Land and Environment Court New South Wales Medium Neutral Citation: David Fox v Planning Ministerial Corporation [2023] NSWLEC 109 Hearing dates: 5 to 9, 13 to 15, 22 and 29 June and 14 July 2023 Date of orders: 20 October 2023 Decision date: 20 October 2023 Jurisdiction: Class 3 Before: Moore J Decision: See directions at [487] Catchwords: COMPULSORY ACQUISITION – determination of compensation – land compulsorily acquired on the Sydney Harbour foreshore at McMahons Point – necessity to determine the public purpose for which the land was acquired –public purpose to be disregarded for the purposes of assessing compensation – the Applicants propose that the public purpose was the creation of a foreshore park identified in 1948 and incorporated in the County of Cumberland Planning Scheme Ordinance 1951– Applicants propose underlying zoning at the date of acquisition was R3 Medium Density Residential after disregarding the public purpose – the Ministerial Corporation's position is that the acquisition was for the purpose of completing the already existing open space reserve surrounding the site – Ministerial Corporation proposes underlying zoning at the date of acquisition was B1 after disregarding the public purpose – public purpose was that advanced by the Ministerial Corporation – resultant underlying zone is B1 Neighbourhood Centre at the date of acquisition VALUATION – valuation of site on an underlying zoning of B1 Neighbourhood Centre – consideration of the extent of a hypothetical B1 development on the site – hypothetical development of three storeys with one ground floor commercial level with basement and a single level apartment above – hypothetical purchaser an owner/occupier not a developer looking to construct the hypothetical development and on‑sell it – consideration of value of commercial component – consideration of value of residential component – two-level hypothetical B1 development subject of quantity surveying evidence – necessity to derive a value after consideration of valuation and quantity surveying costing – necessity to make allowance for risk of obtaining development – valuation of acquired property on B1 underlying zoning basis to be derived from applying nominated adjustments to the valuation analysis of a three-level shop top housing development – directions given for calculating outcome VALUATION – contingent R3 valuation undertaken as a precaution if B1 Neighbourhood Centre incorrect underlying zoning – comparable sales method appropriate basis for valuation assessment –expert valuers consider multiple potential comparable sales – consideration of whether sales were truly comparable – only one sale truly comparable – analysis and adjustment of comparable sale results in valuation of acquired property on R3 underlying zoning basis of $17,200,000 DISBURSEMENTS – dispute as to limited range of disbursements made in support of preparation of Applicants case – disbursements made for the purposes of enabling legal advice to be given to the Applicants – disbursements to be reimbursed pursuant to s59(1)(a) of the Land Acquisition (Just Terms Compensation) Act 1991 COSTS – consideration of costs entitlement of dispossessed owners – dispossessed owners' case not advanced unreasonably or in a fashion causing unnecessary expense – dispossessed owners entitled to costs, even if resultant B1 development less than Valuer General's determination Legislation Cited: Civil Procedure Act 2005, s98(1) County of Cumberland Planning Scheme Ordinance 1951 Environmental Planning and Assessment Act 1979, cll 30 and 31 of Pt 6 of Sch 2 Land Acquisition (Just Terms Compensation) Act 1991, ss 4, 7, 55, 56(1), 59(1)(a) and 66 Land and Environment Court Act 1979, s 38(2) North Sydney Local Environmental Plan 2013, cll 4.3, 4.6, 5.1, 5.10 ,6.9 and the Land Use Table North Sydney Development Control Plan 2013, cl 9.8.8 Trees (Disputes Between Neighbours) Act 2007 Uniform Civil Procedure Rules 2005, rr 1.5, 38.10, 42.1 and 42.15 and Sch 1 Cases Cited: AMP Capital Investors Limited v Transport Infrastructure Development Corporation [2008] NSWCA 325 Arco Iris Trading Pty Ltd v North Sydney Council [2015] NSWLEC 1113 Banno v Commonwealth of Australia (1993) 45 FCR 32 BGP Properties Pty Limited v Lake Macquarie City Council [2004] NSWLEC 399 Blackmore Design Group Pty Ltd v Manly Council [2014] NSWLEC 164 Brock v Roads and Maritime Services (formerly Roads and Traffic Authority of NSW) (2012) 191 LGERA 267; [2012] NSWCA 404 Buhach v Transport for New South Wales [2022] NSWLEC 148 David Fox v North Sydney Council [2016] NSWLEC 1366 Desane Properties Pty Limited v State of New South Wales [2018] NSWSC 553 Dillon v Gosford City Council (2011) 184 LGERA 179; [2011] NSWCA 328 Eureka Operations Pty Ltd v Transport for New South Wales [2021] NSWLEC 41 Fox v North Sydney Council [2020] NSWLEC 1056 G&J Drivas Pty Ltd v Sydney Metro [2023] NSWLEC 20 Halley v Minister Administering the Environmental Planning and Assessment Act 1979 [2010] NSWCA 361 Hrsto v Canterbury City Council (No 2) [2014] NSWLEC 121 James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 oOh!media Fly Pty Limited v Transport for NSW [2023] NSWLEC 26 Pointe Gourde Quarrying and Transport Co Ltd v Sub-Intendant of Crown Lands [1947] AC 565 RD Miller Pty Ltd v Roads and Maritime Services NSW [2020] NSWCA 241 Roads and Maritime Services v Desane Properties Pty Ltd [2018] NSWCA 196 RTA v Perry & Anor (2001) 52 NSWLR 222; [2001] NSWCA 251 Sales v Transport for NSW (No 2) [2021] NSWLEC 96 Sydney Water Corporation v Caruso and Ors [2009] NSWCA 391 Turner v Minister of Public Instruction (1956) 95 CLR 245 Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority (2008) 233 CLR 259; [2008] HCA 5 Waters & Ors v Welsh Development Agency [2004] WLR 14 May 2004 Zhang v Canterbury City Council (2001) 115 LGERA 373; [2001] NSWCA 167 Category: Principal judgment Parties: David Fox and Josette Hazzouri (Applicants) Planning Ministerial Corporation (Respondent) Representation: Counsel: P Tomasetti SC/ D Robertson, barristers (Applicants) N Eastman/H Rogers, barristers (Respondent) Solicitors: Dentons (Applicants) Ashurst (Respondent) File Number(s): 59433 of 2022 Publication restriction: No Judgment Prologue An initial observation Introduction The ownership of the site The acquisition by the Planning Ministerial Corporation The hearing Representation Relevant statutory and planning provisions Introduction The Land Acquisition Act The Environmental Planning and Assessment Act The 2013 LEP Introduction The RE1 zone The other potentially relevant zones requiring consideration Introduction The R3 zone The R4 zone The B1 zone The IN4 zone Other potentially or applicable planning controls in the 2013 LEP A relevant definition in the 2013 LEP The 2013 DCP Past development proceedings The zoning history of McMahons Point The issues for determination The evidence A further introductory observation concerning the scope and complexity of the evidence Introduction to the form of the evidence The disputes about admissibility of proposed evidence The expert witnesses The field inspection Introduction The notes of the field inspection The dispute as to the "public purpose" Introduction Short summaries of the parties' competing public purpose arguments The Applicants' position The Ministerial Corporation's position Determination of the public purpose Introduction The acquisition-effecting documents Introduction The Minister's letter Proposed Acquisition Notice The Ministerial approval to initiate acquisition The Government Gazette notice The opening submissions for the Applicants The opening written submissions for the Applicants The opening oral submissions for the Applicants The opening submissions for the Ministerial Corporation The opening written submissions for the Ministerial Corporation The opening oral submissions for the Ministerial Corporation The closing submissions for the Applicants The closing written submissions for the Applicants The closing oral submissions for the Applicants The closing submissions for the Ministerial Corporation The closing written submissions for the Ministerial Corporation The closing oral submissions for the Ministerial Corporation The submissions in reply for the Applicants Consideration A potential IN4 hypothetical zoning Introduction Conclusion on IN4 zoning pleading The form of a B1 development for the site The planning evidence on B1 development potential Introduction Mr McKenzie's individual expert report Mr Chamber's individual expert report The first joint expert town planners' report Conclusion on the broad town planning position Constraints on any hypothetical B1 development Introduction Heritage matters Defining an approvable B1 building envelope The Moreton Bay Fig tree Introduction The arboricultural evidence Conclusion on the Moreton Bay Fig The concurrent architectural and planning evidence Introduction Mr Aspinall's B1 designs Mr McKenzie's evidence Mr Aspinall's general view on developability Consideration The defects in Mr Aspinall's Exhibit 6 schematic for the B1 zoning hypothetical development The roof form of a hypothetical development A cl 4.6-dispensation request Introduction The town planning evidence Mr Chambers' evidence on a cl 4.6 dispensation request Consideration Any issues associated with parking requirements The planning role of the 2013 DCP Conclusion on the form of the hypothetical B1 development Valuation of the B1 hypothetical development The Applicants' purchase of the property The B1 hypothetical development valuation evidence The attack on Mr Garnsey's evidence – his mathematical imprecision A slightly higher B1 schematic development Mr Dale's valuation report in reply Mr Garnsey's initial assessment of a B1 value The joint valuers' report on the B1 zoning assumption Consideration Introduction The nature of the developer Deriving a B1 site valuation outcome Introduction Detailed consideration of Mr Garnsey's Table 10 Introduction The hypothetical development proponent The southern residential terrace absence deduction Valuation of the commercial space Mr Lawson's pricing includes the relevant risk An adjustment to Mr Lawson's TKD B1 scenario costing The R3 hypothetical development A contingent residential valuation Introduction Consideration of the appropriateness of the sales relied upon Introduction The built form of a residential development The valuers' comparable residential sales Introduction The attack on Mr Garnsey's evidence – his residential sales evidence Defining the pool of the comparable sales A north/south market divide Consideration of market division The properties on the northern side of the harbour Introduction The valuation evidence – 11 Bay View Street, Lavender Bay Consideration Alterations necessary to be made to Mr Dale's adjustments Introduction View adjustment Market movement An additional adjustment Conclusion on the derived value of the site Disputed disbursement costs Introduction Applicants' written submissions on disturbance costs Relevant Legal Principles The Applicants' chronology concerning the disputed costs The Applicants' position The Ministerial Corporation's position Consideration Overall conclusions Costs Directions Judgment Prologue 1. Given that there is a degree of urgency in finalising these proceedings (at least at first instance), I provide the following brief summary of the conclusions which I have reached. These are: 1. the proper understanding of the public purpose contended for by the Planning Ministerial Corporation (the Ministerial Corporation) is correct; 2. it therefore follows that the underlying hypothetical zoning is B1 Neighbourhood Centre; 3. the hypothetical developer would be an owner/occupier; 4. the hypothetical development form capable of being achieved on the site is a three-level "shop top housing" development – being a basement and ground floor commercial space with the upper level as a single residence; 5. achieving that development potential would require a successful dispensation request pursuant to cl 4.6 of the North Sydney Local Environmental Plan 2013 (the 2013 LEP) and there is a modest risk attaching to such a dispensation request. This risk can be accommodated by making a modest downward adjustment to what would otherwise be the value to be ascribed to the B1 hypothetical development; 6. if I am found to be wrong in my determination of characterisation of the public purpose, I have undertaken a contingent R3 Medium Density Residential valuation, deriving a resultant value for the site of $17,200,000 on that basis; and 7. whatever the resultant value of my hypothetical B1 valuation for the site when compared to the compensation determination made by the Valuer General or any settlement offer which may have been made for the Planning Ministerial Corporation (the Ministerial Corporation), I have concluded that it is appropriate that the Applicants have their costs of the proceedings at first instance whatever might be its final outcome. An initial observation 1. In truth, a hypothetical purchaser engaged in a transaction pursuant to s 56(1) of the Land Acquisition (Just Terms Compensation) Act 1991 (the Land Acquisition Act), even for a site of the significance of the one that is the subject of these proceedings, would not descend into the valuation assessment quagmire to the extent of the expert evidence that has been involved in these proceedings. The position is that such a hypothetical purchaser might readily be expected to enquire of a town planner: 1. what the town planner expected that the development potential of the site would be; and 2. what risk might be associated with seeking to realise that potential with that risk being one of both time and money. 1. The hypothetical purchaser might also seek advice from that town planner as to the likely building envelope capable of achievement in such a hypothetical development. 2. Such advice would not be extensive and in complex detail. 3. That hypothetical purchaser would likely also seek some comparatively uncomplicated valuation advice as to what the site might be worth in light of the town planning advice. 4. It beggars belief that such a hypothetical purchase would be transacted on the basis of expert professional advice to the extent of the scope, cost and delay that has been brought to bear in these proceedings. 5. Said facetiously, the hypothetical purchaser assembling such a team of hypothetical experts might well discover that the resulting advice did not arrive until several weeks after a hypothetical transaction would be concluded with a different hypothetical purchaser who did not feel constrained by the necessity to consult such a range of experts to the extent brought to bear for the purposes of this litigated hypothetical transaction. Introduction 1. 1 Henry Lawson Avenue, McMahons Point (the site) - Lot 1 in DP 915829 - is located on the southern side of Henry Lawson Avenue with Henry Lawson Reserve on both its east and west sides and with a frontage to Sydney Harbour to the south. Henry Lawson Reserve is an open grassed area with a sandstone sea wall along the harbour. The site has an area of 365.5sqm with a street frontage of 15.24m. The site contains two dilapidated existing two storey buildings with the eastern building being the smaller of the two. 2. The reproduced map extract below shows the contextual location of the site. 1. The site has dramatic views to the southeast, south and southwest toward the Harbour Bridge, the Opera House, the skyline of the Sydney CBD and other Sydney Harbour foreshore elements. 2. The site was used for ship building/ship repair purposes from the 19th century until such operations ceased in the 1980s (the precise date being immaterial for present purposes). However, as a result of these past maritime activities, heritage constraints apply to any use of the site. 3. The site contains two parallel slipways. The western slipway consists of a concrete slope with iron rails with a timber boat cradle presently on it. The concrete apron and rails extend 20m into the harbour (and beyond the seaward boundary of the site). The eastern slipway is a tidal slipway extending from the harbour into the site with the rails extending under the eastern building on the site. A stone seawall lines the outer sides of each slipway and joins the Henry Lawson Reserve seawall at each harbour boundary point of the site. 4. Henry Lawson Avenue runs from west to east from Blues Point Road to the McMahons Point ferry wharf. It slopes gently downward from the west until it flattens out as it approaches its turning circle head at the wharf. In addition to the public ferry service from the wharf, there is also a regular bus service from the wharf along Henry Lawson Avenue and thence up Blues Point Road toward the North Sydney CBD. 5. On its right, travelling from west to east, all of the land fronting Henry Lawson Avenue, other than the site, is public open space. 6. Immediately to the west of the site, in the public open space, is a substantial Moreton Bay Fig Tree, a tree whose canopy extends over the site and whose crown is some five metres or so higher than the ridgeline of the present buildings on the site. It is not disputed that this tree is self‑sown. As was observed during the course of the field inspection later described, there has been some past pruning of tertiary branches which have obviously extended toward the site. There is also no dispute that this tree is in good condition. 7. On the northern side of Henry Lawson Avenue, there has been long past sandstone quarrying undertaken (presumably for local construction purposes). Because of the fall of Henry Lawson Avenue toward the east, the old sandstone quarry face becomes gradually higher as one moves to the east down the slope of Henry Lawson Avenue. There are various vegetation elements growing on, or hanging over, portions of this historic quarry face. The cliff across Henry Lawson Avenue from the site has a height of approximately 11 metres. This cliff backdrop is relevant for considering any hypothetical redevelopment proposal for the site in the circumstances where the public purpose is subject to the later described statutory disregard. Atop this cliff is located residential development with its primary outlook appearing to be toward the harbour (understandably) and having frontages to Warung Street. The ownership of the site 1. The site was owned, at the time of its compulsory acquisition, by Mr David Fox and Ms Josette Hazzouri (together, the Applicants). The site was purchased in August 2009 for $7,500,000 (GST exclusive). The acquisition by the Planning Ministerial Corporation 1. The property was compulsorily acquired by the Planning Ministerial Corporation (the Ministerial Corporation). The acquisition was effected by a notice published in the Government Gazette on 21 June 2021. 2. Compensation was subsequently determined by the Valuer General pursuant to the Land Acquisition Act as comprising $9,150,000.00 for the market value of the site (s 56 of the Land Acquisition Act) and $228,857.00 for disturbance (s 59(1) of the Land Acquisition Act). The Applicants, being dissatisfied with the compensation amounts determined by the Valuer General, have appealed to this Court (s 66 of the Land Acquisition Act) to have the amount of compensation to which they are entitled determined by the Court. The hearing 1. As noted on the coversheet, the hearing was held on 5 to 9, 13 to 15, 22 and 29 June and 14 July 2023. A field inspection was held on Tuesday 6 June as later discussed. Representation 1. The Applicants were represented by Mr P Tomasetti SC and Mr D Robertson, barristers. The Ministerial Corporation was represented by Mr N Eastman and Mr H Rogers, barristers. Relevant statutory and planning provisions Introduction 1. For present purposes, provisions of the Land Acquisition Act, the Environmental Planning and Assessment Act 1979 (the EPA Act), the North Sydney Local Environmental Plan 2013 (the 2013 LEP) and the North Sydney Development Control Plan 2013 (the 2013 DCP) arise for consideration in these proceedings. The Land Acquisition Act 1. The first of the relevant provisions appropriate to be set out, from the Land Acquisition Act, are the definition of "public purpose" contained in s 4(1) together with s 7, the provision which makes it clear that the Land Acquisition Act does not, itself, authorise compulsory acquisition but merely provides a process for compensation for such compulsory acquisition. The power to acquire, compulsorily, land for a public purpose must be given by some other statutory enactment. It is also appropriate to set out ss 55, 56(1) and 59(1)(a) of the Land Acquisition Act. 2. As earlier noted, the Applicants have appealed to the Court pursuant to s 66 of the Land Acquisition Act as they are dissatisfied with the compensation determination made by the Valuer General for their compulsorily acquired property. There is no necessity to set out the terms of this provision. 3. The relevant provisions needing to be set out are in the following terms: 4 Definitions (1) In this Act: … public purpose means any purpose for which land may by law be acquired by compulsory process under this Act. … 7 Act not to empower authority to acquire land (1) This Act does not empower an authority of the State to acquire land if it does not have the power (apart from this Act) to acquire the land. (2) … 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) …, (c) ..., (d) any loss attributable to disturbance, (e) …, (f) …. 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) – (c) …. (2) … (3) … 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) – (e) … (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. (2) Subject to the regulations, a reference in this section to a qualified valuer is a reference to a person who— (a) has membership of the Australian Valuers Institute (other than associate or student membership), or (b) has membership of the Australian Property Institute (other than student or provisional membership), acquired in connection with his or her occupation as a valuer, or (c) has membership of the Royal Institution of Chartered Surveyors as a chartered valuer, or (d) is of a class prescribed by the regulations. The Environmental Planning and Assessment Act 1. The ability to acquire the site from the Applicants compulsorily arose as a consequence of the exercise of powers granted to the Planning Ministerial Corporation by a combination of cll 30 and 31 of Part 6 of Schedule 2 of the EPA Act. The relevant elements of these provisions are reproduced below: 30 General land functions of Corporation (1) ... (2) ... (3) ... (4) In addition to other functions conferred or imposed on the Planning Ministerial Corporation under this or any other Act, the Corporation may, for the purposes of this Act— (a) – (h) … (i) by notification published in the Gazette, dedicate any land vested in the Corporation as a reserve for public recreation or other public purposes and fence, plant and improve any such reserve. (5) ... (6) …. 31 Power of Corporation to acquire land etc (1) The Planning Ministerial Corporation may, for the purposes of this Act or pursuant to any function conferred or imposed on the Minister or the Planning Secretary by an environmental planning instrument, acquire land by agreement or by compulsory process in accordance with the Land Acquisition (Just Terms Compensation) Act 1991. (2) Without limiting the generality of subclause (1), the Planning Ministerial Corporation may acquire in any manner authorised by that subclause— (a) any land to which an environmental planning instrument applies and which the Minister considers should be made available in the public interest for any purpose, or (b) – (d) …. (3) - (7) …. The 2013 LEP Introduction 1. The 2013 LEP is the principal (but not only) environmental planning instrument potentially requiring consideration in these proceedings. Within the potentially applicable uses in the Land Use Table of the 2013 LEP are set out not only the objectives and uses for the site provided for by its present zoning but also the relevant provisions that would otherwise be applicable, potentially, for the site, disregarding the public purpose for which the site has been acquired (as mandated by s 56 of the Land Acquisition Act as earlier set out). 2. In addition to the actual zoning of RE1, there are four other zones set out in the Land Use Table of the LEP which require consideration. All five of the elements of the LEP's Land Use Table are set out below. The RE1 zone 1. The RE1 zone is that which applies to the site. The relevant element of the Land Use Table for this zone is in the following terms: Zone RE1 Public Recreation 1 Objectives of zone • To enable land to be used for public open space or recreational purposes. • To provide a range of recreational settings and activities and compatible land uses. • To protect and enhance the natural environment for recreational purposes. • To ensure sufficient public recreation areas are available for the benefit and use of residents of, and visitors to, North Sydney. 2 Permitted without consent Environmental protection works. 3 Permitted with consent Aquaculture; Building identification signs; Business identification signs; Community facilities; Environmental facilities; Information and education facilities; Kiosks; Recreation areas; Recreation facilities (outdoor); Restaurants or cafes; Roads; Water recreation structures. 4 Prohibited Any development not specified in item 2 or 3. The other potentially relevant zones requiring consideration Introduction 1. The position advanced on behalf of the Applicants is that the underlying zoning that would presently be applicable, if the public purpose was to be disregarded as required, would be for residential purposes. Two zonings, R3 and R4, are advanced for the Applicants in the alternative as potentially available on this basis. Although it is appropriate to set out the relevant elements of the Land Use Table of the LEP applicable to each of these zones, for reasons later addressed the site is constrained by existing site characteristics in a fashion which does not mean that there would be any difference in hypothetical development potential whichever of these zones was applicable (if either of them was found to be applicable in the counter‑factual circumstances requiring consideration). The R3 zone 1. The relevant elements of the LEP's Land Use Table applicable to the R3 zone are in the following terms: Zone R3 Medium Density Residential 1 Objectives of zone • To provide for the housing needs of the community within a medium density residential environment. • To provide a variety of housing types within a medium density residential environment. • To enable other land uses that provide facilities or services to meet the day to day needs of residents. • To encourage the development of sites for medium density housing if such development does not compromise the amenity of the surrounding area or the natural or cultural heritage of the area. • To provide for a suitable visual transition between high density residential areas and lower density residential areas. • To ensure that a high level of residential amenity is achieved and maintained. 2 Permitted without consent Environmental protection works 3 Permitted with consent Attached dwellings; Boarding houses; Centre-based child care facilities; Community facilities; Dual occupancies (attached); Dwelling houses; Group homes; Home-based child care; Hostels; Information and education facilities; Multi dwelling housing; Neighbourhood shops; Oyster aquaculture; Places of public worship; Recreation areas; Respite day care centres; Roads; Semi-detached dwellings; Seniors housing; Tank-based aquaculture 4 Prohibited Pond-based aquaculture; Any other development not specified in item 2 or 3 The R4 zone 1. The relevant elements of the LEP's Land Use Table applicable to the R4 zone are in the following terms: Zone R4 High Density Residential 1 Objectives of zone • To provide for the housing needs of the community within a high density residential environment. • To provide a variety of housing types within a high density residential environment. • To enable other land uses that provide facilities or services to meet the day to day needs of residents. • To encourage the development of sites for high density housing if such development does not compromise the amenity of the surrounding area or the natural or cultural heritage of the area. • To ensure that a reasonably high level of residential amenity is achieved and maintained. 2 Permitted without consent Environmental protection works. 3 Permitted with consent Attached dwellings; Boarding houses; Centre-based child care facilities; Community facilities; Dual occupancies (attached); Dwelling houses; Entertainment facilities; Home-based child care; Hostels; Information and education facilities; Multi dwelling housing; Neighbourhood shops; Oyster aquaculture; Places of public worship; Recreation areas; Residential flat buildings; Respite day care centres; Roads; Semi-detached dwellings; Shop top housing. 4 Prohibited Pond-based aquaculture; Tank-based aquaculture; Any other development not specified in item 2 or 3. The B1 zone 1. As was observed during the course of the field inspection, the Sails Restaurant is located on the waterfront of the foreshore of Lavender Bay at the turning circle head of Henry Lawson Avenue, some 140 metres from the boundary of the site. The site of the restaurant is zoned B1. The relevant elements of the Land Use Table in the 2013 LEP for this zone as at the date of acquisition were in the following terms: Zone B1 Neighbourhood Centre 1 Objectives of zone • To provide a range of small-scale retail, business and community uses that serve the needs of people who live or work in the surrounding neighbourhood. • To encourage active street life while maintaining high levels of residential amenity. • To encourage development for the purpose of shop top housing. 2 Permitted without consent Environmental protection works 3 Permitted with consent Boarding houses; Business premises; Centre-based child care facilities; Community facilities; Entertainment facilities; Health services facilities; Information and education facilities; Kiosks; Medical centres; Neighbourhood shops; Neighbourhood supermarkets; Office premises; Oyster aquaculture; Places of public worship; Public administration buildings; Recreation areas; Recreation facilities (indoor); Respite day care centres; Restaurants or cafes; Roads; Shops; Shop top housing; Signage; Tank-based aquaculture; Take away food and drink premises 4 Prohibited Pond-based aquaculture; Any other development not specified in item 2 or 3 1. It is relevant here to note that shop top housing (the definition of which is later set out) is permissible in this zone. The IN4 zone 1. The final potential underlying zoning applicable to the site is that which would be in force if it was to be regarded as zoned for waterfront industrial activities, consistent with what had been the past history of such activities on the site. The zoning, if such a hypothetical use was applicable, is the IN4 zone. The relevant element of the Land Use Table for the IN4 zone is in the following terms: Zone IN4 Working Waterfront 1 Objectives of zone • To retain and encourage waterfront industrial and maritime activities. • To identify sites for maritime purposes and for activities that require direct waterfront access. • To ensure that development does not have an adverse impact on the environmental and visual qualities of the foreshore. • To encourage employment opportunities. • To minimise any adverse effect of development on land uses in other zones. 2 Permitted without consent Environmental protection works. 3 Permitted with consent Aquaculture; Boat building and repair facilities; Boat launching ramps; Charter and tourism boating facilities; Jetties; Kiosks; Light industries; Marinas; Roads; Signage. 4 Prohibited Any development not specified in item 2 or 3. Other potentially or applicable planning controls in the 2013 LEP 1. Six other provisions of the 2013 LEP are also appropriate to be reproduced. These are set out below: 4.3 Height of buildings (1) The objectives of this clause are as follows— (a) to promote development that conforms to and reflects natural landforms, by stepping development on sloping land to follow the natural gradient, (b) to promote the retention and, if appropriate, sharing of existing views, (c) to maintain solar access to existing dwellings, public reserves and streets, and to promote solar access for future development, (d) to maintain privacy for residents of existing dwellings and to promote privacy for residents of new buildings, (e) to ensure compatibility between development, particularly at zone boundaries, (f) to encourage an appropriate scale and density of development that is in accordance with, and promotes the character of, an area, (g) to maintain a built form of mainly 1 or 2 storeys in Zone R2 Low Density Residential, Zone R3 Medium Density Residential and Zone C4 Environmental Living. (2) The height of a building on any land is not to exceed the maximum height shown for the land on the Height of Buildings Map. (2A)–(2C) (Repealed) 4.6 Exceptions to development standards (1) The objectives of this clause are as follows— (a) to provide an appropriate degree of flexibility in applying certain development standards to particular development, (b) to achieve better outcomes for and from development by allowing flexibility in particular circumstances. (2) Development consent may, subject to this clause, be granted for development even though the development would contravene a development standard imposed by this or any other environmental planning instrument. However, this clause does not apply to a development standard that is expressly excluded from the operation of this clause. (3) Development consent must not be granted for development that contravenes a development standard unless the consent authority has considered a written request from the applicant that seeks to justify the contravention of the development standard by demonstrating— (a) that compliance with the development standard is unreasonable or unnecessary in the circumstances of the case, and (b) that there are sufficient environmental planning grounds to justify contravening the development standard. (4) Development consent must not be granted for development that contravenes a development standard unless— (a) the consent authority is satisfied that— (i) the applicant's written request has adequately addressed the matters required to be demonstrated by subclause (3), and (ii) the proposed development will be in the public interest because it is consistent with the objectives of the particular standard and the objectives for development within the zone in which the development is proposed to be carried out, and (b) the concurrence of the Planning Secretary has been obtained. (5) - (8) …… 5.1 Relevant acquisition authority (1) The objective of this clause is to identify, for the purposes of section 3.15 of the Act, the authority of the State that will be the relevant authority to acquire land reserved for certain public purposes if the land is required to be acquired under Division 3 of Part 2 of the Land Acquisition (Just Terms Compensation) Act 1991 (the owner-initiated acquisition provisions). (2) The authority of the State that will be the relevant authority to acquire land, if the land is required to be acquired under the owner-initiated acquisition provisions, is the authority of the State specified below in relation to the land shown on the Land Reservation Acquisition Map (or, if an authority of the State is not specified in relation to land required to be so acquired, the authority designated or determined under those provisions). Type of land shown on Map Authority of the State Zone RE1 Public Recreation and marked "Local open space" Council Zone RE1 Public Recreation and marked "Regional open space" The corporation constituted under section 2.5 of the Act Zone SP2 Infrastructure and marked "Classified road" Transport for NSW Zone C1 National Parks and Nature Reserves and marked "National Park" Minister administering the National Parks and Wildlife Act 1974 Zone C2 Environmental Conservation and marked "Local open space" Council Zone C2 Environmental Conservation and marked "Regional open space" The corporation constituted under section 8 of the Act (3) Development on land acquired by an authority of the State under the owner-initiated acquisition provisions may, before it is used for the purpose for which it is reserved, be carried out, with development consent, for any purpose. 