Land and Environment Court New South Wales Medium Neutral Citation: Sales and Ors v Transport for NSW (No 2) [2021] NSWLEC 96 Hearing dates: 12 – 16 October, 3 November, 8 December 2020 and 8 February 2021 (written submissions filed, 13 and 19 February 2021) Date of orders: 01 September 2021 Decision date: 01 September 2021 Jurisdiction: Class 3 Before: Robson J Decision: See orders at [279] Catchwords: VALUATION — Compulsory acquisition — Market value — Highest and best use — Statutory construction of environmental planning instruments — Residential subdivision — Valuation methodology — Injurious affection VALUATION — Compulsory acquisition — Disturbance — Legal costs Legislation Cited: Environmental Planning and Assessment Act 1979 (NSW), ss 3.28, 4.15 Interpretation Act 1987 (NSW), ss 5, 33 Land Acquisition (Just Terms Compensation) Act 1991 (NSW), ss 54, 55, 56, 59, 66 Liverpool Local Environmental Plan 2008 Roads Act 1993 (NSW) State Environmental Planning Policy (Western Sydney Employment Area) 2009, Sch 4, cll 3, 4, 8, 9, 10, 11, 12, 18, 23, 33A Cases Cited: 4nature Incorporated v Centennial Springvale Pty Ltd (2017) 95 NSWLR 361; [2017] NSWCA 191 Apokis v Transport for NSW (2020) 101 NSWLR 844; [2020] NSWCA 39 Boland v Yates Property Corporation Pty Ltd (1999) 74 ALJR 209; [1999] HCA 64 Brewarrana Pty Ltd v Commissioner of Highways (No 2) (1973) 6 SASR 541; (1973) 32 LGRA 170 Bronzel v State Planning Authority (1979) 21 SASR 513; (1979) 44 LGRA 34 Cassidy v Sydney Water Corporation [2008] NSWLEC 223 Closer Settlement Limited v The Minister (1942) 17 LGR (NSW) 62 Coastal Estates Pty Ltd v Bass Shire Council [1993] 2 VR 566; (1993) 79 LGERA 188 Commissioner of Police for New South Wales v Eaton (2013) 252 CLR 1; [2013] HCA 2 Commissioner of Succession Duties (SA) v Executor Trustee and Agency Company of South Australia Limited (1947) 74 CLR 358; [1947] HCA 10 Cranbrook School v Woollahra Municipal Council (2006) 66 NSWLR 379; [2006] NSWCA 155 Dan Wei Zheng v Roads and Maritime Services [2017] NSWLEC 77 DEM (Australia) Pty Ltd v Pittwater Council [2004] NSWCA 434; (2004) 136 LGERA 187 Eureka Operations Pty Ltd v Transport for New South Wales [2021] NSWLEC 41 Graham Trilby Pty Ltd v Valuer-General [2008] NSWLEC 217 Hastings Point Progress Association Inc v Tweed Shire Council [2009] NSWCA 285; (2009) 168 LGERA 99 Ironhill Pty Limited v Transgrid; Ironhill Management Pty Limited v Transgrid [2004] NSWLEC 700; (2004) 139 LGERA 398 ISPT Pty Ltd v Valuer General (NSW) [2009] NSWCA 31; (2009) 165 LGERA 25 Kelliher v Commissioner for Main Roads (No 2) [2015] WASC 478 Marrickville Council v Sydney Water Corporation [2013] NSWLEC 222 Maurici v Chief Commissioner of State Revenue (2003) 212 CLR 111; [2003] HCA 8 New South Wales Cremation Company Pty Limited v Valuer General [2016] NSWLEC 135 Penfold and Bracey v Health Administration Corporation [2009] NSWLEC 157 Penrith City Council v Dincel Construction System Pty Limited (No 4) [2021] NSWLEC 1 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28 Spencer v The Commonwealth (1907) 5 CLR 418; [1907] HCA 82 Sydney Water Corporation v Caruso [2009] NSWCA 391; [2009] 170 LGERA 298 Sydney Water Corporation v Marrickville Council [2014] NSWCA 438 SZTAL v Minister for Immigration and Border Protection; SZGTM v Minister for Immigration and Border Protection (2017) 262 CLR 362; [2017] HCA 34 Toveno Pty Ltd v Roads and Maritime Services [2014] NSWLEC 1266 Tovir Investments Pty Ltd v Waverley Council [2014] NSWCA 379 Turner v Minister of Public Instruction (1956) 95 CLR 245; [1956] HCA 7 Vilro Pty Ltd (In Voluntary Liquidation) v Roads and Traffic Authority NSW (No 3) [2010] NSWLEC 234; (2010) 179 LGERA 47 Wingecarribee Shire Council v De Angelis [2016] NSWCA 189 Woolworths Ltd v Pallas Newco Pty Ltd (2004) 61 NSWLR 707; [2004] NSWCA 422 Category: Principal judgment Parties: Nancy Eileen Sales (First Applicant) Paul Howard Roots (Second Applicant) Gail Elizabeth Borg (Third Applicant) Transport for NSW (Respondent) Representation: Counsel: P Tomasetti SC with A Pearman (Applicants) L Waterson with T Poisel (Respondent) Solicitors: MJO Legal (Applicants) Hunt & Hunt Lawyers (Respondent) File Number(s): 2018/00387274 Publication restriction: Nil Judgment 1. Nancy Eileen Sales, Paul Howard Roots and Gail Elizabeth Borg (collectively, 'applicants'), bring these proceedings pursuant to s 66 of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) ('Just Terms Act'), seeking compensation as a result of the compulsory acquisition on 23 February 2018 (the 'date of acquisition') of 3.482ha of land comprising Lot 5 in DP 1234822 at Luddenham ('Acquired Land') by Roads and Maritime Services (now Transport for NSW) ('Transport'). 2. The Valuer General of NSW determined the amount of compensation to be offered for the Acquired Land and based upon that valuation Transport offered the applicants total compensation in the sum of $4,263,150 comprising $4,155,000 for the market value of the Acquired Land (including injurious affection) at the date of acquisition and $108,150 for disturbance. The applicants objected to the amount of compensation offered and commenced these Class 3 proceedings on 17 December 2018. 3. In their "amended further further amended" points of claim filed 26 May 2021, the applicants seek total compensation in the sum of $8,042,000 (alternatively, $7,905,000) comprising $7,875,000 (alternatively $7,737,500) for the market value of the Acquired Land (including injurious affection) at the date of acquisition and $166,798.95 for disturbance. 4. In its "further amended" points of defence filed 28 May 2021, Transport contends for total compensation in the sum of $5,149,503.60 comprising $5,008,510 for the market value of the Acquired Land (including injurious affection) at the date of acquisition and $140,993.60 for disturbance. 5. With the agreement of the parties, I have made a number of findings that will subsequently be applied by the parties in a valuation process to determine the market value of the Acquired Land (including injurious affection) at the date of acquisition. Accordingly, upon receipt of the details of this valuation process, I will determine the total compensation to which the applicants are entitled. Background 1. At the date of acquisition, the applicants were the registered proprietors of the Acquired Land, as tenants in common in unequal shares. For the purpose of valuation, it is relevant to note that the Acquired Land formed part of a larger contiguous area of land that was owned by the applicants, either collectively or individually, which had an area of 12ha ('Parent Parcel'). After the acquisition of the Acquired Land an area of 8.518ha either collectively or individually owned by the applicants remained of the Parent Parcel ('Residue Land'). 2. The Acquired Land was acquired by Transport pursuant to the Just Terms Act for the purposes of the Roads Act 1993 (NSW), and in particular, the public purpose of upgrading and realigning The Northern Road (Stage 4) (which has since been constructed adjacent to the eastern boundary of the Residue Land), being a major road route to the proposed new Western Sydney Airport and surrounding "Aerotropolis". 3. An understanding of the physical relationship between the Parent Parcel and the Acquired Land (which is roughly a coffin-shaped pentagon) is gleaned from comparing the Parent Parcel (comprising Lot 1 in DP 90157, Lot 1 in DP 215715 and Lot 2 in DP 629074) and the Acquired Land (previously part of Lot 1 in DP 90157 and now comprising Lot 5 in DP 1234822) as shown in the following plans and in Annexure A to this judgment. Plan of Parent Parcel Plan of Acquired Land 1. The Parent Parcel is located within the local government area of Liverpool City Council ('Council'). At the date of acquisition, the Parent Parcel was located approximately 300m to the west of land on which it is proposed to develop the new Western Sydney Airport. To the north-west of the Parent Parcel is Luddenham village. 2. Relevantly for the purpose of valuation, at the date of acquisition the southern portion of the Parent Parcel (an area of 85,295m²), and accordingly the southern portion of the Residue Land (an area of 63,428m²), was zoned R2 Low Density Residential ('R2') under the Liverpool Local Environmental Plan 2008 ('LLEP') (land subject to the R2 zone is referred to as the 'Southern Land'). The northern portion of the Parent Parcel (an area of 34,705m²), and accordingly the northern portion of Residue Land (an area of 21,752m²), was zoned RU1 Primary Production zone ('RU1') under the LLEP (land subject to the RU1 zone is referred to as the 'Northern Land'). 3. For present purposes, it is sufficient to note that, at the date of acquisition, under the LLEP, development comprising a residential subdivision would be permitted in the R2 zone but would not be permitted in the RU1 zone. An extract from the zoning map (on which the lots comprising the Parent Parcel can be seen) from the LLEP at the date of acquisition follows. Extract from zoning map from the LLEP 1. The following plan more clearly depicts the location of the zone boundary between the RU1 zone and R2 zone under the LLEP (and therefore between the Southern Land and the Northern Land) on the Parent Parcel prior to the date of acquisition. 1. At the date of acquisition, and since January 2015, the Northern Land, while within the RU1 zone under the LLEP, was also part of a precinct ('Precinct 11') in the south-western extremity of the Western Sydney Employment Area ('WSEA'), being an area identified for future employment-related development and subject to the State Environmental Planning Policy (Western Sydney Employment Area) 2009 ('WSEA SEPP'). As the boundary of the WSEA follows the boundary between the Northern Land and the Southern Land, the Southern Land, which was in the R2 zone, was not within the WSEA. 2. The WSEA SEPP was made in 2009 with aims, inter alia, of promoting economic development and the creation of employment in the WSEA by providing for development including major warehousing, distribution, freight transport, industrial, high technology and research facilities, as well as coordinated planning and development of land in the WSEA. The WSEA SEPP provides development controls for the WSEA, including land use zoning. 3. While the WSEA SEPP provides for four discrete land use zones in the WSEA, at the date of acquisition, the WSEA SEPP mapped the Northern Land as "Unzoned Land", and cl 12 of the WSEA SEPP allowed innominate development on the unzoned land "with development consent". As will be seen, there is an issue between the parties as to whether at the date of acquisition the Northern Land would be considered to be able to be developed for residential subdivision under the WSEA SEPP. The statutory valuation task 1. The amount of compensation to which a person whose land has been compulsorily acquired is entitled is set out in s 54 of the Just Terms Act, as follows: 54 Entitlement to just compensation (1) The amount of compensation to which a person is entitled under this Part is such amount as, having regard to all relevant matters under this Part, will justly compensate the person for the acquisition of the land. … 1. Section 54 directs attention to the amount by which the owner of the land is worse off as a result of the compulsory acquisition. The market value of the land is a relevant consideration, but is not the only consideration, as s 55 of the Just Terms Act makes clear: 55 Relevant matters to be considered in determining amount of compensation In determining the amount of compensation to which a person is entitled, regard must be had to the following matters only (as assessed in accordance with this Division)— (a) the market value of the land on the date of its acquisition, (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) the disadvantage resulting from relocation, (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. 1. The "market value" of land is subsequently defined in s 56 of the Just Terms Act, as follows: 56 Market value (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. … 1. Noting the comments of Basten JA in Apokis v Transport for NSW (2020) 101 NSWLR 844; [2020] NSWCA 39 ('Apokis') at [36]-[44] regarding the role of the "judicial valuer", it is apt to note at this point that the statutory task the Court is undertaking is not to objectively determine the market value of the Acquired Land, but rather, in accordance with the terms of the legislation set out above, to determine the terms of the hypothetical transaction that would occur between the hypothetical purchaser and the hypothetical vendor of the Acquired Land at the date of acquisition. As will be seen, in these proceedings this involves judicial consideration of two discrete hypothetical transactions. 2. In this way, the statutory definition of market value picks up the hypothetical transaction described by the High Court in Spencer v The Commonwealth (1907) 5 CLR 418; [1907] HCA 82 ('Spencer') at 432, where Griffith CJ described the question for the Court as "[w]hat would a man desiring to buy the land have had to pay for it on that day to a vendor willing to sell it for a fair price but not desirous to sell?", and further indicated that the process required the Court to: "…put yourself as far as possible in the position of persons conversant with the subject at the relevant time, and from that point of view to ascertain what, according to the then current opinion of land values, a purchaser would have had to offer for the land to induce such a willing vendor to sell it…" Highest and best use 1. When assessing market value under s 56 of the Just Terms Act, the Court considers the "highest and best use" of the Acquired Land at the date of acquisition. 2. While the concept of "highest and best use" is not explicit in the statutory text, it has been incorporated by reference to the hypothetical transaction, and the terms on which this would occur, being, "…the fair price of the land, which a hypothetical prudent purchaser would entertain, if he desired to purchase it for the most advantageous purpose for which it was adapted": Spencer at 440-441 (Isaacs J). 3. The assessment of the "highest and best use" of land is "applicable to the land before the acquisition": Apokis at [68]. This is when, in the process of undertaking the hypothetical transaction, the parties would assess what the highest and best use of the land would be. Thus, the question for the Court is "to discover the value of the land to the dispossessed owner if put to its best use": Turner v Minister of Public Instruction (1956) 95 CLR 245; [1956] HCA 7 ('Turner') at 274. State of knowledge 1. In Spencer, the High Court adverted to the knowledge that can be attributed to the parties to the hypothetical transaction where Isaacs J at 441 indicated that the Court: "…must further suppose both to be perfectly acquainted with the land, and cognizant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property." 1. In Apokis at [36]-[47], Basten JA surveyed key cases since Spencer that engaged with the scope of knowledge that can be attributed to the parties to the hypothetical transaction. This includes cases such as ISPT Pty Ltd v Valuer General (NSW) [2009] NSWCA 31; (2009) 165 LGERA 25 at [4], where Allsop P recorded his doubt as to the aptness of the phrase "perfectly acquainted", a sentiment reflected by Basten J when he concluded, in terms which I consider are particularly apposite to these proceedings, that the reference to "perfectly acquainted" was unlikely to have been "intended to set a standard which would require an 11-day court hearing to determine the value of a largely undeveloped block of land of less than 80ha" and reiterated the need to focus on the statutory language: Apokis at [47]. 2. I remain cognisant of the above matters in my consideration of the issues in these proceedings. Summary of issues 1. As will be considered below, because the Acquired Land was not a discrete pre-existing parcel of land, the conventional "before and after" valuation method for determining the value of the Acquired Land has been adopted by both parties. This involves valuing the Parent Parcel as it existed immediately before the acquisition ('before scenario') by applying the statutory test and then applying the same test to the Residue Land after the acquisition ('after scenario'), where the value of the Acquired Land is assumed to be the difference between the two valuations. The before and after valuation method captures not only the market value of the Acquired Land at the date of acquisition, but also any increase or decrease in the market value of the Residue Land caused by the carrying out of the public purpose for which the Acquired Land was acquired. It also means that two hypothetical transactions are undertaken, the first in the before scenario, and the second in the after scenario. 2. While the before and after valuation method is agreed, the parties disagree about how the Parent Parcel and the Residue Land are to be valued, which, apart from differences between the valuers as to the actual valuation methodology to be adopted, also raises a number of questions of nicety regarding the highest and best use of the Parent Parcel and the Residue Land, including the precise nature and extent of the respective land's development potential as a residential subdivision. 3. Although it is agreed that the highest and best use of the Southern Land was residential subdivision, there is a disagreement (characterised by Transport as a "threshold dispute") between the parties as to whether, having regard to the interpretation and application of the LLEP and the WSEA SEPP, the highest and best use of any of the Northern Land at the date of acquisition was residential subdivision. This disagreement is relevant to the advice that the parties to the hypothetical transaction of the Parent Parcel in the before scenario, and the Residue Land in the after scenario, would receive about the Northern Land and would inform the terms upon which the hypothetical parties would transact. This affects the valuation of the Parent Parcel and the Residue Land, and accordingly the valuation of the Acquired Land under the Just Terms Act. 4. Transport maintains, and the applicants contest, that, at the date of acquisition, no part of the Northern Land could have been used for residential subdivision, such that no residential subdivision could have been undertaken on that part of the Parent Parcel in the before scenario or the Residue Land in the after scenario. Transport's position is that the highest and best use of the whole of the Northern Land (being 34,705m² in the before scenario and 21,752m² in the after scenario) was land banking for future employment purposes ('land banking') under the WSEA SEPP. As a result, any residential subdivision on the Parent Parcel and the Residue Land would be wholly contained within the boundaries of the Southern Land (being 85,295m² in the before scenario and 63,428m² in the after scenario). 5. Conversely, the applicants, although originally accepting that no part of the Northern Land could be used for residential subdivision pursuant to the LLEP, at the hearing of these proceedings contended that the effect of the WSEA SEPP was that the Northern Land, even though mapped as "unzoned land" thereunder, was available for residential subdivision. Given this, the applicants' primary position was that the highest and best use of all of the land in the Parent Parcel and the Residue Land (including the Northern Land) was for residential subdivision (being 120,000m² in the before scenario and 85,180m² in the after scenario). 6. In the alternative, the applicants contend that if the residential subdivision was confined to the Southern Land, roads and other infrastructure associated with this residential subdivision (being 'Ancillary Facilities') could, in any event, be located on the Northern Land. As a result, the applicants' alternative position is that the highest and best use of the Southern Land was residential subdivision (being 85,295m² in the before scenario and 63,428m² in the after scenario); that the highest and best use of part of the Northern Land was for Ancillary Facilities for this residential subdivision (being 10,105m² in the before scenario and 7,052m² in the after scenario); and that the highest and best use of the remainder of the Northern Land was land banking (being 24,600m² in the before scenario and 14,700m² in the after scenario). 7. Two further (essentially town planning) issues arise in relation to the residential subdivision that could be developed on the Parent Parcel and the Residue Land, centering around the "lot yield" and cost of the residential subdivision. Given the importance of lot yield to one of the competing valuation methodologies put forward by the parties, the hypothetical development method ('HDM'), the resolution of these issues is particularly important if the HDM is adopted. 8. The town planning issues include, first, the appropriate provision for public open space in the residential subdivision in the before scenario and the after scenario and the impact of this public open space on lot yield (where the applicants maintain that, given the availability of public open space in the locality, lot yield would not be significantly affected by a requirement for public open space); and second, the type of physical treatment on the eastern boundary of the Residue Land likely to be required for a residential subdivision in the after scenario (essentially whether a 1.8m high timber boundary fence ('1.8m fence'), as contended for by Transport is appropriate or whether, as the applicants contend, a 5m high masonry wall ('5m wall') would be required). 9. Despite accepting that the before and after valuation method was generally appropriate, the parties disagreed about the valuation methodology by which the Parent Parcel and the Residue Land were to be valued, with the applicants' valuer adopting the HDM as his valuation methodology and Transport's valuer adopting the "comparable sales approach" or "direct comparison approach" ('DCA') as his primary valuation methodology and then adopting the HDM as a secondary "check" methodology. 10. Transport's position is that the DCA is the more appropriate valuation methodology because there are sales of englobo land zoned to allow residential subdivision which are reliably comparable to that part of the Parent Parcel and the Residue Land where the highest and best use is residential subdivision. The applicants dispute this on the basis that the identified sales of englobo land are not sufficiently comparable to support the use of the DCA, as the extent of the adjustments required when using the DCA undermines the valuation methodology. 11. The applicants' position is that the HDM is the appropriate valuation methodology because (on their submission, the whole of) the Parent Parcel and the Residue Land are ripe for residential subdivision. Transport maintains that the use of the HDM, either as the sole valuation methodology or as a secondary "check" methodology, requires the input of a number of variables (about which there is dispute), that these variables are determined using a subjective and opinionative process, and as such the HDM has potential to provide an unreliable indicator of market values. 12. Two further valuation issues arise, the first being the appropriate approach to "hurdle rates" in the Estate Master development feasibility program ('Estate Master program') which is utilised in HDM valuation methodology, including the quantum of the hurdle rates (where the applicants submit that both the internal rate of return ('IRR') and profit and risk margin ('P+R Margin') should be considered, while Transport submits that the IRR is the appropriate hurdle rate). The second issue is whether an allowance for injurious affection needs to be made in the after scenario, on the basis that there is a decrease in the value of the Residue Land as a result of carrying out the public purpose (where Transport's primary position is that no allowance would be made for injurious affection as the physical treatment on the eastern boundary of the Residue Land would adequately mitigate the impacts of the road, while the applicants claim that a −5% reduction in the average gross realisation of all lots should be applied where some, but not all, physical treatments on the eastern boundary of the Residue Land are likely to be required. 13. Finally, there remained an issue in relation to the applicants' claim for loss attributable to disturbance arising from the acquisition. At hearing, the applicants' final claim in the sum of $166,798.95 was mostly accepted by Transport except for a discrete claim, in the sum of $25,805.35, being the cost incurred by the applicants for expert town planning advice and a report obtained prior to the commencement of these proceedings. 