme), but this was submitted to be guesswork. There was no evidence that the market would analyse R2 zoned land based on conceptual estimates and assumptions, and ascribe to it an undevelopable or E2 value.
Even assuming that Council correct about the flood burden on part of the R2 land, there were en globo subdivision plots in this location “replete” with Indicative Layout Plan roads “which would transport a burden of losing yield and carrying out the construction of those roads”. However, as Mr Hollinshead accepted, the market does not transact on a “rate per minus road” basis, even when it putatively imports a construction burden and yield loss on the developer.
The approach adopted by Council further offended valuation principles in that Mr Hollinshead “simply relied” on Dr Martens and his conceptual scheme predicated on material that would not have had an impact on strategic planning by 2010, disregarding the public purpose to conclude that R2 land is “developable” and “non developable”. That is, he took into account the “time, cost and risk of developing that land”, as he should have, but did not actually apply it. Mr Hollinshead had not sought to isolate any costs, nor determine the time, and he appears to have considered that the “risk” was not about what the R2 would be zoned, because the planners had agreed that that would have occurred in 2010, so that it would be known to the market. The risk was about whether or not the land would be developed, not zoned, and that risk could not be “100%” based on the conceptual models and assumptions of Dr Martens, particularly where he had agreed in the joint report that an alternative regional scheme was possible, and when Mr Chambers said that this would have been locked in well before the date of acquisition in mid May 2010.
If the Court did not accept the applicants’ contentions concerning Council’s approach in relation to the value of R2 land said by Mr Hollinshead to be undevelopable, the applicants submitted that the rate should be the same as for the E2 land.

The applicants accepted that there ought to be an E2 rate applicable to the E2 area of 17,465m2 identified by Mr Haskew. The dispute about this rate was submitted to be straightforward, there being “very little” evidence on either side, and no evidence that could be relied on by the Court for the purpose of applying a value to E2 land. Mr Hollinshead’s reliance on the Box Hill sales GH7, GH8 and GH9 was submitted to be fanciful, Mr Hollinshead having conceded that these were not comparable sales in a comparable market. The adjustment of 15% by Mr Hollinshead equally had no basis in comparable sales as conceded by Mr Hollinshead in response to questions from the Acting Commissioner.
Where the Court is presented with no market evidence as to the value of E2 land, the applicants submitted that the Court would be correct to take guidance from previous authorities (namely, Constantine and Croghan v Blacktown City Council [15] (Croghan) in which the Court determined that the value of the E2 land was $80/m2), coupled with an allowance for time, as proposed by Mr Phippen. The Court would note Mr Hollinshead’s concession that Mr Phippen made a “good point” that E2 land that adjoins R2 land has additional value as it can be used for ancillary uses. The Court would also note Mr Hollinshead’s concession that E2 land has value to a developer in that it can be used for flood mitigation and other permissible uses for the purposes of developing it and the neighbouring R2 land.
Mr Hollinshead set a baseline for the value of E2 land of $52 to $62 per m2 (being the rates derived by Mr Hollinshead from his analysis of sales GH7, GH8 and GH9) which Mr Hollinshead then adjusted down. The applicants submitted that the Court would reject this baseline, and start with a baseline of $80 per m2 as accepted in Constantine and Croghan, faced with the similar problem of having to value E2 land with a shortfall of sales evidence. This number would then be adjusted upwards in light of the passage of time, the ancillary benefits and value of E2 land adjoining R2 land, and the valuable permissible uses that a developer could make of the E2 land for flood mitigation and other engineering works. The Court would therefore accept Mr Phippen’s valuation of $180 per m2 for E2 land.