1. Although the theoretical development constraints that would apply to the site are elsewhere discussed in the context of each of the potential counter‑factual zonings requiring consideration, it is appropriate to note that the 2013 LEP makes express provision for the mapping of foreshore building lines. It does so in cl 6.9, a clause in the following terms: 6.9 Limited development on foreshore area (1) The objective of this clause is to ensure that development in the foreshore area will not impact on natural foreshore processes or affect the significance and amenity of the area. (2) Development consent must not be granted for development on land in the foreshore area except for the following purposes— (a) the extension, alteration or rebuilding of an existing building wholly or partly in the foreshore area, (b) the erection of a building in the foreshore area, if the levels, depth or other exceptional features of the site make it appropriate to do so, (c) boat sheds, sea retaining walls, wharves, slipways, jetties, waterway access stairs, swimming pools, fences, cycleways, walking trails, picnic facilities or other recreation facilities (outdoors). (3) Development consent must not be granted under subclause (2) unless the consent authority is satisfied that— (a) the development will contribute to achieving the objectives for the zone in which the land is located, and (b) the appearance of any proposed structure, from both the waterway and adjacent foreshore areas, will be compatible with the surrounding area, and (c) the development will not cause environmental harm such as— (i) pollution or siltation of the waterway, or (ii) an adverse effect on surrounding uses, marine habitat, wetland areas, fauna and flora habitats, or (iii) an adverse effect on drainage patterns, and (d) the development will not cause congestion or generate conflict between people using open space areas or the waterway, and (e) opportunities to provide continuous public access along the foreshore and to the waterway will not be compromised, and (f) any historic, scientific, cultural, social, archaeological, architectural, natural or aesthetic significance of the land on which the development is to be carried out and of surrounding land will be maintained, and (g) in the case of development for the alteration or rebuilding of an existing building wholly or partly in the foreshore area, the alteration or rebuilding will not have an adverse impact on the amenity or aesthetic appearance of the foreshore, and (h) sea level rise or change of flooding patterns as a result of climate change has been considered. (4) In this clause— foreshore area means the land between the foreshore building line and the mean high water mark of the nearest natural waterbody shown on the Foreshore Building Line Map. foreshore building line means— (a) the line that is landward of, and at the distance specified on the Foreshore Building Line Map from, the mean high water mark of the nearest natural waterbody shown on that map, or (b) if no distance is specified, the line shown as the foreshore building line on that map. 1. In the context of cl 6.9 of the 2013 LEP, it is to be noted that the relevant element of the mapping, which addresses the foreshore building line on the two sides of the McMahons Point Peninsula, sets foreshore building lines for the waterfront properties with residential zoning on this peninsula. It is to be noted that no foreshore building line is mapped for any of the RE1 land at the head of the peninsula where site is located. However, it will be necessary to comment (briefly) on the hypothetical limitation which would apply to the site as a constraint on its development potential in the counter‑factual highest and best use assessment. The foreshore building line clause in the LEP makes provision for development to be permitted forward of that building line in certain circumstances. 2. The site is also subject to the heritage provisions of the LEP (the impact of the existence of former maritime harbourside industrial uses and remnant slipways and associated equipment on the site providing constraints on hypothetical development in all potential counter‑factual zoning circumstances) which arise as a consequence of the heritage provisions in the 2013 LEP. The clause, cl 5.10, is in the following terms: 5.10 Heritage conservation (1) Objectives The objectives of this clause are as follows— (a) to conserve the environmental heritage of North Sydney, (b) to conserve the heritage significance of heritage items and heritage conservation areas, including associated fabric, settings and views, (c) to conserve archaeological sites, (d) to conserve Aboriginal objects and Aboriginal places of heritage significance. (2) Requirement for consent Development consent is required for any of the following— (a) demolishing or moving any of the following or altering the exterior of any of the following (including, in the case of a building, making changes to its detail, fabric, finish or appearance)— (i) a heritage item, (ii) an Aboriginal object, (iii) a building, work, relic or tree within a heritage conservation area, (b) altering a heritage item that is a building by making structural changes to its interior or by making changes to anything inside the item that is specified in Schedule 5 in relation to the item, (c) disturbing or excavating an archaeological site while knowing, or having reasonable cause to suspect, that the disturbance or excavation will or is likely to result in a relic being discovered, exposed, moved, damaged or destroyed, (d) disturbing or excavating an Aboriginal place of heritage significance, (e) erecting a building on land— (i) on which a heritage item is located or that is within a heritage conservation area, or (ii) on which an Aboriginal object is located or that is within an Aboriginal place of heritage significance, (f) subdividing land— (i) on which a heritage item is located or that is within a heritage conservation area, or (ii) on which an Aboriginal object is located or that is within an Aboriginal place of heritage significance. (3) When consent not required However, development consent under this clause is not required if— (a) the Applicant has notified the consent authority of the proposed development and the consent authority has advised the Applicant in writing before any work is carried out that it is satisfied that the proposed development— (i) is of a minor nature or is for the maintenance of the heritage item, Aboriginal object, Aboriginal place of heritage significance or archaeological site or a building, work, relic, tree or place within the heritage conservation area, and (ii) would not adversely affect the heritage significance of the heritage item, Aboriginal object, Aboriginal place, archaeological site or heritage conservation area, or (b) the development is in a cemetery or burial ground and the proposed development— (i) is the creation of a new grave or monument, or excavation or disturbance of land for the purpose of conserving or repairing monuments or grave markers, and (ii) would not cause disturbance to human remains, relics, Aboriginal objects in the form of grave goods, or to an Aboriginal place of heritage significance, or (c) the development is limited to the removal of a tree or other vegetation that the Council is satisfied is a risk to human life or property, or (d) the development is exempt development. (4) Effect of proposed development on heritage significance The consent authority must, before granting consent under this clause in respect of a heritage item or heritage conservation area, consider the effect of the proposed development on the heritage significance of the item or area concerned. This subclause applies regardless of whether a heritage management document is prepared under subclause (5) or a heritage conservation management plan is submitted under subclause (6). (5) Heritage assessment The consent authority may, before granting consent to any development— (a) on land on which a heritage item is located, or (b) on land that is within a heritage conservation area, or (c) on land that is within the vicinity of land referred to in paragraph (a) or (b), require a heritage management document to be prepared that assesses the extent to which the carrying out of the proposed development would affect the heritage significance of the heritage item or heritage conservation area concerned. (6) Heritage conservation management plans The consent authority may require, after considering the heritage significance of a heritage item and the extent of change proposed to it, the submission of a heritage conservation management plan before granting consent under this clause. (7) Archaeological sites The consent authority must, before granting consent under this clause to the carrying out of development on an archaeological site (other than land listed on the State Heritage Register or to which an interim heritage order under the Heritage Act 1977 applies)— (a) notify the Heritage Council of its intention to grant consent, and (b) take into consideration any response received from the Heritage Council within 28 days after the notice is sent. (8) Aboriginal places of heritage significance The consent authority must, before granting consent under this clause to the carrying out of development in an Aboriginal place of heritage significance— (a) consider the effect of the proposed development on the heritage significance of the place and any Aboriginal object known or reasonably likely to be located at the place by means of an adequate investigation and assessment (which may involve consideration of a heritage impact statement), and (b) notify the local Aboriginal communities, in writing or in such other manner as may be appropriate, about the application and take into consideration any response received within 28 days after the notice is sent. (9) Demolition of nominated State heritage items The consent authority must, before granting consent under this clause for the demolition of a nominated State heritage item— (a) notify the Heritage Council about the application, and (b) take into consideration any response received from the Heritage Council within 28 days after the notice is sent. (10) Conservation incentives The consent authority may grant consent to development for any purpose of a building that is a heritage item or of the land on which such a building is erected, or for any purpose on an Aboriginal place of heritage significance, even though development for that purpose would otherwise not be allowed by this Plan, if the consent authority is satisfied that— (a) the conservation of the heritage item or Aboriginal place of heritage significance is facilitated by the granting of consent, and (b) the proposed development is in accordance with a heritage management document that has been approved by the consent authority, and (c) the consent to the proposed development would require that all necessary conservation work identified in the heritage management document is carried out, and (d) the proposed development would not adversely affect the heritage significance of the heritage item, including its setting, or the heritage significance of the Aboriginal place of heritage significance, and (e) the proposed development would not have any significant adverse effect on the amenity of the surrounding area. A relevant definition in the 2013 LEP 1. It is also appropriate to set out the definition of shop top housing from the 2013 LEP as it becomes engaged if the underlying zoning is B1 Neighbourhood Centre as is a permissible form of development in this zone (as can be seen from the earlier set out extract from the Land Use Table): shop top housing means one or more dwellings located above the ground floor of a building, where at least the ground floor is used for commercial premises or health services facilities. The 2013 DCP 1. The DCP contains specific provisions for the site in Part C 9.8.8. These provisions are in the following terms: 9.8.8 1 Henry Lawson Avenue Diversity P1 To be purchased by the State government to complete the regional public open space network created along the entire southern foreshore of McMahons and Blues Points. P2 The site is redeveloped with cognisance of the former use of the site. P3 Until the site is purchased for public use, the site may continue to be used as a boat building or repair facility with ancillary residential accommodation. No more than 50% of the gross floor area may be used for residential purposes and must be located above the ground floor level. Form, massing and scale P4 Heritage listed slipways and sea walls to be retained. P5 A two to three storey form. Setbacks P6 Front: 1m (minimum). P7 Rear: (to Sydney Harbour): 5.8m minimum. P8 Side: Non-residential component: 0m minimum. Residential component: 1.5m minimum. Colours and materials P9 Development uses muted colours and non-reflective materials, such as brick and timber to ensure that the scenic and environmental qualities are preserved. Past development proceedings 1. A planning proposal was submitted to the Council on behalf of the Applicants seeking the rezoning of the site but was not proceeded with and does not require, therefore, to be explored further. 2. However, there have also been two development applications made to the Council which resulted in Class 1 proceedings in the Court. Each of these applications had relied on the beneficial and facultative provisions of cl 5.10(10) of the 2013 LEP as the basis for why redevelopment of the site for shipbuilding and repair use with associated ancillary residential development should be permitted. Clause 5.10(10) of the 2013 LEP has earlier been set out. 3. The first of the Class 1 appeals was determined by O'Neill C in 2016 (David Fox v North Sydney Council [2016] NSWLEC 1366). The Commissioner dismissed the appeal and refused development consent for the proposed development. The second Class 1 appeal was heard and determined in 2020 by Walsh C (Fox v North Sydney Council [2020] NSWLEC 1056). The Commissioner dismissed this appeal and refused development consent for that proposed development. 4. Each of these development applications relied on the beneficial and facultative conservation incentive provision in cl 5.10(10) of the 2013 LEP earlier set out. That provision, as can be seen, allows consent to be given to otherwise impermissible development, if relevant heritage protection works are incorporated in such a development proposal. 5. Those circumstances do not arise here as, after the application of the statutory disregard which necessitates the setting aside of conservation zoning, the various development scenarios requiring consideration in these proceedings do not require any reliance on cl 5.10(10) of the 2013 LEP in order to be capable of being approved. The zoning history of McMahons Point 1. The zoning history of McMahons Point was set out in the written evidence of Mr Chambers, the Applicants' town planning expert (Evidence Book, pages 179 to 180): The issues for determination 1. Mr Tomasetti's written opening submissions summarised what were said, on behalf of the Applicants, to be the issues requiring determination in these proceedings. They were described as being: 22. Given the parties' positions, the issues which the Court will be required to determine at the hearing fall into four broad categories: (a) The identification of the public purpose for which the Property was acquired; (b) The zoning of the Property as at the date of acquisition but for the proposal to carry out the public purpose; (c) The matters to be disregarded in determining the market value of the Property; and (d) The most appropriate valuation method to apply to determine the market value of the Property as at the date of acquisition. 1. Mr Eastman's written opening submissions proposed that the issues requiring determination could be summarised as being: E. ISSUES FOR DETERMINATION 35. As a consequence of the matters identified above, the Respondent contends that the issues for determination in these proceedings are: a. What is the "public purpose" for which the land was acquired? b. What is the underlying zoning and the relevant development standards and other planning controls which would apply to the site, in circumstances where the public purpose is to be disregarded? c. If zoned B1: is residential development (in the form of shop top housing) achievable? d. If zoned R3, what residential development is achievable (e.g. height, FSR, setbacks, heritage constraints, car parking)? e. Whether zoned B1 or R3: What is the correct valuation method to apply? f. If zoned B1: what are the inputs into the residual analysis? g. If zoned R3: what are the appropriate comparable sales and how are they to be adjusted? h. What is the appropriate amount for disturbance for legal, valuation and consultant fees? 1. Although that which I have set out above was subject to some later refinement toward the conclusion of the hearing, I am satisfied that what is set out in the preceding two paragraphs provides a sufficient and accurate reflection of what I need to address in this judgment. The evidence A further introductory observation concerning the scope and complexity of the evidence 1. It is appropriate, prior to the commencement of addressing preliminary evidentiary issues and then listing the details of the expert witnesses and their areas of expertise, to observe that the complexity and detail of what has become engaged for the purposes of this almost eleven day hearing and has necessitated my preparation of a judgment of north of 200 pages in length has been the proposition best encapsulated by what Mr Eastman advanced (Transcript 7 June 2023, page 72, lines 12 to 16) where he said: Because it's not enough, in my submission, just simply to identify that if it is to be B1 or, indeed, IN4, not setting out what the controls and constraints would be, would be an error, because a hypothetical purchaser would make that inquiry in some detail of the planners, of a heritage consultant, of an architect, and of a quantity surveyor, on my case. 1. Whilst I accept that there is a degree of particularity concerning this site arising from the legitimate contest between the Applicants and the Ministerial Corporation as to the public purpose requiring to be set aside as a consequence of the statutory disregard in s 56(1) of the Land Acquisition Act, I am unable to accept the broad proposition inherent in Mr Eastman's submission above (a submission not initially embraced on behalf of the Applicants but, as later discussed, apparently reluctantly embraced - I am prepared to assume), of the necessity to rely on detailed and complex expert evidence going well beyond what would reasonably be expected to be sought by a hypothetical prudent purchaser before engaging in private treaty negotiations with the hypothetical vendor for the purchase of this site. 2. Unfortunately, the embracing of the degree of detail in areas other than conventional valuation evidence (evidence which is necessary for the task upon which I have needed to embark) has caused both duration of hearing and of judgment preparation (including judgment length) that are, perhaps, quite unwarranted under the circumstances. Introduction to the form of the evidence 1. The evidence in the proceedings was primarily tendered in electronic form, enabling relevant historical photographs and planning maps to be displayed on screen in the courtroom. Limited evidentiary material was admitted in paper documentary form. The disputes about admissibility of proposed evidence 1. There was limited controversy as to the admissibility of any of the evidentiary material. It is not necessary to go into any great detail by setting out the past procedural history and rulings which had been made by Duggan J concerning applications foreshadowed (but not made) for the Applicants to be permitted to rely on additional expert evidence (these procedural matters having arisen in the period shortly prior to the hearing dates). 2. These matters arose before Duggan J in circumstances where the proceedings had been commenced on 1 March 2022 and initial procedural directions had been made by Pepper J in July 2022 (including, at that time, addressing the qualification of expert witnesses for the Applicants and the Ministerial Corporation in nominated disciplines and when the Applicants disavowed any intention to rely on expert evidence in several areas where the Ministerial Corporation proposed to do so). 3. It is sufficient for present purposes to note that, at the pre-trial mention before me on 31 May 2023, Mr Eastman foreshadowed that there would be objections to what was proposed to be appended to the Town Planning Joint Expert Report as material upon which Mr Chambers had relied as providing foundational assumptions for his town planning evidence. If this material was to be admitted, the Ministerial Corporation would be at a significant evidentiary disadvantage, he submitted. 4. Consideration of the objections foreshadowed at the pre-trial mention was deferred to be dealt with if such material was sought to be relied upon for the Applicants at trial. 5. In this context, it is to be noted that the material to which objection was foreshadowed comprised hypothetical residential development plans and associated materials prepared by Tanner Kibble Denton Architects (TKD) and photomontage material prepared by Virtual Ideas, a 3D visualisation company, which provided images (looking toward and looking out from) the hypothetical residential development postulated in the TKD documents. The material also included an arboriculture report from Mr Peter Castor responding to the potential for the presence of the substantial Moreton Bay Fig Tree providing constraints on giving effect to any development proposal in any of the hypothetical zoning outcomes being considered. 6. The Ministerial Corporation also objected to two heritage reports prepared by Mr Brooks for the Applicants (one dated March 2023 and, second, a supplementary expert report dated May 2023). 7. On the third day of the hearing, I dealt with the objections pressed by the Ministerial Corporation to any of these documents being permitted to be relied upon. 8. For the purposes of addressing those matters, affidavits from Mr Hill (the Ministerial Corporation's legal representative) and Ms Vatala (the Applicants' legal representative) were read and folders of documents referenced in those affidavits were tendered. Mr Tomasetti also tendered an earlier affidavit of Mr Hill which had been relied upon in an earlier interlocutory hearing. 9. I indicated to Mr Tomasetti that, if he continued to seek to be able to rely upon the material that was sought to be "slipstreamed in" as expert evidence by being incorporated by attachment to Mr Chambers contribution to the Town Planning Joint Expert Report, I was unlikely to agree to that course. However, I indicated that if he wished to make an immediate (belated) oral application for leave to rely on the various documents as expert material and (if admitted) make their authors available for cross‑examination (if required), I would permit him to make such an application orally and address it forthwith. Mr Tomasetti elected to make that application. 10. Although Mr Eastman submitted that the making of an oral application for the Applicants to be permitted to rely on the objected‑to material as expert evidence would be contrary to r 38.10 of the Uniform Civil Procedure Rules 2005 (UCPR), he also (quite properly) conceded that the Ministerial Corporation had commenced to prepare to respond to the Applicants' architectural material if it was admitted. He also indicated that, if the Applicants were permitted to rely on the material from Mr Castor, his cross-examination of Mr Castor would be comparatively brief. 11. I indicated to Mr Eastman that it seemed to me that s 38(2) of the Land and Environment Court Act 1979 (the Court Act) permitted me to inform myself as I saw fit in Class 3 proceedings such as these (subject to the requirement that my doing so did not deny the Ministerial Corporation procedural fairness and natural justice). 12. I indicated that I was minded to permit the Applicants to rely on the TKD architectural material prepared in support of the Applicants' proposal that an R3 Residential hypothetical zoning was to be accepted as appropriate and, for this purpose, to permit Mr Castor's report, as relevant to such matters, also to be admitted. 13. In light of Mr Eastman's concessions, I was satisfied it was appropriate to permit the Applicants to rely on the TKD architectural material and on Mr Castor's report as expert evidence, provided necessary timetable adjustments were made to accommodate the Ministerial Corporation having sufficient time to respond. 14. However, permitting the Applicants to rely on this additional material required allowing some further time for the Ministerial Corporation's architect to be prepared to respond to it. As a consequence, in order to permit this and to permit any necessary further joint conferencing between the town planners and the architects (on an all‑in basis) and for the Ministerial Corporation's quantity surveyor to consider the new architectural material, a day was lost out of the originally scheduled hearing timetable and the additional day I had been able to make available on the Friday of the first week of the hearing (when the hearing had not been originally scheduled) was unable to be utilised. 15. The parties settled an agreed timetable for completing the matter and, as a consequence of another matter for which I had been listed not proceeding, I was able to allocate an additional day on 29 June 2023 to enable completion of the matter in a timely fashion. 16. I ruled that I would not permit the Applicants to rely on the second additional expert report prepared by Mr Brooks. I did so (Transcript 7 June 2023, page 105, lines 30 to 42) on the basis that this document had been prepared by Mr Brooks late and on his own initiative rather than being a document arising as a consequence of some further matter raised with him by others during the course of conferencing. 17. I also ruled that I was not prepared to admit the photomontage report prepared by Virtual Ideas for two reasons. The first, and primary, reason for this was that providing a photomontage demonstrating what might be the view to the south-east toward the Harbour Bridge and beyond was not necessary to be demonstrated by a photomontage as it was something I had observed for myself during the course of the field inspection (as had also been observed by those accompanying me on that inspection). Second, to the extent that that photomontage did not incorporate any obstruction to that potential view that might arise from any hypothesised residential development on the element of the reserve immediately to the east of the site (such hypothetical development being an element of the Applicants' case theory), the photomontage was not an accurate depiction in any event. The expert witnesses 1. Generally, the expert witnesses gave written and oral evidence in pairs by discipline. The Applicants' heritage expert gave evidence by audio‑visual link as he was on leave overseas at the time of the hearing. Each of the experts provided an individual expert report. Joint expert reports were provided as appropriate: 1. Heritage evidence was given by Mr Graham Brooks for the Applicants and Mr Stephen Davies for the Ministerial Corporation; 2. Town planning evidence was given by Mr Bob Chambers for the Applicants and Mr Garth McKenzie for the Ministerial Corporation; 3. Architectural/urban design evidence was given by Mr Lachlan Rowe for the Applicants and Mr John Aspinall for the Ministerial Corporation; 4. Quantity surveying evidence was given by Mr David Lawson for the Ministerial Corporation; and 5. Valuation evidence was given by Mr Paul Dale for the Applicants and by Mr Nicholas Garnsey for the Ministerial Corporation. 1. Oral evidence was also given concurrently by the town planners and the architectural/urban design experts on an "all in" basis as part of the evidence concerning hypothetical designs which might be advanced to the Council for approval in the counterfactual possibility that the underlying zoning of the site was either R3 or B1. 2. Written and oral arboricultural evidence was also given for the Applicants by Mr Peter Castor. 3. An expert quantity surveying report was also produced by Mr David Lawson for the Ministerial Corporation. It is to be noted that the Applicants did not elect to seek to adduce any expert quantity surveying evidence. In addition to his initial statement of evidence in the Evidence Book (dated 22 February 2023), Mr Lawson subsequently provided a supplementary expert report dated 13 June 2023 that addressed the hypothetical development designs prepared by Mr Rowe and Mr Aspinall. This report became Exhibit 9. It will later be necessary to refer to some detail of this report for the purposes of examining how a B1 shop top housing development of the nature I have concluded it is appropriate to be hypothetically envisaged for the site is able to be valued. 4. As a consequence, when I later come to address my valuation conclusions on the basis of a B1 hypothetical development for the site, Mr Lawson's quantity surveying evidence concerning costing of the designs of the Applicants' architect and the Ministerial Corporation's architect stands as the uncontradicted evidence on such costing matters. I will later turn to address Mr Eastman's submissions as to why I should make a concluded valuation determination based on a hypothetical B1 shop top housing development proposal by reliance on Mr Lawson's evidence for this. In this context, it is appropriate also to observe that Mr Lawson was not required for cross-examination and his evidence is, therefore, unchallenged. The field inspection Introduction 1. On the second day of the hearing, a field inspection was undertaken. At the request of the Applicants' representatives, it was undertaken by boat to view not only the site, but also the various waterfront properties considered by the valuers in their various comparable sales analyses. The viewings of these properties from the water were not only ones which permitted an understanding of the location and orientation of each of them but, turning the boat at right angles to the water frontage of each of these properties enabled us to obtain an understanding of the views able to be enjoyed from any development (present or future) on those properties. 2. Photographs of this aspect observed during the field inspection were taken and subsequently tendered to supplement the relevant photograph in the Evidence Book. The only location at which we left the boat to undertake a walkaround was at the site. 3. To the extent that observations were made by the experts during the course of the site inspection, they are reflected in the settled notes of the field inspection later set out. The notes of the field inspection 1. Notes were taken of the field inspection and a set of joint notes subsequently settled by the legal representatives of the parties. These notes were subsequently tendered and are reproduced below: Agreed notes from the site views on 6 June 2023 The Court and the parties met at Man O'War Steps Wharf at 9am on 6 June 2023. Court Applicant Respondent Nick Eastman Peter Tomasetti SC Harry Rogers David Robertson Nicole Purves, Ashurst His Honour Justice Moore Stephanie Vatala, Dentons Nick Garnsey (valuer for Respondent) Associate to Justice Moore Shirley Leung, Dentons Garth McKenzie (town planner for Respondent) Paul Dale (valuer for Applicants) Danyal Ibrahim (representative for Respondent) Bob Chambers (town planner for Applicants) (only for site view) Sonna Yawary (representative for Respondent) Chris Ashjian (Applicants' representative) Jenny Byrnes (representative for Respondent) Felix Lin (representative for Respondent) The inspection of the subject site and the comparable sales properties took place by boat. The parties also walked around the foreshore of the subject site and its immediate surrounds. His Honour Moore J requested that photos be taken looking outward to harbour views. The two valuers were instructed by the parties to take photographs throughout the site and comparable sales view. Moore J stated that representatives were to convey matters of fact only; no assumptions or conclusions. The following statements were made when viewing each of the properties: 4 Cove Street, Watsons Bay • Paul Dale stated that: ○ One quarter of the site extends to below the mean high-water mark. ○ When the transaction took place, the property was only partially built and the purchaser had to complete the build. ○ The property was last sold in November 2021 for $27 million. • Peter Tomasetti pointed out the nearby public wharf and public walkway, and that you can see the CBD outline and the top of the arch of the Harbour Bridge from the property but there is no view of the Opera House. 1 Wingadal Place, Point Piper • Paul Dale said that: ○ The property has two view elements. ○ Other than from the top level of the property, the view from the property is to Double Bay. ○ Top level of property has views over neighbouring properties toward the bridge. ○ When the property was sold, the property was a prestige house. The house has now been rebuilt. ○ The property was last sold in April 2021 for $38 million. • Nick Garnsey said: ○ The property was in good condition when sold. ○ There is a turn table in garage. 42 Wolseley Place, Point Piper • Paul Dale noted that access to the property was through a shared driveway, and the site was steep and had a shallow waterfront. Paul Dale also noted the property has two counterparts; top level and lower level. • Peter Tomasetti said that the driveway serves the property and the property next door. • Nick Garnsey said that the owners of the 2 properties each owned half the driveway with reciprocal rights of carriageway • Nick Garnsey said that the property sold twice first in 2019 for $22M and the second time in 2022 for 2022 for $27M acquired by Yakob the owners of 42A. • Paul Dale said the property was sold for $22 million in November 2019. Paul Dale also said that the property sold for $22 million in November 2021 and sold for $27 million in July 2022. • Paul Dale noted the property was grass land. • Peter Tomasetti said we can see the Harbour Bridge from where we are. 6 & 2A Castra Place • Paul Dale said that: ○ No. 6 has a 6 metre-wide frontage and adjoins the marine facility. ○ No. 6 and No. 2A fronts onto a public beach. There is "quite an odour" coming from the drainage, especially at low tide. ○ No. 6 sold in April 2021 for $26 million to Malouf and then Malouf bought 2A in June 2021 for $35 million. • Nick Garnsey noted that there is a sign on no. 6 for a DA for internal alterations and additions. • Peter Tomasetti noted that there is no view of the Opera House or CBD from no. 2A or no. 6 but there is a view into the bay. • Nick Garnsey noted that the aspect is due north from both no. 6 and no. 2A. He said that there was a development consent for no. 6 for alterations and additions, and that nos. 6 and 2A are owned by different registered proprietors. • Paul Dale said that the views were not as good at no. 2A and no. 6 as from the subject site because the views at no. 2A and no. 6 are not iconic. 