14. Given the above, at the completion of the hearing, the parties' respective positions as to the compensation to which the applicants are entitled under the Just Terms Act are as follows: Applicants' Applicants' Transport's Heads of Compensation Position Alternative Position Position Sections 55(a) and 55(f) – Market Value and Injurious $7,875,000 $7,737,500 $5,008,510 Affection Section 59(1)(a) – Legal fees $107,178.66 $107,178.66 $81,373.31 Section 59(1)(b) – Valuation fees $59,620.29 $59,620.29 $59,620.29 $8,041,798.95 $7,904,298.95 Total rounded to rounded to $5,149,503.60 $8,042,000 $7,905,000 1. The Court was invited to determine the issues raised in these proceedings in a manner which would facilitate the parties applying the Court's findings in the valuation process to determine the market value of the Acquired Land (including injurious affection) at the date of acquisition and accordingly the total compensation to which the applicants are entitled. That approach has been adopted. Evidence 1. The hearing proceeded over eight days and the Court received extensive expert evidence in the fields of town planning, engineering, and valuation. I was assisted in hearing the proceedings by Acting Commissioner Knight in accordance with s 37 of the Land and Environment Court Act 1979 (NSW). 2. In relation to the primary issues noted above, the applicants relied upon town planning evidence of Stephen Connelly and valuation evidence of Paul Dale; and Transport relied upon town planning evidence of Anthony Rowan and valuation evidence of Grahame Hollinshead. Each expert gave evidence of the advice that would have been given to the vendor and purchaser in the hypothetical transactions. 3. Although the Court also received detailed engineering and development costing evidence from Aman Kalsi and Terry Hams, which was utilised by the valuers, the parties reached agreement as to the requirement for, and cost of, a number of matters relating to the works involved in the development of residential subdivisions on the Parent Parcel and the Residue Land. Town planning – WSEA 1. Although the primary question for the Court in these proceedings involves the valuation of land, it is appropriate that the disagreement between the parties in relation to the advice that the parties to the hypothetical transactions would receive regarding the interpretation and application of the LLEP and the WSEA SEPP and the resulting highest and best use of any of the Northern Land be resolved, given the implications for the valuation of the Parent Parcel and the Residue Land, and accordingly, the valuation of the Acquired Land under the Just Terms Act. This requires consideration of the applicable planning instruments and the likely view of the consent authority, being Council, as to the development of the Northern Land. 2. It is agreed that at the date of acquisition, the hypothetical parties would have received advice and transacted on the basis that the Southern Land was ripe for residential subdivision, and that Council would grant development consent for residential subdivision on land zoned R2, such that the highest and best use of the Southern Land as part of both the Parent Parcel and the Residue Land was residential subdivision. 3. Given this, the question is whether the parties to the hypothetical transactions would transact on the basis that the highest and best use of the Northern Land was residential subdivision, both in the before scenario and the after scenario. As outlined above, the Northern Land was subject to the RU1 zone under the LLEP (pursuant to which residential subdivision was prohibited) and also mapped as "unzoned land" under the WSEA SEPP at the date of acquisition. 4. The parties provided detailed submissions in relation to the interpretation and application of cl 12 of the WSEA SEPP to the Northern Land. In summary, the applicants' primary position is that cl 12(1) of the WSEA SEPP (which provided that "[d]evelopment may be carried out on unzoned land only with consent") operated to permit development for any purpose, including residential subdivision, on the Northern Land with development consent. The applicants submit that cl 12(2) (which requires the consent authority to consider impact on adjoining zoned land, and be satisfied the development is appropriate and compatible with land uses on any such adjoining zoned land, prior to granting development consent) should be interpreted by reference to the adjoining R2 zoned Southern Land (under the LLEP) and is accordingly satisfied, such that residential subdivision would be allowed on the whole of the Northern Land. The applicants' alternative position is that Ancillary Facilities for a residential subdivision on the Southern Land could be located on the Northern Land. 5. In contrast, Transport, while accepting that cl 12(1) of the WSEA SEPP permitted development for any purpose, including residential subdivision, with development consent, contends that cl 12(2) only refers to physically adjoining land that is itself zoned under the WSEA SEPP, with the result that the requirements would not be satisfied by a residential subdivision and development consent for a residential subdivision would not be granted on the Northern Land. Transport further contends that, even if this was not the case, development consent would not be granted for a residential subdivision of the Northern Land because this use would be antithetical to the aims of the WSEA SEPP, which are to preserve the whole of the WSEA (including the Northern Land) for future employment purposes. 6. Apart from the legal submissions considered below, the Court received extensive and differing town planning evidence in relation to the interpretation and application of the WSEA SEPP and the LLEP, and accordingly, the highest and best use of the Northern Land. The town planners proffered various development scenarios across the Parent Parcel and the Residue Land, which differed in the nature and extent of the residential subdivision that would be undertaken, and a number of these scenarios were considered by the valuers. In summary, the applicants' town planner, Mr Connelly, considering that cl 12(2) of the WSEA SEPP authorised residential subdivision to be carried out on the Northern Land with development consent, located a residential subdivision across the Northern Land. Mr Connelly also prepared an alternative residential subdivision layout confining the residential subdivision to the Southern Land but locating Ancillary Facilities on the Northern Land. Transport's planner, Mr Rowan, took the view that cl 12(2) of the WSEA SEPP would not support a residential subdivision being developed on the Northern Land, and located his residential subdivision and Ancillary Facilities entirely within the R2 zoned Southern Land. The application of the WSEA SEPP 1. Before considering the parties' positions in further detail, it is convenient to note the relevant provisions of the WSEA SEPP applicable at the date of acquisition, noting that cl 12 was subsequently repealed on 11 June 2020, as follows: Part 1 Preliminary … 3 Aims of Policy (1) This Policy aims to protect and enhance the land to which this Policy applies (the Western Sydney Employment Area) for employment purposes. (2) The particular aims of this Policy are as follows: (a) to promote economic development and the creation of employment in the Western Sydney Employment Area by providing for development including major warehousing, distribution, freight transport, industrial, high technology and research facilities, (b) to provide for the co-ordinated planning and development of land in the Western Sydney Employment Area, (c) to rezone land for employment or environmental conservation purposes, (d) to improve certainty and regulatory efficiency by providing a consistent planning regime for future development and infrastructure provision in the Western Sydney Employment Area, (e) to ensure that development occurs in a logical, environmentally sensitive and cost-effective manner and only after a development control plan (including specific development controls) has been prepared for the land concerned, (f) to conserve and rehabilitate areas that have a high biodiversity or heritage or cultural value, in particular areas of remnant vegetation. 4 Land to which Policy applies This Policy applies to the land identified on the Land Application Map. Note. The Land Application Map shows the subject land divided into the following precincts: … (j) Precinct 11 (Broader Western Sydney Employment Area). … 6 Consent authority For the purposes of this Policy, the consent authority for development of land to which this Policy applies is, subject to the Act, the council (referred to in this Policy as the relevant council) of the local government area in which the land is situated. Note. The approval of the Minister may also be required for the carrying out of development referred to in Part 3A of the Act (Major infrastructure and other projects). … 8 Relationship to other environmental planning instruments (1) State Environmental Planning Policy No 1—Development Standards does not apply to the land to which this Policy applies. (2) This Policy to prevail over LEPS In the event of an inconsistency between this Policy and a local environmental plan or deemed environmental planning instrument that applies to the land to which this Policy applies, this Policy prevails to the extent of the inconsistency. Part 2 Permitted or prohibited development 9 Land use zones The land use zones under this Policy are as follows: (a) IN1 General Industrial, (b) IN2 Light Industrial, (c) E2 Environmental Conservation, (d) SP2 Infrastructure. 10 Zoning of land to which Policy applies For the purposes of this Policy, land is within the zones shown on the Land Zoning Map. 11 Zone objectives and land use table (1) The Table at the end of this clause specifies for each zone: (a) the objectives for development, and (b) development that may be carried out without consent, and (c) development that may be carried out only with consent, and (d) development that is prohibited. (2) The consent authority must have regard to the objectives for development in a zone when determining a development application in respect of land within the zone. … … 12 Unzoned land (1) Development may be carried out on unzoned land only with consent. (2) Before granting consent, the consent authority: (a) must consider whether the development will impact on adjoining zoned land and, if so, consider the objectives for development in the zones of the adjoining land, and (b) must be satisfied that the development is appropriate and is compatible with permissible land uses in any such adjoining land. … Part 4 Development Control Plans 18 Requirement for development control plans (1) Except in such cases as the Director-General may determine by notice in writing to the consent authority or as provided by clause 19, the consent authority must not grant consent to development on any land to which this Policy applies unless a development control plan has been prepared for that land. (2) The requirements specified in Schedule 4 apply in relation to any such development control plan. … … Part 5 Principal development standards … 23 Development adjoining residential land (1) This clause applies to any land to which this Policy applies that is within 250 metres of land zoned primarily for residential purposes. (2) The consent authority must not grant consent to development on land to which this clause applies unless it is satisfied that: (a) wherever appropriate, proposed buildings are compatible with the height, scale, siting and character of existing residential buildings in the vicinity, and (b) goods, plant, equipment and other material resulting from the development are to be stored within a building or will be suitably screened from view from residential buildings and associated land, and (c) the elevation of any building facing, or significantly exposed to view from, land on which a dwelling house is situated has been designed to present an attractive appearance, and (d) noise generation from fixed sources or motor vehicles associated with the development will be effectively insulated or otherwise minimised, and (e) the development will not otherwise cause nuisance to residents, by way of hours of operation, traffic movement, parking, headlight glare, security lighting or the like, and (f) the development will provide adequate off-street parking, relative to the demand for parking likely to be generated, and (g) the site of the proposed development will be suitably landscaped, particularly between any building and the street alignment. … Part 6 Miscellaneous provisions … 33A Development near zone boundaries (1) The objective of this clause is to provide flexibility where the investigation of a site and its surroundings reveals that a use allowed on the other side of a zone boundary would enable a more logical and appropriate development of the site and be compatible with the planning objectives and land uses for the adjoining zone. (2) This clause applies to so much of any land that is within the relevant distance of a boundary between any 2 zones. The relevant distance is 50 metres. (3) This clause does not apply to: (a) land zoned E2 Environmental Conservation, or (b) land within the coastal zone, or (c) land proposed to be developed for the purpose of sex services or restricted premises. (4) Despite the provisions of this Policy relating to the purposes for which development may be carried out, consent may be granted to development of land to which this clause applies for any purpose that may be carried out in the adjoining zone, but only if the consent authority is satisfied that: (a) the development is not inconsistent with the objectives for development in both zones, and (b) the carrying out of the development is desirable due to compatible land use planning, infrastructure capacity and other planning principles relating to the efficient and timely development of land. (5) The clause does not prescribe a development standard that may be varied under this Policy. … Applicants' position 1. The applicants submit that the WSEA SEPP did not prohibit a residential subdivision on "unzoned land" at the date of acquisition, and that such development was governed by cl 12. Accordingly, subject to the consideration of any impact on adjoining zoned land and the objectives for development in those zones, and being satisfied that the development was appropriate and compatible with permissible uses on any adjoining land that was zoned (as required by cl 12(2)), a consent authority could grant consent for a residential subdivision under the WSEA SEPP. The applicants contend that the consent authority would be satisfied that a residential subdivision on the Northern Land would be entirely consistent with the objectives for development of the Southern Land which is zoned R2 under the LLEP. Thus, the parties to the hypothetical transactions would transact on the basis that the highest and best use of the Northern Land both as part of the Parent Parcel in the before scenario and as part of the Residue Land in the after scenario would be a residential subdivision. 2. The applicants contend that the fact that the Northern Land is "unzoned land" under the WSEA SEPP and that cl 12 permits development for any purpose on unzoned land with development consent (noting the qualifications in cl 12(2)), while under the LLEP, the Northern Land is zoned RU1 which would not permit residential subdivision, means there is inconsistency between the LLEP and the WSEA SEPP. Pursuant to cl 8 of the WSEA SEPP, the WSEA SEPP prevails over the LLEP. 3. The applicants submit that "unzoned land" in an environmental planning instrument (such as the WSEA SEPP) cannot be likened to "deferred land" in an environmental planning instrument, as while the environmental planning instrument controls unzoned land but does not purport to zone it, the environmental planning instrument does not control nor zone deferred land. The applicants submit that the WSEA SEPP controls unzoned land in the WSEA such as the Northern Land and requires development consent for development, creating an inconsistency between the WSEA SEPP and the LLEP, where the provisions of the WSEA SEPP prevail, citing DEM (Australia) Pty Ltd v Pittwater Council [2004] NSWCA 434; (2004) 136 LGERA 187 at [6]-[7]; Hastings Point Progress Association Inc v Tweed Shire Council [2009] NSWCA 285; (2009) 168 LGERA 99. 4. The applicants submit that where the WSEA SEPP prevails over the LLEP, the planning controls in the WSEA SEPP will apply to ensure that any development occurs in a logical, environmentally sensitive, and cost-effective manner. The applicants note that pursuant to cl 18 of the WSEA SEPP, a development control plan ('DCP') must be prepared for any land to be developed (unless there is an exception determined by the Director-General) and any such DCP must include specific development controls and comply with Sch 4 of the WSEA SEPP. 5. In the above circumstances, the applicants submit that to the extent that this Court in Penrith City Council v Dincel Construction System Pty Limited (No 4) [2021] NSWLEC 1 ('Dincel') held that cl 12 of the WSEA SEPP did not override a discrete prohibition on development under the Penrith Local Environmental Plan 2010 and there was therefore no inconsistency (so as to raise the operation of cl 8 of the WSEA SEPP), that case was wrongly decided and should not be followed. In that case, the Court did not accept an argument that because the WSEA SEPP allowed any development, and the Penrith Local Environmental Plan 2010 prohibited some forms of development, the planning instruments were inconsistent. Rather, the Court held that until the repeal of cl 12 of the WSEA SEPP, the use of certain land at Kemps Creek zoned RU2 Rural Landscape under the Penrith Local Environmental Plan 2010 and used for earthworks (and/or a warehouse/distribution centre), which was prohibited under the Penrith Local Environmental Plan 2010, continued to be prohibited under the WSEA SEPP. 6. Turning to the requirements in cl 12(2) of the WSEA SEPP, the applicants submit that the reference to "adjoining zoned land" in cl 12(2)(a) does not simply refer to adjoining land zoned pursuant to the WSEA SEPP, but also applies to adjoining land zoned under the LLEP. The applicants note that at the date of acquisition, much of the land the subject of the WSEA SEPP was in fact unzoned. Given this, the focus of cl 12(2) is that development on the "unzoned land" must be "compatible" with the objectives on land which adjoins the unzoned land, and which is zoned. Applying this interpretation, the applicants submit that the development of the unzoned Northern Land for residential subdivision is not incompatible with the objectives of the physically adjoining R2 zoned Southern Land and that Council would be comfortable granting development consent for a residential subdivision on the Northern Land as the criteria in cl 12(2) of the WSEA SEPP is (or would be) satisfied. 7. In support of their position, the applicants make the following submissions. First, even though land is not zoned for residential purposes under the WSEA SEPP, cl 23 specifically applies to land that is within 250m of "land zoned primarily for residential purposes" such that cl 23 must refer to land outside the WSEA SEPP, and land zoned under an instrument other than the WSEA SEPP. Further, where the Northern Land is within 250m of the Southern Land, which is zoned primarily for residential purposes, the requirements of cl 23 of the WSEA SEPP would be satisfied by residential subdivision of the Northern Land. 8. Second, cl 33A of the WSEA SEPP provides flexibility where a use that is allowed "on the other side of a zone boundary would enable a more logical and appropriate development", by allowing development consent to be granted to development for any purpose that may be carried out in the adjoining zone. The applicants submit that the reference to "adjoining zone" is not only a reference to land zoned under the WSEA SEPP, given the reference to land within the coastal zone (which is not a zone under the WSEA SEPP), when limiting the application of the clause. 9. The applicants also contend that general planning principles and other provisions in the WSEA SEPP support their position. They submit that the "impediments" facing an applicant seeking residential subdivision of the unzoned land raised by Mr Rowan would not be accepted, as the requirement for a DCP to be prepared for the land to be developed in cl 18 of the WSEA SEPP, could be satisfied by the making of a concept development application under the Environmental Planning and Assessment Act 1979 (NSW) ('EPA Act'), and the requirement to provide information in Sch 4 of the WSEA SEPP would not be a significant disincentive to securing a residential subdivision of the Northern Land under the WSEA SEPP. 10. Finally, the applicants submit that the parties to the hypothetical transactions would have been advised that to develop the Southern Land without developing the Northern Land would leave a strip of unzoned land of an irregular and narrow shape. This would not constitute orderly development. For that reason, a residential subdivision of the unzoned Northern Land is likely to be permitted. 11. In summary, the applicants submit that the parties to the hypothetical transactions, acting prudently and being fully informed (as discussed above), would conclude there was no planning reason not to permit a residential subdivision on the Northern Land, and thus, across the entirety of the Parent Parcel in the before scenario and the Residue Land in the after scenario. In those circumstances, the Court would find that the whole of the Parent Parcel would provide a lot yield of 124 lots in the before scenario and the whole of the Residue Land would provide a lot yield of 79 lots in the after scenario (without taking into account, as considered below, the resolution of additional town planning issues including the requirement for additional open space and/or a physical treatment on the eastern boundary of the Residue Land in the after scenario, which are discussed below). 12. In the alternative, the applicants submit that even if the Northern Land could not be used for residential subdivision, Ancillary Facilities for a residential subdivision could be located on the Northern Land. The applicants point to the fact that Council granted a development consent in 2005 for the 108-lot community title residential subdivision on the Parent Parcel ('2005 development consent') which provided for the location of certain works related to the residential subdivision (including a sewage treatment facility, stormwater detention basin, and a road) on that part of the Parent Parcel which was zoned "1(a) Rural" under the then current local environmental plan, and is now zoned RU1 under the LLEP. At that time, the R2 zoned Southern Land was considered the "last piece of englobo R2 zoned land at Luddenham". The applicants submit that this would "bear upon" the minds of the parties to the hypothetical transactions, such that they would be satisfied that Council would grant development consent for Ancillary Facilities on the Northern Land. Transport's position 1. Transport accepts that cl 12(1) of the WSEA SEPP permits development for any purpose (including residential subdivision) on the Northern Land with development consent, with the apparent result that it accepts the WSEA SEPP prevails over the LLEP due to inconsistency. 2. However, Transport does not accept the applicants' position that the Northern Land could be developed as a residential subdivision. This is because first, cl 12(2) only applies to physically adjoining land that is zoned under the WSEA SEPP; and second, in any event, the satisfaction of the criteria in cl 12(2) does not automatically lead to development consent for a residential subdivision being granted by Council, in circumstances where a residential subdivision is antithetical to the aim of the WSEA SEPP to preserve the whole of the WSEA for future employment purposes. 3. Transport takes the same view in relation to the applicants' alternative position regarding Ancillary Facilities being located on the unzoned Northern Land, suggesting that this would not be approved because the sole purpose of the Ancillary Facilities would be to service the residential subdivision on the Southern Land rather than support the employment purposes of the WSEA. As a result, the parties to the hypothetical transactions would be advised that the highest and best use of the Northern Land was for land banking. 4. Transport's first argument is that the reference to "adjoining zoned land" (in cl 12(2)(a) of the WSEA SEPP) relates to land discretely zoned under the WSEA SEPP that adjoins the "unzoned land" the subject of cl 12(1). In the circumstances before the Court, while the R2 zoned Southern Land physically "adjoins" the Northern Land, it is not "adjoining zoned land" (emphasis added) for the purposes of cl 12(2) because it has not been zoned as one of the land use zones specified under the WSEA SEPP. Transport provides a number of submissions to support this contention: first, the WSEA SEPP only applies to land identified in the "Land Application Map" (as per cl 4) which does not include the Southern Land; second, the WSEA SEPP contains a list of four "land use zones" in cl 9, none of which was equivalent to the R2 zone; third, pursuant to cl 10, the zoning of land under the WSEA SEPP is set out in the "Land Zoning Map", which does not include the Southern Land; and fourth, the "Land Use Table" in cl 11 contains specific objectives, and permitted and prohibited uses, within the four nominated land use zones. 