Council identified the key area of dispute between the parties in relation to value as whether the acquired land should be valued purely according to its zoning (Phippen), or by reference to its developability (Hollinshead). In relation to this issue, the position of both valuers was “set” by the evidence of the hydrologists, Mr Bewsher for the applicants contending that all water management issues would have been resolved as at the acquisition date, and Dr Martens assuming a stand-alone development scenario.
The applicants were critical of Mr Hollinshead’s approach to valuation for two reasons: first, what they said to be a lack of market evidence in relation to the tripartite approach; and second, in relation to the evidence of Dr Martens which provided the data for Mr Hollinshead’s areas. Council had addressed this second reason in relation to the developability issue, and the Court would not reject the evidence of Dr Martens for the reasons there outlined. In relation to the first reason, Council submitted that the applicants’ criticisms were unfounded for three reasons.
First, nothing about a tripartite approach offends any element of the “Four As” discussed in Marroun at [196]-[197] (Sheahan J). Zoning is typically used by valuers in the “accumulation” step of the process to identify land that is potentially comparable, and it is also used in the “analysed” step. To suggest that the commentary in Marroun in relation to the second of the “Four As” requires a unitary rate to be derived is to misread the decision. In Marroun at [201], Sheahan J simply gives examples of common bases of measurement and comparison, a list which is not exhaustive. The cross-examination of Mr Hollinshead on the question of methodology made the variety of ways land may be valued clear, including valuation on a rate per yield basis or a rate per m2/ha basis. Mr Hollinshead agreed that there is a stronger linear relationship between price per m2 than there is for yield for lot.
Second, it was not surprising that there was no sales evidence of en globo R2 zoned land that is undevelopable, and the absence of that sales evidence did not mean that the market’s analysis of en globo R2 zoned land did not account for its developability. Indeed, Mr Phippen approached the valuation of R2 zoned land as an expert in the matter of Croghan (and the Court adopted the approach) by valuing R2 zoned land based on it being flood free, flood liable but capable of being made flood free, and flood liable and undevelopable. Here, Mr Hollinshead provided market evidence that there is a differentiated price paid for R2 land that is fully developable and R2 land that requires fill. Those sales were the five agreed residential sales (unconstrained by flooding) (sales PP12, PP20, PP21, GH1 and GH2), and the two sales Mr Hollinshead relied upon as the foundation for his fill rate (sales GH3 and GH4). While those were not sales of en globo land with a mix of the two attributes, Mr Hollinshead appropriately conceded that the market evidence was not perfect, and acknowledged in cross-examination that he did not have any blended sales, but rather had en globo unconstrained sales and pure en globo constrained sales.
Third, Mr Hollinshead in cross-examination explained why he chose his method of valuation which was based on “his experience in dealing with developers in the area”. He accepted that if the advice to him at the acquisition date was that the acquired land was constrained by a hydrology problem, he would have to take that into account in his valuation. He also accepted that, all things otherwise being equal, there would be a difference in value between land that does not require fill, and land that does. Mr Phippen simply did not attempt to engage with the evidence of Dr Martens. However, Mr Phippen did accept in cross examination that if Mr Bewsher’s approach of saying all hydrology matters would be resolved by the date of acquisition, then his valuation would have to change.
Accordingly, Council submitted, it was not the applicants’ valuer who took issue with Mr Hollinshead’s tripartite approach to the valuation methodology, and it was well open to the Court to apply that methodology depending on its findings in relation to the underlying zoning issue and the developability issue. It was only if the Court can be satisfied that there would be no water management issues on the acquired land at the acquisition date, that any consideration could be given to valuing the acquired land purely by reference to zoning.