27 Elamang Avenue, Kirribilli • Nick Garnsey said that: ○ The property with the crane is no. 27. ○ At no. 27 there is a much deeper waterfront than the subject site and the site area is 626m2. Nick Garnsey said the property has the same width as the subject site but is deeper. ○ At the time of the sale, there was a 1960s house and after the sale, a DA was obtained to demolish that house and re-build. ○ Sold for $19.1 million in February 2022. • Paul Dale said there was not a lot of residual value in property. 17 Elamang Avenue, Kirribilli • Nick Garnsey said that: ○ The house at no. 17 is a federation house and is locally heritage listed. ○ No. 17 sold for $18.7 million in April 2022. ○ No. 17 has a deep waterfront the same width as the subject site but is deeper • Paul Dale said that: ○ From advertising photos No. 17 appears very dated internally. He agreed that it is heritage listed. ○ No. 17 was sold in April 2022. ○ Parking for no. 17 is at street level. There is no protected ingress and egress from parking spaces to the house. 2-4 Stannards Place, Kirribilli • Nick Garnsey noted that the property was sold in October 2022 for $19.8 million with $7.5 million for the smaller property, and $12.3 million for the larger one. There is no DA attached to the property. • Nick Garnsey said No. 2 was approximately 858sqm in area and No. 4 was approximately 400sqm in area. • Nick Garnsey pointed out the slipway. • Paul Dale asked the Court and parties to observe the view corridor. Mr Dale noted that there is a boat repair facility opposite to the property and that there are boat activities next door. 11 Bay View Street, Lavender Bay • Peter Tomasetti pointed out the fig tree that sits on the property. • Nick Garnsey said that: ○ The site area was about 1404m2 and was 30 metres wide. ○ The property is made up of 5 titles: 3 long narrow parcels and 2 wider parcels. ○ Residence is at the base of the property. ○ The property was state heritage listed in the 1990s and sold in December 2022 for $42.2 million. • Paul Dale noted that the views from the residence are different to the views from the guest home. The residence is set back with a large tree in the backyard. • Paul Dale also noted the windows are different to what would be approved today for a newly built home. 5 Bay View Street, Lavender Bay • Nick Garnsey noted that no. 5 Bay View is a block of apartments (red brick development) that was sold in one line and has a site area of 714m2. • Nick Garnsey noted that the property was sold for $8.1 million in April 2013. • Paul Dale noted that no. 5 Bay View is an elongated site. • Nick Garnsey noted that no. 5 is a used as an example to compare to the 2009 sale of the subject, 3 Bay View Street, Lavender Bay • Nick Garnsey said the property is a white modern building and sold for $10.3 million in around December 2012 while the building was built in 2014 or 2015. No building at time of sale. • Nick Garnsey noted the land is 955sqm in area. • Nick Garnsey said he also had information about the sale of 9 Bay View Street, Lavender Bay • Paul Dale said it was important to note the shape of the lots of nos. 3 and 5 which were very elongated. 1 Henry Lawson Avenue, McMahons Point Whilst on the water: • Peter Tomasetti pointed out the following: ○ Sails Restaurant ○ There is a division that was created in the 1990s between Henry Lawson Reserve and Blues Point Reserve. ○ There is a fig tree on the land adjoining the subject site. ○ There is an indent in the sea wall into the site as MHWM used to go higher up into the site. ○ There is a galvanised dinghy rack and other moveable heritage items on the subject site. ○ The rock wall is 13-14 metres. ○ Shipway rails go underneath the building extension. ○ Rusted wheels on the site, along with the digging rack and removable heritage items. • Peter Tomasetti said that in the counterfactual scenario the Applicants say that the whole foreshore would have been developed for residential properties with dwellings. • His Honour Justice Moore queried the eastern boundary line in relation to the cyclone fencing. Peter Tomasetti said he could not be sure but close to the fence line and the site speaks for itself in relation to the Western side. • Paul Dale said this property has views in a different category to views from the other comparable sales properties. • Nick Garnsey noted that the frontage of the site is 15 metres and the depth is 24 metres. The Court and the parties then viewed 1 Henry Lawson Avenue, McMahons Point on land and the following observations were made. • Peter Tomasetti pointed out: ○ The steel rails, bollard, wheels, and cradle on the site. ○ The state of timbers and the rails. ○ There are 2 buildings on the site and the upper floors were residences. ○ Retaining walls on either side of the property. ○ The views from the property to the Harbour Bridge, Opera House, Barangaroo, finger wharves, which would also be available from within the building on both levels. • Nick Eastman queried where the foreshore line would lie. Peter Tomasetti said it is hard to say and would suggest there would be some setback. • Peter Tomasetti said that in the counterfactual the adjacent lots would also be developed as residential properties, which may impact some of the views from the subject site. • Bob Chambers pointed out the R4 and R3 zoning boundaries. The Sails restaurant is zoned B1. • Garth McKenzie said the built form coming up to foreshore is reflection of building line map. Garth Mckenzie said that the subject site would have very little direct sunlight and that on 21 June most of the site would be in shadows probably from about 10am and into the afternoon the property would be completely in shadows. • Peter Tomasetti said that car parking spaces at the front of the property. He also pointed out that on the other side of the road is a 2 hour parking area with permit holders excepted. • Peter Tomasetti said plans of the B1 scheme show a café of sorts with 96 seats [Ashurst note: We understand this comment was in the context of Mr Aspinall's B1 100% commercial Scheme, see pages 789 – 790 of the Evidence Book]. • Garth Mckenzie said that the front boundary of adjoining properties to west is setback about 1-1.5 metre from the alignment of the front boundary of the acquired land. • Peter Tomasetti said, regarding the fig tree, that all evidence suggests that it self-seeded back in the 1960s. The Landscape Matrix Arborist Report stated that pruning can be done to accommodate development on the subject site. In the counterfactual scenario, the Applicants say that the tree would not be there. • His Honour observed that two branches of the fig tree had previously been pruned. • Peter Tomasetti also pointed out: ○ A close view of the cradle, a moveable item, down at the water at the toe of the site ○ Views of Barangaroo to Luna Park ○ On the Applicants' counterfactual, that the reserve would have been developed in the 60s-80s. ○ Stevens House at corner of Henry Lawson and Blues Point Reserves, with a historical plaque. ○ The plaque shows Blues Point Reserve ○ Blues Point Road • Bob Chambers noted that Henry Lawson Reserve was where the metro infrastructure had been located and it had recently been removed and as a consequence the park re-grassed and landscape. He pointed out the two reserves as well, and a historic plaque showing the two original houses in the reserve. • Bob Chambers said there were the two reserves since the 1990s/2000s. He pointed out Westbridge, a 4 storey walk up flat building built in the 1950s. • Paul Dale said there are iconic views from the site and Blues Point Reserve which are divergent from other views from properties seen on the site view today. • Peter Tomasetti pointed out the wharf property plaque at the corner of Henry Lawson reserve and Blues Point Reserve Berrys Bay • Peter Tomasetti pointed out the area was zoned IN4 and that there was a boatyard and boat building facilities. 1. Following on from the field inspection and what was observed during the course of walking the foreshore reserve on either side of the site (as well as observing the site itself), I considered that there were some matters, as I understood the position – not yet having been taken to the detail of the town planning evidence – which, in light of the opening submissions by counsel, may not have been addressed by the town planners. I drafted four questions which, as I understood the position, would be appropriate to be considered by the town planners if they had not already done so. I provided a copy of the draft questions to the advocates on the morning of the third day of the hearing. The questions were in the following terms: 1. For the purposes of the counterfactual assessment of what would have been the underlying zoning of the site after setting aside the public purpose, is it reasonable to assume that all the reserve land (including the site) from the former vehicle ferry discharge point at the end of Blues Point Road extending to the east to the present ferry wharf would have had the same underlying zoning (whatever that zoning might have been)? 1. If so, on is it be assumed that this entire strip of land could have been zoned B1 Neighbourhood Centre and why? 2. If not, why not? 3. If differential zoning within this strip of land was appropriate to be adopted and some parcel within it was to be regarded as having an underlying zoning of B1, on what basis, on the balance of probabilities, is it appropriate to assume that the site would have been the parcel which would have been so zoned in preference to other parcels of land along this foreshore strip? 1. It was agreed that these matters should be addressed by the town planners. They conducted joint conferencing to consider them – joint conferencing which resulted in a supplementary town planning joint expert report, a document which became Exhibit 6. To the extent that any matters from this additional joint planning report turned out to be relevant, they are dealt with in the later parts of this judgment without the necessity to cite, specifically, Exhibit 6 as their source. The dispute as to the "public purpose" Introduction 1. The competing positions of the parties as to what should be regarded as the underlying zoning of the site after application of the statutory disregard can be seen from the pleadings. The position advanced in the Applicants' Amended Points of Claim was: 13. If the regional park was never proposed, the Property would have been zoned R3 Medium Density or R4 High Density Residential under the North Sydney LEP and possibly, as to a small part, it would have been unzoned. 1. In contrast to the above position, the Amended Points of Defence filed for the Ministerial Corporation set out that body's position in the following terms: 13. The Respondent denies paragraph 13 and says that, subject to expert planning evidence, the underlying zoning of the Property is either C2 Environment Conservation, IN4 Working Waterfront or B1 - Neighbourhood Centre with part of the Property being unzoned. 1. The initial issue requiring determination defines a pathway for assessment of what might be a permissible hypothetical development consistent with the underlying zoning of the site and, as a consequence of defining such a hypothetical development, undertaking the process of reaching a judicial valuation determination as to what is the appropriate level of compensation due to the Applicants. Short summaries of the parties' competing public purpose arguments 1. The competing positions of the parties are summarised below: The Applicants' position 1. The position advanced on behalf of the Applicants is that the public purpose comprises the completion of the broad aspiration in existence since the creation of the County of Cumberland Planning Scheme in 1948 (or of the County of Cumberland Planning Scheme Ordinance – the CCPSO – in 1951, this difference being immaterial for present purposes) that all the south‑facing and east‑facing land below the historic quarry cliff face at the end of McMahons Point was to be acquired and dedicated as public open space. 2. The Applicants say, as a consequence, that all the land along the foreshore at the southern end of McMahons Point had been identified for some seventy years to be open space and that the land used since the 19th century for harbourside maritime‑related uses was to be acquired and accumulated for this purpose as the waterfront uses expired. 3. On this basis, the public purpose required to be set aside is the proposal to create that continuous open space reserve. Doing so meant that the underlying zoning would result in the assumption that the steady transition from those harbourside industrial uses would be to a residential use consistent with the residential development pattern for McMahons Point – particularly on its eastern side. This gradual transition would have resulted in development of all of this foreshore land at the southern end of McMahons Point for residential purposes, leaving the site as the final industrial remnant to be repurposed in this fashion. 4. To demonstrate this, the Applicants rely on the fact that the County of Cumberland Planning Scheme mapped the foreshore area at the southern end of McMahons Point as appropriate to be designated as open space, doing so in 1948. The statutory adoption of this came when the CCPSO came into effect in 1951. An extract from the CCPSO map demonstrating this position is in evidence in Mr McKenzie's Town Planning Expert Report (Evidence Book, folio 287). 5. It was submitted that map extracts from a number of planning instruments subsequent to the CCPSO - contained in the report of Mr Davies (Evidence Book, folios 66 to 97) - demonstrate the consistency of this position of identification of the proposed long-term aspiration that this land at the end of McMahons Point (always including the site) remaining proposed to be public open space until the date of compulsory acquisition. 6. The proposition advanced by Mr Tomasetti was that, disregarding this continuous mapping, the inevitable position (in the hypothetical circumstances requiring consideration) was that all of this land would have slowly transmuted from the 19th century and early 20th century harbour/marine usages which had taken place and would have been residentially developed. 7. On this hypothesis, the site should be regarded as the last remnant harbour/marine industrial use framed on each side by hypothetical residential development. Disregarding the CCPSO public purpose designation for all this foreshore land to be acquired as a public reserve in this fashion would lead to the conclusion that the appropriate present‑day underlying zoning as at the date of the compulsory acquisition of the site would be R3 Medium Density Residential or R4 High Density Residential pursuant to the 2013 LEP. 8. On this basis, the case advanced on behalf of the Applicants simply sought to establish the nature of the residential development hypothetically capable of being erected on the site and, in that context, to derive the value of the site for that purpose using the comparable sales methodology relied upon by the Applicants' valuation expert. The Ministerial Corporation's position 1. In contrast, the case advanced on behalf of the Ministerial Corporation was that the public purpose for which the land has been acquired is defined by, and to be seen from, the statutory process by which the land was acquired - a statutory process that arose from the contemporary legislative structure which enabled the acquisition validly to be made by the Ministerial Corporation. 2. This required, it was submitted, an examination of, and obtaining a proper understanding of what was achieved by, the various documents which authorised and effected the compulsory acquisition process which was commenced by the Minister on 28 May 2021 and finalised by the publication of the notice of acquisition in the Government Gazette on 11 June 2021. 3. Viewed in this fashion, the case initially advanced by Mr Eastman for the Ministerial Corporation requires the assumption that, as at the date of acquisition, the land on either side of the site is accepted to be, for framing purposes, the existing elements of the Blues Point and Henry Lawson Reserves. In this context, the underlying hypothetical zoning for the site is B1 Neighbourhood Centre or IN4 Working Waterfront under the 2013 LEP (disregarding the narrow public purpose demonstrated by the statutory framework and the documents effecting the acquisition). On this basis, the site should be valued on the assumption that it would be zoned B1 or IN4. 4. However, as later discussed, the proposition of a potential underlying zoning being IN4 Working Waterfront was no longer pressed for the Ministerial Corporation – leaving the B1 Neighbourhood Centre pressed as the underlying zoning. 5. The Ministerial Corporation's expert valuer engaged in a valuation exercise based on this assumption (however, it is also to be noted that he also engaged, on a contingent basis, with the Applicants' expert valuer on a comparable sales basis if the residential zoning case theory advanced on behalf of the Applicants was to be accepted by me). Determination of the public purpose Introduction 1. As noted above, there is a dispute as to what, for the purposes of the statutory disregard in s 56(1) in the Land Acquisition Act, I should determine is the public purpose for which the land was acquired from the Applicants. Determination of the public purpose required to be disregarded is, in effect, the dominant matter requiring determination to frame the outcome of these proceedings and the quantum of compensation to be ordered to be paid to the Applicants. 2. I have concluded that the public purpose for which the site was acquired is that which was advanced by the Ministerial Corporation. It is, therefore, not necessary to set out the details of the argument advanced on behalf the Applicants (beyond the summary I have earlier provided) and the evidence adduced on their behalf said to support the version of the public purpose for which they have contended. 3. It is appropriate that I explain why I have reached the conclusion that a proper understanding of the statutory basis upon which the Ministerial Corporation compulsorily acquired the site from the Applicants was necessarily founded on the existence of the surrounding public open space as at the time the Minister determined to authorise the acquisition on 28 May 2021 and the acquisition was subsequently effected. 4. This statutory construct means that the public purpose is to be seen as being the completion of the reserves, and not the identification of, and subsequent creation by either compulsory or negotiated acquisition of, all the land that now comprises the reserves – now completed with the addition to them of the land compulsorily acquired from the Applicants. 5. However, there are also, as will later be seen, a range of matters of detail requiring to be addressed concerning: 1. the detail of what scale of hypothetical development is capable to be achieved on the site under an underlying B1 Neighbourhood Centre zoning; and 2. contingently, if the hypothetical underlying zoning is in fact R3 Medium Density Residential, what is the compensation due to the Applicants on this basis. As it is appropriate to determine this against the possibility I am wrong in my determination of the public purpose to be disregarded, I will need to analyse the competing valuation positions advanced on behalf of the parties and how they are to be resolved in order to derive a value for the site on the R3 zoning basis. 1. Because of the criticality of my determination as to the nature of the public purpose and its resultant definition as to how these proceedings are to be resolved, I am satisfied that it is appropriate to take some considerable length in this judgment to set out the relevant foundational documents for the compulsory acquisition of the site and the submissions advanced on behalf of the parties as to how the compulsory acquisition is to be understood for the purpose of establishing the public purpose (and, hence, what is to be disregarded for the purposes of determining the hypothetical underlying zoning for the site). 2. It is also appropriate to summarise the relevant oral submissions on this topic and to quote from the written submissions concerning the public purpose in order to obtain a proper understanding of the cases advanced on behalf of the parties. However, as will later be seen, I am satisfied that resolving the differences of approach is a comparatively simple matter based on the historical context of the site and the legal acquisition documents to which I have referred above and which are later set out in full. 3. I have earlier set out the terms of s 56(1) of the Land Acquisition Act, this being the provision which creates the statutory disregard – the requirement to set aside the public purpose for which the land has been acquired and, here relevant, any reduction in the value of that land which arises as a consequence of that public purpose. 4. To explain my conclusion and the reasoning leading to it, I now turn to: 1. the documents which effected the acquisition of the site; 2. the submissions advanced on behalf of the Ministerial Corporation as to how these documents should be regarded as defining the public purpose; 3. the submissions on behalf of the Applicants as to why the Ministerial Corporation's identification of the public purpose should not be accepted but that the Applicant's position should be preferred; and 4. my consideration of, and conclusion to be derived from, the Ministerial Corporation's submissions as leading to the inevitable conclusion that the acquisition of the site was for the limited and confined public purpose of including the site in the existing the public open space at the southern end of McMahon's Point and why this acquisition was not merely the final step in a public purpose of the preordained process of open space creation identified in 1948 and commenced in 1951. The acquisition-effecting documents Introduction 1. There are four documents which, together, frame the context of the process leading up to the compulsory acquisition by the Ministerial Corporation to taking place. The first of those was a letter from the then Minister for Planning, the Hon Anthony Roberts MP. This letter was not a step in the subsequent formal acquisition process. This letter was sent to each of the Applicants. 2. The second was the service on the Applicants of a Proposed Acquisition Notice (PAN) as required by s 11 of the Land Acquisition Act. This constituted the first step in the statutory process. This triggered the negotiation period mandated by s 10A of the Land Acquisition Act. 3. The third was the Ministerial Briefing Note by which the then Minister approved compulsory acquisition. 4. The fourth was the notification of the compulsory acquisition by notice published in the Government Gazette effecting the acquisition. 5. It is appropriate to note, at this point, that only the second and fourth of the above listed documents were documents formally mandated as statutory legal steps required to effect the compulsory acquisition of the site. 6. Although somewhat lengthy, it is appropriate to reproduce in their entirety these documents and the competing submissions made concerning them in order to provide an understanding of the conclusion I have reached to adopt the public purpose proposed by the Ministerial Corporation. The Minister's letter 1. On 15 February 2019, the then Minister for Planning wrote letters to each of the Applicants concerning the proposed compulsory acquisition. The two letters were in identical terms. The terms of those letters are set out below: Dear Mr Fox and Ms Hazzouri I am writing in relation to your property 1 Henry Lawson Avenue, McMahons Point, legally described as Lot 1 in DP915829. Blues Point Reserve is a landmark area of regional open space for the people of New South Wales. Your property is the final privately-owned property at this location and its acquisition would complete the project of bringing the whole of Blues Point Reserve into public ownership. The Planning Ministerial Corporation would like to commence negotiations with you to acquire your property in order to bring it into public ownership. I note that the Department of Planning and Environment has previously discussed the acquisition of your property with you at various times between 2012 and 2017. The Corporation will write to you shortly to make an offer for the acquisition of your property. The Corporation's offer to acquire your property will commence the minimum six-month negotiation period that is required under section 10A of the Land Acquisition (Just Terms Compensation) Act 1991. If the Corporation cannot reach agreement with you during this period, it may decide to initiate a compulsory acquisition of your property. If you have any questions about this matter, please contact Pheona Twist, Director, Office of Strategic Lands, at the Department of Planning and Environment on 9274 6187. 1. It is to be noted that this letter's statement of intent does not constitute part of the formal compulsory acquisition process – it was an "offer to treat" seeking to avoid the necessity for such a compulsory process. Proposed Acquisition Notice 1. The first legal step in the process which led to the acquisition of the Applicants' land was issuing of the PAN to the Applicants. The PAN was dated 5 February 2021 and was in the following terms: LAND ACQUISITION (JUST TERMS COMPENSATION) ACT, 1991 SECTION 11 Proposed Acquisition Notice This is a proposed acquisition notice for the purposes of s.11 of the Land Acquisition (Just Terms Compensation) Act 1991 ("the Act"),which provides you written notice of the intention of the Authority specified below to acquire land by compulsory process. TO: David Fox 8-18 William Street BEACONSFIELD NSW 2015 1. The Planning Ministerial Corporation ("the Authority") proposes to acquire the whole of your interest in the land located at 1 Henry Lawson Avenue, McMahons Point, NSW 2060. 2. A description sufficient to identify the land which is proposed to be acquired including title details of the land is in part 1 of the schedule which follows. 3. The Authority proposes to utilise the land which is proposed to be acquired for the purpose identified in part 2 of the schedule which follows. 4. The basis of the power of the Authority to acquire that land is identified in part 3 of the schedule which follows. 5. The period within which the land will be compulsorily acquired is as soon as practicable after 90 days from the date of this notice (see ss 13(1) and 14(1)). 6. If you wish to claim compensation for the acquisition you are requested to lodge with the Authority a claim for compensation. If you wish to lodge a claim for compensation you must lodge it before 17th April 2021 (see s.15(e)). 7. A claim for compensation, should you wish to make one, must be in the form which accompanies this notice and is entitled Claim for Compensation. 8. Compulsory acquisition of land is a significant matter and you may wish to consult a lawyer and consider the terms of the Act as to your rights (a link to a website which has the Act is www.legislation.nsw.gov.au). You may wish to contact the Authority for further information and you may find that there is further information publicly available on the website of the Authority or at http://www.propertyacquisition.nsw.gov.au. SCHEDULE REFERRED TO ABOVE Part 1: All that piece or parcel of land situated at McMahons Point in the Local Government Area of North Sydney, Parish of Lavender Bay, County of Cumberland being Lot 1 in Deposited Plan 915829, described as 1 Henry Lawson Avenue, McMahons Point and said to be in the ownership of David Fox and Jozette Hazzouri as joint tenants. Part 2: For the purpose of public recreation and inclusion to Blues Point Reserve. Part 3: The Planning Ministerial Corporation may, pursuant to Part 6, clause 31 of Schedule 2 to the Environmental Planning and Assessment Act 1979, acquire land by compulsory process in accordance with the Land Acquisition (Just Terms Compensation) Act 1991 for the purposes of the Environmental Planning and Assessment Act 1979. The Ministerial approval to initiate acquisition 1. The next step in the process which led to the acquisition of the Applicants' land was the Ministerial adoption of a recommendation to acquire the site by compulsory acquisition based on the PAN of 5 February 2021. This process was initiated by a briefing note put to the Minister. That briefing note (Exhibit 1, pages 20 to 26) was in the following terms: Approval for compulsory acquisition of land and interests at 1 Henry Lawson Avenue, McMahons Point Purpose: To seek the Minister's approval of the compulsory acquisition of the interests in Lot 1 in Deposited Plan 915829, being described as 1 Henry Lawson Avenue, McMahons Point (Land) by the Planning Ministerial Corporation (Corporation) in accordance with the Land Acquisition (Just Terms Compensation) Act 1991 (Just Terms Act). Analysis: The land is identified for acquisition in the North Sydney Local Environmental Plan 2013 (LEP) and North Sydney Council (Council) has accepted transfer of the land 'as is' to complete the Blues Point Reserve corridor. The Corporation is the nominated acquisition authority pursuant to the LEP. Approval date: 2 June 2021 Reason for deadline: Proposed acquisition notices (PAN) were issued to all parties with an interest in the Land on 5 February 2021. The 90-day period plus seven-day deemed postal delivery period for the PANs concluded on 17 May 2021. Under the Just Terms Act, the Corporation must within 120 days of issuing PANs acquire the Land by compulsory process by publishing a notice in the NSW Government Gazette. Failure to do so will mean the Corporation is unable to issue another PAN in respect of the Land for 12 months delaying the acquisition. Required papers will need to be approved and lodged on 2 June 2021 in order to be tabled at the 9 June 2021 Executive Council meeting. Recommendations That the Minister: 1. Note that PANs were issued to all parties with an interest in the Land, on 5 February 2021 (Attachment A). 2. Note the 90-day period under section 13(1) of the Just Terms Act plus a seven­ day deemed postal delivery period for the PANs concluded on 17 May 2021. 3. Approve the compulsory acquisition of the Land as shown edged red on the Deposited Plan (Attachment B) and edged red on the aerial photograph (Attachment C) under the Just Terms Act by publication of the Acquisition Notice (Attachment D) in the Gazette. 