5. Transport submits that cl 23 of the WSEA SEPP does not assist the applicants' position that the Southern Land constitutes "adjoining zoned land". Transport contends that while cl 23 mandates consideration of particular matters where development in the WSEA is to be located "within 250 metres of land zoned primarily for residential purposes", it is in this limited context in which the WSEA SEPP requires consideration of land outside the WSEA. In this respect, while cl 23 would apply to any proposed development on the Northern Land (and require consideration of land outside the WSEA and zoned under other instruments), this does not lead to, nor support, the proposition that a residential subdivision can be carried out within the WSEA itself. If this was the case, there would be a significant duplication or overlap between the considerations mandated by cll 23 and 12(2) (which would not arise if "adjoining zoned land" under cl 12(2) was limited to land zoned under the WSEA SEPP, where the WSEA SEPP does not contain a residential zone). 6. Transport submits that another factor militating against the applicants' position is the incongruous consequence, if, as the majority of land in the WSEA was "unzoned land" at the date of acquisition, this land could be used for any purpose no matter how inconsistent with the employment-based aims of the WSEA SEPP, so long as the land was physically proximate to other land and the use was consistent with the zoning of that other land, thereby rendering the boundaries of the WSEA "illusory". In contrast, Transport's interpretation of cl 12(2) has no such incongruous consequences and is consistent with the aims of the WSEA SEPP. Where development is proposed in unzoned land in physical proximity to other parts of the WSEA that are already zoned under the WSEA SEPP, it is appropriate to mandate consideration of the consistency of the proposed development with particular objectives of those adjoining zones. 7. If, contrary to Transport's contention, the Court accepts the applicants' interpretation of cl 12(2) and finds that the R2 zoned Southern Land constitutes "adjoining zoned land", Transport's second argument is that, even if the criteria in cl 12(2) are satisfied, they are not exhaustive of the matters that must be considered by the consent authority when deciding whether to grant development consent. Council, as the consent authority, would be required to consider the "Matters of consideration" under the former s 79C (cf. now s 4.15) of the EPA Act, which includes the provisions of relevant environmental planning instruments, and this would militate against the grant of development consent. For example, the consent authority would consider the relevant provisions of the WSEA SEPP including the aims at cl 3. The use of the Northern Land for a residential subdivision is antithetical to those aims, for the following reasons: none of the aims of the WSEA SEPP refer to residential development; the use of the Northern Land for a residential subdivision would not protect the land for employment purposes and would not provide employment generating uses, nor allow for linkages between employment generating uses and the proposed airport; and would therefore, in effect, "shrink" the WSEA. Accordingly, Transport submits that the Court would prefer Mr Rowan's evidence to the effect that the inconsistency between the aims of the WSEA SEPP and a residential subdivision renders it "near impossible" to obtain development consent for a residential subdivision on the Northern Land. 8. Transport contends that pursuant to cl 18 of the WSEA SEPP, for development consent to be granted for any use of the Northern Land (absent a written exemption from the Director-General), a DCP or alternatively a concept development consent under the EPA Act, where the concept plan is prepared in accordance with Sch 4 of the WSEA SEPP, would be required. At the date of acquisition, no DCP had been prepared. Transport submits that neither an exemption from the Director-General nor a concept development consent would be able to be obtained for residential subdivision of the Northern Land, for the following reasons: 1. Mr Connelly's evidence was that the Director-General would take into account the aims of the WSEA SEPP in granting any exemption, such that an exemption would not have been forthcoming for the development of the whole of the Northern Land as a residential subdivision (however Mr Connelly opined that Ancillary Facilities on the Northern Land may have obtained an exemption); 2. Mr Connelly's evidence was therefore that it would have been necessary to obtain a concept development consent for the subdivision of the whole of the Northern Land under the EPA Act; 3. Mr Connelly accepted that the relevant provisions of the WSEA SEPP, including its aims, were matters for consideration when deciding whether to grant an application for concept development consent under the EPA Act; and 4. Transport submits that, accordingly, as a residential subdivision of the Northern Land is antithetical to the aims in the WSEA SEPP, a concept development application for such a development to satisfy cl 18 would not be approved. 1. In response to the applicants' reliance upon the 2005 development consent (wherein Council authorised the use of the Northern Land for associated infrastructure related to a community title residential subdivision), Transport submits that this development consent does not assist the applicants' position given that the WSEA SEPP did not exist at that time and has only applied to the Northern Land since 2015. 2. In summary, Transport submits that the parties to the hypothetical transactions would not have proceeded on the basis that the Northern Land could be used for a residential subdivision, or for Ancillary Facilities for a residential subdivision. Rather, that the highest and best use of the Northern Land was land banking. 3. Finally, Transport submits that the late adoption of the applicants' primary position regarding the highest and best use of the Northern Land militates against a finding by the Court that the parties to the hypothetical transactions would have been advised that the highest and best use of the Northern Land was a residential subdivision – as the parties to these proceedings initially proceeded on the basis of a different assumption, and this means that "a very basic and material matter" concerning the application of the WSEA SEPP had been overlooked or misunderstood. Consideration 1. The interpretation and application of the WSEA SEPP and LLEP to the Northern Land raises issues of statutory construction. As noted above, my consideration is undertaken in the context of the advice that the parties to the hypothetical transactions would receive. However, where those parties are attributed a state of knowledge (which is, if not "perfectly acquainted" with the land and cognisant of the circumstances that may affect its value, likely in any event to have been informed by advice in relation to the legally correct interpretation and application of the WSEA SEPP and LLEP to the Northern Land), it is appropriate to determine what the legally correct interpretation and application of the WSEA SEPP and LLEP to the Northern Land is, given the implications this has for the resulting highest and best use of the Northern Land and thus the valuation of the Parent Parcel and the Residue Land. 2. The applicable legal principles that I am to apply when undertaking the task of statutory construction are well known, however some initial brief comments can be made. The objective is to construe the relevant statutory provision so it is consistent with the language and purpose of the statue when considered as a whole: Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28 ('Project Blue Sky') at [69]. While ordinarily the legal meaning of the provision will reflect the grammatical meaning of the provision, in certain limited circumstances, the context of the words, the consequences of construction, the purpose of the statute, or the canons of construction may require the words of the provision to be read in a different way: Project Blue Sky at [78]; SZTAL v Minister for Immigration and Border Protection; SZGTM v Minister for Immigration and Border Protection (2017) 262 CLR 362; [2017] HCA 34 at [14]. 3. These general principles of statutory construction apply to the interpretation of environmental planning instruments such as the LLEP and the WSEA SEPP: Cranbrook School v Woollahra Municipal Council (2006) 66 NSWLR 379; [2006] NSWCA 155 at [36]. In this respect, while environmental planning instruments should be interpreted in a practical manner, this does not override general principles of statutory construction nor require "laxity or flexibility" in interpretation: Tovir Investments Pty Ltd v Waverley Council [2014] NSWCA 379 at [54]; Wingecarribee Shire Council v De Angelis [2016] NSWCA 189 at [20]; 4nature Incorporated v Centennial Springvale Pty Ltd (2017) 95 NSWLR 361; [2017] NSWCA 191 at [45]. This is also consistent with s 33 of the Interpretation Act 1987 (NSW) ('Interpretation Act'), which applies to environmental planning instruments by virtue of s 5(6), and requires a construction which promotes the purpose or object of an Act over one which would not. 4. A number of initial observations can be made about the WSEA SEPP by way of context. First, it is clear that the WSEA SEPP only "applies" to land identified on the "Land Application Map" referred to in cl 4 and this does not include the R2 zoned Southern Land. 5. Second, perusal of both the "Land Zoning Map" referred to in cl 10 of the WSEA SEPP and the "Land Application Map" (each of which overlays cadastral lot boundaries including the lots comprising the Parent Parcel) clearly shows that the boundary of the land subject to the WSEA SEPP followed the demarcation between the R2 zone and the RU1 zone under the LLEP on the Parent Parcel (shown at [11] and [12] above) and not the cadastral boundaries of the lots comprising the Parent Parcel. I consider that this approach to the boundary of the WSEA reflects an intentional decision on the part of the drafter. 6. Third, it is clear that the WSEA SEPP contains (in cl 9) an exhaustive list of the four "land use zones" applicable under the WSEA SEPP being: IN1 General Industrial; IN2 Light Industrial; E2 Environmental Conservation; and SP2 Infrastructure, and further, that there is no equivalent zoning under the WSEA SEPP to the R2 zone under the LLEP. 7. Fourth, the "Land Use Table" in cl 11 of the WSEA SEPP identifies with specificity the objectives for development, as well as development that may be carried out without consent, may be carried out with consent, and is prohibited, in each of the four land use zones. It is clear that the objectives for each of the four land use zones do not directly or indirectly reflect matters that would be expected in the objectives of a residential (or equivalent) zone (cf. the objectives in the R2 zone; R3 Medium Density Residential zone; R4 High Density Residential zone; and R5 Large Lot Residential zone under the LLEP). Further, aside from the objectives of the four land zones, the specified type of development which "may be carried out only with consent" in each of the four land use zones provides no indication of support for a residential subdivision in the WSEA. 8. Fifth, the "particular aims" in cl 3 of the WSEA SEPP are clearly contrary to, and in my view incompatible with, a residential subdivision in the WSEA. In this respect, I accept and adopt Transport's submissions summarised at [70] above. 9. Turning then to the interpretation and application of cl 12 of the WSEA SEPP, I find, as agreed between the parties, that at the date of acquisition cl 12 of the WSEA SEPP operated so as to permit any development on the Northern Land with development consent (where the requirements of cl 12(2) are complied with) and in this respect prevailed over the provisions of the LLEP which were inconsistent with this position, pursuant to cl 8 of the WSEA SEPP and/or the then s 36 (now s 3.28) of the EPA Act. Accordingly, although the LLEP did not permit residential subdivision in the RU1 zoned Northern Land, this is not determinative to my consideration of the highest and best use of the Northern Land. 10. Given the detailed submissions made, more particularly by the applicants, in relation to the interpretation and application of cl 12 of the WSEA SEPP, I do not consider Dincel and the reasoning therein in relation to cl 12 of the WSEA SEPP to be apt in the present proceedings (noting this reasoning was not relied on in granting relief in Dincel). Having regard to first, the explication of the purpose and context of cl 12 within the WSEA SEPP more generally; second, the treatment of unzoned land in environmental planning instruments; and third, the analysis of inconsistency arising between the specific provisions of the LLEP and the WSEA SEPP, to adopt the phrasing of Mason P in Woolworths Ltd v Pallas Newco Pty Ltd (2004) 61 NSWLR 707; [2004] NSWCA 422 at [137], "the matter does not appear to me now as it appears to have appeared to me then" such that I am satisfied that in the context of these proceedings an inconsistency arises between cl 12 of the WSEA SEPP and the LLEP, and therefore the WSEA SEPP prevails. 11. Accepting then that cl 12(1) of the WSEA SEPP regulates development on the Northern Land and may prima facie permit development for any purpose including residential subdivision (which would be prohibited under the LLEP), cl 12(2) requires consideration. 12. Although the wording of cl 12(2) of the WSEA SEPP is not pellucidly clear, for the reasons that follow, I find that the phrase "adjoining zoned land" in cl 12(2)(a) relates to zoned land within the WSEA (and identified in the "Land Application Map" under cl 4 and the "Land Zoning Map" under cl 10 of the WSEA SEPP) that adjoins the "unzoned land" referred to in cl 12(1). While acknowledging that the R2 zoned Southern Land "adjoins" the Northern Land in a physical sense, I accept Transport's submission that for the purposes of cl 12(2), the land must be adjoining land that is zoned under the WSEA SEPP. My reasons for this finding are as follows. 13. The reference to "adjoining zoned land" in cl 12(2)(a) must be considered in the context of the WSEA SEPP as a whole. Preceding the provision is the articulation of the actual land use zones provided for in the WSEA SEPP, and it follows that this expression refers to those land use zones earlier specified. In this respect, considering the structure of the clauses in the WSEA SEPP, cl 12 refers to "unzoned land" and, is preceded by cl 9 which specifically refers to "land use zones"; cl 10 which refers to "Zoning of land to which policy applies"; and cl 11, which relates to "Zone objectives and land use table" and which, as noted above, sets out in detail the objectives of the land use zones and specific development types. 14. Moreover, I do not accept that the WSEA SEPP should be interpreted in a manner which, leaving aside both the aims of the instrument itself and the discrete objectives of the land use zones in that instrument, requires the consent authority (in the present circumstances, Council) to simply consider the objectives of the R2 zone pursuant the LLEP. In this respect, there is a clear divergence between the aims of the WSEA SEPP which relate to protecting and enhancing the WSEA for employment purposes (in addition to the "particular" aims detailed in cl 3(2) of the WSEA SEPP), and the objectives of the R2 zone under the LLEP which include "[t]o provide for the housing needs of the community within a low density residential environment … [t]o provide a suitable low scale residential character commensurate with a low dwelling density … [t]o ensure that a high level of residential amenity is achieved and maintained". Taking into account the purpose of the WSEA SEPP, the interpretation of cl 12(2) which supports consideration of the objectives of the land use zones under the WSEA SEPP when considering the appropriateness of granting development consent for a development on land in the WSEA is to be preferred. 15. I accept Transport's contention that there would be an incongruous consequence if the unzoned land within the WSEA could be developed for a purpose which was inconsistent with the economic development and employment aims of the WSEA SEPP, simply because that land was physically proximate to other land not part of the WSEA and the intended development was consistent with the land use zoning of that other land under a different environmental planning instrument. Rather, for the reasons noted above, I consider that it is logical that development of unzoned land in the WSEA which is proximate to other land that has already been zoned under the WSEA SEPP, would require consideration of the consistency between that which is proposed on the unzoned land and the objectives of the land use zone under the WSEA SEPP of the adjoining land. 16. I have considered the submissions made by the applicants in relation to the effect of references to zoned land and adjoining zone in cll 23 and 33A of the WSEA SEPP. I accept Transport's position in relation to cl 23, being that it is in the limited context of cl 23 that consideration of land outside the WSEA and zoned under a different environmental planning instrument is required. I find that this interpretation promotes a harmonious result in the internal construction of the WSEA SEPP, and avoids the duplication or overlap between cll 12 and 23 identified by Transport: Project Blue Sky at [70]; Commissioner of Police for New South Wales v Eaton (2013) 252 CLR 1; [2013] HCA 2 at [78]. Further, I accept that cl 23 does not support residential development being undertaken within the WSEA. 17. I note that cl 33A of the WSEA SEPP applies to land that is within a specific distance of a boundary between two zones, and as such does not apply to the Northern Land which is "unzoned land". In relation to the reference to adjoining zones in that provision, I accept the evidence of Mr Rowan and find that this refers to adjoining zones under the WSEA SEPP. This interpretation is consistent with the objective of the clause as it provides flexibility between zones under the WSEA SEPP. It also avoids the incongruous consequence, discussed above, of the integrity of the WSEA being compromised by development which is not provided for in the WSEA SEPP. I consider the reference to "the coastal zone" (with the definite article) in cl 33A to be a specific, descriptive reference to land zoned in a particular manner under an instrument that is not the WSEA SEPP. 18. Applying this interpretation of "adjoining zoned land", it follows that when considering any application for development consent for a residential subdivision in the unzoned Northern Land, Council must: 1. Consider the impacts on adjoining land zoned under the WSEA SEPP; 2. Consider the objectives of the specific land use zones of the adjoining land zoned under the WSEA SEPP; and 3. Be satisfied as to the appropriateness and compatibility of the residential subdivision with permissible land uses under the WSEA SEPP land use zones of that adjoining land. 1. In my view, development of a residential subdivision would not be considered appropriate and compatible with the objectives or permissible land uses in adjoining land zoned under the WSEA SEPP, where this land is zoned IN1 General Industrial, E2 Environmental Conservation, and SP2 Infrastructure. It follows that development consent for a residential subdivision on the Northern Land would not be granted. 2. Even if I am wrong about the above construction of "adjoining zoned land" such that it refers to the adjoining R2 zoned Southern Land, and on the basis that the consideration and state of satisfaction required in cll 12(2)(a) and (b) respectively could be obtained by reference to the R2 zone, I find that it is very likely (if not beyond doubt) that when assessing any application for development consent on the unzoned Northern Land, Council would consider the overall aims and objectives of the WSEA SEPP and find that these aims and objectives would not be met by a residential subdivision of the Northern Land, such that development consent would not be obtained. 3. I am further persuaded in this view by the evidence given by Mr Connelly, noted at [71] above, regarding the consideration of the relevant provisions of the WSEA SEPP, including its aims, during the process of meeting the requirements of cl 18 of the WSEA SEPP relating to a DCP. In this respect, the parties accepted that cl 18 of the WSEA SEPP would require a DCP to be prepared or alternatively a concept development consent to be obtained for development to be undertaken on the Northern Land (or an exemption determined by the Director-General) and that Sch 4 provides details of the matters to be included in any such DCP or concept development consent. I find that this provides a number of opportunities for the consideration of the provisions of the WSEA SEPP, where: 1. The Director-General would consider the aims of the WSEA SEPP when deciding whether to grant an exemption from the requirement to obtain a DCP; and 2. A consent authority such as Council has the ability to consider the WSEA SEPP when considering an application for a concept development consent. 1. It is more likely than not that those considering whether to grant an exemption to the requirement to obtain a DCP or grant a concept development consent would find that a development of a residential subdivision on the Northern Land would be antithetical to the aims of the WSEA SEPP, and an exemption or development consent would not be obtained. 2. Finally, I do not accept the contention of the applicants that to develop the Southern Land without developing the Northern Land would leave a "strip of unzoned land of an irregular and narrow shape which is not orderly development". Rather, I find that the Northern Land is properly conceived as part of the WSEA and can be incorporated into development that is properly undertaken in the WSEA in accordance with the aims of the WSEA SEPP. I am further comforted in my findings by the consideration that the WSEA SEPP has, as its boundary, the precise demarcation between the land zoned R2 and the land zoned RU1 under the LLEP. 3. For the above reasons, I consider that the parties to the hypothetical transactions would approach the sale on the basis that Council would not favourably entertain an application for development for a residential subdivision on the Northern Land. 4. Therefore, in summary, I find that the parties to the hypothetical transactions would transact on the basis that the correct interpretation and application of the WSEA SEPP and LLEP is that the WSEA SEPP prevails and that any development can be undertaken on the Northern Land with development consent. However, I accept Transport's position and find that the reference in cl 12(2) of the WSEA SEPP to "adjoining zoned land" is a reference to land in the WSEA and zoned under the WSEA SEPP, with the consequence that Council would not grant development consent to a residential subdivision on the Northern Land, as it would be inconsistent with the objectives and land uses in the adjoining zoned land, and this would be the basis upon which the hypothetical transactions would have been undertaken. I further find that no exemption to the requirement for a DCP or concept development consent, nor any DCP or concept development consent itself, would have been granted to fulfil the requirements of cl 18, as a residential subdivision of the Northern Land in whole or in part would have been entirely inconsistent with the aims of the WSEA SEPP, and that this would also be the basis upon which the hypothetical transactions would have been undertaken. 5. These findings are also applicable to the applicants' alternative position, being that the highest and best use of part of the Northern Land would be for the development of Ancillary Facilities in support of a residential subdivision on the Southern Land. In this respect, I accept the submissions of Transport, which highlight that in circumstances where the purpose and use of Ancillary Facilities is to facilitate and service the residential subdivision on the Southern Land, the same factors that militate against a grant of development consent to a residential subdivision on the Northern Land apply in relation to the grant of development consent for Ancillary Facilities on the Northern Land. 6. I find that Council would not grant development consent to the development of Ancillary Facilities on the Northern Land, on the basis that the objectives and land uses of the adjoined land zoned under the WSEA SEPP do not support the provision of infrastructure supporting residential development. The adjoining WSEA SEPP zones focus on facilitating employment-generating development (in respect of the IN1 General Industrial zone) and protection and management of environmental value (in respect of the E2 Environmental Conservation zone). While the SP2 Infrastructure zone includes the wider objective of providing "for infrastructure and related uses", the land use table indicates the only supported land uses are roads, or purposes identified in the Land Zoning Map (being classified roads). Given this, development consent for Ancillary Facilities would not be obtained. 