In relation to the three sales relied on by both valuers to determine an E2/undevelopable rate to be applied to the acquired land as large, finished lots in a subdivision (sales GH7, GH8 and GH9), Council noted that each had an elevated area for a house and a low area backing onto a creek line. Mr Hollinshead, doing the best he could with the available imperfect sales evidence, had analysed each sale by reference to the value of nearby finished house blocks (given that these sales were essentially large lot house blocks with obvious areas for a dwelling), and deducted that value from the overall purchase price to derive a value for the extra undevelopable area of land. Mr Hollinshead then made an adjustment to bring the value of the undevelopable land back to an en globo value to account for its otherwise finished purchase price. In doing this, he selected the developer margin of 15% that, in his experience, is typically used when undertaking a residential land valuation, and which takes the value of a finished subdivision, determined by gross realisations of the finished lots, and makes deductions for time, cost, risk, margin to derive an en globo land value.
Council noted that Mr Phippen also acknowledged that there was no real market for land zoned E2 in isolation. However, this did not mean that the method applied by Mr Hollinshead was not a sound way to derive a value for E2 land that does not often transact. Mr Phippen’s attempt at the same task was to adjust finished residential blocks by an en globo residential value (his $600/m2). This was submitted to be an inadequate adjustment to account for the residential component of the environmental sales, and Mr Hollinshead’s approach to be more sound.
Mr Phippen’s primary approach to determining the value of the E2 part of the acquired land was not to look at the sales evidence at all. During cross-examination, he “unreservedly rejected the approach taken by Mr Hollinshead to the environmental sales he otherwise agreed to include in the joint report”. Rather, he relied on the Court’s previous findings about the value of E2/undevelopable land. He took the finding in Constantine that such land is valued at $80/m2, and sought to adjust that rate for time. Assuming that the Court would look to the other decisions, Mr Phippen’s approach to adjusting the Court’s previous findings for time has been rejected; first in Constantine (which sought to adjust the Court’s findings in Caruso and Ors v Sydney Water Corporation [17] (Caruso)), and most recently in Croghan. In each of these cases, notwithstanding the effluxion of time since the dates of acquisition, the Court has applied a rate of $80/m2 to undevelopable land.
Accordingly, if the Court were to reject the approach taken by Mr Hollinshead to derive a market value of E2 land/undevelopable at $40/m2 and instead have regard to the Court’s previous decisions, there would be no justification for a rate of greater than $80/m2 being applied to the E2/undevelopable land.

As judicial valuer, I have adopted in calculating compensation the following mathematical approach (taking a hypothetical scenario involving the goods and services tax (GST)):
The amount of $1,100 comprises 10% GST.
Therefore, the amount of $1,100 is equal to 110%.
The amount of $1,100 which does not include 10% GST is $x equals 100%.
The algebraic equation is $1,100 multiplied by 100 equals $x multiplied by 110.
$110,000 equals $110x.
$110,000 divided by 110 equals $110x divided by 110.
Therefore x equals $1,000.
Put another way, $1,100 divided by 11 multiplied by 10 equals $1,000. [22]
The mathematical approach set out above results in a more liberal adjusted land value rate than that produced by the mathematical approach adopted by the expert valuers in this matter. On the approach adopted by the valuation experts, the total adjustment percentage is multiplied by the analysed unadjusted land value rate, and the resulting amount subtracted from the analysed unadjusted land value rate to derive the final adjusted land value rate (the expert valuers’ mathematical approach). The expert valuers’ mathematical approach is evident in the parties’ amended adjustments table reproduced at [88] above. Taking sale PP21, for example, Mr Phippen and Mr Hollinshead agreed that the unadjusted land value of PP21 was $475/m2. They both applied a -4.5% adjustment to sale PP21 to calculate an adjusted land value of $454/m2. This can be derived by calculating 4.5% of the unadjusted land value rate amount (that is, $475/m2 multiplied by 0.045 which equals $21.38) and subtracting this -4.5% adjustment from the unadjusted land value (that is, $475/m2 minus $21.38) to arrive at a final adjusted land value of $454/m2 (being $475/m2 minus $21.38 which equals $453.63/m2 which is then rounded up to $454/m2). By way of hypothetical illustration, the mathematical approach I adopt results in more liberal final amount of $455/m2 (accepting the expert valuers’ unadjusted land value of $475/m2 and their agreed adjustment of -4.5%, that is, $475/m2 multiplied by 10.45 divided by 10 equals $454.55, which is then rounded up to $455). By way of further illustration, applying the expert valuers’ mathematical approach to the hypothetical scenario involving GST above, a deduction of 10% GST from the unadjusted amount of $1,100 would result in a more conservative final estimate of $990 ($1100 multiplied by .10 = $110; $1100-$110 = $990), compared to my mathematical approach which results in a final amount of $1,000, after an adjustment of -10% is applied to the unadjusted amount of $1100.
I have therefore calculated the following adjustments applying the approach set out at [225] above to arrive at a more liberal estimate:
Following my adjustments to sales PP12, PP20, PP21, GH1 and GH2, the adjusted R2 land value rate for the acquired land is in the range of between $457/m2 and $505/m2.
Acting as judicial valuer, I adopt an adjusted R2 land value rate for the acquired land of $480/m2, when rounded.