4. Recommends to Her Excellency the Governor that she approves publication of the Acquisition Notice (Attachment D) in the Gazette to effect the compulsory acquisition of the Land under the Just Terms Act by: a) Signing the Executive Council Minute (Attachment E); and b) Forwarding the signed Executive Council Minute (Attachment E) and Explanatory Note (Attachment F), the Acquisition Notice (Attachment D), the Deposited Plan 915829 (Attachment B) and aerial photograph (Attachment C) to the Executive Council for the Governor's approval. Key reason The Land is the last remaining privately owned property at this location The immediate surrounding land is waterfront public open space known as Blues Point Reserve. This surrounding land is either owned by Council or is land owned by the Corporation under the Care Control and Management (CCM) of Council under section 48 of the Local Government Act 1993. Blues Point Reserve is considered a landmark area of regional open space for the people of New South Wales. The Land is the final privately-owned property at this location and its compulsory acquisition would complete the project of bringing the whole of Blues Point Reserve into public ownership. The Land enjoys spectacular views of a large section of the southern harbour foreshore, including the Harbour Bridge. The acquisition is an election commitment The acquisition of the Land was announced by the NSW Government as an election commitment in 2019. The Hon. Anthony Roberts, former Minister for Planning, Housing and Special Minister of State, wrote to the landowners in February 2019 informing them that it was the Government's intention to acquire their property and bring the Land into public ownership. The Land is identified for acquisition by the Corporation The land is identified for acquisition in the LEP. The majority of the site is zoned RE1 Public Recreation while the slipway area is Unzoned Land under the provisions of the LEP. The Corporation is the nominated acquisition authority pursuant to the LEP for land that is zoned RE1 Public Recreation identified as Regional Open Space, while there is no nominated acquisition authority for the Unzoned Land. The Land Reservation Acquisition Map in the LEP identifies the whole of the Land to be acquired. It is owned by Mr David Fox and Ms Jozette Hazzouri, has a total land area of 366.7 square metres and is a regular shaped parcel, sloping gently from the roadway to the rear boundary (mean high water mark). Improvements on the land include a dilapidated 1960's boatshed/residence of timber construction. The building is unsafe and non-habitable and requires demolition. Other improvements include an historic slipway with sandstone sea walls which is in poor condition. Westpac Banking Corporation has a registered interest to the Land as mortgagee in dealing AG242460 under the second schedule on the Certificate of Title. Previous negotiations from 2013 to 2016 Discussions have been ongoing with the landowners since 2013. In June 2013, a written request was received from the landowners' representative formally requesting the Corporation acquire its client's property through negotiated agreement. The Corporation commenced due diligence investigations and independent valuation advice was obtained so that an offer to purchase could be made in 2014. Following a period of inactivity by the landowners, negotiations stalled, and no further negotiations occurred at that time. In July 2016, the Minister requested that the Corporation proceed to purchase the subject property by negotiated agreement. The proposed acquisition did not progress as the landowners were not prepared to enter negotiations. Current negotiations A valuation of the Land was undertaken by Mr Nicholas Garnsey of Cushman & Wakefield in accordance with the Just Terms Act. Mr Garnsey assessed the Land to have a market value of $5.7 million, with an upper limit of $6.2 million for negotiation purposes, if required, to reach agreement with the landowners. Approval was received on 22 June 2020 to purchase the subject property for $5.7 million plus an allowance of $48,000 for disturbance. Approval to negotiate up to $6.2 million plus an allowance for disturbance was also received at this time. An offer of $5.7 million plus a further payment of $48,000 for disturbance was made to the landowners on 23 June 2020. This offer commenced negotiations and the minimum six-month negotiation period in accordance with section 10A(2) of the Just Terms Act. As part of the negotiation process, the Corporation and the landowners exchanged valuation reports for the purposes of a joint review by the respective valuers. The landowners' valuer, Mr Anthony Alford of Lunney Watt & Associates Pty Ltd, assessed the market value of the Land to be $12.22 million plus an allowance of $1,012,684 for disturbance. The Valuers held a 'without prejudice' conference and an agreed market value for the subject property was not achieved. While both Valuers' methodology and adopted comparable sales and rentals are similar, the high-level mathematical analysis of the comparable data differs and these adjustments were not resolved during the joint valuation conference or the subsequent meeting between the valuers, the landowners' representative and the Corporation. During these discussions, the Corporation's Valuer, in order to resolve all doubts in the landowners' favour, agreed to revise his assessed market value of the Land to $6.5 million. Following approval, an offer to purchase for $6.5 million plus an allowance of $64,000 for disturbance was made to the landowners on 21 September 2020, however, agreement has not been achieved with the landowners to date and negotiations have stalled. There are environmental factors and heritage significance to be considered The Land is identified as a Heritage Item (10453) in the LEP Heritage Map and is listed in Schedule 5 of the LEP as "slipway and site of former Holmes residence". Michael Holmes (W L Holmes & Company) was an established boat builder at McMahons Point from the late 19th century until the mid-20th century. The property remained in the Holmes' family ownership until 1950. The slipway was the last active small slipway business in this area. The use of the land as a commercial business has been known to be in operation from approximately 1880 until 1950. As part of the due diligence investigations during the current negotiations, the landowners Stage 1 Preliminary Site Investigation report was peer reviewed by Environment Energy and Science Group (EES) which were representing the Corporation. EES reported that there was a low to moderate risk of contamination being present on the site due to its past usage as a boat service facility. There is the potential presence of unverified soils on site as well as potential asbestos containing material used in the construction of the improvements. A Phase 2 Detailed Site Investigation was recommended however, because the entirety of the site is covered by the footprint of the site's buildings, handheld drilling would be required. As the Land is in private ownership, this is not feasible or practical as part of the due diligence investigations to make an offer to purchase. The Valuer-General, as part of the compulsory acquisition process when determining compensation payable to interests in land, will consider all information that it is furnished with by both acquiring authority and the interests in the land. The Corporation will provide the Valuer-General with copies of all reports related to the due diligence investigations. Council has agreed to accept transfer of the property 'as is' Council is identified as the end user agency and the Corporation has worked closely with Council since initial discussions commenced with the landowners in 2012. In 2013, 2016, and at the present time. Council has agreed in writing to accept the transfer of the Land following acquisition in an 'as is' condition. Acquisition by compulsory process under the Just Terms Act Where an acquiring authority cannot reach agreement with all of the parties having an interest in the land the acquiring authority is proposing to acquire, the acquiring authority may compulsorily acquire those interests. Compulsory acquisition is legislated under the Just Terms Act. The Just Terms Act requires the acquiring authority to negotiate with each interested party for a minimum of six-months before the acquiring authority commences the process to compulsorily acquire that party's interest in the land (by issuing a PAN to the interested party). For this matter the six-month negotiation period concluded on 23 December 2020. PANs were issued to the parties with an interest in the Land on 5 February 2021. Even after the issue of PANs, the acquiring authority and an interested party may continue to negotiate and ultimately agree to an amount of compensation payable to that interested party. Agreement in this instance has not been reached. The 90-day period after the issue of PANs concluded on 17 May 2021 so now, with the Governor's approval, the Corporation may effect the compulsory acquisition by publishing the Acquisition Notice in the Government Gazette. Upon publication of the Acquisition Notice, the Corporation will become the owner of the Land and the freehold and registered interests will revert to one of compensation to be determined by the Valuer-General. The Valuer-General is required to make a determination of the compensation payable to each interested party. An interested party may either accept the determination within 90 days or appeal the determination to the Land and Environment Court. Supporting analysis Legal impact The Department's Legal and Governance Division has been advising on the acquisition of the Land since the election commitment was made and has approved this briefing note and the accompanying attachments. Funds are available from the Sydney Region Development Fund Following compulsory acquisition, the Valuer-General will determine compensation independently but will have regard to the Corporation's valuation advice and other due diligence reports as well as the landowner's valuation advice and due diligence reports. Funds are available within the Corporation's acquisition budget for 2021/2022. 1. As can be seen above, the recommendation was accepted on 28 May 2021. The Government Gazette notice 1. On 11 June 2021, the Notice of Acquisition was published in the Government Gazette – this was the second legal step in the acquisition process. That notice was in the following terms: ENVIRONMENTAL PLANNING AND ASSESSMENT ACT 1979 Land Acquisition (Just Terms Compensation) Act 1991 Notice of Compulsory Acquisition of Land in the LOCAL GOVERNMENT AREA OF NORTH SYDNEY The Planning Ministerial Corporation constituted by the Environmental Planning and Assessment Act 1979 declares, with the approval of Her Excellency the Governor, that the land described in the Schedule to this notice is acquired by compulsory process under the Land Acquisition (Just Terms Compensation) Act 1991 for the purposes of the Environmental Planning and Assessment Act 1979. SCHEDULE All that piece or parcel of land situated at McMahons Point in the Local Government Area of North Sydney, Parish of Lavender Bay, County of Cumberland being land known as Lot 1, Deposited Plan 915829, land known as 1 Henry Lawson Avenue, McMahons Point and said to be in the ownership of David Fox and Jozette Hazzouri. 1. This Notice of Acquisition was signed by Mr Jim Betts, Planning Secretary on behalf of the Planning Ministerial Corporation. The notice effected the compulsory acquisition and, thus, the transfer of the title of the site from the Applicants to the Ministerial Corporation. The opening submissions for the Applicants The opening written submissions for the Applicants 1. The Applicants' outline of opening submissions dealt, in anticipation, with what was understood to the case theory of the Ministerial Corporation as to the statutory disregard. As they are not lengthy and, as they address the Ministerial Corporation's opening submissions in anticipation, it is appropriate to reproduce portions of the Applicants' outline of opening submissions which not only contain that anticipatory response, but also provide some of the background as advanced for the Applicant's case theory on the public purpose. The material set out below is taken from the opening outline on behalf the Applicants filed on 30 May 2023: 3. … As at June 2021, it was the only remaining privately owned land with direct foreshore access between Henry Lawson Avenue, McMahons Point and the harbour. ……. The view scape is very wide and panoramic. It is also the focus point of National celebration on New Year's Eve and Australia Day. It is an extraordinary place by day and then again - in a uniquely different way - by night. These landmarks are icons of the Australian landscape. This is not a real estate brochure for the sale of the property – it is established fact. 4. It was no doubt for the reason that the land adjacent to Henry Lawson Avenue was so positioned that it was conceived decades ago that the harbour foreshore at Blues Point should become a public park rather than remain in private ownership. 5. The NSW Government has been creating Henry Lawson Reserve since the County of Cumberland Scheme was gazetted. The Property was the last parcel to be acquired and its acquisition completes the public park that was then envisaged. Each year hundreds of thousands of visitors are attracted to the park to enjoy the views and the National days of celebration referred to above. As the Minister for Planning in due course advised the applicants, "Blues Point Reserve is a landmark area of regional open space for the people of New South Wales". The Property by happenstance, separates the eastern part of the park from the western part of the park. 1. The Applicants' opening written submissions later returned to what was understood to be the Ministerial Corporation's case theory, saying: 19. The respondent's contention appears to be that, but for the public purpose (which it has so far failed to adequately articulate), the Property would have been zoned part B1 Neighbourhood Centre and part UL Unzoned Land under the NSLEP 2013. The respondent also seems not to accept that the existence of the adjoining parklands is to be disregarded in determining the market value of the Property. 20. The fact of the adjoining public reserve must be disregarded. It is then difficult for the applicants to accept that the Blues Point Reserve would have all been zoned in these ways as though the foreshore would have instead become a neighbourhood shopping complex. If the reserve was zoned R3 Residential Medium Density then there is no logic in a hypothesis that the Property would have been differently zoned. The opening oral submissions for the Applicants 1. The opening oral submissions for the Applicants were comparatively brief. Although they were in two tranches, it is appropriate to set them out in full (Transcript 5 June 2023, page 6, line 23 to page 7, line 31): TOMASETTI: The applicant's case is that we have to enter into a counter factual situation due to s 56, to a large degree and to an important degree. We rely on Woollams' case which involved Warragamba Dam which your Honour would be no doubt familiar with. But just to quickly paint that picture again, because it is fundamental to our case, Woollams' case concerned the acquisition of land in the village of Warragamba. Today that village lies under the water of Warragamba Dam. Woollams' case was a claim for compensation arising from the acquisition of land in the Warragamba Village because the land was going to be flooded by the construction of the Warragamba Dam. What the Court accepted in that case was that the village was falling into a rapid state of disrepair. The scheme had been known about for ten or so years beforehand. Everybody knew that it was going to be flooded, and capital investment in the village stopped. Properties fell into disrepair, schools weren't expanded, the shops fell into non use and gradually the village was more or less abandoned as the project date approached. The Court said, "What we have to do is disregard the public purpose." It was a Public Works Act case but it doesn't matter. Similar provision has been adopted into s 56 in accordance with those cases that have been referred to, Raja's case and the Pointe Gourde case. What the Court accepted was it had to imagine that the Warragamba Village was not affected by the public purpose and that it would have carried on and the question was how would it have prospered? To do that in that case the Court looked at other villages on the outskirts of Sydney, then metropolitan areas in Sydney, Colo and other small towns, satellite towns on the outskirts of the city, and found that those little towns were prospering, there were schools prospering, there were shopping complexes and houses, people were looking after their houses, roads were being improved, tarred, guttered, electricity, et cetera, was all being supplied. The Court accepted that that's how the village of Warragamba would have been but for the public purpose and compensation was assessed on the basis that what had been acquired was land in a prospering village. That decision has been referred to and applied many times since it was handed down 40 or 50 years ago. The principle remains good in our submission. What we have to imagine in this case is that the regional park did not exist. We have to therefore ask what would have been the underlying zoning? The phrase underlying zoning is not referred to of course in the Act but I'm sure your Honour knows what I mean. That's what people often label the exercise. We have to identify how the land would have been zoned but for the proposal or the carrying out of the public purpose, and the applicants' case is it would have been zoned R3 medium density. The respondents' case is that it would not have been zoned for residential purposes, it would have been zoned IN4, an industrial waterfront type, light industrial type zoning. Alternatively, it would have been zoned B1, neighbourhood business, or E2, environmental conservation. We reject those alternates. What we say in the amended points of claim, that given this subject, the subject site, and given the likely development as Mr Chambers says that would have occurred in the 60s, 70s, and 80s, this area of foreshore would have been developed for residential purposes. We have to accept the land as it is at the date of acquisition in its then state, zoned as the Court finds as it would have otherwise been zoned, but for the public purpose, and then we have to imagine how the market would have responded to the offer of the subject land if a for sale sign was placed on it, settlement 11 June 2021. 1. The second tranche was (Transcript 5 June 2023, page 25, lines 37 to 50): TOMASETTI: On the map which zones the land RE1 and which identifies as the acquisition authority the respondent in these proceedings, the land is marked, that is the park is marked - sorry, the subject land is marked regional open space. It can't be regional open space on its own. It's got to form part of a park. That designation, we rely upon as informing the public purpose. I hasten to say the respondent doesn't dispute that the public purpose was open space, but it says the open space is just to include this land in the Blues Point Reserve, whereas we say it's part of the bigger public purpose, that is to establish a regional park embracing both Blues Point Reserve and Henry Lawson Reserve. They're contiguous parcels of land and form the same park. You go there, as we will. There is no fence, boundary or otherwise that indicates here starts one reserve and there starts another. The opening submissions for the Ministerial Corporation The opening written submissions for the Ministerial Corporation 1. The written opening submissions for the Ministerial Corporation, in addressing the question of the public purpose required to be disregarded by s 56(1) of the Land Acquisition Act, did so in short compass. The relevant paragraph of the written submissions is set out below: 17. The parties disagree as to how the public purpose is to be characterised. Although the proper characterisation of the public purpose is not a matter for expert opinion, the town planners appear to adopt the competing assumptions of the parties. For the Respondent's part, it contends: a. Before assessing the causal aspects of s 56(1)(a), the anterior question is: what is the ''public purpose"? The term ''public purpose" used in both s 56(1)(a) and s 55(f) is a defined term in s 4 of the Just Terms Act, which provides that the ''public purpose means any purpose for which land may by law be acquired by compulsory process under this Act". The power conferred on the Respondent in cl 31 of Schedule 2 of the EP&A Act relevantly provides: 31 Power of Corporation to acquire land etc (cf previous ss 9, 10, 11, 12) (1) The Planning Ministerial Corporation may, for the purposes of this Act or pursuant to any function conferred or imposed on the Minister or the Planning Secretary by an environmental planning instrument, acquire land by agreement or by compulsory process in accordance with the Land Acquisition (Just Terms Compensation) Act 1991. (2) Without limiting the generality of subclause (1), the Planning Ministerial Corporation may acquire in any manner authorised by that subclause- (a) any land to which an environmental planning instrument applies and which the Minister considers should be made available in the public interest for any purpose, or (b) any land of which that proposed to be acquired under this clause forms part, or (c) any land adjoining or in the vicinity of any land proposed to be acquired under this clause, or (d) a leasehold or any other interest in land. b. Here, the land was zoned "REI - Public Recreation" in the LEP and was something the Minister considered should be made available in the public interest. That was the purpose identified in the PAN dated 5 February 2021, for ''public recreation and inclusion to Blues Point Reserve"; c. This is consistent with the approach of Lloyd J in Halley v Minister Administering the Environmental Planning and Assessment Act 1979 [2010] NSWLEC 6; (2010) 170 LGERA 449, dealt with land zoned 9(c) Regional Open Space under a local environmental plan. Lloyd J said at [22]: The question is, what is "the proposal" of the acquiring authority - the Minister in the present case. According to the notice of compulsory acquisition published in the Gazette, the land was acquired "for the purposes of the Environmental Planning and Assessment Act 1979". The only possible purpose for acquisition under that Act is to fulfil the stated objective of the 9(c) zone as described in the LEP: "to identify, preserve and plan future development of privately owned land of Regional Open Space significance which should eventually be acquired by the State". d. The caution given by the High Court in Walker Corporation v Sydney Harbour Foreshore Authority [2008] HCA 5; 233 CLR 249 that: (at [28], " ... that whilst decisions from other jurisdictions upon other legislation might assist in determining the precedents from which the statutory text was derived, it could not be decisive"; and (from [29] to [35], what is captured at [31]) in the "caution required in construing modern Australian legislation by reference to ''principles" derived in this way ... " must be kept in mind when determining the public purpose and approaching the construction of the words "caused by" (as to which a 'but for' test is often applied- see G & J Drivas v s:ydney Metro [2023] NSWLEC 20); e. The Applicant's approach - which proceeds on the basis that the public purpose is the creation of a park, and that the surrounding parkland would otherwise have been redeveloped at some prior time in history - incorrectly identifies the public purpose of the acquisition. It is also contrary to the Court of Appeal's approach to the Just Terms Act in Roads and Traffic Authority of NSW v Mosca [2006] NSWCA 159; (2006) 146 LGERA 335 in which Handley JA said, at [15], that "[t]he basic principle of compensation law is that the land must be valued at the relevant date in its existing condition with all its potentialities as potentialities" (citing Yates Property Corporation Pty Ltd v Darling Harbour Authority (1991) 24 NSWLR 156 at 175-6 itself citing the Raja 's case [1939] AC 302, 313 and Turner v Minister for Public Instruction [1956] HCA 7; (1956) 95 CLR 245, 268-9). There is no warrant for attempting to conjure a 'non-scheme world' (that being an historic approach to older English statutes, now disapproved: see Waters v Welsh Development Agency [2004] UKHL 19; [2004] 1 WLR 1304; [2004] 2 All ER 915). The opening oral submissions for the Ministerial Corporation 1. Mr Eastman commenced his oral submissions on this point by acknowledging the county open space zoning pursuant to the CCPSO. However, he then turned to address why the Ministerial Corporation proposed that I should not conclude that this defined the public purpose that was required to be disregarded. This was because it was not appropriate to take such a broad characterisation of the public purpose and that the correct approach was one that was neither too broad nor too narrow. 2. In addressing this proposition, he commenced by take me to the statutory definition of "public purpose", noting that the Land Acquisition Act itself does not confer any power to effect compulsory acquisition – such a power has to be sourced in a separate specific enactment – here found in cl 31 of Sch 2 of the EPA Act. He submitted that the construction of the "public purpose" must be by reference to the power conferred on the acquiring authority to take the land (citing Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority (2008) 233 CLR 259; [2008] HCA 5 – Walker Corporation). 3. He then took me to the detail of the terms of cl 31 to the Schedule - drawing my attention specifically to cl 31(2)(a) and the fact that this provision contained two elements which were in the conjunctive – there being no present dispute that the site was land to which an environmental planning instrument applies (the 2013 LEP) but also expressly noting the added requirement which was that the Minister was required to consider that the land "should be made available in the public interest for any purpose". 4. He then noted that he would later take me to the various documents underpinning the acquisition process (it being appropriate to note that these documents are those which have earlier been set out). 5. Mr Eastman next handed up a document containing a series of case extracts. It is not necessary to address any of those in detail at the present time, as he indicated he would return in more detail to them as part of the Ministerial Corporations closing submissions. However, it is first appropriate to record that he set out what was, he proposed, the relevant extract from Walker Corporation earlier noted. 6. Second, he referenced the decision of Hodgson JA in RTA v Perry & Anor (2001) 52 NSWLR 222; [2001] NSWCA 251 (Perry) (at [100] and [101]) as exemplifying why a determination of a public purpose should be neither too wide nor too narrow. He repeated that, in such a context (Transcript 7 June 2023, page 67, lines 45 to 49): … the definition of "public purpose" must be linked to the power of the acquiring authority which, in my case, is conjunctively linked to being included in an environmental planning instrument, as one step, and also being something that the minister considers should be made available in the public interest. 1. After referencing a number of other authorities (not needing to be listed here), he submitted that, in this instance, the public purpose was that which had been set out in the PAN – proposing that I should accept that there was authority that I am entitled to go to that document to construe what was the public purpose. He then continued (Transcript 7 June 2023, page 68, lines 21 to 26): EASTMAN: I think you also know that when you see it in a gazette notice and it is just simply referenced by to the power in the Act, that is of course right because it must be construed in accordance with the power of the resuming authority to take the land. But it may well not be narrow or indeed broad enough as to what it captures and that's why recourse to the other documents is permissible, in my submission. 1. He submitted that the PAN made it clear that the purpose was the inclusion of the site into the existing reserves and that, for the purpose of the statutory disregard, the creation of the entirety of the reserve over a seventy-year period was not the public purpose. 2. He summarised the contemporaneous context for this in the following fashion (Transcript 7 June 2023, page 68, lines 40 to 47): EASTMAN: The last action of any purchase for open space purposes was 1976 and so it is 45 years later before something else occurs. Despite the breadth of the fact that you have an open space zoning differently characterised under different planning instruments, the proposal of this acquiring authority pursuant to the statutory power that it exercises that is linked not only to zoning but also to an individual decision of the planning minister that something should be made available in the public interest is why that which is described in the proposed acquisition notice is the correct approach to the public purpose. 1. Having put that general proposition as to how I should understand the public purpose, Mr Eastman then turned to address matters of what underlying zoning would arise depending on which of the case theories I adopted as to the public purpose and its triggering of the statutory disregard in s 56(1) of the Land Acquisition Act. The closing submissions for the Applicants The closing written submissions for the Applicants 1. The closing written submissions for the Applicants addressed the public purpose in three separate places. It is also appropriate to set these out in their entirety. The first element was in the following terms: 12. The Respondent's case is a surprising one. It contends that the public purpose – the scheme – for which the Subject Site was compulsorily acquired was for "public recreation and inclusion into Blues Point Reserve". That is, the public purpose was not the project to create Blues Point Reserve, but rather it was to "complete the project of bringing the whole of Blues Point Reserve into public ownership". So it says the scheme was the completion of the project rather than the carrying out of the project. This is tautological to say the least. The carrying out of every public purpose would involve the carrying out of steps that make up the project. Each step in the project could not, in itself, be a public purpose within the meaning of that phrase in section 56 of the Just Terms Act. 13. The respondent appears to contend that in valuing the Subject Site the Court is not to disregard the existence of the parkland surrounding the Site, but rather is to value the Site on the basis that it is a remnant parcel of private land in the middle of a public reserve. The valuers agree that the existence of the public park surrounding the Subject Site disadvantages it. Notwithstanding, the respondent submits that, but for the public purpose, the Subject Site would have likely been zoned B1 Neighbourhood Centre under the NSLEP 2013 as at the date of its acquisition, and that its highest and best use was as a development site for shop top housing. On that basis, the respondent's valuer says that the Subject Site was valued at $7,150,000 as at the date of its acquisition. 14. The respondent's approach is wrong both in fact and in law. The public purpose leading to the acquisition of the Subject Site was the creation of Blues Point Reserve, a project which is now completed with the acquisition of the Subject Site. The applicants submit that: (a) The public purpose for which the Subject Site was acquired was to create a regional park on the foreshore of McMahons Point known as "Blues Point Reserve" and/or "Henry Lawson Reserve". (b) The Subject Site was zoned RE1 Public Recreation under the NSLEP 2013 and that the zoning was a step in the carrying out of the public purpose. (c) The zoning of the Subject Site in that way decreased the value of the land as it was a very restrictive zoning that did not permit most uses particularly residential use. But for the fact that the land was identified as a heritage item in the NSLEP 2013 and therefore subject to clause 5.10(10) thereof the land could not be used for any valuable purpose, particularly where existing use rights have been abandoned. The zoning of the Site must be disregarded when determining the market value of the land. (d) The parkland surrounding the Subject Site was acquired by the respondent or its predecessors for the same public purpose. That land was also zoned RE1 Public Recreation as the zoning (as stated above) was itself a step in the carrying out of the public purpose. (e) The surrounding parkland zoning and its use for public purposes also decreases the market value of the Subject Site. The surrounding parkland isolates the Subject Site and by that isolation stigmatises and blights it. The reserve is open to the general public for recreational purposes 24 hours per day and so the Site loses any private setting. A large fig tree was allowed to grow in the park immediately west of the Subject Site. That tree would never have established itself and grown as it has had that land been used for residential purposes and not a park. The zoning and the use of the adjoining land must then also be disregarded in determining the market value of the Subject Site. (f) Disregarding both the proposal to carry out the public purpose, and the carrying out of the public purpose, the Subject Site (and the surrounding reserve) would have been zoned R3 Medium Density Residential under the NSLEP 2013. The surrounding parkland comprising Blues Point Reserve would have been developed long ago with quite dense residential development typical of that which was built in McMahons Point in the 1950s to 1970s – single detached dwellings and residential flat buildings. The large fig tree growing to the west of the Subject Site is unlikely to ever have self-seeded and grown as it has. (g) If the reserve was zoned R3 Residential Medium Density then there is no logic in a hypothesis that the Property would have been differently zoned. In particular, there is no basis for finding that, but for the public purpose, the whole of the land comprising the Blues Point Reserve would have been zoned B1 Neighbourhood Centre, in which case the foreshore would have instead become a neighbourhood shopping complex. Nor is there any basis for finding that, but for the public purpose, the Subject Site would have been zoned B1 Neighbourhood Centre and the adjacent sites would have had some different (undefined) zoning. In the late 1970s, the owner, Mr Holmes had applied to Council to convert the boatshed into a restaurant. However, Council did not support the proposal. (h) The highest and best use of the Subject Site as at the date of acquisition was as an infill site suited to the carrying out of development for a luxury residence. On each side of the Site there would be prestigious residential development. It would be suited to the class of purchaser who was a high net worth individual interested in having a site of landmark quality close to the Sydney CBD and with spectacular attributes. 1. The second element was in the following terms: D.4. The stated purpose for which the Subject Site was compulsorily acquired 43. As noted above, the Subject Site was identified in the Land Reservation Acquisition Map of the NSLEP 2013 as "Regional Open Space (RE1)". 44. Further, as detailed below, the Subject Site had first been identified for use as a public reserve in 1948, when the Site and the surrounding land (the area of land which now comprises Blues Point Reserve and Henry Lawson Reserve) was proposed to be zoned Open Space – Parks and Recreation Areas under the proposed County of Cumberland Planning Scheme. 45. As detailed below, by about 1976, all of the land comprising Blues Point Reserve and Henry Lawson Reserve, except the Subject Site, had been purchased or acquired by the NSW Government (or its agencies) and had been dedicated for use as a public park, public reserve or public area for passive recreational purposes. 46. In February 2019, the Minister for Planning sent a letter to the applicants which relevantly stated: "I am writing to you in relation to your property 1 Henry Lawson Avenue, McMahons Point, legally described as Lot 1 in DP915829. Blues Point Reserve is a landmark area of regional open space for the people of New South Wales. Your property is the final privately-owned property at this location and its acquisition would complete the project of bringing the whole of Blues Point Reserve into public ownership. The Planning Ministerial Corporation would like to commence negotiations with you to acquire your property in order to bring it into public ownership. …" (emphasis added) 47. On 5 February 2021, the respondent served a proposed acquisition notice on the applicants which relevantly stated that respondent proposed to acquire the Subject Site for "the purpose of public recreation and inclusion to Blues Point Reserve". 48. On 11 June 2021, the acquisition notice was published in the NSW Government Gazette which stated (without further specification) that the Property was acquired for "the purposes of the Environmental Planning and Assessment Act 1979". 1. The third element was in the following terms: F.1. Issue 1: The identification of the public purpose for which the land was acquired 225. Pursuant to s 56(1) of the Just Terms Act, in determining the market value of the land, the Court must disregard: "any increase or decrease in the value of the land caused by the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired" (s 56(1)(a)). 226. As for identifying the "public purpose" for which the land was acquired, it is necessary for the Court to identify "the scheme for which the property is compulsorily acquired": Roads and Traffic Authority of New South Wales v Perry (2001) 52 NSWLR 222 at [52], citing Fraser v City of Fraserville [1917] AC 187 at 194; see also Perry at [96]. That is, it is necessary to consider whether a particular event or conduct, which caused an increase or decrease on the value of the land that was compulsorily acquired part of "the proposal" to carry out the public purpose: RD Miller Pty Ltd v Roads and Maritime Services NSW [2020] NSWCA 241; (2020) 103 NSWLR 234 at [179]. 227. In Perry at [99]-[100], Hodgson JA stated: "In a case such as the present, it is necessary to determine what is the public purpose for which the claimant's land was acquired, including the appropriate level of generality at which the purpose should be identified. … I do not thing there are any clear rules determining how the relevant purpose or the appropriate level of generality is to be determined. Factors to be taken into account would, in my opinion, include the degree of continuity and consistency of various elements of what is proposed and done, and fairness to both the claimant and the acquiring authority." 228. The applicants submit that the public purpose for which the Subject Site was acquired was for its inclusion into the surrounding public parkland comprising Blues Point Reserve / Henry Lawson Reserve, as part of the scheme to create a public parkland on that part of the foreshore of Sydney Harbour which the NSW Government had been pursuing for a period of almost 75 years, since at least March 1948, when the Acquired Land and the neighbouring land were proposed to be zoned Open Space – Parks and Recreation Areas under the proposed County of Cumberland Planning Scheme. 229. The Subject Site was acquired for the purpose of providing regional open space and completing what is known as Blues Point Reserve (and also by some in part - Henry Lawson Reserve). The acquisition of the Subject Site brings the open space finally into public ownership. 