7. A similar outcome is reached in relation to an application for an exemption to the requirement for a DCP or a concept development consent, and any DCP or concept development consent itself, sought to fulfil the requirements of cl 18 of the WSEA SEPP, on the basis that the development of Ancillary Facilities is not consistent with the stated aims of the WSEA SEPP. Given this, the parties to the hypothetical transactions in the before scenario and the after scenario would not transact on the basis that the Northern Land could be utilised for Ancillary Facilities. 8. To the extent that the applicants place reliance upon the 2005 development consent, I do not consider that this assists the applicants' position in relation to the approval of a residential subdivision on the Northern Land. It is clear that the WSEA SEPP did not exist at the time Council granted that development consent – as it only applied to the Northern Land from 2015 – and I consider that the parties to the hypothetical transactions would have been advised of this. 9. Both parties made submissions in relation to the weight to be attributed to the respective town planners' evidence. By and large, I have found it unnecessary to decide between the town planners' evidence, as the interpretation and application of cl 12 of the WSEA SEPP is primarily a legal issue, and the evidence of the town planners was often responsive to the specific regulatory and factual scenarios that they were commenting on, which were based on different assumptions and did not lend themselves to comparison. Moreover, both town planners provided reasoned, responsive and relevant evidence to assist the Court. However, to the extent to which it is required, I prefer Mr Rowan's evidence about the impediments that would likely be experienced by the hypothetical parties seeking to obtain development consent for a residential subdivision under the WSEA SEPP on the Northern Land. The town planners reached agreement about the requirements of cl 18 of the WSEA SEPP when applying for development consent but had different opinions about the ease with which these requirements could be complied with. I do not subscribe to Mr Connelly's view that these requirements would not be a disincentive to obtaining development consent, rather, I prefer Mr Rowan's view that the effect of these requirements is that development consent for a residential subdivision on the Northern Land would be "near impossible" to obtain. Town planning – lot yield and development cost 1. Apart from the consideration of the area on which a residential subdivision would be able to be undertaken on the Parent Parcel in the before scenario and the Residue Land in the after scenario, and based upon the above discussion in relation to the LLEP and the WSEA SEPP, the Court received detailed evidence on a number of further town planning matters which would likely impact the lot yield and development cost of any such residential subdivision. The issues to be resolved by the Court, in the context of the position that would be adopted by the parties to the hypothetical transactions, include, first, the amount of public open space that would need to be provided in a residential subdivision in the before scenario and the after scenario; and second, whether physical treatment would need to be applied on the eastern boundary of the Residue Land in the after scenario. 2. The materiality of these further town planning matters depends to a large extent on the valuation methodology adopted by the Court when valuing the land for residential subdivision, as lot yield and cost are important integers in the HDM valuation methodology. In contrast, if the DCA valuation methodology is adopted, the lot yield in particular appears less material. As noted earlier, Transport contends that the divergence of opinions on these further town planning matters is another reason why the HDM is less reliable than the DCA in terms of valuation methodology. 3. The Court was provided with a number of scenarios for residential subdivision that engage with different iterations of the above town planning matters and proffer a resulting lot yield, prepared by the town planners. Potential scenarios and lot yields were provided in the following evidence: Mr Connelly's and Mr Rowan's initial positions in their individual expert reports (part of Ex A (A1), (A2)); the town planning joint expert report dated 21 December 2019 (part of Ex A (A3)); the further individual expert report of Mr Connelly dated October 2020 (Ex C); the supplementary report of the town planners provided 14 October 2020 (Ex D); and the further additions to the joint planning and costings report (Ex H). In addition, the valuers undertook valuations of a number of different scenarios and potential iterations (a process which was subject to its own issues to be resolved by the Court, as discussed above) and proffered market values of certain scenarios and development costs in the following evidence: Mr Hollinshead's and Mr Dale's initial expert reports (part of Ex A (C1), (C2)); the joint report of the valuation experts dated 26 August 2020 (part of Ex A (C3)); the supplementary joint report of the valuation experts dated 1 October 2020 (part of Ex A (C5)); and the further supplementary joint report of the valuation experts dated 29 October 2020 (Ex J). 4. The scenarios, lot yields and development costs were reviewed and revised during the course of the hearing, with some iterations now falling away on the basis of my finding that only the R2 zoned Southern Land was able to be used for residential subdivision. I make reference to relevant scenarios, lot yields and development costs in the following discussion where appropriate. Public open space 1. The town planners disagreed about the amount of public open space to be provided in any residential subdivision in the before scenario and the after scenario. As noted above, this issue is to be considered in the context of the position that the parties to the hypothetical transactions would take, which also imports consideration of the amount of public open space Council would likely require in a residential subdivision. 2. The town planners agreed that there are no specific requirements within the WSEA SEPP, Council's Liverpool Development Control Plan 2008 ('LDCP'), or the Liverpool Contributions Plan 2009 ('Contributions Plan') that details the amount of public open space to be provided in a residential subdivision. 3. Generally, Mr Connelly opined that a smaller amount of public space would be required than the amount opined by Mr Rowan. This was because Mr Connelly considers that Luddenham has adequate (if not excessive) total public open space in the amount of 4.6ha, such that Council would not require a significant amount of open space in a residential subdivision (also noting the in perpetuity maintenance burden that public open space imposes on Council). Mr Connelly's preferred "pocket park" approach adopted the standard of ensuring dwellings were within 400m walking distance of a park. 4. In contrast, Mr Rowan contested the assertion that there is excess public open space in Luddenham, noting, first, that Council is likely to consider the provision of public amenities and public services when granting consent to a residential subdivision; second, that the existing public open space services the existing residential population; and third, that the distance from the eastern side of a residential subdivision to the existing public open space would be excessive. Mr Rowan opined that additional public open space would be required and used the following inputs as a basis for his calculation: first, a benchmark for open space for residential release areas adopted from the NSW Department of Planning, Industry and Environment's rate for growth areas (being 2.83ha per 1,000 persons); and second, the likely occupancy rate of a residential subdivision on the basis of Council's Contributions Plan (being 3.4 persons per dwelling). Mr Rowan also gave evidence noting that open space was unlikely to be required to be dedicated to Council as "public open space", but would be provided as "community open space" (where Mr Connelly gave contrary evidence that there could be no "community open space" in a Torrens Title subdivision, meaning that open space required dedication to Council in the usual way or via a voluntary planning agreement). 5. During the hearing, Mr Connelly put forward an alternative approach for the calculation of public open space using Mr Rowan's method but adopting an occupancy rate of 2.9 persons per dwelling as an input, on the basis of 2016 census data for Luddenham. 6. The town planners undertook a number of calculations and provided the Court with details of the public open space that would likely be required by Council under a number of different scenarios. Given my findings above, that the Northern Land would not be granted development consent for a residential subdivision, many of these calculations are no longer apt (as they were premised on all or some of the Northern Land being utilised for residential subdivision). Nonetheless, I record the key calculations adopted by the parties as follows: 1. First, in relation to the public open space for the Parent Parcel in the before scenario where the whole of the Northern Land is used for residential subdivision: Mr Connelly opined 2,419m² (cf. Transport's submission of 4,709m² which appears to include other non-residential lots) or, adopting his alternative occupancy rate, 10,188m²; Mr Rowan opined 11,942m²; 2. Second, in relation to the public open space for the Parent Parcel in the before scenario where part of the Northern Land is used for residential subdivision: Mr Connelly opined 2,419m² and did not utilise his alternative occupancy rate; Mr Rowan opined 9,537.1m²; 3. Third, in relation to the public open space for the Parent Parcel in the before scenario where none of the Northern Land is used for residential subdivision: Mr Rowan opined 7,510m²; Mr Connelly did not provide calculations; 4. Fourth, in relation to the public open space for the Residue Land in the after scenario where the whole of the Northern Land is used for residential subdivision: Mr Connelly opined 2,419m² or, adopting his alternative occupancy rate, 6,481m²; Mr Rowan opined 7,770m²; and 5. Fifth, in relation to the public open space for the Residue Land in the after scenario where none of the Northern Land is used for residential subdivision: Mr Rowan opined 5,677m²; Mr Connelly did not provide calculations. 1. Finally, the town planners considered what provision for public open space had been required for the 2005 development consent, and how this would impact the hypothetical transacting parties' view of Council's likely approach to the requirement for public open space. The town planners disagreed, as Mr Connelly opined that no public open space was required in the 2005 development consent, and the area identified by Mr Rowan as public open space was in fact utilised for effluent disposal and stormwater treatment. Applicants' position 1. The applicants adopt Mr Connelly's evidence and submit that the parties to the hypothetical transactions in the before scenario and the after scenario would transact on the basis that (beyond Mr Connelly's "pocket park" approach) no additional public open space would be required in a residential subdivision, as a result of the overall availability of public open space in the "Airport and Rural locality" in 2016 (being 94ha of district and regional open space). In this respect, the applicants rely on the presence of two large recreation reserves in Luddenham – Luddenham Showground and Sales Park (where Sales Park, despite being in the adjacent Penrith local government area, is located within Luddenham village and within the "Airport and Rural locality"). They contend that Mr Connelly's allowance of 2,419m² for public open space in his residential subdivision layouts is appropriate. 2. The applicants also refer to Council's Liverpool Population and Social Infrastructure Study (Judith Stubbs, 2019) ('Study'), which while prepared after the date of acquisition, includes the requirements for open space in each locality from 2016 to 2041 (and thus records the requirements for open space applicable at the date of acquisition). The applicants contend that the Study illustrates that there was a surplus of parks and open space in 2016 in the "Airport and Rural locality" due to the small population, and as such, on the date of acquisition, Council would not require any more public open space than that proposed by Mr Connelly in his residential subdivision layouts in the before scenario and the after scenario. 3. The applicants contest Mr Rowan's evidence that the advice he would give to the parties undertaking the hypothetical transactions in the before scenario and the after scenario was that approximately 1ha of public open space would be required to be provided with a residential subdivision, on the basis that Council may require it for recreation. They consider this to be "excessive, overly burdensome, [and] not an economic use of land". The applicants submit that Mr Rowan either misunderstands or misapplies the formula for open space (as the benchmark of 2.83ha per 1,000 persons includes regional, district and local open space, and should not be used as a formula for additional local open space without consideration of existing regional and district open space). In this respect, residents of a residential subdivision in the before scenario and the after scenario would have access to 94ha of open space at a district and regional level, meaning that no additional local open space would be required. Transport's position 1. Transport contests the applicants' and Mr Connelly's "pocket park" approach to public open space in a residential subdivision in the before scenario and the after scenario. First, they submit that Council would not be satisfied that there was adequate existing public open space by reference to public open space located in a different local government area to that for which Council had responsibility. Second, they note that where a residential subdivision would increase demand for public open space, the parties to the hypothetical transactions would assume that public open space would need to be provided to meet this demand. Third, they do not accept the applicants' reliance on the Study on the basis that the town planners did not have regard to the Study and it does not address the demand for local public open space generated by a residential subdivision. 2. Transport also rejects Mr Connelly's secondary position of utilising Mr Rowan's formula using a lower occupancy rate. This is because Mr Connelly's preferred position is his "pocket park" approach, and although he exhibited "general reluctance" about his secondary position, it was recently proffered, and the rate nominated in Council's own Contributions Plan represents a more appropriate occupancy rate. 3. Finally, Transport notes that in relation to the 2005 development consent, the use of part of the Northern Land for effluent disposal and stormwater treatment was not mutually exclusive with the use of this area also for community open space. Consideration 1. I accept that the transacting parties in the before scenario and the after scenario would assume that Council would take into account the provision of public open space when assessing and approving an application for development consent for a residential subdivision, such that some public open space would have to be incorporated into a residential subdivision layout. While the applicants and Transport put forward competing positions in relation to the public open space likely to be required by Council in a residential subdivision, and Mr Connelly and Mr Rowan provided competing evidence, I prefer the evidence of Mr Rowan and the position proffered by Transport. My reasons follow. 2. I accept that a new residential subdivision would generate an increased demand for public open space, such that the hypothetical parties would consider that Council requires the provision of additional public open space in a residential subdivision layout (rather than relying on existing public open space). When considering the amount of public open space required, I find that Council would place weight on the amount of public open space available within its local government area. In this respect, I do not consider that the availability of existing public open space in other local government areas (such as Sales Park, being in the adjacent Penrith local government area) or at a regional or district level, would mitigate Council's concerns about ensuring there is adequate additional public open space to meet additional demand, such that they would accept Mr Connelly's "pocket park" approach. 3. Rather, I prefer Mr Rowan's formula for ascertaining the amount of public open space to be provided in response to a new residential subdivision in the before scenario and the after scenario. I note that the inputs adopted by Mr Rowan are based on, or derived from, Council documents that were available to the hypothetical parties at the date of acquisition (and I prefer these inputs to those derived from resources that postdate the date of acquisition). While the applicants criticise Mr Rowan's use of the benchmark of 2.83ha per 1,000 persons on the basis that it is not limited to local open space, I consider, first, Mr Rowan properly seeks to use the formula to calculate the demand for additional public open space that would be generated by residents in a new residential subdivision (where the formula can be applied at different scales including the subdivision scale); second, while this demand for public open space can be addressed through the provision of regional, district and local open space, no additional public open space at a regional or district level is being proposed; and third, therefore, the demand for additional public open space would be addressed through the provision of local public open space. 4. I also take into account the fact that the Parent Parcel in the before scenario and the Residue Land in the after scenario is the last remaining parcel of englobo residential land in Luddenham, such that any deficit in public open space cannot be made up in a future subdivision. Additionally, the land to the north and east of the Southern Land (of the Parent Parcel and the Residue Land) will be utilised for future employment-generating development, meaning that it is unlikely to be developed into public open space. Given my findings above in relation to the highest and best use of the Northern Land, I do not accept that public open space for a residential subdivision would be located on the Northern Land. Rather, the layout of a residential subdivision in the before scenario and the after scenario needs to provide for adequate public open space on the Southern Land. 5. As a result, I find that the parties to the hypothetical transactions would adopt Mr Rowan's calculations when considering the amount of public open space required in any residential subdivision in the before scenario and the after scenario. In his initial individual expert report, Mr Rowan opined as to the lot yield for a residential subdivision of the Parent Parcel in the before scenario and the Residue Land in the after scenario, on the basis that no residential subdivision or development of Ancillary Facilities would be undertaken on the Northern Land, and the public open space would be accommodated within a residential subdivision on the Southern Land, including stormwater detention basins. Mr Rowan's residential subdivision layout for the Parent Parcel in the before scenario achieves a lot yield of 78 lots, generates demand for public open space in the amount of 7,510m², and accommodates this public open space. Mr Rowan's residential subdivision layout for the Residue Land in the after scenario achieves a lot yield of 59 lots, generates demand for public open space in the amount of 5,677m², and accommodates this public open space. I find that the parties to the hypothetical transactions would adopt these lot yields proposed by Mr Rowan. Physical treatment on the eastern boundary of the Residue Land 1. The applicants and Transport disagree about the approach that the parties to the hypothetical transaction would take to the risk of Council requiring a physical treatment on the eastern boundary of the Residue Land in the after scenario, to mitigate the impact of the adjacent public purpose (being The Northern Road) on a residential subdivision. Depending on the characteristics of the physical treatment, this may have the effect of reducing the available space for residential subdivision and accordingly the lot yield in the after scenario, as well as increasing the development cost of a residential subdivision in the after scenario. 2. The town planners agreed that they would advise the parties to the hypothetical transaction in the after scenario that the proposed residential lots along the eastern boundary of the Residue Land would be subject to road noise (where this noise would not have existed in the before scenario). The town planners' evidence was that there is no requirement in the WSEA SEPP, LLEP or LDCP for a physical treatment on the eastern boundary of a residential subdivision on the Residue Land. However, the town planners gave conflicting evidence about the physical treatment on the eastern boundary that may be required by Council in any event to attenuate the impact of the road. 3. Mr Connelly opined that there is a risk that Council would require a physical treatment on the eastern boundary of the Residue Land as "best practice" to manage the noise, visual, psychological and air emission impacts of the public purpose. Given this, the hypothetical parties would be advised, and transact on the basis, that a residential subdivision may need to include "road related impact mitigation proposals". In support of his position, Mr Connelly noted that the environmental impact statement for The Northern Road indicates that predicted noise levels exceed Transport's noise control guidelines and cumulative limits at existing dwellings adjacent to the Residue Land. Mr Connelly provided three physical treatment options, which after some development during the hearing, finally constituted: first, a 40m wide mound; second, a 5m wall; and a 1.8m fence. While Mr Connelly opined that a 40m wide mound was best practice, he noted he could best assist the Court by focusing on a 5m wall and a 1.8m fence. 4. Mr Rowan opined that a 1.8m fence would provide an adequate screen from the road developed on the Acquired Land, and thus constitute a sufficient physical treatment on the eastern boundary of the Residue Land. Mr Rowan notes the following factors that militate against any more onerous physical treatment being required by Council: the dwellings in a residential subdivision would already be noise attenuated as a consequence of their proximity to the Western Sydney Airport; the residential subdivision itself will be a source of street lighting and cars; and the future employment-generating use of the adjacent WSEA land, will result in the residential subdivision having an "urban character". 5. It was common ground between the town planners that there would be an expectation of future aircraft and aircraft-related activities next to the Parent Parcel in the before scenario, as there would also be next to the Residue Land in the after scenario, as a result of the proximity of the Parent Parcel and the Residue Land to the future Western Sydney Airport. Clause 7.18 of the LLEP imposes noise attenuation requirements for residential subdivision on land impacted by aircraft and aircraft-related activities applicable to the Southern Land, and the town planners agreed that a similar requirement would be imposed in relation to the Northern Land as part of a DCP or a concept development plan (noting, as set out above, that I have found that no development consent would be obtained for residential subdivision on the Northern Land in any event). Applicants' position 1. The applicants contend that the eastern boundary of the Residue Land would be subject to road noise impacts in the after scenario, which were not present in the before scenario, as a result of the additional new road. The applicants note that where the two neighbouring properties to the Residue Land were identified in the environmental impact statement for the public purpose as eligible for acoustic treatment as a consequence of the noise impact of the public purpose, a residential subdivision of the Residue Land would also be subject to noise impacts giving rise for a need for acoustic treatment. 2. Further, the applicants disagree with Transport's reliance on noise as a result of "latent" aircraft and aircraft-related activity impacting the Residue Land as a reason that no physical treatment on the eastern boundary would be required. The applicants submit that the "latent" aircraft and aircraft-related activity noise which would occur in the before scenario and the after scenario, and the road noise resulting from the public purpose in the after scenario, are separate considerations. Further, the applicants submit that aircraft would be flying to the northeast or southwest of the Residue Land, rather than flying overhead 24 hours a day as speculated by Transport. Finally, the applicants contend that expected aircraft noise impacting the Residue Land would decrease by the time the Western Sydney Airport is operational, as a result of improved jet engine technology. 