The Box Hill sales, sales GH7 (14 Thorpe Way, Box Hill), GH8 (18 Thorpe Way, Box Hill) and GH9 (102 Longerenong Avenue, Box Hill), comprise both R2 and E2 zoned land components.
Mr Phippen does not appear to have made any adjustment for the R2 zoned component of these sales. Mr Hollinshead analysed the three sales using paired sales of smaller R2 zoned lots, namely unconstrained, flood free R2 zoned residential homesites in sales GH7, GH8 and GH9 which transact for around $1,725m2. The analysis by Mr Hollinshead does not appear to recognise the larger parts of those sales which are zoned R2. Mr Hollinshead’s calculations in relation to sale GH9 appears to be incorrect as the sale price of $1,425,000 less his adopted amount of $862,500 for the 500m2 of R2 zoned land derives an amount of $562,000 which, when divided by the remaining area of land of 6,707m2, equates to an average of $84/m2, when rounded (not $52/m2).
As set out above at [122], I have accepted Mr Chambers’ opinion in relation to the underlying area of the E2 zoned component of the acquired land as 19,702.6m2.
The areas of the E2 zoned land in sales GH7, GH8 and GH9 are:
GH7: 4,680m2 as recorded in the joint report of the valuation experts;
GH8: 3,947m2 as recorded in the joint report of the valuation experts; and
GH9: 3,964m2 as estimated by the Court and based on the site plan in Annexure 1 to the joint valuation report titled “Hollinshead additional environmental sales”.
I have made my own adjustments and analysis of these three sales as set out immediately below.
I have analysed sale GH7 as follows:
The part R2 zoned land in sale GH7 has an area of 2,190m2 or (2,190m2 divided by the total area of 6,870m2), or say 32% when rounded.
The part E2 zoned land in sale GH7 has an area of 4,680m2 or (4,680m2 divided by the total area of 6,870m2), or say 68% when rounded.
I have determined that 68% of the sale price ($1,210,000, contract date 13 May 2021: Annexure 1 to the joint report) is applicable to the part E2 zoned land in sale GH7.
68% x $1,210,000 = $822,800 divided by the E2 zoned part of the land of 4,680 m2 which derives a land value rate of say $176/m2 before any adjustments for direct comparison.
I have analysed sale GH8 as follows.
The part R2 zoned land in sale GH8 has an area of 2,160m2 or (2,160m2 divided by the total area of 6,107m2), or say 35% when rounded.
The part E2 zoned land in sale GH8 has an area of 3,947 m2 or (3,947m2 divided by the total area of 6,107m2) or say 65% when rounded.
I have determined that 65% of the sale price (of $1,210,000 sale date 13 May 2021) is applicable to the part E2 zoned land in sale GH8.
65% x $1,210,000 = $786,500 divided by the E2 zoned part of the land of 3,947m2 derives a land value rate of say $199/m2 (when rounded) before any adjustments for direct comparison.
I have analysed sale GH9 as follows.
The part R2 zoned land in sale GH9 has a Court estimated area of say 3,243 m2 or (3,243 m2 divided by the total area of 7,207 m2), or say 45% when rounded.
The part E2 zoned land in sale GH7 has a Court estimated area of 3,964m2 or (3,964m2 divided by the total area of 7,207m2) or say 55% when rounded.
The Court has determined that 55% of the sale price ($1,425,000 contract date 20 September 2021) is applicable to the part E2 zoned land in sale GH9.
55% x $1,425,000 = $783,750 divided by the E2 zoned part of the land of 3,964 m2 which derives a land value rate of say $198/m2 (when rounded) before any adjustments for direct comparison.
My adjustments to sales GH7, GH8 and GH9 for the purposes of direct comparison with the underlying E2 zoned component of the acquired land which has an adopted area of 19,702.6 m2 are set out in the table below, noting that:
each comparable sale has a rear boundary to a watercourse, namely, the Killarney Chain of Ponds, and is flood prone, as shown in Annexure 1 to the joint valuation report which Mr Hollinshead extracted from the GHD SEPP flood mapping; and
within each comparable sale is an R2 zoned area, elevated, away from the rear boundary which is not flood prone and fronts the street (Thorpe Way and Longerenong Avenue).