230. The applicants submit that the evidence in the proceedings (as summarised in paragraphs 58-114 above) clearly establishes that the public purpose for which the Subject Site was compulsorily acquired for the purpose of creating (and completing the creation of) a regional park on the southern foreshore of McMahons Point known as Blues Point Reserve / Henry Lawson Reserve. That factual finding as to the public purpose is clearly established in particular by the following factual matters. (a) The Subject Site was zoned Open Space – Foreshore Reservations & Places of Natural Beauty or Advantage under the County of Cumberland Planning Scheme, along with the adjoining / surrounding land along the southern foreshore or McMahons Point adjacent to Blues Bay: see paragraphs 58-59 above; (b) From 1951 until the date of its acquisition, the Subject Site (and the adjoining / surrounding land along the southern foreshore or McMahons Point adjacent to Blues Bay) was zoned Public Open Space or an equivalent zoning under every planning instrument applicable to that land thereafter: see paragraphs 61-62, 74, 82-83 and 101-102 above; (c) The surrounding land on each side of the Subject was acquired by the respondent or its predecessors for the same public purpose and converted into public parkland. That land was also zoned RE1 Public Recreation as the zoning (as stated above) was itself a step in the carrying out of the public purpose: see paragraphs 63-70 and 124 above; (d) The Subject Site was identified on the Land Reservation Acquisition Map of the NSLEP 2013 as "Regional open space", for which the respondent was the authority of the State designated as the relevant authority to acquire the land: see paragraph 32; (e) The NSDCP 2013 stated that the Subject Site was "To be purchased by the State Government to complete the regional public open space network created along the entire southern foreshore of McMahons and Blues Points": see paragraph 104 above; (f) Prior to the respondent compulsorily acquiring the Site, the Minister for Planning advised the applicants in February 2019, "Your property is the final privately-owned property at this location and its acquisition would complete the project of bringing the whole of Blues Point Reserve into public ownership": see paragraph 46 above; (g) Following acquisition of the Subject Site, the respondent transferred ownership of the Site to North Sydney Council for $1, subject to a positive covenant which required Council to "use the entirety of the Land for Recreational Purposes with not less than 80% of the area of the Land remaining Open Space", and required Council to ensure that "the Land is not used for any purpose other than Recreational Purposes": see paragraph 113 above; and (h) Since taking ownership of the Subject Site, Council has allocated $1.4 million in funds to carry out works to convert the Site to public open space: see paragraph 114 above. 231. There can be no fairness to the applicants where the respondent takes 70 years to complete acquisition of land for the regional park and for the Respondent to then argue that by reason of lapse of time it is just too hard to now assume or establish what the underlying zoning of the land would have been but for the public purpose. This seems to be Mr McKenzie's position. The Respondent should do its forensic best to assist the Court in finding what the underlying zoning would have been had the public purpose never been proposed. Mr Chambers is unequivocal about it. There can be no fairness to the Applicants by simply ignoring the question and assuming that the public purpose is the completion of the public purpose, as the Respondent argues. On that basis, it says the market value of the land should be determined without taking into account the decrease in value caused by its position situated within parkland on either side and next to a large tree, which would never had grown if the land had been zoned for residential purposes. 232. It is fair and reasonable for the Court to adopt Mr Chambers' advice. It is fair to the Applicants and it is fair to the Respondent that in arriving at the market value for the Acquired Land any blight to their property caused by its isolation within the public park be disregarded. 233. Based on these matters, the Court should find, as a matter of fact, that the public purpose for which the Subject Site was compulsorily acquired for the purpose of creating (and completing the creation of) a regional park on the southern foreshore of McMahons Point known as Blues Point Reserve / Henry Lawson Reserve. The closing oral submissions for the Applicants 1. At the commencement of Mr Tomasetti's oral closing submissions on the issue of the public purpose, he submitted that the term "disregarding" in s 56(1) of the Just Terms Act mandated that I ignore the carrying out of the public purpose (Transcript, 22 June 2023, page 535, line 14 to 15). 2. Mr Tomasetti addressed me on the two elements of s 56(1) that, in his submission, required identification in cases such as the present. These elements were whether there is any increase or decrease in the value of the land; and whether such increase or decrease in the value of the land was caused by the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired. In respect of the latter, Mr Tomasetti submitted (Transcript, 22 June 2023, page 535, line 21 to 25): TOMASETTI: As for the second element… that element is usually addressed on a but for basis and we cite authority to support that including relatively recent authority in the Court of Appeal in Barkat v Roads and Maritime Services [2019] NSWCA 240 (Barkat). 1. Mr Tomasetti submitted that, consistent with the decision of Duggan J in G&J Drivas Pty Ltd v Sydney Metro [2023] NSWLEC 20 at [29], the word "any" in s 56(1) was, prima facie, to be considered as a term without limitation (Transcript, 22 June 2023, page 535, line 18 to 20). 2. Mr Tomasetti then directed my attention to the decision of the Court of Appeal in Perry. He submitted (Transcript, 22 June 2023, page 535, line 49 to page 536, line 11): TOMASETTI: As to the identification of the public purpose, the best assistance that the Court has as to what has to be done in that regard comes from the decision in RTA v Perry, which Mr Eastman referred to and I referred to in opening. We set out the relevant passage from Hodgson JA's decision in Perry at paragraph 227 of these submissions. Perry is in our bundle, for ease of reference for the Court. But the passage that we quote, we feel distils the essential matters which the Court should bear in mind. In a case such as the present, it's necessary to determine what is the public purpose for which the claimant's land was acquired, including the appropriate level of generality at which the purpose should be identified. "I do not think there are any clear rules determining how the relevant purpose or the appropriate level of generality is to be determined." Said his Honour. "Factors to be taken into account would, in my opinion, include the degree of continuity and consistency of various elements of what is proposed and done, and fairness to both the claimant and the acquiring authority." 1. Mr Tomasetti proposed that the notions of fairness described by Hodgson J in Perry precluded the Applicant from relying on their own delay in acquiring the subject land. He advanced this proposition in the following terms (Transcript, 22 June 2023, page 537, line 3 to 22): TOMASETTI: The subject land just happens as it's turned out through quirk of history to have remained in private open ownership until 2021. The Government did not see it as an imperative to acquire this block for some 70-odd years, 75 years we say in para 228. That brings me to notions of justice and fairness, or notions of fairness to use the words used by Hodgson J in Perry. It can't possibly be fair to an applicant to not acquire or to delay acquiring his land and at the same time acquiring land on either side of it to create and use that adjoining land for a public purpose leaving the subject land in effect blighted and then say 75 years later as we submit Mr McKenzie does in part, "It's all too hard, we don't know what would have happened, too many assumptions, so therefore I have to just say that the public purpose is the acquisition of this particular land." That's what Mr McKenzie says. That cannot possibly be fair, that resuming authority of very important land to make up a significant public park on the foreshores of Sydney Harbour. The public authority delays merely three quarters of a century and then says by dint of the passage of time, "You can't say any longer that your land was acquired for the public purpose which we envisaged in 1948." 1. I had the following exchange with Mr Tomasetti regarding the question of fairness (Transcript, 22 June 2023, page 537, line 24 to page 538, line 11): HIS HONOUR: The question of fairness here does not run for 75 years, does it? It runs to the extent that it's engaged from 3 June 2009. That is the date of acquisition. TOMASETTI: It runs to the date of acquisition. HIS HONOUR: To the date of acquisition by your clients. TOMASETTI: From my clients. HIS HONOUR: No, the fairness issue you say-- TOMASETTI: I'm sorry, I'm sorry-- HIS HONOUR: --is not 75 years-- TOMASETTI: You said 2009. HIS HONOUR: --it is from 3 June 2009, is it not? But what you say is the blight has existed in your case from 1948 or 51, depending on whether you want to take the identification or the formalisation, but to the extent that there might be - I'm not expressing a view about it - a fairness issue in the fashion that you're advancing, that fairness for your clients can only run from the date of acquisition of the land by your clients, can't it? TOMASETTI: In the sense that that's when they purchased it. But in my submission the fairness which Hodgson J is talking about is fairness in identifying the public purpose. So to identify the public purpose, you have to have regard to fairness in a broader sense. Not just fairness on the applicant who happened to have the land acquired from them or when they purchased it, but fairness in the overall sense. It's completely unfair to say to anybody that might come into ownership of this land that the scheme that has led to the acquisition which occurred in June 2021 was simply the acquisition of that particular parcel to complete the park. That is not fair because it's visiting upon the applicants in dollar terms the blight occasioned to its land by the actual proposal and the carrying out of the public purpose. 1. Mr Tomasetti next addressed the decision of the High Court in Turner v Minister of Public Instruction (1956) 95 CLR 245. He submitted (Transcript, 22 June 2023, page 541, line 40 to page 542, line 8): TOMASETTI: Your Honour would be, with respect, familiar with Turner. What Turner stands for and is often referenced in the decisions is that the land the subject of the acquisition has to be valued as it actually is, and any potentialities that the land may have had to be taken into account, but only as potentialities, not as actualities. That's a fundamental foundational proposition, and applying that principle to the subject case, and I'll return to zoning, but the subject land has a physical area, it's in a particular position, it has buildings on it that are dilapidated and past their usable life. It has a seawall which retains fill that was placed there many years ago when some of the land was reclaimed from the harbour. It has two slipways and the site is, for the reasons of the seawall and the slipways present, identified as a heritage item under the North Sydney LEP 2013. All those things have to be taken into account because they're actualities. Immediately next door though there is parkland and that parkland, for the reasons that I'll expand upon, is to be disregarded in order to ensure that market value is, accurately as we can, arrived at. 1. Mr Tomasetti proposed that identifying the public purpose is a question of fact. He suggested (Transcript, 22 June 2023, page 536, line 13, 19 to 23): TOMASETTI: It's going to be ultimately a question of fact as to what is the public purpose. … The completion of the project in our submission cannot be a public purpose in itself. That would be, as we say in our submissions, somewhat tautological if that's the correct word. That would mean that in every case, potentially every step in carrying out a public purpose, would become the public purpose in itself if it was correct. 1. Mr Tomasetti suggested that the stated public purpose contained in the letter dated 5 February 2021 that was addressed to the Applicants from the director of the Office of Strategic Lands was possible to be characterised as an admission (Transcript, 22 June 2023, page 541, line 5 to 12): TOMASETTI: We say that the Minister should not be allowed to depart in court from the stated public purpose which he put in his letter to my clients. That was a carefully considered piece of correspondence and contains, if it's necessary to characterise it, an admission as to what the public purpose was. The public purpose can't in itself be completion of the project, you have to identify the project itself. I guess in one sense the reference back to that letter doesn't answer the question conclusively and, in some sense, may beg the question, but when you look at the other facts there can be no controversy about it. 1. Mr Tomasetti submitted that the subject land was zoned RE1 public recreation as the zoning was itself a step in the carrying out of the public purpose. He submitted that the site was identified on the Land Reservation Acquisition Map in the North Sydney LEP 2013 as regional open space to complete the regional public open space network created around the southern foreshore of McMahons and Blues Point (Transcript, 22 June 2023, page 539, line 4 to 7). 2. Mr Tomasetti expanded upon the proposition that the RE1 zoning of the subject land and the park ought to be ignored in the assessment of market value. He advanced this proposition by rejecting the evidence of Mr McKenzie, the Respondent's town planning expert (Transcript, 22 June 2023, page 547, line 1): TOMASETTI: Our case was clearly pleaded. We said you had to, in the amended points of claim, you had to ignore the RE1 zone of the subject land and the park, you had to assume the subject land would be right for development with a single prestigious freestanding dwelling and that the reserve would be otherwise developed. Mr McKenzie, in a somewhat dogmatic way, set up the respondent's case by saying the public purpose is not regional open space, it's just acquisition of the subject land. He said the subject land is set in open space and at the date of acquisition it was in open space and what its highest and best use was set that way. It would have a B1 zoning. He didn't entertain the R3 zoning. The Court set up questions to make him engage those questions. Well what if? Just, you know put aside your view at the moment and just make some assumptions and what if it was B1 in a developed area or what if it was R3 in a developed park, and Mr McKenzie then struggled. Mr Chambers answered the questions very briefly, virtually yes, yes, no or something like that. Mr McKenzie gave us longwinded prolix explanations which made us no clearer at the end what his opinion was than when he started, but very reluctant, it seems, to accept the possibility that the park zoning is to be ignored as a matter of law and that the park would've been developed, and if so what type of development, and at the end of his evidence he said a couple of times, "Look, it's all too hard, there's too many assumptions, it's too much, I can't tell you." In my respectful submission, if it was too hard for him and he couldn't express an opinion, fair enough, but then you have to say, well can I do with his evidence? That is, what can the Court do with his evidence? My submission is, for reasons I'll come to, you have to reject it because he's admitted himself it's all too hard and too many assumptions. Mr Chambers didn't find it that way at all. 1. Mr Tomasetti submitted that the public purpose in the present case began with the zoning of the subject land as open space in the County of Cumberland Planning Scheme Ordinance in 1951 (Transcript, 22 June 2023, page 541, line 29 to 30). 2. Mr Tomasetti addressed, in chronological order, the history of the public purpose with a particular emphasis on the position taken by Mr Chambers, the Applicant's town planning expert. He submitted (Transcript, 22 June 2023, page 552, line 39 to page 554, line 21): TOMASETTI: The diagram at page 17 in paragraph 59 of our closing written submissions shows the public purpose for which the subject land was acquired. In its first conception, in the planning scheme maps attaching as forming part of the ordinance back in 1951, in paragraph 62 you can see the scheme continuing between 1953 and 1963. At the same time we trace in a chronological order, which is helpful, how the land gradually changed hands, ultimately ending up with the government. At paragraph 60 in March 1951 Sydney Ferries advised the New South Wales government of its intention to cease operating ferry services as they were no longer profitable. The harbour bridge had been constructed, people weren't relying on ferry traffic so much anymore, and in response the New South Wales government purchased the building and undertaking of Sydney Ferries, including the ferries, land, building and stores at McMahons Point. The subject site was transferred to the company Harbour Lighterage & Showboat Ltd which was a division of Sydney Ferries. We can there see back in 1951 the beginning of the end, perhaps, of waterfront maritime industries to the intensity of which they had been previously thriving around the foreshores of the harbour. In paragraph 63 in the period between 1960 and 1970, the New South Wales government or its agencies acquired or purchased all of the parcels of land which now comprise the area known as Blues Point Reserve, Henry Lawson Reserve, except for the subject site, and we summarise the transactions. The subject site was sold to William Holmes, paragraph 71 and following, in 1969. Mr Holmes applied to the council, paragraph 73, to convert the boat shed into a restaurant. But council didn't support the proposal then. And to the best of our understanding, the Sails Restaurant commenced somewhere in the 80s. In 1982 the land was sold to Melino Pty Ltd, and in May 1985 it was advertised for sale. By the end of the 1980s..(not transcribable)..constructed a small two storey structure on the eastern side of the property above the existing slipway. Then in the 1989 LEP the land's zoning continued for open space. The land was sold to Spanos in 1992. A new plan commenced in June 2001 which is paragraph 85. The planning controls continue, and Spanos sold to my clients, paragraph 87, in 2009. Then there was the preparation of the current LEP which began, it seems, back in 2007. I won't go over the controversy between the department and council as to who should be paying for the site. It's set out here in writing. In paragraph 96 the letter to the council of 18 September 2012 says, "As per the…the acquiring authority." It's that last sentence which is most important. The idea that the land would be otherwise zoned than for regional open space had the barb in it that if you don't like that council then zone it local open space and you be the acquiring authority, and that led to the subsequent controversy that Mr Chambers has identified. Paragraph 101 shows the subject land forming part of the park with its key zoning controls. Relevantly, you can see in the extract from the zoning map in paragraph 102 the neighbourhood centre zones which are identified up on Blues Point Road. It's difficult to see, but the Sails Restaurant is there as well on the northern side of the cul-de-sac at the eastern end of Henry Lawson Avenue, and the subject site is shown as located in the park. As your Honour also knows, the area of McMahons Point had been progressively rezoned, according to Mr Chambers, the maps support that proposition. In fact, the land to the immediate north of the subject site, but slightly to its east is zoned R4 high density residential. Otherwise, the balance of the peninsula is generally zoned for residential purposes in pink, and there had been a contraction of the industrial zone further to the north, and on the western side of Blues Point Road over time. The foreshore on the edge of Berry's Bay had gone partially residential, partially open space, and you can see in the extract of the plan coloured purple is the land forming part of the Noakes boat repair facility. Mr Chambers opines, as we point out, that you see from the planning maps the gradual regression of waterfront maritime activity. You see public pressure for land to be zoned for residential purposes or open space. We have to assume under the s 56 disregard the existence of the open space and ask what the underlying zoning would've been. I appreciate that's counterfactual but it's necessary. If it could be reimagined and open space was not an option, there is just no reason to conclude other than that the pink colouring, the residential zoning medium density would've continued down to the waterfront. The Blues Point Towers site is shown in the extract. It has, I think, a 12-metre-high maximum height of buildings control on it, but it's a multi storey tower. Mr Seidler's development of that site formerly thought of as a grander scheme for the peninsula, is what it is. But it shows how the residential use has crept down toward the water. 1. Mr Tomasetti proposed that the Applicant's position on the public purpose was clear and that the evidence of Mr Chambers was to be preferred. In this context, he contended that the public purpose leading to the acquisition of the subject land was to complete the creation of the open space on the foreshore of McMahons Point (Transcript, 22 June 2023, page 554, line 37 to 40). The closing submissions for the Ministerial Corporation The closing written submissions for the Ministerial Corporation 1. The closing written submissions for the Ministerial Corporation on the topic of the public purpose are set out in full below: B. Public purpose 3. The respondent's position is that the applicants' preferred public purpose, which would require the Court to revisit over 70 years of history, is overbroad. The public purpose is properly characterised as being the inclusion of the Property in Blues Point Reserve or, equivalently, the completion of that reserve. 4. The remainder of this chapter is structured as follows: (i) The framework of the Just Terms Act (ii) The respondent's power to acquire the Property (iii) The appropriate level of generality at which to identify purpose (iv) The relevant history of the Property (v) Contemporary evidence of purpose, and (vi) Conclusion. 5. Before addressing those matters, it is appropriate to observe that, contrary to what the applicants appear to submit, the identification of the public purpose for the acquisition is not assisted by town planning evidence. The town planning experts were no better placed than the Court to evaluate the historical and documentary evidence said to be relevant to the identification of public purpose - and, with respect, they were in no position to account for the considerable body of law on that subject. (i) The framework of the Just Terms Act 6. Section 54 provides that the amount of compensation payable is "such amount as, having regard to all the relevant matters under this Part, will justly compensate the person for the acquisition of the land." Section 55 then provides that, in determining the amount of compensation, "regard must be had" to the matters in paragraphs (a)-(f), including the "market value" of the land on the date of acquisition. 7. Market value is defined in s 56(1) so as to require the court to disregard: "(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 ... " 8. By s 4(1) of the Compensation Act, "public purpose" is defined to mean "any purpose for which land may by law be acquired by compulsory process under this Act". Section 56(l)(a) is to be read with s 3(l)(a), which states that one of the objects of the Act is "to guarantee that, when land affected by a proposal for acquisition by an authority is eventually acquired, the amount of compensation will be not less than the market value of the land (unaffected by the proposal)". 9. Read in light of those provisions, s 56(1)(a) directs attention to the purpose for which the land was "by law [] acquired" by the resuming authority, the respondent (PMC), and "the proposal" by the resuming authority to carry that purpose out. As the High Court explained in Walker Corporation: "The construction of the market value disregard in [s 56(1)(a)] for which the Foreshore Authority correctly contends, links "the proposal" to that of the resuming authority. It puts aside anterior discussions or agitations by the Council and others in favour of classifying the land as public space. In this way there is reflected in the terms of para (a) of s 56(1) a policy to require a disregard only of that increase or decrease (as in this case) in value for which the resuming authority is responsible." 10. Further, s 56(1)(a) does not leave any space for remarks made in earlier authorities about the need to disregard characteristics of the acquired land which reflect "a step in the process of resumption" but have only an "indirect relationship" with the proposal to acquire the land for the public purpose. Nor should the language of s 56(l)(a) be glossed by the use of concepts such as "the scheme" or, equivalently, "the project". The applicants' submissions fail to observe those strictures. (ii) The respondent's power to acquire the Property 11. The definition of public purpose requires consideration of the basis in law for the acquisition by the resuming authority. The Just Terms Act is facilitative of compulsory acquisition, but does not itself confer any power to acquire. The power exercised by the respondent in acquiring the property was cl 31 of Schedule 2 to the Environmental Planning and Assessment Act 1979 (NSW) (EP&A Act), which relevantly provides: "(1) The Planning Ministerial Corporation may, for the purposes of this Act or pursuant to any function conferred or imposed on the Minister or the Planning Secretary by an environmental planning instrument, acquire land by agreement or by compulsory process in accordance with the Land Acquisition (Just Terms Compensation) Act 1991. (2) Without limiting the generality of subclause (1), the Planning Ministerial Corporation may acquire in any manner authorised by that subclause- (a) any land to which an environmental planning instrument applies and which the Minister considers should be made available in the public interest for any purpose,. or ... " 12. Clause 31(2) provides, in effect, that the general power to acquire land by agreement or compulsory process in cl 31(1) extends to land described in (relevantly) cl 31(2)(a). 13. Accordingly, cl 31 directs attention to the 2013 NSLEP - in which the Land Reservation Acquisition Map reserved the subject land, and not the adjoining land, for acquisition as "regional open space" - and to the purpose for which the Minister considered that the Property should be made available in the public interest. Those matters are returned to below. (iii) The appropriate level of generality 14. The correct identification of the public purpose for an acquisition (or, under similar but outmoded law, the "scheme" for which land was acquired) is complicated by the fact that a public purpose will often be able to be expressed at multiple levels of generality. In this case, the acquisition of the Property could loosely be described as being, eg, for public space and recreation; for the creation of the Blues Point Reserve; for incorporation of the Property into the Blues Point Reserve; or for a purpose at any one of many other levels of generality. The task for the Court is to identify the appropriate level of generality having regard to the provisions of the Just Terms Act. As Hodgson JA observed in Road and Traffic Authority (NSW) v Perry: "In a case such as the present, it is necessary to determine what is the public purpose for which the claimant's land was acquired, including the appropriate level of generality at which the purpose should be identified. In this case, at the most general level, the purpose could be identified as the upgrading of the Pacific Highway between Sydney and the Queensland border; and there are other possible identifications, including the Raleigh Deviation generally, or particular versions of the Raleigh Deviation, or the extension of the Raleigh Deviation to Perry's Hill. I do not think there are any clear rules determining how the relevant purpose or the appropriate level of generality is to be determined. Factors to be taken into account would, in my opinion, include the degree of continuity and consistency of various elements of what is proposed and done, and fairness to both the claimant and the acquiring authority." 15. Hodgson JA's reference to "fairness to both the claimant and the acquiring authority" reflects the ultimate purpose of the valuation exercise, as set out in s 54 of the Compensation Act, being to "justly compensate" the owner of the acquired land. His Honour's observations have been adopted by the Court of Appeal, by this Court, and by courts in other jurisdictions. 16. Handley JA's remarks in Perry, as to the "wider purpose ... which underlay the acquisition", must be read in context. Those remarks were directed to the presently uncontroversial proposition that the public purpose is not the specific use to which the acquired land is to be put. The position remained, as Handley JA also observed, that: "The identification of the scheme which underlay this acquisition requires the evaluation of complex events which occurred over 4½ years and questions of degree are involved. It would be relevant to consider whether a separate contract was let, and construction work started at the southern end of the Raleigh Deviation before the planning for the Perry's Hill extension had either commenced or been completed and before the decision was made to acquire the land taken. It would also be relevant to consider whether or not the planning and construction work for the Raleigh Deviation and the Perry's Hill extension were interrelated and not severable in time, location, contractual arrangements or otherwise." 17. That simply underscores the importance of accurately identifying the public purpose in accordance with the observations of Hodgson JA. Elaborate counterfactuals and the statutory disregard 18. It is not controversial that s 56(1)(a) can require the court to disregard the effect on surrounding land of the public purpose for which the subject property was acquired, such as a decline in amenities in the area. But to identify a purpose or scheme too generally is to require the disregard of "the planning history over a much wider area [than the acquired land] and dating back many years". To do so risks inviting the court to engage in a speculative exercise in alternative history - to "conjure up a land of make-believe" and let "[the judicial valuer's] imagination take flight to the clouds". In Waters, such an approach to the "Point Gourde principle" was deprecated by the House of Lords in strong terms. Although not in terms directed to the statutory disregard in s 56(1)(a), the observations of Lord Nicholls are apt to this case: "(i) the Pointe Gourde principle should not be pressed too far; it should be applied in a manner which achieved a fair and reasonable result; (ii) a result was not fair and reasonable where it required a valuation exercise which was unreal or virtually impossible; ... (v) while normally the scope of the intended works and their purpose would appear from the formal resolutions or documents of the acquiring authority, that formulation was not to be regarded as conclusive; (vi) when in doubt a scheme should be identified in narrower rather than broader terms." 19. There is no dispute that the application of s 56(l)(a) can require the Court to engage in counterfactual analysis. But requiring the Court to engage in a highly speculative analysis reaching back many years (or, as in this case, decades) is apt to be unfair. Fairness to both the claimant and the acquiring authority is, as explained above, relevant to the level of generality at which public purpose should be identified. It follows that the desirability of avoiding elaborate, speculative counterfactuals is a matter which may legitimately be taken into account in identifying the public purpose for which the Property was acquired. The appropriate level of generality in this case 20. The applicants contend, in effect, that the public purpose of the acquisition of the property was the creation of Blues Point Reserve. Their request that the court attempt to make findings about an alternative history of planning and development on the McMahons Point foreshore since 1948 is a very strong indication that their preferred purpose is too general. (The correctness of the applicants' alternative history is addressed below at [66]-[87]. That analysis exposes the speculative character of the applicants' case on this issue.) 21. Another matter pointing against the purpose for which the applicants contend is that it would result in windfall compensation. When the applicants purchased the property in 2009, the adjoining land had been used as public space for decades. The applicants accept that the price they paid "reflected the restrictions on use that were imposed by zoning of the land for a regional park". But they now invite the court to value the property on the basis that the entire area would have differently zoned from the 1950s and, at an unspecified time, used for residential development. That goes directly to the fairness, as between the applicants and the respondent, of the applicants' preferred public purpose. (iv) The relevant history of the Property 22. The history of the use and zoning of the Property does not support the applicants' suggestion that the acquisition of the Property by the respondent (in 2021) and the acquisition of various parcels of adjoining land by other entities (several decades earlier) are explained by the same proposal to carry out the same public purpose. To adopt the language used in Perry, the lack of "continuity and consistency of various elements of what [was] proposed and done" tells strongly against the broad purpose for which the applicants contend. 23. The respondent makes four points. 24. First, 3 of the 7 adjoining parcels of land were acquired by the Cumberland County Council and the North Sydney Council between 1960 and 1962; a further 3 were acquired by the SPA between 1968 and 1971; and an additional parcel was acquired by the PEC in 1976. The subject property, on the other hand, remained in private ownership until its acquisition in 2021. On the face of it, that raises a large question about the correctness of the applicants' preferred purpose. The decision in Woollams v Minister, on which they rely, was based on a statutory disregard in relevantly different terms (referring to the "public works ... for which such land was resumed", as distinct from "the proposal" of the resuming authority to carry out the "public purpose"). In any event, however, in Woollams there had been a 13 year period between the announcement of the public works for which the property was acquired and the date of acquisition. In this case the applicants' alternative history spans over 70 years. 25. Secondly, in applying the Just Terms Act, the relevant "proposal" is that of the respondent, not "some aggregation over time of the policies of the Council and ... the [State] Government". Accordingly, it is not appropriate to attribute to PMC a purpose which may have been held by the Cumberland County Council in first zoning the property and the adjoining land as "Open Space" (which in any case did not prevent continued use of the property and adjoining land for ferry and boating activities long after 1951), or by the North Sydney Council in adopting other forms of open or recreational zoning under later environmental plans. Nor is the court required to imagine away the history of opposition by members of the public to residential development along the foreshore. 