3. Given this, the applicants submit that the "risk" of Council requiring a physical treatment on the eastern boundary of the Residue Land maintained by Mr Connelly is one that the parties would factor into the hypothetical transaction in the after scenario as a cost of developing a residential subdivision. Further, the applicants contend that the parties would consider the appropriate physical treatment on the eastern boundary of the Residue Land to be a 5m wall, at a development cost of $1,060,000. Transport's position 1. Transport submits that the parties to the hypothetical transaction would not assume that a 5m wall was "required to ameliorate perceived amenity impacts caused or contributed to by the public purpose", and that this physical treatment on the eastern boundary of the Residue Land would be "a disproportionate response". Transport relies on the fact that dwellings in the residential subdivision in the after scenario will already be subject to significant noise amelioration measures due to the proximity to the Western Sydney Airport, and submits that any visual impacts of the public purpose would be minimal. Transport contends that the applicants' submissions referring to decreased aircraft noise in the future are "bold and unsubstantiated". 2. As a result, Transport's position is that the appropriate physical treatment on the eastern boundary of the Residue Land is an "ordinary" 1.8m fence. Transport contends that this is the measure that has been required for other roadside developments approved by Council. Transport also notes that there is flexibility in the layout of the residential subdivision in the after scenario, and the relocation of roads and parks could reduce the noise and visual impact of the public purpose on the Residue Land, thus reducing the need for a physical treatment. 3. Transport brought the Court's attention to the differing positions of the applicants' town planner, Mr Connelly (who advocated for the "best practice" mound but later focused on a 5m wall and a 1.8m fence), and the applicants' valuer, Mr Dale (who adopted a 5m wall after originally adopting a 20m mound), submitting that the applicants' own valuer rejected the applicants' town planning experts' best practice position, which detracts from Mr Connelly's credibility on the topic. Consideration 1. I note that while on the site view, the Court observed an earthen mound on the Acquired Land. I give this factor little weight, except to the extent that it is relied upon to confirm a foresight, on the basis that the question before the Court is what the parties to the hypothetical transaction would have anticipated that Council would have required as a physical treatment on the eastern boundary of the Residue Land on the date of acquisition, not what has actually been undertaken in the time that has passed since the date of acquisition. It follows that I also give little weight to any changes in the opinions of the town planners or valuers that arose as a result of the presence of the earthen mound on the Acquired Land after the date of acquisition. 2. I accept that there is a risk that Council would require some form of physical treatment on the eastern boundary of the Residue Land to mitigate the impacts of the public purpose, being a not insubstantial road, on the Residue Land. The issue for the Court to resolve is the character of the physical treatment that the parties to the hypothetical transaction in the after scenario would consider to be required, on the applicants' submission, a 5m wall; and, on Transports submission, a 1.8m fence. 3. Considering the above submissions and evidence, a threshold question arises about the effect of the "latent" aircraft and aircraft-related activity noise impacts (which would impact both the Parent Parcel in the before scenario and the Residue Land in the after scenario due to their proximity to the new Western Sydney Airport) as against the effect of the public purpose. I find that while the impacts of the public purpose on the Residue Land constitute a separate issue to the aircraft and aircraft-related activity noise impacts, road noise impacts must be considered in the context of the broader acoustic environment affecting a residential subdivision on the Residue Land. In this respect, road noise would be one of a number of noise impacts on dwellings in the residential subdivision in the after scenario. I accept that the dwellings in the residential subdivision will already be subject to a number of noise amelioration measures, which while undertaken to address aircraft and aircraft-related activity noise impacts, would also reduce the impact of road noise. In these circumstances, Council is less likely to require a significant physical treatment on the eastern boundary of the Residue Land on the basis of the noise impact of the public purpose. 4. However, the applicants contend, and I accept that noise is not the only impact on the residential subdivision resulting from the public purpose in the after scenario. Visual impacts (including road lights and lights from traffic at night); air pollution from traffic; amenity impacts on private open space; potential amenity impacts on indoor space; and psychological and health impacts, were also identified. I consider that Council is likely to be aware of these types of impacts and require a physical treatment on the eastern boundary of the Residue Land to address them. 5. The town planners gave conflicting evidence about whether a 1.8m fence would adequately mitigate the visual impacts of the public purpose. Mr Rowan opined that a 1.8m fence would be adequate in circumstances where the road is located in a cutting and the line of sight between lots on the Residue Land and the public purpose would be limited to view lines from the first floor of dwellings in the residential subdivision to traffic some 63m to 70m in the distance. In contrast, Mr Connelly opined that there are some parts of the residential subdivision where there would be view lines between the backyard or ground floor of dwellings and the public purpose, and most dwellings would have a view line from the first floor, such that a 1.8m fence would not be adequate. I prefer the evidence of Mr Connelly, and consider that the existence of view lines from dwellings to the public purpose, raises the risk of a more substantial physical treatment in the form of a 5m wall being required by Council, and the parties to the hypothetical transaction would transact on this basis. 6. In circumstances where a stated aim of the R2 zone is the maintenance of residential amenity, I consider that a 5m wall would also be Council's preferred physical treatment to address the other types of impact of the public purpose on the Residue Land, such as amenity and health impacts. I find that the parties to the hypothetical transaction would consider a 5m wall physical treatment option as likely to be required when undertaking the hypothetical transaction in the after scenario. This would increase the development cost of the residential subdivision in the after scenario, but I consider would not have an impact on the lot yield of the residential subdivision. 7. The development cost of a 5m wall has been the subject of consideration by the engineering and costing experts, on the basis of a number of different town planning assumptions. In their further additions to the joint planning and costings joint reports, the experts proffered a rate of $3,245/m for the construction of a 5m wall. In their final submissions, the applicants appear to adopt a development cost of $1,060,000 while Transport appears to adopt a lower cost of $941,050. I consider that the final construction cost of a 5m wall will need to be calculated by the experts on the basis of my findings on the town planning issues in this judgment (including that the residential subdivision and Ancillary Facilities would be confined to the R2 zoned Southern Land) and adopting the characteristics of the wall described by Mr Connelly. Conclusion on lot yield and development cost 1. My findings in relation to the two outstanding town planning issues are as follows: first, the parties to the hypothetical transactions would transact on the basis that Council would require additional open space to be provided in a residential subdivision in the before scenario and the after scenario, to meet the additional demand for public open space generated by new residents. Transport's submissions and Mr Rowan's evidence are to be preferred in this regard. Second, the parties to the hypothetical transaction would transact on the basis that Council would require physical treatment on the eastern boundary of the Residue Land in the after scenario to mitigate the impacts of the adjacent public purpose. Given the variety of impacts on the Residue Land as a result of an adjacent busy road, I am of the view that Council would require a 5m wall, and the parties would transact on this basis. 2. Taking these conclusions, I find that the lot yield of a residential subdivision on the Parent Parcel in the before scenario would have a lot yield of 78 lots. In the after scenario, the lot yield of a residential subdivision on the Residue Land would be 59 lots and would involve a discrete development cost for the provision of a 5m wall, which, as noted above at [144] is subject to final calculations by the parties. Valuation – valuation methodology 1. The parties agree that the "before and after" valuation method is the appropriate valuation method for determining the value of the Acquired Land. This method accounts for the matters set out of at ss 55(a), (c), and (f) of the Just Terms Act (being the market value of the acquired land, any loss attributable to severance, and any increase or decrease in the value of any other adjoining or severed land held by the person at the date of acquisition) but not ss 55(b), (d) and (e): Apokis at [28]. 2. However, as noted above, the parties dispute the appropriate valuation methodology to be adopted when valuing the Parent Parcel and the Residual Land for the purposes of the before and after valuation method. In summary, Transport submits that the DCA should be utilised, while the applicants submit that the HDM, using the Estate Master program, should be utilised. I note here that while the DCA and the HDM are variously described as an "approach" and "method", they constitute competing valuation methodologies. Given the issues joined between the parties, a short summary of the different valuation methodologies and the manner the valuers have applied them, provides useful context prior to considering the parties' positions. 3. In these proceedings, utilising the DCA involves deriving a $/m² value for each of the Northern Land (zoned RU1 under the LLEP and unzoned under the WSEA SEPP) and the Southern Land (zoned R2 under the LLEP) of the Parent Parcel and the Residue Land on the basis of realised market sales of land similar (that is, "comparable") to the land being valued. These market sales are then adjusted to create equivalence with the Parent Parcel and the Residue Land. The usual, but not only, manner of utilising the DCA was summarised in New South Wales Cremation Company Pty Limited v Valuer General [2016] NSWLEC 135, as follows: "[99] It has been accepted that a generally valid method of conducting a comparable sales approach is to undertake it in the four steps of accumulation, analysis, adjustment and application. [100] First, the valuer, judicial or otherwise, should accumulate comparable properties. In undertaking this process, the "sales to be treated as comparable sales need to be truly comparable", although the Court should not be "unreasonably selective" of its comparable properties in any event. … [102] Second, the valuer should analyse those comparable sales. This often involves converting the value of those sales into another measurement that can be easily compared. Examples of this process include converting those sales into unitary rates, such as a [rate per square metre]. [103] Third, the valuer should adjust those properties it considers comparable to create equivalence with the unimproved subject land. As stated by Biscoe J in Holcim (Aust) Pty Ltd v Valuer-General [2009] NSWLEC 225 at [31]: The basis for the valuers' valuation assessments is the sales comparison method. Accepted valuation practice permits adjustments for differences, such as in location, area and time to enable valuers to have comparable values which, following adjustment, account for the various differences with the subject property. Such adjustments are generally based on a reasoning process drawing on the skill and experience of the valuer and are undertaken to derive an opinion of value through a deductive process. Because properties are rarely identical, adjustments for differences are obviously necessary but caution is required through making as few adjustments as possible, in a consistent manner, to ensure the reliability of the comparable sale when related to the subject property. Too many adjustments potentially render the comparable sale unsafe to rely upon. Caution is therefore required where large adjustments are to be made. Reflecting the significant roles of skill, experience and personal assessment in the adjustment process, the scope for differences in the quantum and direction of adjustment between valuers can be considerable. Third, the Court should then apply these adjusted values to the subject property. The purpose of this is to determine, based on comparable sales and as best it can, what value the subject property would obtain if it were to be sold on the market. [104] Fourth, the valuer should apply the comparable sales to determine a value of the subject land based on the adjusted values of the comparable properties." (some citations omitted) 1. In contrast, utilising the HDM involves deriving a $/m² value for the areas of the Parent Parcel and the Residue Land amenable to residential subdivision by determining the total value of the sales of all of subdivided lots in the completed hypothetical residential subdivision (the 'gross realisation'), and then factoring in the estimated costs of the subdivision, estimated return and other inputs, to reach a rate that a prospective purchaser would pay for the parts of the englobo Parent Parcel and the Residue Land amenable to residential subdivision. This process was described in Closer Settlement Limited v The Minister (1942) 17 LGR (NSW) 62 ('Closer Settlement') at 65 as follows: "In arriving at the value of land which is suitable for subdivision a familiar and appropriate method … is to estimate from whatever comparable sales of land in subdivision are available the price which would be realized by the land when sold; then to estimate the costs involved in the subdivision and the length of time that the realization would take, making provision for the payment of rates and taxes and for interest on money outstanding; and an estimated net return on the subdivision is obtained. It is of course clear that a person purchasing land in globo for the purpose of subdividing it would not pay the sum of money which is the present equivalent of the estimated return. Many factors in the calculation are speculative: the land in subdivision may not realize the prices which are at present expected, and the subdivision may take longer to realize than is at present anticipated. To compensate for the risk involved in the venture the purchaser would certainly discount the estimated returns." 1. In this matter, the HDM has been undertaken using the Estate Master program, a cash flow model designed for property development feasibility analysis which calculates investment returns including residual land value, development profit, internal rate of return, and net present value based upon a set of inputs. The Estate Master program can be used to estimate residual land value based on hypothetical development. 2. Fundamentally, the difference between the two valuation methodologies can be distilled to whether comparable market sales of englobo land are adjusted to obtain a value for the englobo Parent Parcel and Residual Land (being the DCA), or whether comparable market sales of subdivided residential lots are unpacked to obtain a value for the englobo Parent Parcel and Residual Land (being the HDM). I will briefly summarise the evidence provided by the valuers before considering the parties' submissions regarding the competing approaches to the valuation methodologies. The valuers' evidence 1. Valuation evidence was provided by Mr Dale (retained by the applicants) and Mr Hollinshead (retained by Transport). In addition to their primary individual expert reports, the valuers participated in joint conferencing and prepared three joint expert reports. Each valuer provided details of their primary valuation methodology, any secondary "check" valuation methodology that was utilised, and considered a range of different development scenarios resulting from differing instructions regarding the nature and extent of the highest and best use of the Northern Land and Southern Land in both the before scenario and the after scenario, as well as the approach to town planning issues. 2. In summary, Mr Dale utilised the HDM (applying the Estate Master program) as his primary valuation methodology when valuing land with the highest and best use as residential subdivision. Mr Dale also gave consideration to the DCA, and while he entertained comparable sales and adjustments for the purposes of the before scenario, as a result of his concern with the DCA valuation methodology he did not complete the analysis, and did not consider the DCA in the after scenario. Mr Dale maintained that there were no sufficiently comparable sales of englobo land zoned to allow residential subdivision to support the use of the DCA, and where certain comparable sales of englobo land were sought to be utilised (considered below), the extent of the adjustments required to those sales undermines the reliability of the DCA valuation methodology. Therefore, the HDM valuation methodology is to be preferred. 3. Mr Dale initially utilised the HDM for the Southern Land only as at that time he utilised the DCA for the Northern Land on the basis that its highest and best use was for land banking and there were sufficient comparable sales of RU1 zoned land to support the use of the DCA (thus taking a blended approach to the valuation methodologies on the assumption that the land would transact in one sale). However, Mr Dale later utilised the HDM for the whole of the Parent Parcel and the Residue Land on the changed assumption (which I have determined above is not to be adopted) that the Northern Land could also be used for residential subdivision. 4. Mr Hollinshead utilised the DCA as his primary valuation methodology, and applied this valuation methodology first, when valuing land with the highest and best use as residential subdivision (which he assumed was confined to the Southern Land); and second, when valuing land with the highest and best use for land banking (which he assumed constituted the Northern Land). Mr Hollinshead maintained that the DCA is the most "direct and reliable" valuation methodology, and that there were "sufficiently reliable" comparable market sales for it to be used to value both the land with the highest and best use as residential subdivision and the land with the highest and best use for land banking. In contrast, Mr Hollinshead opined that the HDM requires subjective and opinionative inputs which have the potential to cause unreliability, which led him to utilise the HDM (also applying the Estate Master program) as a secondary "check" valuation methodology only. DCA valuation methodology 1. In summary, the DCA was utilised by both valuers to determine a $/m² value for land with the highest and best use for land banking (which I have found to be the whole of the Northern Land). Both valuers also considered the DCA when determining a $/m² value for land with the highest and best use as residential subdivision (which I have found to be confined to the Southern Land), although while Mr Hollinshead derived rates for both the before scenario and the after scenario, Mr Dale only undertook adjustments in the before scenario before reverting to the HDM valuation methodology. 2. When considering the use of the DCA for land with the highest and best use as residential subdivision, the valuers identified and analysed three common sales of land for englobo residential development, being sales at 23 Allan Road, Mulgoa (the 'Mulgoa Sale'); 205 Seventh Avenue, Austral (the 'Austral Sale'); and 110 Croatia Avenue, Edmondson Park (the 'Edmondson Park Sale'). Both valuers agreed that the Mulgoa Sale is the most comparable (stating "…it is of the most relevance and the most assistance"), although Mr Dale maintained concerns as to its true comparability and therefore the appropriateness of utilising the DCA more generally. Mr Hollinshead also considered a sale at 70-80 Croatia Avenue, Edmondson Park in his individual expert report, while Mr Dale considered a sale at 30 Gurner Road, Austral in his individual expert report. 3. The Mulgoa Sale relates to the sale of 4.274ha of land zoned RU5 Village which exchanged on 4 August 2016, 18 months before the date of acquisition in these proceedings, for the sum of $6,635,000. To create equivalence between the Mulgoa Sale and the hypothetical transaction for the Parent Parcel in the before scenario, the valuers agreed on a number of adjustments including: the existence of a development consent (−5%); the existence of airport noise (−10%); the risk relating to securing approval for connection to the external sewer (−5%); the cost of providing an external sewer network at $47/m² (−20%); and that no adjustment would be made in relation to size (0%). The valuers disagreed about the required adjustments for market movement and location, and also diverged regarding the appropriate kind of adjustment ("label") to create equivalence, with Mr Hollinshead making an adjustment for dwelling density per hectare of gross developable area and Mr Dale making an adjustment for gross revenue per hectare. Each of these contested adjustments for the Mulgoa Sale when compared to the Parent Parcel in the before scenario is discussed in more detail. 4. In relation to market movement, Mr Dale adopted a +57% adjustment which he derived from price movements for median house sales in Luddenham on the basis of Luddenham's "strategic position" (being that Luddenham was "receiving a new international airport and transport infrastructure with consequent employment opportunities" that were not applicable in the Mulgoa Sale nor, in his opinion, the Austral Sale, or the Edmondson Park Sale). Mr Hollinshead adopted a +17% adjustment which he derived from his analysis of "paired" sales of vacant residential lots in Glenmore Park over time, and improved residential properties in Luddenham over time, in the amount of 1% per calendar month. 5. In relation to location, Mr Dale made no adjustment on the basis that the extra distance to the Parent Parcel in comparison to the Mulgoa Sale would be offset by the rural outlook and strong employment and growth opportunities in the Luddenham area. Mr Hollinshead made an initial adjustment of −12.5% (which he revised to −5% in "an attempt to be conservative in favour of the [applicants]"), based on paired sales analyses of single residential allotments in Edmondson Park and Luddenham. 6. In relation to the valuers' divergence on the kind of adjustments to be made, Mr Dale initially made a +14.17% adjustment for gross revenue per hectare of gross developable area, to account for differences in gross revenue and development costs between the Parent Parcel and the Mulgoa Sale. However, in cross-examination, Mr Dale accepted that there would be "no difference" in the gross revenue per hectare of gross developable area between the Mulgoa Sale and the Parent Parcel. Mr Hollinshead expressed concern with Mr Dale's initial quantum of adjustment, but also objected to that kind of adjustment, on the basis it double counts because the gross revenue is a function of land size, location and dwelling density (which have already been the subject of adjustments). 7. Mr Hollinshead considered an adjustment for dwelling density per hectare to account for differences in lot size and dwelling density between the Parent Parcel and the Mulgoa Sale, but found that no adjustment was required for the Mulgoa Sale as the dwelling density is similar to the Parent Parcel (on the basis that the riparian corridor of the Mulgoa Sale is excluded from the gross developable area). Mr Dale contended that the riparian corridor should be considered when assessing dwelling density as "the whole site has to be taken into account", in circumstances where the lot yield in the Mulgoa Sale would not have been achieved in the absence of the riparian corridor, and this created a 50% variation in dwelling density between the Mulgoa Sale and the Parent Parcel. 