Wenkart v Blacktown City Council (No 2)

At a glance

Court

Decision date

Before

Catchwords

Source

Email me a plain-English brief of this case

Catchwords

Judgment

JUDGMENT

Introduction

Issues

Outcome

Procedural history

Agreed matters

First Ponds Creek

Relevant legislation

The Court as judicial valuer

Planning controls

The 28 April 2015 Mott Macdonald report

Evidence

Issues arising from the evidence

Town planning evidence

Hydrology evidence

The applicants’ hydrologist Mr Bewsher

Council’s hydrologist Dr Martens

The joint hydrology report and areas of disagreement between the hydrologists

Valuation evidence

Mr Phippen’s valuation evidence for the applicants

Mr Hollinshead’s valuation evidence for Council

Joint conferencing of the valuers and areas of disagreement between them

Ecological evidence

Issue 1: The relevant areas of the acquired land that would have been zoned R2 and E2 under the Growth Centres SEPP in May 2010, absent the public purpose

Applicants’ submissions in relation to the areas of the acquired land zoned R2 and E2

Council’s submissions in relation to the areas of the acquired land zoned R2 and E2

Conclusions in relation to the areas of the acquired land that would have been zoned R2 and E2 under the Growth Centres SEPP in May 2010 absent the public purpose

Issue 2: Whether part of the R2 zoned land would be “undevelopable”

Applicants’ submissions in relation to whether part of the R2 zoned land would be “undevelopable”

Council’s submissions in relation to whether part of the R2 zoned land would be “undevelopable”

Conclusions in relation to whether part of the R2 zoned land would be “undevelopable”

Issue 3: The monetary rates per m2 to apply to the categories of R2 and E2 zoned land

Applicants’ submissions in relation to the monetary rates

The methodology issue

The fifteen “concessions”

The value of the R2 “developable” land

The value of the R2 “developable with fill” land

The value of the R2 land said by Mr Hollinshead to be “undevelopable”

The value of the E2 or “undevelopable” land (and riparian land)

The applicants’ conclusions in relation to the market value of the acquired land

Council’s submissions in relation to the monetary rates

A “matter of concern” in relation to the evidence of the applicants’ valuer, Mr Phippen

A matter of method

Adjustment to sale PP20 (79-91 Boundary Road, Box Hill)

Analysis of environmental sales

Location adjustments

Size adjustments

The other “concessions”

The appropriate rate for the R2/developable land

The appropriate rate for the R2/developable with fill land

The appropriate rate for the E2/undevelopable land

Conclusions in relation to the monetary rates per m2 to apply to the categories of R2 and E2 zoned land

Mr Phippen’s evidence

Valuers’ adjustments to the sales evidence

Underlying areas

Characteristics of the R2 zoned area of the acquired land

Characteristics of the E2 zoned area of the acquired land

Adjustments for time for sales PP12, PP20, PP21, GH1 and GH2

Adjustments for location for sales PP12, PP20, PP21, GH1 and GH2

Adjustments for size and shape for sales PP12, PP20, PP21, GH1 and GH2

Other adjustments for sales PP12, PP20, PP21, GH1 and GH2:

Other adjustments for sales PP12, PP20, PP21, GH1 and GH2: part of the R2 zoned area of the acquired land is flood prone

Overall adjustments to sales PP12, PP20, PP21, GH1 and GH2

Comparable sales GH3 (134 Cranbourne Street, Riverstone) and GH4 (Lot 2, Moon Crescent, Schofields).

Comparable sales GH7, GH8 and GH9

Discount for in one line components

Conclusions as to the market value of the acquired land

Costs

Conclusion and orders

Endnotes