26. Further, even if the PMC can be assimilated to the State Planning Authority (SPA) and the NSW Planning and Environment Commission (PEC), on the basis that those entities were in some sense its predecessors, only some of the adjoining land was ever acquired by those entities. Three of those 7 parcels (Lot 1 in DP902933, Lot 1 in DP1159898, and Lot 51 in DP861201) were acquired directly by either the Cumberland County Council or the North Sydney Council.29 (The properties acquired by the SPA and the PEC were transferred to North Sydney Council in September 2022. It appears that the properties acquired by the Cumberland Country Council were vested in or transferred to the North Sydney Council when that body was dissolved.) 27. Thirdly, although it is true that the property continued to be zoned open space and that from time to time inquiries were made about purchase of the property by North Sydney Council and other entities, on multiple occasions decisions were made against the acquisition of the Property. Most obviously, no decision was made to acquire the Property for the purpose of public space at the time of its sale to William Holmes in 1969. By that point most of the adjoining land-including the parcels on either side of the Property and the 3 other parcels that were owned by Harbour Lighterage Ltd – had already been acquired by the Council or the SPA (see [53] below). The next year, in 1970, North Sydney Council gave conditional approval for the "rebuilding of the former boathouse building on the western portion of the site with the upper level to be used for residential purposes and the lower level for maritime related purposes." It appears that, pursuant to that development approval, the existing buildings were then erected, preserving the form of the initial boathouse on the western part of the site. 28. In 1981, the Council commissioned a study of open space in the municipality, which criticised "Council and Government policy and actions" for not supporting, and in some cases (such as the subject property) for discouraging, small-scale waterfront industry. The report recommended that "Holmes Boatshed, McMahons Point be encouraged to remain, either in its present form on private land, or under lease". In response to that recommendation, the Council "retracted [its then] plans to purchase the site and enabled it to continue in its current use as a boatshed for its contribution to the harbourfront and water-based activities and services". The "Department of Environment and Planning subsequently confirmed it would not acquire the property." 29. Those matters (and the development of the 2013 NSLEP, addressed below) are squarely against any entity having continuously maintained a proposal to acquire the property for the purpose of the creation of the reserve. To the contrary, at various times both the Council and the State government have accepted that the property should continue to be used as working waterfront with an ancillary residence, in effect as a heritage item. It is true that such proposals have been in conflict with the aspiration (held at different times by various entities, including members of the public) of creating a continuous public space along the foreshore. But an ongoing controversy as to the future of the Property is not sufficient to engage the disregard in s 56(1)(a), as the High Court held in Walker Corporation: "Matters of debate or doubt as to the outcome of controversy respecting use of particular land might affect the perception of the willing but not anxious market participants well before there is 'the proposal' which is the means selected by the resuming authority to end the controversy." 30. Fourthly, the development of the NSLEP 2013 reflected the absence of a proposal, in the lead-up to the 2013 NSLEP, for the acquisition of the site by the respondent. The relevant history is as follows. a. The initial draft LEP adopted by the Council in December 2008, and then sent to the Department, proposed that the property be zoned RE1 and reserved as regional open space. b. In July 2010, the Department issued a certificate requiring changes to the draft LEP before it could be publicly exhibited. The Department required that the regional open space reservation be altered to a local open space reservation and suggested that the Council "consider other zoning options" if acquisition by the Council was not feasible. Concerned about the financial liability attached to a local open space zoning, the Council then requested that the Department amend the condition to require that the site be zoned IN4 with a site-specific condition allowing a single dwelling. c. On 29 October 2010, the Department issued a revised certificate which required the draft LEP to be amended to remove the regional open space reservation and, consistently with the Council's request, to zone the site as IN4. d. In July 2011, following submissions received in response to the public exhibition, the Council adopted various changes to the draft LEP, including returning the zoning of the site to REI and removing the regional open space reservation. e. In September 2012, the Department repeated that the property was no longer designated for acquisition by the State and again requested that the Council remove the regional open space reservation. f. In February 2013, the Council resolved that the site be deferred from inclusion within the draft LEP to permit further negotiations with the Minister and the Office of Strategic Lands. g. In mid-April 2013, the State government ultimately agreed for the site to be made subject to a regional open space reservation. 31. The Land Reservation Acquisition Map prepared for the 2013 NSLEP ultimately identified the property as "Regional Open Space (REl)". The adjoining land, already held by the Council or the State, was zoned REl but not reserved. 32. It may be accepted that the reservation and zoning ultimately adopted in the 2013 NSLEP was a consequence of "the proposal" for PMC to carry out the public purpose for which the property was ultimately acquired - its inclusion in the Blues Point Reserve. The critical point is that, until at least April 2013, there was not a proposal for the PMC to acquire the land. That is so regardless of whether, as the applicants contend, the exchanges in relation to the 2013 NSLEP are best understood as reflecting a dispute over who should be responsible, legally and financially, for any acquisition. A preference that land be acquired, but by someone else, is not a proposal to do so. (v) Contemporary evidence of purpose 33. The Notice in the Gazette referred, without further detail, to "the purposes of the [EPA Act]". As was observed above, that ultimately points to the 2013 NSLEP (which has already been addressed), as well as to the purpose for which the Minister considered that the land should be made available. It is appropriate, therefore, to look to other documentary evidence of purpose, including internal documents of the respondent. 34. The Proposed Acquisition Notices referred to "the purpose of public recreation and inclusion to the Blues Point Reserve". To similar effect, the letter of 15 February 2019 from the then Minister for Planning to the applicants explained that the acquisition of the Property "would complete the project of bringing the whole of Blues Point Reserve into public ownership". That letter supports, and certainly in no way contradicts, the respondent's position as to the public purpose for the acquisition. As such, it is not necessary to determine the correctness of the applicants' (adventurous) contention that the respondent is bound by the terms of the letter. 35. The Ministerial brief which sought (and on 28 May 2021, received) approval for the acquisition situated the acquisition in the context that: a. "The immediate surrounding land is waterfront public open space known as Blues Point Reserve"; b. "The Land is the final privately-owned property at this location and its compulsory acquisition would complete the project of bringing the whole of Blues Point Reserve into public ownership"; c. "The acquisition of the Land was announced by the NSW Government as an election commitment in 2019"; d. "The land is identified for acquisition in the [2013 NS]LEP"; and e. "Discussions have been ongoing with the landowners since 2013." 36. All of that documentary evidence is consistent with the narrower purpose contended for by the respondent. It is only by excising words (such as "inclusion" and "complete"), or by reading others in isolation (such as "the project"), that the applicants are able to make good their contentions about purpose. (vi) Conclusion 37. Section 56(1)(a) directs attention to the purpose for which the Property was acquired by the respondent under cl 31 of Schedule 2 to the EP&A Act, and the proposal by the respondent to carry that purpose out. Clause 31 points to the NSLEP 2013 and the purpose of the responsible Minister in approving the acquisition, in so far as it is can be discerned from the documentary evidence. Both of those considerations support the narrower purpose of incorporation of the Property into the reserve. It is true that the history of the Property since 1948 reflects ongoing controversy about its use. But the respondent is not to be identified with North Sydney Council, or the public, or one or more other entities; and in any case, the history is squarely against any entity having consistently maintained a proposal to acquire the Property for the reserve. 38. Those matters are sufficient to dispose of the applicants' case on purpose. However, to the extent there remains any question about the level of generality at which the public purpose should be identified, considerations of fairness dictate that the question should resolved in favour of the respondent. The closing oral submissions for the Ministerial Corporation 1. The closing oral submissions for the Ministerial Corporation are summarised below. 2. After addressing, briefly, Walker Corporation, Waters & Ors v Welsh Development Agency [2004] UKHL 19 (Waters) and RD Miller in the Court of Appeal (RD Miller Pty Ltd v Roads and Maritime Services NSW [2020] NSWCA 241), Mr Eastman suggested that the first of these cases was the most relevant one on the issue of the public purpose and the second and third dealt with the Pointe Gourde principle (Pointe Gourde Quarrying and Transport Co Ltd v Sub-Intendant of Crown Lands [1947] AC 565). 3. The decision in Walker Corporation effectively instructed me, he proposed, "don't go to the old decisions, go to the statute." (Transcript 29 June 2023, page 580, lines 33 and 34). 4. Mr Eastman agreed with my proposition that the Land Acquisition Act is a closed code but suggested that the Court of Appeal spoke directly and relevantly to the scope of the public purpose, citing the example of Perry, in which there was a degree of continuity and consistency, and words like "fairness to both parties" were used. 5. He submitted that these concepts, as repeated by the Court of Appeal in AMP Capital Investors Limited v Transport Infrastructure Development Corporation [2008] NSWCA 325, are effectively binding on me to discern the correct interpretation of the words "public purpose". 6. He also submitted that I was interpreting a statute which had a definition of "public purpose", that definition being central in this case. His reason for drawing my attention to Waters was to draw between the older way and the statutory construct of the public purpose under the 1991 NSW act. 7. If I was against him on the public purpose, then the counterfactual assumption would have to be gone into and whether there would have been residential zoning at some point – determination or indeterminate in this case. 8. An accepted approach about the construction of the provision relates to whether counterfactuals are an appropriate form to take, which Waters deals with. 9. Mr Eastman next addressed the history of decisions addressing how the Pointe Gourde principle had been applied 10. After a short adjournment, I raised with Mr Eastman the issue of whether the Ministerial Corporation still pressed the possibility of a hypothetical IN4 zone for the site as pleaded in the Amended Points of Defence. It is not necessary to address this here as it is later separately dealt with. 11. Mr Eastman next addressed the dispute between the State and the Council about which tier of government ought be responsible for funding the acquisition – a matter which, in light of the events giving rise to these proceedings, does not require further consideration. 12. I indicated that the way the proceedings had been run, the valuation had to be addressed on the assumption that it is B1 or R3. 13. Mr Eastman submitted that the evidence established that the underlying zoning was B1, except for the R3 theory advanced by Mr Chambers. He submitted that, although it might have been suggested it be zoned IN4 in 2013, it certainly would have been zoned B1 (in the hypothetical) over the course of the following few years according to Mr McKenzie. That required me to value the site on a B1 not a R3 basis. 14. Mr Eastman then directed me to page 260 of Walker Corporation, where there are references to several cases that predate this legislation and the conclusion that the proposal was that of the Foreshore Authority and not the council. 15. Mr Eastman next took me to page 262 of Walker Corporation and the reference to the Carr government's announcement in 2002 "The acquisition will…western harbour corridor." Mr Eastman emphasized the words "complete" and "added to" in that acquisition announcement because of their relevance to the discussion of generality in characterising the type of public purpose in this case. Mr Eastman's point was that there are different levels of generality to which one can assess and pitch a public purpose. He asked, rhetorically, "what is the one that the statute is directed to?" submitting that there is a distinction between the broader approach of Pointe Gourde and that set by the 1991 legislation. 16. The importance of the definition of public purpose in s 4 of the Land Acquisition Act and the provision allowing the Planning Ministerial Corporation to affect acquisition of this land is significant. The public purpose can only by interpreted through the lawful power of the Minister, or of the Planning Ministerial Corporation to acquire land, which is sch 2, cl 31 of the EPA Act. 17. He noted that this is land to which an environmental planning instrument applies, and which the Minister considers should be made available in the public interest. 18. The appropriate level of generality can be seen as being for public space, recreation and the inclusion of the site into the existing Blues Point Reserve. This is at the appropriate level of generality and is contextually consistent with the approach of Hodgson J in Perry, where, at a too general level, the public purpose was sought to be identified as the upgrading of the Pacific Highway between Sydney and the Queensland border. Not every Pacific Highway acquisition could be characterised as simply for one public purpose. Pacific Highway cases are confined by the 1991 Act to a narrower understanding of the public purpose. 19. What Hodgson J referred to as the fairness to both the claimant and the acquiring authority, is a principle which of which the identification should not be so general that it disregards planning history dating back many years. 20. The decision in Waters proposed a 17-year disregard and this was not accepted. The decision of Duggan J, in Drivas, looked at what construction might have been carried out over an 18-month period. These time periods are much more confined than what I face - a proposition which is potentially winding back 70 years which would be significantly longer than any of the other cases that deal with this principle. 21. Mr Eastman argued that the Applicants' public purpose is far too general and has potential to result in windfall compensation to the Applicants. As was said in their submissions, when they purchased, the price reflected the restrictions on the use imposed for the zoning of the site for a regional park. 22. Mr Eastman then addressed the language in Perry about the continuity and consistency of the various elements. The continuity and consistency of an acquisition of land between North Sydney and the Queensland border for the Pacific Highway was too broad. There was not continuity and consistency of purpose at that level of generality. That was the question with which Hodgson J was concerned. 23. He submitted that the Applicants had argued that there were seven parcels of land acquired over a long period of time – this process therefore was to be construed as being one with a common and continuing purpose. 24. The evidence shows that of those seven, the first were acquired in 1960 and 1962 by County of Cumberland Council and North Sydney Council. The next three were the State Planning Authority (SPA) and the last was the Planning and Environment Commission (PEC) in 1976. In Halley, Tobias J determined that broadly, from a statutory perspective, the SPA and PEC were predecessors to the minister. 25. However, Mr Eastman submitted, there is no evidence as to what specifically was the intention of each of these predecessors to the Minister. No consistency of purpose was demonstrated. 26. The point Mr Eastman made related to the history of the property and the lack of continuity and consistency. The purposes of the County of Cumberland Council in the CCPSO and North Sydney Council when it adopted its LEP are not attributable to the Ministerial Corporation. Although they are predecessor purchases of the seven parcels, some were acquired directly by the County of Cumberland Council or the Council and no commonality of purpose has been demonstrated. 27. The next of the points Mr Eastman made was that, despite the continuous zoning by the Council, there were multiple decisions against the acquisition of the property. Although the land must have been for public sale at the time of the Holmes' purchase in 1969, it was not taken to taken into government ownership at that stage. In 1981, there was a council commissioned study about the lack of support for small scale waterfront industries which recommended the Holmes' boatshed be encouraged to remain as private land and to be continued as used for an industrial purpose. 28. At this point, I asked whether it was Mr Eastman's proposition that the combination of the Ministerial Briefing Note, the Minister's earlier letter foreshadowing the acquisition of the property, and the actual PAN and the gazette notice constituted the crystallisation of the formal proposal to acquire. Mr Eastman responded that they were and that the acquisition must be looked at through the lens of these crystallizing documents to derive a precise understanding of the public purpose. 29. Mr Eastman suggested that there was a direct connection between the decision in April 2013 and then the acquisition. His position is that to look at the words "the project" in documentary material and not the statutory power and the genesis of the proposal and supporting documents, is to put a gloss on the language of "the project" rather than have proper regard to the active words of the inclusion of the site to the reserve. 30. Mr Eastman submitted that what is derived from the documents of this acquisition provides the appropriate level of generality having regard to the issue of continuity and consistency. 31. Mr Eastman then moved to address issues of past history of adjacent land uses and what the hypothetical forms of development might have been on them when the waterfront uses ceased - depending on whether there was to be accepted a B1 or R3 zoning. The submissions in reply for the Applicants 1. Mr Tomasetti addressed identification of the public purpose during his closing oral submissions commencing by saying (Transcript, page 635, line 26 to 30): TOMASETTI: The identification of the public purpose is required because of the statutory imperative in s 56 of the Just Terms legislation. There's no dispute about that. The statutory text speaks of the public purpose. Whether we call it the scheme or give it another name, provided it's simply a label for the same thing, it matters not. 1. Mr Tomasetti submitted what he proposed was the definitive identification of the public purpose for the acquired land (Transcript, page 635, line 45 to 47): TOMASETTI: [T]he most informative way to answer the question is simply to look at how the Planning Ministerial Corporation identified it for itself. It seemed to have no difficulty when describing the public purpose. 1. Mr Tomasetti next turned to the letter dated 5 February 2021 that was addressed to the Applicants from the director of the Office of Strategic Lands. This letter was contained in the Respondent's Bundle of Documents that was tendered as Exhibit 1. Attached to the letter was a PAN for the site issued under s 11 of the Land Acquisition Act, the contents of which, in Mr Tomasetti's submission, provided a clear indication of the public purpose (Transcript, page 636, line 3 to 9): TOMASETTI: At page 1 behind tab 1 of exhibit 1 is a letter of 5 February 2021, written to one of my clients and in the second paragraph the director of the Office of Strategic Lands said, "The land is required for the purpose of public recreation and inclusion to Blues Point Reserve". At page 3 of the bundle there is the second page of the PAN, the proposed acquisition notice, issued under s 11 of the Act and in that letter in Part 2 on page 3, the director of the Office of Strategic Lands within the department on 5 February 2021 said, "The land was acquired for the purpose of public recreation and inclusion to Blues Point Reserve". 1. Mr Tomasetti submitted that, in its simplest terms, the public purpose was an acquisition for the creation of the Blues Point Reserve corridor and that the subject site was the last parcel of land required to complete that corridor. Mr Tomasetti took me to a briefing note contained in the Respondent's Bundle to advance this position (Transcript, page 636, line 11 to 28): TOMASETTI: At page 20 there is an internal document headed "Approval for compulsory acquisition of land and interests at 1 Henry Lawson Avenue, McMahons Point. … The Minister for Planning and Public Spaces on 28 May 2021 signs that document and circles the word "approved" … At page 22 "Key Reasons", "The land is the final privately owned property at this location and its compulsory acquisition would complete the project of bringing the whole Blues Point Reserve into public ownership". Nothing can be clearer than the statement "the project of bringing the whole of Blues Point Reserve into public ownership". 1. Mr Tomasetti suggested that identifying the public purpose was an exercise unique to the facts and circumstances of each acquisition. He advanced this proposition in the following terms (Transcript, page 637, line 32 to 42): TOMASETTI: Our principal submission on this public purpose point is really quite simple. It matters not that you may have to go back 50 years in the circumstances of this case or 70 years. It's beside the point. It matters not that you might have to go back two or three years. The question for the Court is to identify the public purpose and if that mandates that you need to go back in time a long way, so you should do and [in] Woollams case that's what happened. It was 13 years in that case and the consequences of identifying the public purpose was to ensure that the landowner was appropriately compensated, notwithstanding the degradation of the village in which the land was part and which had been entirely neglected because of its imminent flooding by the Warragamba Dam project. 1. Mr Tomasetti replied to the submissions advanced by Mr Eastman concerning the English case of Waters & Ors v Welsh Development Agency [2004] UKHL 19 (Waters). He submitted (Transcript, page 638, line 11 to 26): TOMASETTI: In the Waters v Welsh Development Agency case, there was an acquisition for the purposes of a wetland reserve, and the new wetland reserve was required to compensate for the loss of some mud flats as a result of the construction of what was called a barrage project, which I assume was some sort of landfill project. HIS HONOUR: That would be a water barrier. TOMASETTI: Presumably to protect land from the development, and hence the loss of the wetland, et cetera. The issue was what was the public purpose? Was it simply the acquisition of the land for a wetland reserve, or was it part of a wider purpose, the actual carrying out of the barrage project? The role of the compensatory wetlands was vital in the approval of the barrage project. So on appeal, the court dismissed the appeal, accepting that the public purpose was in fact the construction of the barrage project in which the wetland reservation and acquisition was a necessary part. 1. Mr Tomasetti took me to the observations of Lord Nicholls in paragraph 56 of the Waters decision, where his Lordship remarked (Transcript, page 638, line 30): 56. There is an even more fundamental problem. This goes to the very fairness of the Pointe Gourde principle as currently applied. The wider the scheme, the greater the potential for inequality between those outside the area of acquisition, whose land values rise by virtue of the scheme, and landowners whose properties are acquired at a value which disregards the scheme. Conversely, the narrower the scheme, the greater the potential for an authority being called upon to pay compensation inflated by its own investment in improved infrastructure or other regeneration activities. Holding the balance between these conflicting interests is pre-eminently a subject for decision by Parliament. 1. Contrary to Mr Eastman's position with respect to the decision of Waters, Mr Tomasetti submitted that the decision assisted the Applicants in this case. He advanced this proposition in the following terms (Transcript, page 639, line 7 to 15): The decision of Waters, in our submission, if anything assists the applicants in this case. It's a question of fact. It depends on the facts of each case. It's for the court to ascertain what is the public purpose. It can be part of a wider project, but it can also be part of a narrower project. Again, you just have to go back to the facts. It's necessarily a hypothetical exercise, counter factual exercise, because the public purpose was implemented. So it's impossible not to have to engage in a counter factual scenario to disregard the public purpose. The fact that the counterfactual may be elaborate – to use my friend's words, time and time again – is beside the point. 1. Mr Tomasetti addressed me on the Court of Appeal's decision of Halley v Minister Administering the Environmental Planning and Assessment Act 1979 [2010] NSWCA 361 (Halley), a decision where the Court accepted that the change in name of the State agency responsible for the acquisition of a parcel of land was not a matter of relevance. In congruence with this acceptance, Mr Tomasetti took the position that the change of name of the State agency in this case presented a matter of irrelevance. He suggested (Transcript, page 641, line 36 to 40): TOMASETTI: Your Honour might care to note that in Halley's case, there's a discussion about that at paragraphs 45 to 47 where the Court accepted that the change in name of the State agency responsible for acquisition of the land didn't matter. It was essentially the same agency despite the change of name. It's paragraphs 45 to 47. It caused us to remember that the – that Transport for New South Wales was formerly known as the RMS and before that it was known as Roads and Traffic Authority. And some time before that it might have been known as the Department of Main Roads. It's all the same agency when it comes to acquisition for road purposes. The Department of Planning, Infrastructure and the Environment was known as the Department of Planning, Infrastructure and Natural Resources, was known as the Department of Planning, was known as the Planning and Environment Commission, and was known as the State Planning Authority. It's had all sorts of different names overtime but there can be no doubt that the agency is an agency with the State and it's been carrying out the public purpose, the creation of the Blues Point Reserve, as publicly owned parkland on the foreshore for many, many decades. 1. The final position regarding the identification of the public purpose that was embraced by Mr Tomasetti in his closing oral address began with the proposition that the project and the acquisition are not to be considered as one and the same. 2. Mr Tomasetti suggested that the public purpose ought to be disregarded in this case, submitting (Transcript, page 642, line 34 to 42): TOMASETTI: In our submission, therefore, stripped away of all the arguments, you would go to the respondent's brief, you would go to the correspondence issued to my client informing of the public purpose and you would say, as I said in my opening submission, that the project is not completion of the project, the project is the project, and the acquisition was to complete that public purpose, and it's that public purpose which then, having been identified, has to be disregarded so as to ensure the market value of the land is not increased or decreased when compensation comes to be paid to the advantage or disadvantage of one or the other party. Consideration 1. I have earlier set out the terms of s 7 of the Land Acquisition Act. It makes it expressly clear that, for the purpose of seeking a statutory source of authority for any compulsory acquisition, that authority must be found in some other enactment rather than in the Land Acquisition Act itself. The Land Acquisition Act is solely, as its title explains, an enactment providing a regime for just terms compensation for dispossessed landowners when land is compulsorily acquired by an authorised governmental authority for a public purpose. 2. Equally, although "public purpose" is defined in s 4(1) of the Land Acquisition Act, as earlier set out, the defining of what might constitute that public purpose is also not to be found in the Land Acquisition Act, but must be derived from the source of statutory power for such an acquisition and the terms of necessary documentation (such as Proposed Acquisition Notices set out in Pt 2, Div 1 of the Land Acquisition Act as a mandatory necessary element of a process effecting such an acquisition). For present purposes, it is therefore appropriate to consider the source of the statutory power exercised to effect the acquisition of the Applicants' land by the Ministerial Corporation. 3. I do not understand that it is disputed by the Applicants that the source of the statutory power giving rise to this acquisition is to be found in Sch 2, Pt 6 of the EPA Act. The relevant elements of this part have earlier been set out. 4. It is appropriate to record that the Applicants did not make any challenge, in the Supreme Court, to the procedural validity of the process undertaken for the purposes of cl 31(1)(a) of Sch 2 of the EPA Act such challenges being available (see Desane Properties Pty Limited v State of New South Wales [2018] NSWSC 553 at first instance and Roads and Maritime Services v Desane Properties Pty Ltd [2018] NSWCA 196 on appeal). No challenge of that nature having been undertaken and title to the site having transferred, initially, to the Ministerial Corporation prior to its on‑transfer to North Sydney Council, it is now appropriate to turn to the terms of the earlier set out acquisition process documents to obtain a proper understanding of the public purpose for the application of the statutory disregard in s 56(1)(a) of the Land Acquisition Act. Doing so permits that public purpose to be set aside and permit the determination of the hypothetical underlying zoning and thus the appropriate compensation to which the Applicants are entitled. 5. In Perry, the question of defining the scope of the public purpose was one of geographical context – working out, under the circumstances where, along a continuum from the very broad to the very precise, the project definition for the purposes of the statutory disregard should be placed. 6. In this instance, the potential continuum is a temporal one. It is framed by not only the planning designations of the middle of the 20th century and the accrual over the following quarter of a century of land acquisitions expanding the Blues Point and Henry Lawson Reserves but also by the fact that, in 1976, that accrual process ceased. 7. The decision taken in the context of the 2019 state election, by a commitment to be made to acquire the Applicants' property with that acquisition to be funded by the state government arose in a context where each tier of government had vigorously resisted suggestions from the other as to which tier should bear financial responsibility for acquisition of the site. 8. There had been disagreement between government at state level and the Council as to what should be, by implication, the underlying zoning of the site when there were existing IN4 land use rights subsisting on the site until at least some time in the 1990s. 9. It is the hiatus between 1976 and 2019 and the mutually engaged resistance of the two tiers of government to the acquisition of the site that, fundamentally, causes me to conclude that the accrual process which had taken place from 1951 to 1976 had been broken and that, at some point after 1976 (a point not needing to be determined with precision), any vestige of continuation of a public purpose of creation of the Blues Point and Henry Lawson Reserves had disappeared. 10. The result of this disappearance was that the political determination in 2019 (after more than 40 years since the last acquisition of land to be added to the Reserves) supports the proposition that this was a fresh determination, as it were, to acquire the site for a new public purpose – that public purpose being for the incorporation of the site into the existing Reserves, rather than being the endpoint of the continuum of the creation of the Reserves commenced in 1951. 11. In addition, there is conclusive evidence that this position is legally correct. 12. The first of the four documents which I have earlier set out as being the documentary sequence resulting in the compulsory acquisition of the site was the Minister's letter of 19 February 2019 which included the sentence: Your property is the final privately-owned property at this location and its acquisition would complete the project of bringing the whole of the Blues Point Reserve into public ownership. 1. It is also to be observed that, in the briefing note to the Minister seeking adoption of the recommendation to acquire the site, at its commencement (under the heading Analysis), observes that the Council has agreed "to accept transfer of the site to complete the Blues Point Reserve corridor". 2. Later in the document, after the Minister's signature giving approval for compulsory acquisition, the document observes in the second paragraph of commentary under the Minister's signature that: The Land is the final privately-owned property at this location and its compulsory acquisition would complete the project of bringing the whole of Blues Point Reserve into public ownership. 1. To the extent that these provide some non-legal commentary in support of the public purpose case advanced on behalf of the Applicants, it is to be accepted that such an inference is capable of being drawn in the absence of any formal legal expression of a contrary intention – that is, such an expression in support of the proposition advanced on behalf of the Ministerial Corporation. 