8. As a result of these differences in the quantum and kind of adjustments to be undertaken, the valuers were unable to agree on the appropriate adjustments for the Mulgoa Sale to achieve equivalence with the Parent Parcel in the before scenario. Mr Hollinshead adjusted −41% which resulted in a land value rate of $133/m², and Mr Dale adjusted +26% which resulted in a land value rate of $288/m². 9. In relation to the remaining "common" sales considered by the valuers, the Austral Sale and the Edmondson Park Sale, the valuers agreed as to the adjustments to be made to account for the existence of development consent; the existence of airport noise; and the costs of sewer connection. The valuers also agreed that various other adjustments should be made but disagreed as to the magnitude and reasons for such adjustments. As it was agreed that the Mulgoa Sale was the most comparable sale and the valuers' positions in relation to this sale have been extensively discussed above, the discrete positions taken by the valuers in relation to the Austral Sale and the Edmondson Park Sale do not need to be considered in further detail. In summary, for the Austral Sale, Mr Hollinshead adjusted −73%, and Mr Dale adjusted −77%; while for the Edmondson Park Sale, Mr Hollinshead adjusted −64%, and Mr Dale adjusted −70%, for equivalence with the Parent Parcel in the before scenario. 10. Mr Hollinshead's evidence was that the adjusted land value rate of that part of the Parent Parcel with the highest and best use as residential subdivision is $149/m² to $167/m². Adopting what he referred to as a "genuine professional compromise", he opined that the land value rate of $155/m² should be adopted. As adverted to above, after considering the comparable sales and adjustments required in the before scenario, Mr Dale's position remained that the sales analysed were insufficiently comparable and that the magnitude and unconventional nature of the adjustments undertaken meant they could not be relied upon to determine a $/m² value of the Parent Parcel in the before scenario. As a result, Mr Dale did not put forward a rate. 11. Mr Hollinshead opined that his land value rate of $155/m² should also be adopted for the Residue Land with the highest and best use as residential subdivision in the after scenario. Mr Hollinshead initially considered a reduction in the rate in the after scenario on the basis of the value of the Residue Land being diminished as a result of the public purpose, however after joint conferencing, he reached the conclusion that $155/m² should be adopted. Again, Mr Dale did not put forward a rate on the basis that the DCA could not be utilised. 12. Despite their inability to reach any material agreement in relation to land with the highest and best use as residential subdivision, after working through some initial disagreements, the valuers agreed, having considered various comparable sales of land with rural zonings, which I consider below, that if the Court found that the Northern Land (or part thereof) could only be used for land banking, as I have found, the land value rate per square metre to be applied both in the before scenario and the after scenario is $125/m². 13. The valuers agreed that the sale of 2830-2844 The Northern Road, Luddenham ('TNR Sale') is the most comparable sale for that part of the Parent Parcel in the before scenario with the highest and best use for land banking. The TNR Sale was a sale of 10.12ha of RU1 zoned land that transacted on 13 June 2018 for $13,230,000, with an agreed land value rate of $130/m² at the date of acquisition. The valuers considered adjustments between the TNR Sale and the Parent Parcel in the before scenario on the basis of town planning issues (including location and zoning potential) and while their reasoning was expressed separately, both agreed that a small downward adjustment was justified, such that the agreed land value rate of that part of the Parent Parcel in the before scenario with the highest and best use for land banking is $125/m². The valuers also adopted this rate for the Residue Land in the after scenario. HDM valuation methodology 1. As noted above, the HDM was used by Mr Dale as his primary valuation methodology when valuing the part of the Parent Parcel in the before scenario, and the part of the Residue Land in the after scenario, with the highest and best use as residential subdivision. Although he undertook a number of valuations using the Estate Master program based on various scenarios, Mr Hollinshead maintained his reliance on the DCA as he was concerned about the subjective and opinionative process for determining inputs into the HDM, and the assumptions and projections that are required to be made when utilising the HDM, in circumstances where the HDM is sensitive to changes in assumptions, projections and input values. 2. The Court was provided with a number of valuations undertaken using the HDM based on different scenarios for residential subdivision that engage with different iterations of the areas available for residential subdivision, lot yields, and development costs over the course of these proceedings. 3. In their initial individual expert reports and joint expert report, Mr Dale undertook valuations using the HDM for the R2 zoned Southern Land (with supporting Ancillary Facilities located on the Northern Land) in the Parent Parcel in the before scenario and the Residue Land in the after scenario, while Mr Hollinshead undertook valuations using the HDM for the whole of Parent Parcel in the before scenario and the Residue Land in the after scenario (which incorporated both residential subdivision and rural lots). Each valuer initially adopted the respective planning and engineering evidence of the party that engaged them. In his supplementary statement of evidence dated 18 September 2020 Mr Hollinshead revised his land value rate for the Northern Land on the basis that the highest and best use was for land banking, and provided a revised valuation using the HDM which was confined to the R2 zoned Southern Land in the Parent Parcel in the before scenario and the Residue Land in the after scenario. 4. The supplementary joint report of the valuation experts dated 1 October 2020, included competing valuations using the HDM from the valuers for four scenarios based on the residential subdivision layouts of Mr Connelly and Mr Rowan in the before scenario and the after scenario. As considered below, I have found these helpful given my various findings. The valuers undertook further valuations using the HDM in their further supplementary joint report dated 29 October 2020, where they considered 12 hypothetical development scenarios based on, first, Mr Connelly's residential subdivision layouts which assumed a residential subdivision could be developed on the Northern Land; and second, Mr Connelly's and Mr Rowan's competing lot yields and development costs (ultimately comprising valuations of 3 before scenarios and 9 after scenarios). This resulted in the determination of 12 discrete valuations which the valuers state is "predicated on certain assumptions that may or may not be correct", in circumstances where there was "strong disagreement" between the town planners. None of these later scenarios reflect my various findings. 5. At the end of the joint conferencing process, the valuers agreed on the following elements of the valuations using the HDM: first, that the average sale price of residential lots in the before scenario and the after scenario is $530,000 per lot (noting that the issue of injurious affection in the after scenario is considered separately below); second, that the average rate of sales of residential lots created in the before scenario and the after scenario is 3.25 lots per month (where initially Mr Dale adopted 3.5 lots per month, and Mr Hollinshead adopted 3 lots per month); third, that the land purchase fees and cost of finance were agreed; fourth, that 100% debt funding should be adopted in the valuation; fifth, that land holding costs such as statutory rates and taxes were broadly agreed (although precise amounts vary depending on land value); and sixth, that the development costs were as advised by the respective experts. 6. Notwithstanding this, a number of disagreements remained about valuations undertaken using the HDM. The valuers continued to diverge in their approach to town planning issues including the area to be valued as a residential subdivision (due to differing opinions as to whether the Northern Land was amenable to residential subdivision or development of Ancillary Facilities); the assumed lot yield (on the basis of the appropriate provision of public open space in a residential subdivision); and estimated development costs (on the basis that a significant physical treatment on the eastern boundary may be required). However, given my findings above, the substantive issues behind these differences have now been resolved. As a result, these areas of disagreement fall away, and the Court's findings will need to be implemented within any valuation process using the HDM. Additionally, a number of the development scenarios put forward by the valuers are not able to be discretely adopted by the Court as they are predicated on a town planning assumption that has not been accepted by the Court. 7. Putting aside the town planning issues, the valuers accepted that the differences between their valuations using the HDM are now confined to two issues: first, which of the hurdle rates adopted by the valuers in the Estate Master program best represents how the market would assess the land (and what percentage should be adopted as the hurdle rate); second, whether there would be a decrease in the residual land value in the after scenario as a result of the construction of the public purpose. Both these issues are considered in more detail below. 8. In summary, the valuations of the Parent Parcel in the before scenario and the Residual Land in the after scenario of the land with the highest and best use as residential subdivision using the HDM were not agreed, but the points of difference were clearly identified. Again, although not reflective of my findings recorded above, by way of example, on the basis that the whole of the Parent Parcel is available for residential subdivision in the before scenario, and adopting Mr Connelly's lot yields and development costs, Mr Dale determined that the Parent Parcel has a total market value of $23,375,000 (excl GST) and a land value rate of $195/m². On the basis the whole of the Residue Land is available for residential subdivision, and again adopting Mr Connelly's lot yields and development costs, Mr Dale determines that the Residue Land has a total market value of $15,500,000 (excl GST) and a land value rate of $182/m². 9. In contrast, Mr Hollinshead, adopting Mr Rowan's and Mr Ham's lot yields and development costs, determined a market value of $14,175,000 (excl GST) for the land on the Parent Parcel available for residential subdivision in the before scenario, leading to a total market value of $18,513,125 (excl GST) for the Parent Parcel. Mr Hollinshead then, again adopting Mr Rowan's and Mr Ham's lot yields and development costs, determined a total market value of $11,185,000 (excl GST) for the land on the Parent Parcel available for residential subdivision in the before scenario, leading to a total market value of $13,904,000 (excl GST) for the Residue Land. Despite this, Mr Hollinshead relied on his DCA valuations. The applicants' approach to valuation methodology 1. The applicants submit that the HDM should be used to value the Parent Parcel and the Residue Land as it is the preferred valuation methodology where land is "ripe" for subdivision. This is because the HDM reflects how the parties to the hypothetical transactions would value the land, being on the basis that it will be immediately developed to obtain a profit. In these circumstances, the hypothetical purchaser would offer, and the hypothetical vendor would accept, a price that reflects the cost of the developing the land as a residential subdivision with a reasonable margin for profit for the developer. 2. The applicants submit that there is significant judicial support for the use of the HDM, and refer to a number of authorities where the HDM was utilised including: Closer Settlement at 65; Turner at 261; and the discussion of Wells J in Brewarrana Pty Ltd v Commissioner of Highways (No 2) (1973) 6 SASR 541; (1973) 32 LGRA 170 ('Brewarrana') at 552, where his Honour noted: "The evidence leaves me in no doubt that, once again, the question resolves itself into one of degree. Plainly, a calculation based on a hypothetical subdivision will not be vitiated simply because some very slight delay might be experienced before realization could begin, but an inordinate delay of, say, several years could, equally plainly, render the whole undertaking so speculative that a conclusion as to value would be wholly unreliable. In between those two extremes, the skilled valuer will have to decide at what stage the speculative element looms so large that the method becomes unsafe. His decision will depend on all the circumstances of each particular case." 1. In response to "limitations" raised in relation to the use of the HDM (citing Pritchard J in Kelliher v Commissioner for Main Roads (No 2) [2015] WASC 478 at [97]-[99]), the applicants submit: first, as there remains only limited disputed inputs because the valuers are "substantially agreed on every cost input", errors that may sometimes arise from numerous variables dependent on the exercise of subjective judgment are avoided; second, a review of the range of matters to be considered when setting the P+R Margin for the valuation using the HDM (such as demand for lots, delay in completing the subdivision, and supply of lots from neighbouring subdivisions) supports the use of the HDM as there is good demand for lots, the delay in completing the subdivision is agreed, and there is no prospect of competing neighbouring subdivisions and limited other subdivisions in the area; and third, as the land being valued remained ripe for subdivision at the date of acquisition, issues regarding reliability of the HDM where the hypothetical subdivision may not occur for some time do not arise. Given this, the applicants contend that the HDM is the "most appropriate method of valuation". 2. Moreover, the applicants, adopting Mr Dale's evidence, submit that as there are no truly comparable sales of englobo land zoned to allow residential subdivision, the DCA should not be utilised, as the adjustments required to be made are more than minor and make the analysis too subjective. In particular, the applicants criticise the sales identified as comparable, characterising them as "single residential allotments". Further, the applicants criticise the adjustments adopted by Mr Hollinshead for market movement; location; size; dwelling density; airport noise; and busy roads as "subjective and opinionative", and conclude that these adjustments are too high to support the use of the DCA as the preferred valuation methodology. 3. In support of the opinions of Mr Dale, in relation to both his preference for the HDM and his reticence in relation to the DCA, the applicants submit that Mr Hollinshead's valuation evidence was inconsistent (in that it included reversals and recanting), such that the Court would have little confidence in his opinions. The applicants make five specific criticisms being: first, that he reverses his position by first criticising Mr Dale's earlier "blended approach" (that is, separately valuing the Northern Land and the Southern Land using different valuation methodologies) and rejecting the HDM as "subjective and opinionative", before adopting both his own blended approach and the HDM as part of this; second, that he initially rejects land banking as the highest and best use of the Northern Land in favour of a lower rate based on rural use, before increasing the rural use rate to an amount that is comparable to the rate for land banking, and then adopting land banking as the highest and best use of the Northern Land, representing a threefold increase in his rate; third, that he changed his evidence in relation to allowing for injurious affection in the after scenario, resulting in it being discarded in his final evidence; fourth, the presence of errors in his adjustments for market movement (including his approach to, and use of, paired sales to demonstrate market movement) as well as other adjustments made to his four comparable sales; and fifth, that he fails to adopt the adjustments he had identified as a result of his analysis, and instead adopts different adjustments. 4. In conclusion, the applicants submit that Mr Hollinshead's approach to the DCA valuation methodology is "clearly flawed", and his adjustments are too high rendering them "unsafe". Given this, the HDM valuation methodology should be utilised to value land with the highest and best use as residential subdivision. However, the applicants accept, in accordance with the valuers' agreed position, that the DCA can appropriately be used to value the land with the highest and best use for land banking in the before scenario and the after scenario. Transport's approach to valuation methodology 1. Transport submits that where there are "sufficiently reliable comparable sales", the DCA is the conventional valuation methodology. Transport refers to Graham Trilby Pty Ltd v Valuer-General [2008] NSWLEC 217 ('Graham Trilby') at [27], where Jagot J noted that comparable sales represent direct evidence of the market's evaluation of that which must otherwise be accounted for by the valuer utilising the HDM valuation methodology. 2. Transport accepts that the sufficiency of comparable sales is a matter of fact and degree. An "inherent feature" of the DCA is adjustments to create equivalence between the comparable sale and the subject sale, which involve valuation judgments and so are "subjective". Transport contends that the Court should consider the specific circumstances in which adjustments are being made, and the reliability of each adjustment, not their cumulative magnitude. In these proceedings, Transport submits that the adjustments made to the comparable sales identified by the valuers are "not high". 3. Transport notes that the Court has previously held that one comparable sale, subject to the proper adjustment, analysis and application, can provide a sufficient foundation for the use of the DCA: Dan Wei Zheng v Roads and Maritime Services [2017] NSWLEC 77 ('Dan Wei Zheng') at [129]; citing Toveno Pty Ltd v Roads and Maritime Services [2014] NSWLEC 1266 ('Toveno') at [65], [94]; citing Maurici v Chief Commissioner of State Revenue (2003) 212 CLR 111; [2003] HCA 8. The valuers agree that the Mulgoa Sale is the most comparable sale, and also agree to the majority of the adjustments to that sale. Transport also notes that the Courts have previously used the DCA in circumstances where there are "far from perfect" comparable sales available, citing Marrickville Council v Sydney Water Corporation [2013] NSWLEC 222 at [19]; Sydney Water Corporation v Marrickville Council [2014] NSWCA 438. Transport disagrees with the applicants' characterisation of the sales identified as comparable as "sales of single residential allotments" and submits instead that they are englobo sales. 4. Transport makes submissions regarding the three main disagreements between the valuers in relation to the adjustments to the Mulgoa Sale, contending that the Court should prefer the adjustments put forward by Mr Hollinshead. First, the +57% adjustment for market movement proposed by Mr Dale for the Mulgoa Sale cannot be supported because: the average house sales in Luddenham utilised by Mr Dale were unreliable because they come from a different market to the subdivided lots that would result from the Parent Parcel and the Residue Land; when these different market sales are removed, the adjustment becomes a small negative or nil adjustment; and the adjustments are inconsistent with Mr Dale's adjustment for location. Second, Mr Dale's approach to adjustment for location is not supported by market evidence, such that the "transparency" of Mr Hollinshead's adjustment should be preferred. Third, Mr Dale takes an irreconcilable position in relation to the exclusion of the riparian corridor from the gross developable area, but the inclusion of the riparian corridor in the calculation of the dwelling density per hectare of gross developable area. 5. Responding to the applicants' criticisms of the DCA and of Mr Hollishead's evidence, Transport submits that Mr Hollinshead properly altered his opinion in the course of genuine dialogue between expert witnesses, in accordance with the Class 3 Practice Note and the Court's Conference of Expert Witnesses and Joint Expert Reports; and further, the fact that Mr Hollinshead was willing to do this at appropriate occasions has resulted in an increase to his assessment of the applicants' entitlement to compensation and fully addresses the applicants' assertions of his "subconscious reverse engineering" to reduce the amount of compensation. Transport points out that, despite some disagreements regarding adjustments, Mr Dale's land value rates are lower than those derived by Mr Hollinshead for the less comparable Austral Sale and Edmondson Park Sale. 6. Transport makes submissions against the efficacy of the HDM valuation methodology on the basis that it involves many estimates and assumptions, giving it a "speculative" character, and points to judicial criticism of the HDM. Further, Transport notes that the inputs to the HDM are based on the judgment of the valuers and other experts where even small differences in these inputs have significant impacts on the values generated using the HDM. Transport submits that the fact that the valuers have agreed on a number of the inputs into the HDM does not mitigate the issue of speculative inputs, and, in any event, the fact that the parties remain in dispute regarding the further planning issues and hurdle rates further militates against the adoption of the HDM. Consideration 1. It is generally accepted that, insofar as there are comparable sales available to the valuer (being sales of land that are sufficiently similar to the subject land so as to allow a comparison to be made between them), the conventional valuation method is the DCA. As posited by Transport, the DCA is generally preferred because the comparable sales "represent direct evidence of the market's evaluation of all the variables that a valuer must otherwise account for by a subjective opinionative process" when undertaking the HDM valuation methodology: Graham Trilby at [27]. 2. There has been much judicial consideration of both the DCA and the HDM, and the circumstances in which it is appropriate to use each valuation methodology. In this respect, I adopt the comments of Wells J in Bronzel v State Planning Authority (1979) 21 SASR 513; (1979) 44 LGRA 34 at 516, wherein his Honour recognised the availability of different methodologies for valuation and the importance of retaining an open mind about these different methods: "… I am not disposed to reject any method of valuation adopted by either valuer on the ground that it is not worth considering; it seems to me that if Spencer's case [Spencer v The Commonwealth (1907) 5 CLR 418] … is to keep its practical worth in this jurisdiction, this Court should be slow to reject any method that, in expert hands, is capable of yielding a result within bounds that are not unreasonable. The limitations of every method must, of course, always be kept clearly in mind..." (citation added) 1. My analysis of the authorities referred to by the parties leads me to the view that, while there is a general, and understandable, judicial preference for the DCA, this is dependent upon a factual finding that the comparable sales sought to be relied upon are truly comparable, and consideration as to whether there is an orthodox alternative methodology. For the reasons that follow, and not without some concern, I find that, in relation to the valuation of the R2 zoned Southern Land, valuation using the HDM valuation methodology is to be preferred. 2. I accept the general proposition that whether a sale is sufficiently comparable is a question of fact and degree and while some adjustment is always necessary, too much adjustment will render it unsafe to use: Brewarrana at 551. I am conscious that, as submitted by Transport, it has on occasion been held in this Court that it is sufficient for one sale only to be truly comparable to justify the use of the DCA valuation methodology: Dan Wei Zheng at [29]; Toveno at [65], [94]. 3. I have closely considered the extensive expert evidence and the detailed submissions of the parties in relation to the adjustments to the sales that have been identified by the valuers as comparable. The Court also had the benefit of a site view of the land the subject of the Mulgoa Sale as well as a number of the other comparable sales which enabled a better understanding of the expert evidence and submissions on this point. 4. While in these proceedings there is one sale that is agreed to be, at least, more comparable than the other identified sales, I am not satisfied that the Mulgoa Sale is sufficiently comparable to support the use of the DCA. While there is an attractive methodological simplicity in adopting the DCA by attempting to adjust the Mulgoa Sale to create equivalence with the part of the Parent Parcel and the Residue Land available for residential subdivision, given the significant differences between the valuers in relation to adjustments required to be made, which reflect their subjective and evaluative approaches to the issue of market movement, location, and dwelling density per hectare of gross developable area or gross revenue per hectare, and the extent of those adjustments, which extend to a +57% adjustment for one factor, leads me to the view that it would be unsafe to rely upon the Mulgoa Sale when undertaking the valuations using the DCA. 5. In this respect, I rely on, and accept, Mr Dale's consistent opinion that the Mulgoa Sale is not a sufficiently comparable sale, and further, that there are in fact no sufficiently comparable sales of englobo land zoned for residential subdivision to support the use of the DCA. 6. My position is further confirmed by my view that although a single comparable sale can be relied upon to support the use of the DCA, there are usually a number of comparative sales that can be relied upon. The valuers held such divergent opinions about the comparability of the sales at 70-80 Croatia Avenue, Edmondson Park and 30 Gurner Road, Austral, that these sales were not common to the valuers' later valuations using the DCA. In these circumstances, I accept that these sales are not sufficiently comparable such that they can be relied upon when using the DCA. I have also considered the remaining common sales identified by the valuers, the Austral Sale and the Edmondson Park Sale, and first, accept the agreed evidence that they are not as comparable as the Mulgoa Sale and require more adjustments than the Mulgoa Sale (in circumstances where I have already found that the Mulgoa Sale is not sufficiently comparable), and second, that there are analogous significant differences between the valuers' adjustments, militating against reliance on the sales. 7. Further, I take into account that there is an alternative orthodox valuation methodology, albeit one which itself requires a number of subjective determinations in any event, that has been fully considered by both valuers, and has also been the subject of detailed evidence and submissions. 8. I accept, and it is common ground between the parties, that in both the before scenario and the after scenario, the R2 zoned Southern Land is clearly ripe for development for residential subdivision. Accordingly, the parties to the hypothetical transactions would transact on the basis that the Southern Land could be immediately developed as a residential subdivision. 9. Further, I accept that parties have properly considered, and now agree on, most of the input values, projections, and assumptions when undertaking the valuations using the HDM. Further, as the Court has considered and resolved the outstanding town planning issues above, and the issue of hurdle rates and injurious affection are further considered and resolved below, I am therefore satisfied that many of the values, projections, and assumptions have either been agreed by the parties or resolved by the Court on the basis of considered evidence, such that the suggested speculative nature of the inputs into the HDM is minimal. In this respect, I find that the HDM, even if not the "conventional" valuation technique because it does not necessarily represent direct evidence of the market's evaluation, is now able to be supported by input values that reflect market and other evidence. 10. While I am satisfied that the HDM valuation methodology is preferable when valuing the land with the highest and best use as residential subdivision, this preference, as anticipated by the parties, necessitates some further process of valuation using the Estate Master program to be undertaken to reflect the findings of the Court before the amount of total compensation is finalised. I consider that this is a preferable outcome compared to the significant adjustments that would need to be made, and the significant differences between the valuers in relation to their respective adjustments that would need to be reconciled, to support the use of the DCA. 11. I now turn to the appropriate methodology when valuing the Northern Land with its highest and best use for land banking. Having considered the valuation evidence before the Court, I am content to find that, as agreed by the parties and the valuers, $125/m² is the appropriate rate for this land in both the before scenario and the after scenario. 12. I also accept the valuers' final and agreed view as to the appropriateness of a blended approach being undertaken to the determination of value, being the combination of the HDM valuation methodology for the R2 zoned Southern Land and the adoption of the agreed $125/m² rate on the basis of the DCA valuation methodology for the Northern Land, in relation to both the transaction of the Parent Parcel in the before scenario and the Residue Land in the after scenario. Valuation – hurdle rates and injurious affection 1. Having resolved the appropriate valuation methodologies to be used when valuing the Parent Parcel in the before scenario and the Residue Land in the after scenario, some further comment is required in relation to its application. More specifically, the two outstanding valuation issues identified above also need to be resolved by the Court. 2. I have resolved the issue of the appropriate valuation methodologies to be used when valuing the Parent Parcel in the before scenario and the Residue Land in the after scenario, in favour of the HDM for the Southern Land with the highest and best use as residential subdivision and the DCA for the Northern Land with the highest and best use for land banking. However, some further comments are required in relation to the application of these valuation methodologies. More specifically, the two outstanding valuation issues involving the appropriate hurdle rates to be adopted, and whether there should be an allowance for any injurious affection to the Residue Land as a result of the construction of the public purpose, also need to be resolved by the Court. Hurdle rates 1. When valuing the R2 zoned Southern Land using the HDM with the Estate Master program a target rate of return must be adopted. The valuers, and the parties, disagree as to: first, the type of rate of return to be adopted as the minimum target rate of return, or "hurdle rate", when undertaking the valuation; and second, the quantum of the hurdle rates to be adopted when undertaking the valuation. 2. The Court was directed to the Estate Master program "User Manual" ('Manual') and the parties made detailed submissions on the issue. A review of the Manual indicates that, in short, there are two different methods of calculating residual land value in the Estate Master program, which require the adoption of different target rates of return. First, residual land value can be calculated on the target internal rate of return (being the target IRR hurdle rate), whereby the residual land value is the maximum price for the land that a hypothetical purchaser would pay to make the calculated IRR equal the target IRR hurdle rate or their net present value equal zero. Second, residual land value can be calculated on a target development margin referred to as the profit and risk factor (being the P+R Margin hurdle rate), whereby the residual land value is the maximum price for the land that a hypothetical purchaser would pay to make the calculated development margin equal to the target return for the development. 3. The applicants contend that it is appropriate to include the P+R Margin in the HDM as a hurdle rate (as Mr Dale has done and Mr Hollinshead has not). The applicants submit that the appropriate target P+R Margin is 25% and the appropriate target IRR is 16.5% as opined by Mr Dale. In contrast, Transport contends that it is appropriate to include the IRR in the HDM as a hurdle rate, without including the P+R Margin as a hurdle rate, and that the appropriate IRR is 20%, as adopted by Mr Hollinshead. 4. The resolution of the appropriate type and quantum of hurdle rates is important, because they are practically included as inputs into the Estate Master program and affect the determination of land value using the HDM valuation methodology. Generally, if the hurdle rates are higher, a higher return is required on the hypothetical development and the purchaser in the hypothetical transaction pays less for the R2 zoned Southern Land to achieve that higher return. This has the effect of depressing the purchase price for the hypothetical transaction, which reduces the valuation of the Parent Parcel and the Residue Land, and accordingly the Acquired Land. 5. Mr Hollinshead utilised the IRR as his hurdle rate when undertaking the HDM. When determining a "suitable" IRR, Mr Hollinshead analysed market evidence (being the four comparable sales which he relied upon in relation to his valuations using the DCA valuation methodology, noted at [158] above) and derived an appropriate IRR. Mr Hollinshead initially adopted an IRR hurdle rate of 25%, largely based upon the Mulgoa Sale. Later he reduced the IRR hurdle rate to 20% as a "genuine professional compromise". 6. Mr Hollinshead accepted that choosing the appropriate hurdle rate is one of a number of subjective and opinionative inputs into the HDM, and that selecting an appropriate IRR can be subjective. He agreed that the process of using the four comparative sales to derive the IRR for the hypothetical development itself involved a number of significant adjustments. Mr Hollinshead criticised Mr Dale's reliance on his general experience, and failure to undertake analyses based on relevant market data, when adopting his hurdle rates. Mr Hollinshead further opined that his general experience did not support Mr Dale's conclusions. 7. Mr Hollinshead did not use the P+R Margin on the basis that the Manual specifies that the appropriate parameter to use for developments with a project life in excess of two years is the IRR. Mr Hollinshead agreed that if using the Estate Master program for a project life of less than two years, a P+R Margin would be used as the hurdle rate. 8. Mr Dale relied upon his experience in valuing large and small residential development sites and consultations with developers to determine the hurdle rates when preparing his valuations using the HDM. Mr Dale's experience was that the P+R Margin is the key driver in formulating the purchase price of such sites, and that a purchaser would not even formulate a bid without reference to the P+R Margin. He acknowledged that IRRs are relevant, and also considered both the P+R Margin and the IRR when undertaking his valuations using the HDM. 9. Mr Dale criticised Mr Hollinshead's failure to consider the P+R Margin when undertaking his valuation using the HDM, on the basis that first, this does not reflect the long-established valuation principle that the hypothetical parties would have been perfectly informed (and thus should be aware of both "performance indicators"); and second, that this does not reflect Mr Dale's experience in the market place (where he says the IRR is used when comparisons are being made between multiple development projects, and the P+R Margin provides specific information about a particular development project). Mr Dale also criticised Mr Hollinshead's adoption of a consistent IRR of 20% when undertaking valuations of different development scenarios, on the basis this renders the IRR "impotent" as it fails to differentiate between development projects. 10. Based on his experience, Mr Dale opined that the general target for a P+R Margin is 15% to 25%, such that the net profit as a percentage of total development costs would fall somewhere within that range. The low end of the range is more commonly related to land that has a reduced risk through the characteristics of the land and the upper end of the range oriented to the land that has a higher level of risk. Mr Dale noted that developers considered the IRR when formulating a bid, but that target IRRs vary depending on varying lending ability, different projects and economic conditions. In his experience, the general range target for the IRR is 15% to 25%. 11. As a result, Mr Dale based his adopted hurdle rates on the P+R Margin and adopted a target P+R Margin of 25%. This is on the upper end of the market range, on the basis that he has been "mindful of the additional risk involved with the external sewer works required". Mr Dale adopted a target IRR of 16.5% based on his general property market experience and the feedback from market participants. It also reflects the "prevailing low interest rate environment and the development timeframe and capital exposure". Mr Dale preferred his approach based on experience because of the large range of assumptions (including development costs) that are required to be made when analysing englobo sales to derive an estimated P+R Margin or an IRR. Finally, when undertaking his valuations, Mr Dale tried to "get a balance" of hurdle rates such that the P+R Margin and the IRR fell within the general market parameters that he had identified. Applicants' position 1. The applicants made detailed submissions regarding the appropriateness of using the P+R Margin and the IRR as hurdle rates in the Estate Master program. The applicants submit that allowance for profit and risk (through the P+R Margin) is included in the HDM to account for the costs incurred by the hypothetical purchaser in preparing the englobo land for subdivision; the risk of selling the subdivided lots, and the prices for which they are sold; and, the return on the investment made. 2. The applicants contend that "judicial discretion" overwhelmingly supports the use of the P+R Margin as an input into the HDM. For example, the applicants refer to the comments of Gobbo J in Coastal Estates Pty Ltd v Bass Shire Council [1993] 2 VR 566; (1993) 79 LGERA 188 at 578, where his Honour noted: "One of the key ingredients has always been the allowance for profit and risk. The choice of this figure was traditionally supported by evidence as to what minimum figure professional subdividers expected from the particular kind of development, with different rates being sought according as to whether the subdivision was an industrial, residential or resort subdivision. The rate so arrived at might then be modified, according as to whether the time lines were especially long or short." 1. The applicants also provide details of the P+R Margin adopted by the courts in a number of previous cases. The applicants criticise Mr Hollinshead's failure to engage with the P+R Margin as a hurdle rate, and contend that this "failure to properly consider P+R" results in high allowances in the before scenario and low allowances in the after scenario, with the net effect of reducing the compensation to which the applicants are entitled. 2. The applicants submit that Mr Dale's approach of using both the target IRR of 16.5% and the target P+R Margin of 25%, "fully" informs him to provide advice to the hypothetical purchaser (consistent with comments of Dixon CJ in Turner at 268, regarding checking results "by reference to as many sources of information and inference as may be found"). They submit that in contrast (and contrary to Dixon CJ's commentary in Turner), Mr Hollinshead "hides" the P+R Margin. 3. In relation to the quantum of hurdle rates, the applicants submit that Mr Dale's target P+R Margin of 25% is "an acceptable and conventional allowance". Further, Mr Dale's evidence was careful and considered and his position remained firm under cross-examination. 4. The applicants contest the quantum of Mr Hollinshead's target IRR hurdle rate. First, the four comparable sales that he used to derive this rate have a project life of between 18-28 months, and thus in accordance with the Manual, the P+R Margin (not IRR) would be used as a hurdle rate in the Estate Master program. Further, the applicants submit that in cross-examination, Mr Hollinshead agreed that he had made errors in his calculations of the total project life for each of the comparable sales upon which required correction. Finally, it is clear that Mr Hollinshead's analysis of the four comparable sales involves significant assumptions (and indeed more assumptions than are required in deriving a P+R Margin). In these circumstances, the applicants submit that the analysis undertaken by Mr Hollinshead to derive his target IRR hurdle rate is flawed. 5. The applicants further submit that (in a similar manner to Mr Hollinshead's reconsideration of his DCA adjustments) he made significant downwards adjustment on the target IRR from 25% to 20% without justification. 6. The applicants note that based on Mr Hollinshead's initial target IRR hurdle rate of 25%, when his P+R Margins are "unhidden" (using the Estate Master program) in the before scenario, a P+R Margin of 45% is obtained, and in the after scenario, a P+R Margin of approximately 38% is obtained. The applicants contend that these P+R Margins are too high and have the effect of lowering the amount available for a purchaser to pay for the Parent Parcel and the Residue Land, and in these circumstances, the hypothetical purchaser would not be competitive and would not successfully purchase the Parent Parcel and the Residue Land. Transport's position 1. Transport adopts Mr Hollinshead's approach to the hurdle rates. Transport submits that Mr Hollinshead's decision to use the IRR as a hurdle rate (and not the P+R Margin) is consistent with the Manual, which specifies that the appropriate hurdle rate for longer term projects of more than two years is the IRR. In the present circumstances, the project life being considered for the development of a residential subdivision on the Parent Parcel and the Residue Land is greater than two years, and so the IRR should be adopted as the hurdle rate. 2. With reference to the Manual, Transport submits that there are two different methods of calculating residual land values (as noted above), meaning that the P+R Margin and the IRR are based on different principles and methods of calculation (with the result they will most likely result in different values for the same development). Transport submits that using the IRR properly takes into account the time value of money, and is suitable and more effective for longer term projects. 3. Transport contends that using the P+R Margin is flawed and can lead to misleading results for projects that extend beyond two years. Transport contends that Mr Dale's approach and use of the P+R Margin is "directly contrary" to the Manual, in circumstances where the development of a residential subdivision on the Parent Parcel and the Residue Land will take more than two years. 4. In relation to quantum of the IRR hurdle rate, Transport defends Mr Hollinshead from the applicants' criticism of the change from his initial rate of 25% to his later rate of 20%. Transport points out, that this change was fully explained by Mr Hollinshead in his evidence, and moreover, works in the applicants' favour. 5. Transport also contests the applicant's criticism of Mr Hollinshead's use of the four comparable sales to derive an IRR hurdle rate. Although the use of these sales was criticised by the applicants because the total project length for each was less than two years in length and according to the Manual, a P+R Margin should be used for projects of this length and not an IRR, Transport suggests that this criticism is misplaced because the sales were in fact used to derive a range of IRRs from which an appropriate IRR for the subject land was derived by Mr Hollinshead. 6. Transport criticises Mr Dale's approach to the quantum of the IRR and the P+R Margin hurdle rates, and in particular, his reliance on "general experience" in valuation for large and small developers when adopting his target IRR and P+R Margin. Transport also notes that Mr Dale's target IRR of 16.5% is in the lower half of the acceptable range, whereas his target P+R Margin of 25% is at the top of the range, and contends that Mr Dale accepted in cross-examination that this was inconsistent. 7. Transport submits that in circumstances where Mr Dale has not derived his IRR from market evidence, Mr Hollinshead's approach which is "grounded in objective market evidence" should be preferred. Furthermore, Transport indicates that the authorities to which the applicants refer, where a P+R Margin was adopted, relate to developments that are significantly different to those the subject of these proceedings and provide no reliable guide to the appropriate hurdle rate that should be used. 8. Finally, Transport suggests that Mr Dale uses the Estate Master program to "back-solve" for a residual land value he has predetermined – an approach which is impermissible. Thus, Mr Dale's use of the HDM is flawed, first, because his use of the P+R Margin as a hurdle rate is fundamentally inappropriate; and second, in any event, to the extent that he purports to use the IRR (which is the correct hurdle rate), his adopted target of 16.5% is unreliable. Consideration 1. Given the manner in which the evidence has been given and the expertise of each of the valuers, I find it difficult to prefer the evidence of one valuer over the other. Both valuers have approached the issues of the appropriate type of hurdle rate, and then the appropriate quantum, to be adopted from differing yet valid perspectives. I further consider that each valuer has given reasonable evidence despite the criticisms made by the parties in their respective submissions. 2. I consider the comments of Wells J in Brewarrana at 543, to be apposite in these circumstances, where, in considering the evidence of valuers in the proceedings, his Honour noted: "The testimony given by the expert valuers called by the parties demonstrated once again the extraordinary differences in the opinions that, after serious and prolonged deliberation, may be advanced by experienced, professional men in respect of identical subject matter. … The process of valuing land, of course, has something of the character not only of a science but also of an art, in which knowledge, experience and judgment of people, commerce and fashion play integral parts, and it might be thought that the remarkable disparities between the values supported on each side were attributable solely, or at least mainly, to the skill with, and the manner in, which that art was exercised." 1. As noted above, the various other primary inputs into the Estate Master program were ultimately agreed between the parties and this agreement contributed to my determination that the HDM was, in the present circumstances, to be preferred over the DCA: cf. Brewarrana at 554. 2. Turning first to the type of hurdle rate to be adopted, I note that Mr Hollinshead's approach of adopting the IRR as a hurdle rate is consistent with the Manual, and further that this would be persuasive to the parties undertaking the hypothetical transactions in the before scenario and the after scenario: Vilro Pty Ltd (In Voluntary Liquidation) v Roads and Traffic Authority NSW (No 3) [2010] NSWLEC 234; (2010) 179 LGERA 47 at [248]. However, I also consider Mr Dale's evidence that the approach of the market is to prioritise the P+R Margin (to the extent that a purchaser's bid would not be prepared without making reference to the P+R Margin) to be persuasive, and likely to reflect the actual behaviour of the parties to the hypothetical transactions in the before scenario and the after scenario. I also consider the point about the parties to the hypothetical transactions seeking to access to as many sources of information and inference when transacting, to be well made, and to support consideration of both the IRR and P+R Margin as hurdle rates. 3. In relation to the quantum of the hurdle rates, I accept that Mr Hollinshead's approach is based on market evidence through his analysis of the four comparative sales (notwithstanding that this analysis requires a number of subjective adjustments). However, I also recognise the validity of Mr Dale's focus on the particular characteristics of the development of the residential subdivisions on the Parent Parcel in the before scenario and the Residue Land in the after scenario, and his adoption of hurdles rates within the general range. Finally, I accept the practicalities of Mr Dale's approach of using the target IRR and P+R Margin but then adopting the IRR and P+R Margin rates that both fall within the general market parameters. 4. I also take into account that Mr Hollinshead was criticised for his various changes in evidence (some of which were quite significant, and all generally in favour of the applicants) however I consider, as submitted by Transport, that Mr Hollinshead's changes in evidence should be seen as appropriate concessions made in accordance with his duties as an expert witness. 5. In all the circumstances, and keeping in mind the words of Wells J noted above, I prefer Mr Dale's approach based upon: first, the evidence he has given in relation to his experience of the practical approach taken in the market, and his experience with the behaviour of those seeking to undertake residential subdivisions; second, his sophisticated approach to the use of the Estate Master program, which I consider to reflect the likely behaviour of the parties to the hypothetical transactions for land with development potential of upwards of $10,000,000, where the parties would seek to explore any available inputs into the Estate Master program (including the P+R Margin and IRR hurdle rates) in order to be fully informed; third, the submissions of the applicants; and fourth, although not on its own determinative in my conclusion, the general principle that in the case of compensation, that doubts are resolved in favour of the more liberal estimate (Commissioner of Succession Duties (SA) v Executor Trustee and Agency Company of South Australia Limited (1947) 74 CLR 358; [1947] HCA 10 at 374; Boland v Yates Property Corporation Pty Ltd (1999) 74 ALJR 209; [1999] HCA 64 at [356]; Cassidy v Sydney Water Corporation [2008] NSWLEC 223 at [89]) where I am conscious that the principle has been somewhat refined over the years: Sydney Water Corporation v Caruso [2009] NSWCA 391; [2009] 170 LGERA 298 at [3]. Although the application of this general principle must be approached with some caution where the Court is adopting the before and after valuation method, I consider that it is appropriate to take the principle into account in relation to the approach to differences in the type and quantum of hurdle rates proffered by the valuers. 