2. Unfortunately for the Applicants, there is such an express (and, I am satisfied, unequivocal) legal expression of an intention that the acquisition was for the narrower public purpose advocated by the Ministerial Corporation. It is contained in part 2 of the schedule to each of the PAN's issued to the Applicants dated 5 February 2021. This provision in the schedule to the PANs is derived from (3) of the body of the PAN, a paragraph which reads: The Authority proposes to utilise the land which is proposed to be acquired for the purpose identified in part 2 of the schedule which follows. 1. The schedule to the PAN, in Part 2, identifies the purpose for which the compulsory acquisition is to be effected as being (emphasis added): For the purpose of public recreation and inclusion to Blues Point Reserve. 1. It is the use of the word "inclusion", in this statutory notice context, which is fatal to the public purpose proposal advanced on behalf of the Applicants. The use of the expression "inclusion to Blues Point Reserve" necessarily assumes, as a precondition, the existence of the existing Blues Point Reserve. 2. Although the language in the non-statutory documents I have earlier quoted would tend to support the public purpose case theory advanced for the Applicants, I am satisfied that the use of the express words "inclusion to Blues Point Reserve" mandates the conclusion that the acquisition presupposes the existence of that reserve and the acquisition of the site being an acquisition for the purposes of adding it to the existing reserve - rather than a continuation of the project which had been commenced in 1948 by the identification of the reserve lands at the southern end of McMahons Point and the formalisation of the mapping of those lands in the CCPSO in 1951. 3. For this reason, I am satisfied I am obliged to accept that the public purpose to be set aside as mandated by the statutory disregard in s 56(1) of the Land Acquisition Act is not the sequential acquisition over a lengthy period of time of lands into public ownership for the purposes of creating the overall reserve framework but is the specific acquisition of the site for its inclusion into the existing reserve as at the time of acquisition from the Applicants. 4. Given that the parties had framed the question of determination of the public purpose as leading to resolution of the binary choice between an underlying hypothetical R3 zoning (as advocated for the Applicants) and an underlying zoning of B1 (as advocated on behalf of the Ministerial Corporation), it follows from my determination that the Ministerial Corporation is correct in its identification of the public purpose, that I need consider what is the hypothetical development outcome (and thus hypothetical valuation outcome) on the basis of a hypothetical underlying zoning of B1 Neighbourhood Centre pursuant to the 2013 LEP. A potential IN4 hypothetical zoning Introduction 1. In response to the Applicants' Points of Claim, Points of Defence were filed for the Ministerial Corporation on 4 May 2022. Relevantly, they said: 12 In response to paragraph 12 of the PoC, the Respondent, subject to expert planning evidence a. admits that the underlying zoning of the Property is B1 – Neighbourhood Centre; b. further says that the highest and best use of the Property is for the purpose of shop-top housing with a business/retail component being 50% of the potential GFA and the residential component being 50% of the potential GFA; c. otherwise denies paragraph 12 of the PoC. 1. The Applicants filed Amended Points of Claim on 22 June 2022. It is not necessary to set out any extract from them. However, in response to the Applicants' Amended Points of Claim, Amended Points of Defence were filed for the Ministerial Corporation on 5 August 2022. Relevantly, they now said: 13 The Respondent denies paragraph 13 and says that, subject to expert planning evidence the underlying zoning of the Property is either C2 Environment Conservation, IN4 Working Waterfront or B1 - Neighbourhood Centre with part of the Property being unzoned. 1. They continued, relevant to present matters: 14 The Respondent denies paragraph 14 and says that the highest and best use of the Property is for the purpose of either (a) C2 Environmental Conservation, or, (b) IN4 Working Waterfront, or alternatively, (c) shop-top housing with a business/retail component being 50% of the potential GFA and the residential component being 50% of the potential GFA consistent with a B1 Neighbourhood Centre zone provisions and that any development of the Property is constrained by site factors. 1. There is no need to set out the particulars pleaded to (14) above. 2. As can be seen, there are two elements of what was pleaded by the Ministerial Corporation which are engaged for consideration. First is the issue of whether there was ever any realistic prospect that the underlying hypothetical zoning of the site could be demonstrated to remain IN4 after that use had ceased for sufficient time for any existing use rights to have disappeared. That position is addressed in this section of the judgment. The second matter (addressed later in the section dealing with the hypothetical B1 Neighbourhood Centre zoning is whether any shop top housing development would be confined to 2 levels. 3. As can be seen from later discussion, I have concluded that it should not be so confined and that there is (subject to approval of a hypothetical dispensation request pursuant to cl 4.6 of the 2013 LEP as to the height of a B1 structure) the probability that a three-level development would be approved. Such a development would still have one residential level. I now turn to resolve (and remove from consideration), the possibility that the site might have an underlying IN4 zoning. 4. Although there was a planning proposal submitted on behalf of the Applicants to the Council on 4 March 2013 (with a revised proposal submitted on 5 April 2013), that planning proposal, seeking variation to the then local environmental plan or, as it was in the process of being evolved at that time, the forthcoming 2013 LEP, to rezone the site for waterfront industrial usage that planning proposal came to nought and does not require further consideration – although considerable material setting out the terms of the planning proposal and the Council's consideration of it is contained in the Evidence Book. None of the related material requires reproduction. 5. What is relevant for present purposes is an exchange, which I had with Mr Eastman and Mr Tomasetti concerning the pleading by the Ministerial Corporation that an underlying zoning of IN4 was a possible outcome in the proceedings. 6. I raised this with them as that there did not seem to me to be any material in the evidence addressing this pleaded potentiality. It is appropriate to repeat the entirety of this exchange before setting out how I am satisfied I should address this element of what was contained in the Ministerial Corporation's Amended Points of Defence. The exchange was in the following terms (Transcript, 13 June, page 181 to page 183, line 44): HIS HONOUR: I observed that exhibit 6 and this document does not seek to explore the possibility of an IN4 zoning; is that now expressly disavowed by the respondent? EASTMAN: No and partially, in order to get to that point, I would need to be wrong on a certain issue. But it's still potentially open for your Honour, and what we don't speculate about in this case is what happened for the..(not transcribable).. the 2013 LEP. It was going to be IN4 if it wasn't for the public purpose; that requires no speculation. If your Honour comes to a disagreement with me about the characterisation of the public purpose, and thinks at point in time your Honour needs to think about what the surrounding development might be and your Honour speculates on that, it's open to your Honour to determine that what you knew at the time, 2013, it was otherwise going to be IN4. So it would be a point in time option for your Honour; that's not my case. My primary case is very obviously proper characterisation of the public purpose. It would be as Mr McKenzie says. Secondary case is a question of fact; it would be what Mr McKenzie says. But you've got his analysis there and, indeed, you've got Mr Chambers' analysis as well, saying there were four potential types of zoning and canvasses B1 and IN4 as well. So it's not my primary case; I can't stand and say I disavow it because it would be open to your Honour, if your Honour agrees with me about certain aspects of this case, comes to a point in time conclusion and utilises that evidence that actually exists about what occurred for the 2013 LEP. You can come to that conclusion. HIS HONOUR: And if I was to come to that conclusion, then there is, at least as I understand it, I have not been taken to anything that would demonstrate what the hypothetical development potential of an IN4 zoning would be. EASTMAN: It's in the material itself, when there was consideration of zoning that way. And, indeed, there's some secondary material about when the applicant, themselves, put in the planning proposal, and I think I've taken your Honour to some peripheral parts of that. As to what those controls would be, and the witnesses might address your Honour on that, I think there was large scale acceptance that there wouldn't be an FSR control because there isn't one in the LEP, and that the height control would be 10 metres. That's what we know at that point in time. If that's to be different, I guess the experts, or Mr Chambers, or Mr McKenzie can address your Honour on that. HIS HONOUR: Right, and although I haven't yet been back to it, there is something that is contained in the 2013 North Sydney Development Control plan, which is specific, is it not, for IN4 use of the site? EASTMAN: I don't know the answer to that question. HIS HONOUR: Well, it's 9.8.8 of the North Sydney DCP; it was the relevant provision of the DCP that were discussed before Commissioners O'Neill and Walsh in the two development applications that were made, on behalf of the applicants that were refused by each of those commissioners. EASTMAN: Yes, so your Honour's right; that is set out at p 244 of the applicant's bundle, the DCP being underneath tab 3; that's the applicant bundle exhibit, which is exhibit G. TOMASETTI: Mr McKenzie says in his initial report that, in his opinion, land would be zoned B1. In the joint report that follows, he deals with B1. In the issues provided to be, last week by my learned friend, question for the planning experts, was whether the underlying zoning would be B1 or R3, and what controls would apply in either of those events. But topics for concurrent discussion this morning are underlying zoning of B1 or R3. Nobody has dealt with IN4, so far as the respondent is concerned as an alternate zoning; the valuers haven't dealt with it. In my submission, the case that's being run is it's accepted there would be a different zoning, and the alternate zonings are either B1 or R3. I don't accept that my learned friend can, somehow, float this idea that it could be IN4, depending on what your Honour might find. In that case, the whole case would go off the rails. HIS HONOUR: Well, that's why I asked the question, Mr Tomasetti, as to whether the respondent says, in effect, "I can't, ought not contemplate IN4." TOMASETTI: In my submission, the respondent is arguing it's B1, not R3, and we're arguing it's R3, not B1. And if we're wrong each side flips to the B1, if I'm wrong. Or if my learned friend's wrong, it goes to R3. The respondent couldn't be heard to say it could go to IN4. I mean, I accept that it's open to a judicial valuer to reject everybody's argument and go some other different way; that's a thing that a former judge of this Court used to do from time to time. But really, the case should be run on its pleadings, and the valuers are never engaged in IN4; there's no comparable sales in their joint reports about IN4 sales. The whole case would go off the rails. In my submission, your Honour ought not allow the respondent to make a submission that the site could be zoned IN4. HIS HONOUR: Perhaps the appropriate course, Mr Tomasetti, is to wait and see what submission, if any, Mr Eastman advances on that proposition, and, could I just say this; that if I was attracted to such a proposition, it would seem to me I would be obliged to give you notice of that and to provide you with an appropriate opportunity to respond to it. TOMASETTI: I wasn't proposing to cross-examine Mr McKenzie about the possibility of the land being zoned IN4. HIS HONOUR: I am certainly of the view that if highly contingent not to be taken to be expressing any view, tentatively or otherwise. If I were minded to contemplate such a conclusion, I would need to give you the opportunity, both in evidence and in submissions, to respond to it on proper notice. TOMASETTI: Please the Court. HIS HONOUR: That's my intention; that's why I asked the question now to try and get this document, which is B1 or R3. It is a simple, bifurcated choice that is foreshadowed in these issues for cross-examination. But there has been discussion and, indeed, I think it was Mr Eastman's opening, there was discussion about exchanges between the council and the department about what might result in an IN4 zoning, depending on whether either or neither of the parties was to pony up the money to purchase the site from the applicants. TOMASETTI: There was that historical mention, but ever since the case has started in accordance with the issues that, indeed, the respondent has put to us, we've been proceeding on the assumption that any idea that that be zoned IN4 is not something for which the respondent contends. HIS HONOUR: Onward. EASTMAN: Perhaps I should've answered that question this way: at para 13 and 14 of the respondent's pleadings, says IN4 or B1. That's the pleading. In any event, as I said before, on my case, your Honour would need to be, effectively, wrong to get to that point. You would say "I don't accept Mr Tomasetti's assertion that the land would have been developed for residential purposes in the (insert decade) on broad sweep here. But I think that it might have happened in the early part of the 2000s, based on the evidence that I've seen" and then we know exactly what the council did t support an underlying zoning. As I say, you'd be wrong on the characterisation of public purpose, respectfully, to get to that point, and also disagreeing with me on other facts. But it's open, it's pleaded; that would be the pathway to it; that's how I would put it. Conclusion on IN4 zoning pleading 1. As earlier noted, in early 2013, the Applicants had lodged a planning proposal with the Council seeking to amend the then applicable local environmental plan to reinstate a waterfront zoning (the equivalent of the present IN4), but that proposal was not supported by the Council. Although there were also Class 4 proceedings commenced by the Applicants in pursuit of that planning proposal, those proceedings were discontinued. 2. For present purposes, it is sufficient to note that, as can be seen from the above transcript exchanges I had with the advocates, there is no evidence whatsoever that would provide any basis upon which I could conclude that the hypothetical underlying zoning of the site was IN4. That potentiality, in my assessment, disappeared in the 1990s when the existing use rights which had been associated with the Holmes Boat Shed activities on the site ceased to operate and, after the limited period during which such use rights could be resuscitated, expired. Such potential is now, even in a hypothetical sense, long gone. 3. As Mr Tomasetti submitted toward the conclusion of the above set out transcript passage, what has been involved here for the purposes of determining the underlying hypothetical zoning is, truly, a binary choice – the outcome of which necessarily follows from my determination as to what constitutes the public purpose to be set aside as a consequence of the statutory disregard. 4. Having concluded, for the reasons earlier set out, that the public purpose is to be understood in the fashion advanced on behalf of the Ministerial Corporation, the inevitable conclusion as to the hypothetical underlying zoning is that it is B1 Neighbourhood Centre. It is, therefore, now appropriate to turn to considering what would be the hypothetical development potential for the site based on such a B1 Neighbourhood Centre zoning – a shop top housing development. The form of a B1 development for the site The planning evidence on B1 development potential Introduction 1. It is appropriate to commence consideration of the B1 hypothetical development potential of the site by setting out the evidence of each of the town planners given in their individual expert reports on this zoning. It is to be noted that Mr McKenzie and Mr Chambers, in their individual expert reports, addressed each of the three potential zonings arising from the pleaded cases of the parties – IN4, B1 and R3. It is also to be noted that Mr McKenzie concluded that a B1 underlying zoning was appropriate to be adopted whilst Mr Chambers advanced the position that an R3 underlying zoning was to be adopted. 2. Given the position that an underlying hypothetical zoning of B1 Neighbourhood Centre is that which requires to be addressed to enable the determination of a valuation outcome for the site in these proceedings, it is now appropriate to set out what each of these experts said concerning the potential B1 zoning of the site. Mr McKenzie's individual expert report 1. Mr McKenzie dealt with the three zoning potentialities in his individual expert report (Evidence Book PDF folios 324 to 329) and discussed the hypothetical B1 zoning (Evidence Book, PDF, folios 326 and 327). Mr McKenzie commenced his discussion, saying: 8.3.2 B1 Neighbourhood Centre 205. An overview of the intended purpose of this zone is set out in the Department of Planning Practice Note PN 11-002 and states that: The zone is for neighbourhood centres that include small-scale convenience retail premises ('neighbourhood shops'), 'business premises,' 'medical centres' and community uses that serve the day-to-day needs of residents in easy walking distance. 'Shop top housing 'is permitted in the zone, and other mixed use development may be considered appropriate. This zone should not be used for single 'neighbourhood shops,' as these can generally be permitted within the residential zones. In areas where there is increasing housing density and demand for local retail and business services, a B2 or B4 zone should be considered instead of a B1 zone to cater for expansion. 206. Notwithstanding the above in relation to an IN4 zone, it is recognised that the active use of the acquired land had ceased, and despite assuming the maritime use may well have continued, but for the public purpose zoning, equally, economic circumstances might cause a diminution of the propensity for that use to be viable and an alternative underlying zone for the acquired land sought. 207. Council would likely have considered the B1 zone as appropriate for a number of reasons but mainly: a. this zoning would be a response to the IN4 zone employment potential and NSW Maritime's objection to the IN4 zone; b. a B1 zone would be considered to be consistent with s 9.1 Directions 1.1 Business and Industrial Zones, which is to protect employment land in business and industrial zones - it would replace one employment use with another similar employment use, whereby in my opinion a residential zone would be considered inconsistent with that direction; c. this is the same zone that applies to the nearby Sails Restaurant at Lavender Bay, similarly on the harbour foreshore; d. potentially allows for greater public access relating to the interpretive aspects of the heritage significance of the acquired land consistent with the Harbour REP and Council requirements for foreshore land. This would be consistent with enhancing the appreciation of the history and heritage significance of the acquired land that would be generally accessible (refer the heritage advice of Mr Davies p 9 and p 13); and e. the B1 zone has the potential to create a vibrant and active harbour foreshore waterfront consistent with the Harbour REP and Council requirements as opposed to one secluded and privatised by residential use as proposed by Mr Chambers. 1. Mr McKenzie then set out the terms of the relevant portion of the land use table in the 2013 LEP applicable to the B1 Neighbourhood Centre zone. The relevant provisions of the land use table for this zone have earlier been set out and it is unnecessary to repeat them here. Mr McKenzie then continued his discussion of the B1 zone in the following terms: 209. The principal development standards and controls that would apply to the acquired land under this zone would be the same as above in para 204, with the difference being the required parking and loading facilities any ground level curtilage so as to allow for the interpretative opportunity and context of the slipways and sea walls (refer p 8 of Mr Davies heritage advice). These would be commensurate with the type of uses a hypothetical redevelopment would seek approval for. Any ground floor retail premises or business premises associated with shop top housing would be required to provide suitable loading facilities as a minimum. 210. Council ordinarily does not support the use of mechanical car stacker systems for the provision of car parking. Any proposal to use car stackers would need good justification and likely to be limited in application (ie where in the same ownership or strata lot). Mr Chamber's individual expert report 1. Similarly, Mr Chambers discussed all three potential hypothetical zonings in his individual expert report (Evidence Book PDF, folios 198 to 203). He addressed the hypothetical B1 zoning in the following terms (Evidence Book PDF, folios 200 and 201). He commenced by saying: This is the zoning which applies to nearby "Sails at Lavender Bay" (see Figure 4A). The application of this zoning to the site would have been a response to the waterfront location of the site and it's history of (at least in part) waterfront industrial use and it's potential suitability for a café or restaurant with a residence above (ie. shop top housing). 1. As with Mr McKenzie, Mr Chambers next set out the terms of the provisions of the land use table in the 2013 LEP for the B1 zone. Having done so, Mr Chambers then continued: The zoning would permit, with consent, a development similar to that refused by the LEC in 2020, but with a café or restaurant in lieu of the boat repair facility, noting that in this scenario no reliance would need to be placed on Clause 5.10(10) because the use of shop-top housing would be permissible with consent. This would be a compatible zoning with adjoining public open space, in the same way that "Sails at Lavender Bay" is a compatible zoning with the adjoining zones, include the RE1 Public Recreation zone. However, as with the alternate underlying zoning discussed above under the sub-heading "IN4 Working Waterfront" which takes into account the 'real world' step in the planning process which resulted in the imposition of an RE1 Public Recreation zone in 2013, it does not disregard the public purpose to provide a public reserve along the whole length of the foreshore from McMahons Point around to Blues Point, a project which has been in place since 1948. The first joint expert town planners' report 1. Mr McKenzie and Mr Chambers produced a first joint expert town planning report (Evidence Book, PDF folios 655 to 701). In this joint report, each of them explained why he adhered to the preferred underlying zoning which he had advanced in his individual expert report (McKenzie – B1 and Chambers – R3). They did not discuss, on any contingent basis, any differences in opinion which they might have concerning the appropriate form, here relevant, of a hypothetical B1 Neighbourhood Centre development on the site. Conclusion on the broad town planning position 1. As can be seen from the above extracts of the individual expert town planning reports, although there are a number of constraints on a hypothetical B1 development on the site, as discussed below, there is no disagreement between the town planning experts as to the possibility of such a hypothetical development being approved. It is, therefore, necessary to turn to addressing and determining those constraints. Constraints on any hypothetical B1 development Introduction 1. The first step in determining the valuation to be applied to the site on the basis that the underlying zoning is B1 Neighbourhood Centre on the basis that there would be commercial development beneath a residential apartment taking advantage of the available views is to determine what would be the dimensions of the maximum building envelope reasonably capable of achieving approval by the Council. There are a number of factors requiring to be considered in determining such a building envelope. They are set out below and then, in turn, considered to derive what would be an acceptable hypothetical building envelope. 2. First, however, it is also appropriate to note that such a building envelope definition would be, except perhaps to a minor extent as to the maximum necessary building height, equally applicable to a hypothetical R3-zoned residential development. Such a residential development might, for reasons elsewhere discussed, not necessarily require the same floor-to-ceiling heights at each level as would be the position for a B1 hypothetical development. Such a residential development would, nonetheless, seek to achieve the same overall height as would be appropriate for the approvable shop top housing development, doing so in order to maximise the internal amenity for occupants of the hypothetical residential development. 3. It is also to be noted that, although the presence of the substantial Moreton Bay Fig Tree on the allotment immediately to the west of the site requires to be considered for the purposes of a B1 hypothetical development, it is to be accepted that, in the R3 scenario advanced for the Applicants, that tree would not exist and would, therefore, not need to be considered as potentially impacting on any hypothetical residential development. 4. Having determined, for the reasons explained above, that the underlying zoning for the purposes of the counterfactual development must be B1 and that the hypothetical development resulting from an assessment of what might be achievable in such zone must be addressed in the context of the existing surrounding reserve land to both the east and the west of the site, there are a number of matters (some preliminary and some consequent on others) that require to be determined. Heritage matters 1. The site is in a heritage conservation area identified in the 2013 LEP. As earlier set out in the description of the site in its present state, there are a number of items (both fixed and movable) on it associated with its former ship‑building/ship‑repair use which have, or potentially have, heritage significance. The issue, which arose to be addressed in the context of assessing the development potential of the site, for the purposes of any of the hypothetical zonings, was the extent to which material on the site needed to be retained on the site and how the retention of such material might limit what development could take place on the site in any of the underlying zoning scenarios advanced by the parties. 2. As earlier noted, Mr Brooks and Mr Davies were the heritage experts who had been retained by the parties. Primarily, their evidence addressed issues about the historic nature of the development on the McMahons Point peninsula and how the nature of that development had evolved from the original colonial land grants made to Billy Blue up to and including the foreshore development pattern presently able to be observed during the course of the field inspection. For present purposes, it is however only necessary to consider what heritage constraints exist for any hypothetical development of the site. 3. Mr Davies and Mr Brooks gave oral evidence, as well as providing the written evidence earlier noted. Although this evidence was given concurrently, in a functional sense their questioning by Mr Tomasetti and Mr Eastman was in separate segments for each of the experts. It is to be noted that Mr Brooks appeared by telephone, an appearance which (although attended by some technical difficulties) did not constrain the scope of his evidence, as he had all necessary documentary material available to him electronically. 4. Relevant to the present issue of potential heritage constraints on hypothetical development potential for the site, it is to be noted that the Applicants had commissioned a Conservation Management Plan (CMP) by their consultants, TKD. This conservation management plan was in evidence (Exhibit G, folios 254 to 357). 5. The CMP set out the hierarchy of potential values to be assigned to the various ship‑building/ship‑repair objects (both fixed and movable) presently located on the site and then set out an assessment of each of those items resulting in their categorisation, relevantly, as to whether or not they needed to be retained on site for heritage conservation reasons. It is not necessary to reproduce any extracts of the CMP. It is sufficient to note that it concluded that the two slipway elements and the sandstone seawalls (including their returns into the site on either side of the two slipways) should be retained – although replacement of the rusted slipway rails was appropriate. This retention of heritage fabric in any development scenario was advanced for all the hypothetical underlying zonings. 6. It is also sufficient, for B1 hypothetical development assessment purposes, to note that Mr Davies (Transcript 7 June 2023, page 158, lines 1 to 39), and Mr Brooks (Transcript 7 June 2023, page 123, lines 1 to 9) both agreed that the CMP was an appropriately comprehensive document and provided a proper basis for understanding how any of the hypothetical development proposals would be constrained by the presence of the heritage items which would require to be conserved on the site. In light of this agreement, there were no contested potential heritage outcomes requiring to be determined. 7. As a consequence, consideration of all the other potential development constraints and resolving outcomes for them would be on the basis that any hypothetical B1 development on the site would be subject to a condition of development consent requiring implementation of the CMP. Such a condition would also apply to any R3 residential development. Defining an approvable B1 building envelope The Moreton Bay Fig tree Introduction 1. The Moreton Bay Fig tree located on the reserve to the west of the site requires to be considered on two separate bases as potentially giving rise to restrictions on what hypothetical B1 development might be achieved on the site. Those potential restrictions arise from: 1. the present canopy spread of the tree extending substantially to the east over a large proportion of the site; and 2. the extent to which the root system of the tree might extend in an easterly direction across the western boundary of the site and underneath the present existing structures on the site. 1. The first of these potential constraints requires to be considered to determine what might be the permissible height of the hypothetical development whilst the second requires assessment of the extent to which (if at all) additional excavation below existing concrete slabs on the site might be permitted in order to provide definition of the footings for, and floor structure of, the hypothetical development. The arboricultural evidence 1. A copy of an arboricultural impact report prepared for the Department of Planning, Industry and Environment in August 2019 was tendered as part of the Applicants' bundle of documents. This report was prepared by Mr Guy Paroissien, an expert arborist. It was reproduced at folios 358 to 374 of this bundle. At folios 363 and 364, it sets out Mr Paroissien's conclusions that the extent of pruning of the crown of the Moreton Bay Fig that would be necessary to accommodate the built form of development on the site would be acceptable, subject to conditions concerning management of the pruning. The report also concluded that, subject to arboricultural supervision during construction, there was not likely to be any unacceptable impact on the root system of the Moreton Bay Fig by excavation postulated by Mr Aspinall. 2. Indeed, as I had observed to the parties during the course of the field inspection, past pruning to the tree at several locations in the eastern portion of its canopy adjacent to the site had been undertaken in the past with effective and appropriate collar creation on the limb from which the pruning had taken place. 3. As earlier noted, Mr Castor provided an expert report on arboricultural issues for the Applicants. He was cross-examined by Mr Eastman. It is unnecessary to set out any extracts from Mr Castor's oral evidence – noting that it was recorded in the transcript of 13 June 2023 at page 211, line 48 to page 217, line 29. 4. The questioning of Mr Castor as to the extent of excavation which might be contemplated for the site and the potential for that to impact on any roots of the Moreton Bay Fig Tree that were in what would be regarded as the critical root zone of the tree for the purposes of Australian Standard 4970 of 2009 was a section plan prepared by Mr Aspinall which became Exhibit 7. 5. It was Mr Castor's oral evidence that the excavation extent hypothesised by Mr Aspinall in the sectional schematic in Exhibit 7 would not have any unacceptable impact (or, indeed, any impact) on the root system of the Moreton Bay fig tree. Conclusion on the Moreton Bay Fig 1. It is clear that, provided such pruning as would have been necessary for the purposes of implementing a B1 hypothetical development was carried out by a qualified arborist and in accordance with the requirements of Australian Standard 4373 of 2007 – Pruning of Amenity Trees, pruning of the Moreton Bay Fig in a sufficient fashion to permit implementation of a hypothetical development to a maximum roof height of 8.5 metres (or potentially somewhat higher) above existing ground (that being how the height is to be measured for the purposes of the 2013 LEP) could be undertaken without any adverse impact on the Moreton Bay Fig. 2. It is therefore appropriate to conclude that, for the purposes of the hypothetical B1 development, there would be no unacceptable impacts on the Moreton Bay fig in achieving both the extent of pruning necessary for such hypothetical construction nor excavation to the extent postulated by Mr Aspinall as necessary in order to maximise the potential height of a hypothetical B1 structure to be erected on the site. The concurrent architectural and planning evidence Introduction 1. Schematic plans for hypothetical developments on either an underlying zoning of B1 Neighbourhood Centre or R3 Medium Density Residential basis were prepared by the architects giving expert evidence. The original hypothetical development schematics for the Applicants had been prepared by Mr Rowe of TKD Architects. His schematic designs were based on a three‑level development (two levels addressing the Henry Lawson Avenue frontage) with a hipped roof form. Mr Aspinall of Urbaine Design had prepared schematics for the Ministerial Corporation based on a skillion roof form. Mr Aspinall's schematics in both their original and revised form postulated a skillion roof sloping away from the street and, consistent with Mr Rowe's approach, having a two-storey presentation to Henry Lawson Avenue. 