6. I therefore find that, consistent with the approach adopted by Mr Dale, both the P+R Margin and the IRR should be adopted as hurdle rates when undertaking valuations using the HDM. I further find, doing the best I can, and again consistent with the approach adopted by Mr Dale, a target P+R Margin hurdle rate of 25% would be adopted; and a target IRR hurdle rate of 16.5% should be adopted, in both the before scenario and the after scenario. Injurious affection in the after scenario 1. The applicants raise the issue of injurious affection, being a decrease in the value of the Residue Land by reason of the carrying out of, or the proposal to carry out, the public purpose for which the Acquired Land (as set out in s 55(f) of the Just Terms Act) was compulsorily acquired. The Acquired Land has been utilised for the upgrade and realignment of The Northern Road, which runs adjacent to the Residue Land. 2. Given my findings above in relation to the physical treatment on the eastern boundary, and specifically that the parties to the hypothetical transaction would transact on the basis that a 5m wall would be required, I consider that no further allowance needs to be made for injurious affection when undertaking the HDM valuation in the after scenario, on the basis that the Residue Land would be effectively screened from The Northern Road by a 5m wall. My reasons for this conclusion are illustrated through a brief consideration of the evidence and the parties' submissions in relation to injurious affection, as follows. 3. Mr Hollinshead originally reduced the per square metre rate of the R2 zoned land on the Residue Land by −2.5% to account for injurious affection in the after scenario, as a result of the impact of the road on the private open space of the residential subdivision, when undertaking his primary DCA valuation. When undertaking his HDM valuation, Mr Hollinshead applied a −5% discount to the gross realisation of the lots along the eastern boundary of the Residue Land to account for the impact of road noise. However, after observing the earthen mound on the Acquired Land at the site view and considering the future aircraft and aircraft-related activity noise that would impact the Residue Land in both the before scenario and the after scenario, Mr Hollinshead reduced his allowance for injurious affection for both the DCA and HDM valuation methodologies to 0%. 4. Mr Dale opines that if a 1.8m fence is the physical treatment that was found to be appropriate on the eastern boundary of the Residue Land in the after scenario, the gross realisation of $530,000 per lot (in the before scenario) should be reduced by −4.53% across all lots in the after scenario when undertaking the HDM valuation to account for injurious affection, arising from the amenity impacts of the road on the Acquired Land on residential subdivision on the Residue Land. However, where "effective screening" of the public purpose is undertaken, encompassing noise impacts, visual impacts and air pollution, Mr Dale opines that no reduction for injurious affection is required in the after scenario. Mr Dale adopted Mr Connelly's evidence to the effect that a 5m wall would be an adequate screen, but a 1.8m fence would not. Applicants' position 1. The applicants criticise Mr Hollinshead's change of position on injurious affection on the basis of the earthen mound being observed on the Acquired Land, noting that he does not have access to details of the characteristics of the mound, and as such cannot be sure of mound's ability to mitigate the negative impact of the road on the Residue Land. They also note that Mr Hollinshead's position is inconsistent with Mr Rowan's position, where Transport's town planner accepted that injurious affection would have occurred. 2. The applicants submit that it would be appropriate for the Court to find that the public purpose has caused injurious affection across the Residue Land. If the appropriate physical treatment on the eastern boundary in the after scenario is a 1.8m fence, the applicants' position is that the Court would nonetheless accept injurious affection has occurred across the Residue Land and that a −5% reduction to the average gross realisation of the lots should be applied to all lots in the after scenario. However, the applicants appear to accept that no additional allowance for injurious affection would be required if an adequate physical treatment is applied on the eastern boundary to mitigate injurious affection to the Residue Land. Transport's position 1. Transport submits that it has never taken the position that the public purpose will have no impact on the Residue Land – rather, its position is that the degree and nature of the visual and noise impacts of the public purpose on the Residue Land is such that a 1.8m fence physical treatment on the eastern boundary would be adequate to address these impacts. Given this, Transport submits that, accepting the construction of a 1.8m fence, there would be no decrease in the value of the Residue Land in the after scenario due to injurious affection resulting from the public purpose. However, if the Court finds that a reduction for injurious affection in the after scenario is appropriate in any event, then Transport's position is that if the HDM is the preferred valuation methodology, Mr Hollinshead's −5% reduction to the gross realisation of the lots along the eastern boundary of the Residue Land should be adopted. 2. Transport criticises Mr Dale's position on injurious affection on the basis that this was adopted during the hearing as a "fallback" because the applicants' position on a 5m wall was "disproportionate". Further, Transport submits that Mr Dale failed to provide a "cogent explanation" of why he adopted the approach of applying the reduction for injurious affection to all lots rather than just the lots on the eastern boundary of the Residue Land which are adjacent to the public purpose. Consideration 1. The submissions made by the parties about injurious affection in the after scenario are contingent on my findings about the physical treatment on the eastern boundary of the Residue Land likely to be required by Council. I have found that the parties to the hypothetical transaction would transact on the basis that Council would be likely to require a physical treatment on the eastern boundary, in the form of a 5m wall. 2. Where a 5m wall is constructed in the after scenario, the Residue Land would be effectively screened from noise impacts, visual impacts, and air pollution generated by The Northern Road, such that no further allowance for injurious affection needs to be made. Conclusion on valuation issues 1. My findings in relation to the two outstanding valuation issues are as follows: the appropriate hurdle rates to be adopted when undertaking valuations using the HDM are a target P+R Margin of 25% and a target IRR of 16.5% in the before scenario and the after scenario, as opined by Mr Dale. No discrete allowance needs to be made for injurious affection in the after scenario. 2. On the basis that the Court accepted the appropriateness of the HDM valuation methodology when valuing the land with the highest and best use as residential subdivision (which I have), and given the significant areas of agreement between the various experts, the Court was invited to make discrete findings in relation to outstanding matters, and to direct the parties to confer and provide an agreed quantum of the market value of the Acquired Land (including injurious affection) determined by the adoption of the Court's findings, including through appropriate modelling in the Estate Master program, to enable the Court thereafter to make an order for the determination of the total compensation to which the applicants are entitled. 3. Although I take this course somewhat reluctantly, I am conscious that the evidence of the Estate Master program modelling presently before the Court that reflects or is similar to my findings (particularly in relation to the lot yield of a residential subdivision on the R2 zoned Southern Land in both the before scenario and the after scenario), is confined to: Mr Hollinshead's modelling detailed in Mr Hollinshead's "HDM Detailed Inputs and Discussion" within Annexure 1 of the supplementary joint report of the valuation experts dated 1 October 2020 (part of Ex A (C5)); and Mr Dale's "Development Cost Correction, AR Design Proposal" within the "Supplementary JER Valuation" within Annexure 3 of the further supplementary joint report of the valuation experts dated 29 October 2020 (Ex J), which updated Mr Dale's earlier modelling detailed in Mr Dale's "HDM Detailed Inputs and Discussion" within Annexure 2 of the supplementary joint report of the valuation experts dated 1 October 2020 (part of Ex A (C5)) to make provision for the physical treatment on the eastern boundary of the Residue Land in the after scenario by allowing $1,060,000 for the construction of a 5m wall. 4. I consider that the later expert evidence received by the Court (including the supplementary report of the town planners provided 14 October 2020 (Ex D); Mr Hams' and Mr Connelly's joint report for development costing filed 15 October 2020 (Ex G); and most of the further supplementary joint report of the valuation experts dated 29 October 2020 (Ex J)) appears to address development scenarios which do not precisely reflect my findings detailed above. I am also concerned that the various costs of construction (including matters such as the construction bond, cost of provision of external sewerage works, including rising main works) which were otherwise agreed between the experts in relation to certain development scenarios, may not remain directly applicable as a result of the findings that I have made. 5. In these circumstances, I consider that there is insufficient evidence before the Court to finally determine the total compensation to which the applicants are entitled (as the Court is unable to run the Estate Master program modelling). I therefore proceed on the basis that the parties will confer and provide an agreed quantum of the market value of the Acquired Land (including injurious affection) determined by the adoption of the Court's findings, including through appropriate modelling in the Estate Master program. Disturbance costs 1. Pursuant to s 55(d) of the Just Terms Act, in determining the amount of compensation regard must be had to any loss attributable to disturbance. This is defined exclusively in s 59(1) as follows: 59 Loss attributable to disturbance (1) In this Act— loss attributable to disturbance of land means any of the following— (a) legal costs reasonably incurred by the persons entitled to compensation in connection with the compulsory acquisition of the land, (b) valuation fees of a qualified valuer reasonably incurred by those persons in connection with the compulsory acquisition of the land (but not fees calculated by reference to the value, as assessed by the valuer, of the land), (c) financial costs reasonably incurred in connection with the relocation of those persons (including legal costs but not including stamp duty or mortgage costs), (d) stamp duty costs reasonably incurred (or that might reasonably be incurred) by those persons in connection with the purchase of land for relocation (but not exceeding the amount that would be incurred for the purchase of land of equivalent value to the land compulsorily acquired), (e) financial costs reasonably incurred (or that might reasonably be incurred) by those persons in connection with the discharge of a mortgage and the execution of a new mortgage resulting from the relocation (but not exceeding the amount that would be incurred if the new mortgage secured the repayment of the balance owing in respect of the discharged mortgage), (f) any other financial costs reasonably incurred (or that might reasonably be incurred), relating to the actual use of the land, as a direct and natural consequence of the acquisition. 1. The parties are mostly in agreement as to the loss attributable to disturbance that is claimed by applicants, however, one matter remains in dispute. The applicants claim the sum of $25,805.35, being fees for obtaining town planning advice and a report incurred prior to the commencement of these proceedings ('early town planning fees'), as legal costs under s 59(1)(a) of the Just Terms Act. Transport contests this amount on the basis that the early town planning fees do not constitute legal costs for the purposes of the Just Terms Act. Otherwise, the parties agree that the applicants are entitled to the sum of $81,373.31 for legal costs under s 59(1)(a) of the Just Terms Act, and the sum of $59,620.29 for valuation fees under s 59(1)(b). Applicants' position 1. The applicants make the following submissions in support of their claim for disturbance including the early town planning fees as legal costs, bringing the claim to the total sum of $166,798.95. 2. First, the applicants' lawyer Mr Peter James required input from the applicants' town planner, Mr Connelly, as a "precedential step" in order to give legal advice, and so retained Mr Connelly and incurred disbursement costs. The applicants submit that if a lawyer requires town planning (or other) advice in order to give proper legal advice to their client, then the cost of that town planning (or other) advice is "encapsulated" within the right to recover legal costs under s 59(1)(a) of the Just Terms Act. The applicants also note that Mr James required the town planning advice in order to properly brief the applicants' valuer, Mr Dale, to obtain valuation advice. 3. Second, the early town planning fees are "disbursements" of Mr James, where the expression "legal costs" includes disbursements (by reference to s 4 of the then Legal Profession Act 2004 (NSW), currently s 6 of the Legal Profession Uniform Law (NSW)). Therefore, the early town planning fees would be included in the applicants' legal costs. The applicants note that Transport has not disputed at the inclusion of other disbursements in their claim for legal costs. The applicants' counsel contend that the position taken by Transport in relation to the early town planning fees was unusual. 4. Third, the scope, purpose and intention of s 59 of the Just Terms Act suggests that a broad approach to legal costs should be taken by the Court. The applicants note the right to obtain compensation for disturbance is provided in the context of a person being required to participate in a number of statutory processes and incur costs as a result of the acquisition of their land by a public authority, through no fault of their own. The applicants submit that the intention of s 59, through the inclusion of legal costs; valuation fees; relocation costs; stamp duty costs; financial costs reasonably incurred; and other financial costs relating to the use of the land as a direct and natural consequence of the acquisition, is to cover the person's costs involved in the process. 5. Further, the applicants submit that a person is entitled to take advice from valuers and lawyers as to their rights in the circumstances of the acquisition. The Just Terms Act clearly provides for a person to recoup the professional fees and disbursements of a valuer – where valuers costs often include the costs of information and advice obtained from third parties, such as planning costs; engineering costs; graphic design work; and quantity surveyor work, which inform the valuation. The applicants contend that the situation for recouping legal costs should be analogous to this, with the result that s 59(1)(a) of the Just Terms Act should not be construed narrowly so as to include professional fees for legal advice, but exclude disbursements, such as search fees, that enable the legal advice to be given. 6. Fourth, the applicants reject Transport's reliance on the previous cases of Penfold and Bracey v Health Administration Corporation [2009] NSWLEC 157 ('Penfold and Bracey') and Ironhill Pty Limited v Transgrid; Ironhill Management Pty Limited v Transgrid [2004] NSWLEC 700; (2004) 139 LGERA 398 ('Ironhill'). The applicants submit that in Penfold and Bracey, Biscoe J did not provide reasons as to why he accepted the resuming authority's submissions and found that costs of town planners; negotiators; surveyors; researchers; quantity surveyors; architects; and a developer, were not legal costs, limiting the weight that can be put on his Honour's finding. The applicants submit that the question of legal costs was raised in very different circumstances in Ironhill, as the Court was concerned with whether tasks undertaken by a person were legal tasks (and therefore compensable as legal costs) or tasks relating to that person's role as a director of the applicant. 7. Finally, the applicants contend that the nature of the case "strongly supports" a finding that the applicants required planning advice and a report prior to commencing these proceedings. In this respect, the applicants appear to be suggesting that where a significant part of the proceedings related to legal issues arising from town planning matters, it was reasonable for the early town planning fees to be included in the applicants' legal costs in their claim for disturbance. Transport's position 1. Transport submits that the total sum of $140,993.60 is appropriate for loss attributable to disturbance, which excludes the applicants' claim for early town planning fees. Transport makes the following submissions in support of their position: first, Transport refers to previous cases of this Court in which legal costs were found to exclude the costs of third parties and work of a non-legal nature. In Penfold and Bracey at [132], Biscoe J found that the costs of town planners; negotiators; surveyors; researchers; quantity surveyors; architects; and a developer, were not legal costs and were not allowable under s 59(1)(a) of the Just Terms Act. In Ironhill at [258], McClellan CJ of LEC, analysed the work done by a person who was both a solicitor and a director of the applicant, and found that "various research and investigative tasks" were carried out by the person on behalf of the applicant and could not be "correctly described as legal work which would give rise to legal costs…". 2. Second, Transport submits that the statutory text of the Just Terms Act does not support a broad interpretation of legal costs to include the costs of obtaining town planning advice. In this respect, "[f]or better or worse", the Just Terms Act is not intended to permit applicants to recover town planning costs and the applicants should not be able to obtain compensation for town planning costs merely by structuring the cost as a disbursement in the course of obtaining legal advice. 3. Transport refutes the suggestion by the applicants that the nature of the case affects the operation of s 59(1)(a) of the Just Terms Act, which, Transport submits, applies to all acquisitions of land "in accordance with its tenor". In this respect, where legal costs are not defined in the Just Terms Act and the definition is not imported from the then Legal Profession Act 2004 (NSW) or, the current Legal Profession Uniform Law (NSW) (contrary to the applicants' submission), Transport submits that it only extends to "costs incurred in respect of work of a legal nature by legal practitioners". Consideration 1. Having considered the submissions made by each of the parties, I am satisfied that the early town planning fees constitute legal costs for the purposes of the Just Terms Act, and that as a result, these fees should be included in the applicants' loss attributable to disturbance, such that the total sum is $166,798.95. 2. Starting with s 59 of the Just Terms Act, I consider that the scope, purpose and intention of the section indicates a legislative intention that a person who has had land compulsorily acquired by a public authority is compensated for the statutory process that they are inevitably involved in, through loss attributable to disturbance. In this respect, I accept the applicants' submissions at [262]. 3. In relation to s 59(1)(a) of the Just Terms Act, I note that legal costs which are eligible to be compensated as loss attributable to disturbance are those legal costs which are "reasonably incurred", and further incurred "in connection with" the compulsory acquisition of the land. I consider that the text and context of this section indicates a legislative intention that the reasonable costs of a person obtaining legal advice in relation to compulsory acquisition are compensated. This ensures that the person is informed about the statutory process, their rights and obligations under this process, and whether offers of compensation are appropriate. Moreover, I consider that it would be inconsistent with the legislative purpose to compensate a dispossessed owner for only part of the fees required to be incurred to enable legal advice to be provided: Eureka Operations Pty Ltd v Transport for New South Wales [2021] NSWLEC 41 at [153]. 4. I accept that the reasonable costs of obtaining legal advice includes the costs of obtaining third party information and advice, where this third-party information and advice directly informs, in the sense of being required for the provision of, the legal advice. Simply stated, if a legal practitioner requires third party information and advice to provide proper and comprehensive legal advice, then this information and advice is properly considered a legal cost. 5. I note the concern of Transport in relation the purposeful structuring of costs as disbursements in the course of obtaining legal advice, in order to obtain the benefit of the costs being legal costs, and compensation for loss attributable to disturbance. I do not consider the contractual relationship between the legal practitioner and the third party, or whether the services of the third party are recoverable as a disbursement, to be determinative in my consideration. Rather, it is the content of the third-party information and advice, and its relevance to the legal advice that is being given to the person who has had their land compulsorily acquired, that is the key consideration. 6. I consider that these circumstances can be distinguished from the previous cases of this Court to which Transport has brought to my attention, in which the Court excluded the costs of third parties and work of a non-legal nature. In Penfold and Bracey, a claim was made by the claimants for a broad gamut of third-party advice and information, running to seven different disciplines. Given the concise summary of the submissions and the Court's consideration in that case, it is unclear if the issue of whether the advice and information received from the third parties was being used to directly inform legal advice was raised with, or considered by, the Court. 7. In Ironhill the Court was concerned with classifying whether tasks undertaken by a person who was both a solicitor and a director of the claimant constituted legal work or work undertaken on behalf of the claimant. These circumstances are different to the not uncomplicated circumstances before me, as the Court was not undertaking an inquiry into whether the advice or information of a third party was being used to inform legal advice. 8. In these proceedings I am satisfied that the early town planning advice and report informed the legal advice of Mr James, and that the costs (in the sum of $25,805.35) were reasonably incurred in connection with the compulsory acquisition of the Acquired Land. I therefore find that the applicants are entitled to the amount of $107,178.66 for legal costs under s 59(1)(a) of the Just Terms Act, and $59,620.29 for valuation fees as loss under s 59(1)(b). Costs of proceedings 1. The applicants submit that because Transport's assessment of compensation is higher than the amount of compensation determined by the Valuer General of NSW, the applicants should be awarded their costs of the proceedings. 2. While I consider that this reflects the usual order, I appreciate that the parties may wish to revisit the matter of costs. As a result, costs will be reserved. Orders 1. The Court orders that: 1. The parties are directed to confer and provide the Court with an agreed sum representing market value (including injurious affection) of Lot 5 in DP 1234822 at Luddenham in accordance with my findings, including through appropriate modelling using the Estate Master development feasibility program. 2. The parties are granted leave to contact my Associate regarding the determination of the total compensation to which Nancy Eileen Sales, Paul Howard Roots and Gail Elizabeth Borg are entitled. 3. Costs are reserved. ********** Annexure A (868381, pdf) DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 02 September 2021