2. Mr Rowe's original design schematics were in the Evidence Book at folios 739 to 762, whilst those prepared by Mr Aspinall (including schematics analysing and responding to those prepared by Mr Rowe) were in expert reports tendered, becoming Exhibits 4 and 6. Mr Aspinall's B1 designs 1. Mr Aspinall produced schematic drawings for two B1 designs that were compliant with an 8.5‑metre maximum height. In each instance, these plans formed part of the A3 plans attached to Exhibits 4 and 6. The schematic for the eastern elevation of each of Mr Aspinall's hypothetical developments was, in its visual presentation form, substantially identical. The substantive conceptual difference between these two designs was that the design in the Exhibit 6 material was based on a three‑level concept, whilst that which was depicted in the Exhibit 4 drawings provided only a two‑level hypothetical zone B1‑compliant development. Mr McKenzie's evidence 1. Mr McKenzie's evidence on the acceptability of Mr Aspinall's three‑level, height‑limit‑compliant design was set out in Exhibit 6 at paragraph 162, a paragraph in the following terms: 162. On the assumption GM has to consider a B1 scenario as at the date of acquisition, GM would advise a hypothetical purchaser or seller that the UDG plans at sheets UDG 017 to 022 (subject to design development, feasibility costing and valuation) represent a development concept for the Acquired Land that in GM's opinion would have high prospects of approval and could be used as a basis for valuation as it would likely be representative of the highest and best use of the Acquired Land assuming a B1 zone under the NSWLEP 2013. The main reasons for this are its compliance with the height of building development standard, the respect embodied in the design to accommodate the heritage features of the acquired land and the stepped design respects the character of the significant exposed harbour foreshore site. Mr Aspinall's general view on developability 1. Mr Aspinall was questioned, at some length, by Mr Tomasetti concerning the prospect of his height‑level‑compliant, three‑level schematic designs being approved by North Sydney Council in the counterfactual circumstances required to be considered in these proceedings. In summary, the position he advanced was that, although he had prepared these schematics in Exhibit 6 to demonstrate that it was possible to design such a compliant three‑level development (whether on a hypothetical R3 basis or a D1 basis as the underlying zoning), he did not consider that such a design would be given development consent. Mr Tomasetti questioned Mr Aspinall on this point (although Mr Tomasetti's questioning was in the context of a hypothetical R3 zone development, for present purposes, that is immaterial). 2. Mr Aspinall trenchantly expressed the view that, in his opinion, no substantial development was capable of being envisaged as approvable for the site. This opinion was at odds with that expressed by Messrs Chambers, McKenzie, and Rowe. In summary, it was Mr Aspinall's position that such a three‑level development (of either zoning typology) – or, indeed, any development whatsoever – would not be approved. 3. The relevant elements of the exchange were in the following terms (Transcript 14 June 2023, page 314, line 31 to page 316, line 32): TOMASETTI: Where Mr McKenzie, expert planner, says that your plan would have high prospects of approval? WITNESS ASPINALL: Yes. TOMASETTI: You didn't express in the report that you disagreed with Mr McKenzie, did you? WITNESS ASPINALL: No, not at that point, no. TOMASETTI: In fact, if you go back to 98, you express what you thought was the highest and best use of the acquired land? WITNESS ASPINALL: Yes, highest and best use but nothing to say most likely to be approved. TOMASETTI: For goodness sakes, Mr Aspinall. A person is-- WITNESS ASPINALL: That's, they're, they're, they're very, very different things. TOMASETTI: A person is coming to you for advice-- WITNESS ASPINALL: Yes. TOMASETTI: --as to what is the development potential-- WITNESS ASPINALL: Yes. TOMASETTI: --for this land? WITNESS ASPINALL: Yes. TOMASETTI: You're saying the highest and best use-- WITNESS ASPINALL: Yep. TOMASETTI: --is what you've drawn in these drawings for an R3 scheme? WITNESS ASPINALL: Absolutely correct. TOMASETTI: Yes, and that means the highest and best use that you will get through a planning decision. WITNESS ASPINALL: No it doesn't, it absolutely does not. They're two entirely different questions. TOMASETTI: Two entirely different things. This is the highest and best use which can never be achieved. Is that what you're saying to the Court? WITNESS ASPINALL: I'm saying it's the highest and best use. TOMASETTI: Which can never be achieved because it won't be approved? WITNESS ASPINALL: Which is unlikely to be achieved. TOMASETTI: Why didn't you say that? WITNESS ASPINALL: I wasn't-- TOMASETTI: Why didn't you say in paragraph 98 for us that whilst this is the highest and best use, it's unlikely to ever be achieved? WITNESS ASPINALL: No, well, I'm, I'm saying it now. That wasn't, that wasn't my brief in this first instance. My brief was, what is the highest and best use on this site within the current constraints? TOMASETTI: What did you understand by the expression, "The highest and best use"? WITNESS ASPINALL: Exactly what I delivered. Maximising the buildable space within the permissible building envelope and setbacks. TOMASETTI: Without regard to whether it was capable of being achieved? WITNESS ASPINALL: I think it's highly unlikely to be achieved, yes, but that's not the highest and best use. The, the two have very little similarity in their words. TOMASETTI: I want to suggest to you that the phrase, "The highest and best use" means the highest and best use to which the land is ever likely to be able to be put? WITNESS ASPINALL: No, I disagree. TOMASETTI: Just tell us for the record, so I can recite what you understand by the expression-- WITNESS ASPINALL: Okay, my brief-- TOMASETTI: --what you think the phrase, "The highest and best use" means? WITNESS ASPINALL: My brief for creating the highest and best use in a hypothetical situation is looking at all the physical planning constraints imposed upon those sites and maximising the built volume within it, appropriate for whatever requirement. I do not see that being linked to an expression of, "And this would certainly be approved" because I think almost certainly it wouldn't. TOMASETTI: You've gone to the trouble of writing a report, preparing plans, showing a development which is unlikely, in your view, to ever be approved? WITNESS ASPINALL: Yes. Consideration 1. I am unable to accept the view expressed by Mr Aspinall that no hypothetical development of any type could reasonably be hypothesised as being approvable in any possible zoning disregarding the public purpose. Whilst there may be circumstances where a site, zoned in a particular fashion, is incapable of being granted development consent because of environmental (particularly ecological) constraints, that is not the position with respect to this site. There is no absolute barrier of the nature addressed by the McCllelan CJ in BGP Properties Pty Limited v Lake Macquarie City Council [2004] NSWLEC 399 that here arise. 2. Whilst there are heritage constraints on hypothetical development potential, for reasons earlier explained, these are limitations and not absolute barriers. 3. I reject Mr Aspinall's assertion that there is no possibility of any significant hypothetical development being approved for the site. It is to be observed that, for the reasons dealt with in this portion of the judgment, a hypothetical B1 shop top housing outcome is possible (and, subject to a successful cl 4.6 dispensation request could be a hypothetical three-level development) with a similar position applying for a hypothetical R3 development (should that later turn out to be the resultant appropriate hypothetical development scenario). The defects in Mr Aspinall's Exhibit 6 schematic for the B1 zoning hypothetical development 1. After court on Wednesday 14 June 2023, whilst reading in preparation for the continuation of the oral evidence of the valuers the following day, I re-examined the various plans prepared by Mr Aspinall that were appended to Exhibit 6. These plans included his schematic plans for a height‑compliant mixed-use development in the hypothetical circumstance that the site should have an underlying zoning of B1. These plans were numbered UDG-018 to UDG-024. The first plan to be noted as relevant for this discussion is UDG–019, the hypothetical ground floor plan for commercial space. This plan depicts, slightly to the east of the centre of the floor plate shown, the location of a lift. It is to be noted that these B1 schematic plans show two levels of development, the first being a ground floor commercial use level and the second, above it, a single residential level containing a three-bedroom apartment. 2. The lift depicted in the commercial space is immediately below the shower recess depicted in the primary bathroom of the residential apartment above. This lift therefore goes nowhere. 3. A second schematic, UDG-020 also depicts the extent of the commercial floor plate of the ground level of this hypothetical development. Toward the north‑eastern corner of this depiction of the commercial floor space there is shown a staircase rising into this commercial space from below. There is no floorplan for any space below. In a similar fashion to the lift in the anomaly described earlier, the staircase also appeared to lead to nowhere. 4. Given that an earlier schematic prepared by Mr Aspinall for a hypothetical commercial element of development on the site had included a lower commercial level (Evidence Book, folio 789), it concerned me that Mr Aspinall had potentially omitted a lower level of possible commercial floor space in his Exhibit 6, B1 hypothetical zone schematic. The Gross Floor Area Analysis Table in his Exhibit 6 schematic proposed only 100 square metres of GFA for commercial space, whilst the corresponding table for the plans for commercial space at folios 789 and 790 of the Evidence Book identified 221 square metres GFA for that commercial development. 5. As I was concerned that there was no explanation for the inconsistencies in the schematics for the hypothetical B1 development (the lift going nowhere and stairs coming from nowhere) and the fact that this schematic may have deprived the Applicants, potentially, of an evidentiary basis of a further significant lowest level GFA for a three-level hypothetical B1 development, I drew these matters to the attention of the advocates, asking that Mr Eastman seek an explanation from Mr Aspinall, with such explanation to be filed and served by noon on Tuesday 20 June 2023 prior to the resumed hearing on the following Thursday. 6. It is not necessary to reproduce the UDG-018 and UDG-024 plans from Exhibit 6 for the purposes of this explanation. 7. As a result of my identification of the anomalies in Mr Aspinall's height compliant B1 zone hypothetical schematic, Mr Aspinall was requested by the Ministerial Corporation's legal representatives to respond to the matters which I had raised. Mr Aspinall's written response was tendered on the morning of 22 June 2023, becoming Exhibit 14. The terms of the questions to which Mr Aspinall was asked to respond and his answers to them are set out below: Question 1: UDG-019 indicates the existence of a lift on the ground floor plan, but there does not appear to be a lift on the first-floor plan (please refer to UDG-021). Your B1 plans of 8 June 2023 show 100m2 of commercial GFA on the ground floor, and do not show a basement level. Is your position that a height compliant B1 development with shop top housing could include a basement level providing additional commercial GFA? Response: The lift location and function has been shown, to serve the commercial level for disabled access and also to provide keyed access t the first-floor accommodation. There is insufficient space to place any further commercial space below the ground floor. It requires a 3300mm ceiling clearance and the combination of this with the residential accommodation + slab thicknesses would exceed the 8500mm height limit by at least 2500mm. Question 2: UDG-020 shows stairs running along the eastern part of the ground floor of your B1 Shop Top scheme. However, these stairs do not appear to be shown elsewhere, other than UDG-023 and UDG-024 in relation to the NLA. Would you please confirm where these stairs lead to? We note that drawing URB-003 in your plans of 3 February 2023 shows stairs running down to the basement plan. Response: These stairs are to allow for access from ground level to the main commercial space with a 3300mm clearance – the actual number of stairs is indicated in the latest plan. Question 3: If your answers to the above questions affect your assessment of the available GFA in a height compliant B1 development with shop top housing, what are the available commercial and residential GFAs? Response: The amended areas are tabulated on the latest plans attached. 1. In turn, Mr Rowe was provided with the opportunity to respond to the above evidence from Mr Aspinall. He did so, with his response becoming Exhibit N. This response was in the following terms: Response to Mr Aspinall's answer to Question 1: i) While there may be insufficient height above ground and tidal levels to fit a basement level in the amended UDG scheme, this is an unnecessary limitation on the potential of the site for a building envelope to be higher, with two storeys above street level and one basement storey below this to achieve three levels in total. ii) The UDG scheme appears to have a Ground Floor six steps lower than the street and while the possibility of a multi-door lift is shown, the only access for a person of limited mobility from the street would be through the garage area between cars and bins which is unlikely to be an acceptable solution to a certifier or access consultant to satisfy the Design for Access and Mobility Australian Standards. A more acceptable solution would be to have generally level access with short, compliant ramps from street level into the commercial space and, if necessary, minimal floor level changes within each floor plate with an internal, accessible lift linking all floors requiring access. iii) Under Clause 2.4.5, Provision P1, table B-2.9 of the North Sydney DCP 2013 related to development in a B1 zone, there is no specific ceiling height specified for a basement level. The ceiling height for a 'Ground Floor' is specified as 3.3m and 'Upper Floors' of commercial space as 2.7m. The absence of any specific ceiling height provision in the DCP for a basement level shows there should be no town planning impediment to achieving additional commercial space on a basement level with a ceiling height of 2.4m or 2.7m within a B1 zone. iv) A fundamental premise of this and other UDG schemes is that the lowest area of the site should dictate the maximum height plane for the building. This is not an accurate reflection of the height of buildings provision of the LEP, nor acknowledges the operation of Clause 4.6 within the instrument. A Clause 4.6 exception could be assumed to be called upon to achieve a 'Highest and Best Use' of the site when consideration is given to the various heritage and other site-specific considerations as were outlined in the Joint Architectural and Planning Experts Report (JER). To quantify the UDG assumptions, the '8.5 metre height limit' shown in drawing number UDG018a reflects the height above the lowest point on the site being the concrete floor of the Eastern slipway. As mentioned in the JER, this is RL 1.8m at the Northern alignment which is up to 3.1m lower than the maximum height on the site at RL 4.92m in the North-western corner. This self-imposed limitation on the height of building has unnecessarily constrained the height of the building to only 5.95m above the footpath level in the middle if the site or, at its minimum, only 5.53m above the footpath in the North-western corner. v) The total plan area of potentially compliant envelope within the setbacks agreed appropriate for the site, i.e. 1m front, 1.5m side and 5.8m rear, is 212m2 while the plan area of the Eastern slipway within this envelope is 56m2. This represents only 26% of the area of the site from which heights may be measured to calculate the height of buildings with all other areas of the site ranging from RL 2.0m to RL 4.92m, a significant increase from the height available above the Eastern slipway at RL 1.8 or lower as it falls to the harbour. It is therefore unnecessary to assume that the maximum height to be achieved for the property should be dictated by such a small component area of the site. vi) It is a reasonable assumption that a two-storey building above street level can be achieved on this site and the resulting ground level would be raised one to two steps, or a short ramp in a commercial scenario, above the natural ground on the footpath in the centre of the site being RL 4.5m. The resulting RL of the ground floor level would allow for a reasonable basement floor below this which would approximately relate to existing ground levels at the back of the Western slipway and would be wholly above any maximum tide level at approximately RL 2.0m. Response to Mr Aspinall's answer to Question 2: i) I believe the staircase in question was a remnant from the drawings of the R3 scheme which showed three floors including the basement. This appears to have been amended in this new B1 scheme and removed to more accurately address the level changes visible in the elevation/section drawing. Response to Mr Aspinall's answer to Question 3: i) As outlined in the previous evidence and the review of the response from John Aspinall to Question 1 above, a three-storey development (applicable to both hypothetical R3 or B1 zonings) can be assumed to be able to be accommodated on the site without unreasonable impacts on neighbouring properties or the public domain. It is therefore more appropriate to consider the total GFA that might be achieved in such a three-storey development, rather than constrain the maximum GFA unnecessarily to what may be available over two storeys. Both the R3 and B1 concept design schemes by TKD Architects reflect the total GFA's of around 368m2 or an FSR of 1:1. 1. These defects in Mr Aspinall's schematic, in the ultimate analysis, do not impact on or undermine my general conclusion that a three-level shop top housing development is capable of achievement, hypothetically, on the site. There is, in reality, no underlying dispute, having chosen the relevant hypothetical B1 development, as to whether it could be achieved – save as to the necessity for a successful dispensation request pursuant to cl 4.6 of the 2013 LEP about compliance with the height of buildings limitation arising from that LEP. The roof form of a hypothetical development 1. The roof form of hypothetical development will impact on the maximum overall height of such a development. In the schematic prepared by Mr Aspinall and the plans prepared by Mr Rowe, differing approaches are taken as to the appropriate roof form to be adopted for a hypothetical development on the site. Mr Aspinall proposes that a skillion roof, sloping towards the harbour, would provide a design which permitted optimisation of floor-to-ceiling heights for, particularly, any three-level development as a proposed outcome. On the other hand, Mr Rowe proposed a more conventional hipped roof development as being appropriate. 2. I discuss below the prospect of a successful hypothetical dispensation request made pursuant to cl 4.6 of the North Sydney LEP. I have concluded that such a dispensation request seeking a modest increase in the maximum height of a hypothetical development (particularly with respect to the north-eastern corner of the development) was likely to be successful and required to be considered as part of the determination of the hypothetical development envelope capable of achieving approval. In such circumstances, I do not consider it necessary to determine whether or not a skillion roof development or a hip roof development would be preferable in the approval process to be hypothesised. This is because if a hipped roof is to be advanced in such a scenario but was to be considered unacceptable by the hypothetical consent authority, substitution of the skillion roof as a lower profile outcome could readily be incorporated into the design. A cl 4.6-dispensation request Introduction 1. I have earlier set out the terms of cl 4.6 of the 2013 LEP. This provision is a beneficial and facultative one providing an avenue for a development proponent to seek to be permitted not to comply with a development standard which would otherwise apply to the site of a development proposal. 2. In this instance, the relevant development standard for which a putative developer of the site for a development in the hypothetical B1 underlying zoning is that which is derived from cl 4.3 Height of Buildings of the 2013 LEP. This clause would impose a height limit of a maximum of 8.5 metres above existing ground level. As earlier noted, existing ground level for the site slopes from west to east downward toward the ferry wharf with there being a small height differential across the frontage. 3. In addition, from the Henry Lawson Avenue frontage to the seawall at the harbour's edge, there is a very gentle slope, a slope which I consider would be imperceptible and not provide any barrier of significance for a hypothetical development on the site. A dispensation request pursuant to cl 4.6 of the 2013 LEP would be one seeking the greatest exceedance to be accepted at the north-eastern corner of the site, with the extent of the exceedance diminishing (but not disappearing) across the site to its north‑western corner. 4. Such a dispensation request would also be based on an excavation of the site in the fashion marked on Mr Aspinall's schematic – an excavation which, on the uncontradicted expert evidence of Mr Castor, would not have any adverse impact on the Moreton Bay Fig. 5. For such a dispensation request to be granted, the request must satisfy the consent authority that the tests set by the clause are met. For the purposes of this analysis, I assume that such a dispensation request has been prepared by the advisers to the hypothetical purchaser in order to satisfy that purchaser that the 8.5‑metre height limit would not act as an insurmountable barrier. 6. Making the assumption that the professional advice to the hypothetical s 56(1) of the Land Acquisition Act purchaser would advise that such a dispensation request would be successful, it is necessary for present purposes to examine whether or not, as a sufficient level of detail, I can be satisfied that this is the case. 7. For this purpose, it is appropriate to set out the tests that are embodied in both cl 4.6(3) and cl 4.6(4)(i) and (ii). These elements of cl 4.6 are in the following terms: 4.6 Exceptions to development standards … (3) Development consent must not be granted for development that contravenes a development standard unless the consent authority has considered a written request from the applicant that seeks to justify the contravention of the development standard by demonstrating— (a) that compliance with the development standard is unreasonable or unnecessary in the circumstances of the case, and (b) that there are sufficient environmental planning grounds to justify contravening the development standard. (4) Development consent must not be granted for development that contravenes a development standard unless— (a) the consent authority is satisfied that— (i) the applicant's written request has adequately addressed the matters required to be demonstrated by subclause (3), and (ii) the proposed development will be in the public interest because it is consistent with the objectives of the particular standard and the objectives for development within the zone in which the development is proposed to be carried out, and (b) the concurrence of the Planning Secretary has been obtained. The town planning evidence 1. Mr McKenzie set out what he considered were the planning controls that would apply to the site if it was hypothetically zoned as B1. He addressed this in paragraph (209) of his expert report: 209. The principal development standards and controls that would apply to the acquired land under this zone would be the same as above in para 204, with the difference being the required parking and loading facilities any ground level curtilage so as to allow for the interpretative opportunity and context of the slipways and sea walls (refer p8 of Mr Davies heritage advice). 1. As can be seen, he referenced the earlier set out standards and controls that he considered would apply if the hypothetical zoning was IN4. He did so at paragraph (204) of his expert report. This paragraph was in the following terms: 204. The principal development standards and controls that would apply to the acquired land would include: a) maximum height of building 8.5m (its's noted that other IN4 zone land has a 10m building height but those areas are in a less prominent location and the 8.5m height matches the scale of nearby development and would lead to a less bulky and visually intrusive development in a significant harbour foreshore setting); b) FSR of 1:1 (it's noted that the other IN4 zone areas have no FSR, but again this control is desirable to limit the size and bulk of any future hypothetical redevelopment of the acquired land due to it significant harbour foreshore prominence). This FSR control is the same that applies to neighbourhood centre zone at the eastern end of Henry Lawson Avenue; c) minimum variable building foreshore setback that is defined by the unzone land and the western slipway; d) side ground floor blank wall - zero setback otherwise 900mm; e) upper level side setback 1.5m (residential); f) front setback minimum of 1m; g) minimum of 1 off street parking space for boat repair facilities and suitable loading space; h) minimum of 1 off street parking space for ancillary residence parking (assuming 1-2 bedrooms); i) heritage listed seawalls and slipways to be retained and maintained; and j) other considerations would include no impact on adjoining vegetation and consideration of site landscaping. 1. During the course of his questioning by Mr Eastman, Mr Chambers was questioned on this point (Transcript 13 June 2023, page 243, lines 7 to 17), saying: EASTMAN: I withdraw the question; it's too broad. I'll ask you something more specific. In order to see what is a relevant consideration, we need to look at the planning controls that apply to the site, correct? WITNESS CHAMBERS: The planning controls that we think would apply to the site, yes. EASTMAN: And, to a large extent, you do not disagree with Mr McKenzie on what they would be, save for the foreshore line? WITNESS CHAMBERS: Correct. Mr Chambers' evidence on a cl 4.6 dispensation request 1. Later during the course of questioning by Mr Eastman, Mr Chambers was interrogated extensively on the question of the need for a successful dispensation request pursuant to cl 4.6 of the 2013 LEP in order to be able to obtain approval for a three-level development on the site. Although the questioning was directed to Mr Chambers in the context of Mr Chambers' evidence concerning the Applicant's position that the hypothetical underlying zoning was R3, the questioning concerning a cl 4.6 dispensation request applies to both the R3 and B1 scenarios. It is unnecessary to set out the entirety of this questioning, but it is appropriate to reproduce four elements from the nine pages of Transcript of Mr Eastman's questions and Mr Chambers' replies. 2. The first is in the following terms (Transcript 13 June 2023, page 244, line 1 to page 245, line 3) EASTMAN: And the principal difference between the Aspinall and Rowe versions is that the Rowe version is three storeys and requires a 4.6 objection to get up, yes? WITNESS CHAMBERS: The Rowe, the Rowe plans for B1 and R3 do not comply with the 8.5 metre building height limitation in the LEP. So, therefore, it would rely on the 4.6 variation request. EASTMAN: It also appears at three storeys from the harbour? WITNESS CHAMBERS: Well, yes, it does, and I think that a building of two to three storeys is one which is highly appropriate for the site, and that's what the current DCP says for the site. It says, it says two to three storeys. 1. The second passage appropriate to reproduce from this evidence is in the following terms (Transcript 13 June 2023, page 247, lines 28 to 47): WITNESS CHAMBERS: …. Mr Aspinall's report circulated on the 8th, doesn't refer to clause 4.6 or variations to the height controls. So, I wanted to make clear that this sight would lend itself to a 4.6 in the same way that some of the waterfront sites lend themselves to 4.6 because they're often on sloping land, and it's not just the sloping land which is relevant as a consideration in 4.6 It's also the excavated nature of the site, so Mr Aspinall's plans which show an 8.5, effectively follow the line of the slipway, rather than the height of the existing ground levels of the land. So, Mr Aspinall's scheme is about just over 5 metres near to the street, when there's 8.5 metre height limit, it's just not, it's just not reflecting the height limit which applies to the site. EASTMAN: You know the distinction between the unreasonable and unnecessary test in 4.6 and the requirement to advance sufficient environmental planning grounds, right? WITNESS CHAMBERS: Yeah, I think there'd be abundant environmental planning grounds to justify a 4.6 in these circumstances. 1. The third extract appropriate to reproduce is in the following terms (Transcript 13 June 2023, page 249, line 19 to page 250, line 2): WITNESS CHAMBERS: Visual impact is something that would be considered for any harbourside development, but from the water. But if you envisage, or try and envisage that there are houses and flats along the southern side of Henry Lawson, the visual impact of an infill, what would be an infill new dwelling, in my opinion very well designed, by Mr Rowe, would have a satisfactory, a very satisfactory appearance from the water. So, you can look at other areas around North Sydney, but are similarly zoned and a similar height limit that were also developed in the 60s, and there's rows of four or five storey, six storey buildings on those lands. I'm not saying that there would be four or five story buildings, I'm saying there would be other buildings built in the 50s and 60s along there, with which this design of Mr Rowe would be compatible. EASTMAN: Yes, so visual impact is relevant? That was my question. WITNESS CHAMBERS: I know the question and I'm answering question. Yes, it is relevant but you've got to consider that visual impact in the context of a developed foreshore, not a park. EASTMAN: Because if it's in the context of a park a 4.6 would be immeasurably difficult to get up, wouldn't it? WITNESS CHAMBERS: I don't think it would be - really, I don't think it would be immeasurably difficult to get up because if one looks at the DCP, the real world, I'm not talking about hypothetical here, the DCP, this says for this site in the context of park either side of the site two to three storeys, no setbacks from ground level, 1 metre from the street, 5.8 metres at rear, approximate FSR of 1:1 and first floor setback 1.5 from the boundary. That, that would be probably more than 8.5 yet that's the controls that have been set in the real world for the site with a park either side, so even in the context of it being a singular building a parkland setting, you can't say that the height that's in Mr Rowe's scheme, in my opinion, is inappropriate. 1. The final extract appropriate to reproduce, a somewhat lengthier one, is (Transcript 13 June 2023, page 251, line 1 to page 253, line 28): EASTMAN: And so what I'm asking you and if you haven't detected already, I'm really switching to the B1 scenario because on the B1 scenario there's not surrounding residential development, there's a park and I'm saying to you, your advice to a hypothetical purchaser would be it would be incredibly risky to think that you're going to get a 4.6 up on a B1 development. WITNESS CHAMBERS: No, I wouldn't say that and I can explain the reasons why. EASTMAN: Okay, go ahead. WITNESS CHAMBERS: The, the - a reasonable and appropriate development under the B1 scenario is shop-top housing. That is development which comprises residential above non-residential and it's a pre-requisite of, for such development to have the ground floor at the level of the street. So think the about neighbourhood shopping centre, think of people walking around doing their shopping, they can go from the footpath into the premises, the non‑residential premises. They don't change grade to get into the commercial premises. So, in Mr Aspinall's B1 scheme, Mr Aspinall, in order to achieve the required floor to ceiling height which you need for non-residential, that's greater than residential, he's set the floor down, which in my opinion would not be something that the consent authority would approve, the consent authority wouldn't approve stairs off the footpath going down to a non-residential space. So, if it's acceptable to have shop-top housing, that shop-top housing seen from the street is going to look something like what Mr Rowe has designed in his B1 scheme. Now, that development's going to come to the street. It's going to extend to the, to the, to the street frontage. However, in this case, the council's DCP calls for a 1 metre setback cause it wants to see a widened footpath so I think that's what Mr Rowe's scheme has done. It's provided that in satisfaction of that desire, and the ground level at the northern part of the site there is from 4.51 to 4.5 to 4.6, and Mr Rowe's building is compliant with the height. It's compliant with the height limit on the northern part of the site. Now, Mr Rowe's building design is, I think, skilfully fragmented so it's not one square building, one rectangular building. It's, it's, it's got an irregular form which means that part of it has got a greater set back from the street. Part of it is closer to the street and at the, at the rear next to the water, part of it extends to what I consider to be the foreshore building line and part of it is set back from the eastern slipway, the heritage listed slipway. Now, the maximum building depth is only about 13 metres, so I - in my opinion, it wouldn't be seen as necessary to step the building down when it's only got a building depth of around 13 metres. What that means as a consequence of the general fall of the land, so the land is falling from about 4.5 at street level in Henry Lawson to the - either side of the land to the top of the, of the sea wall but on the land itself, it has a greater fall because of the past excavation and because of the existence of the heritage slipways. So, there are non‑compliances with the, with the height limit as a consequence of the fall, as a consequence of the excavation, but at the street - on the northern part of the site, the building is compliant. It's within the height limit and quite substantially so if one looks at the - if you like, the habitable space because the top ceiling level is at 11.34. The roof, roof ridge is at 12.9. So, the, the building seen from the street is 6.86 metres high which is what you'd expect for a two‑storey building. So, bearing in mind that appearance from the street, the limited scope for stepping, the compliance with the height controls on the northern part of the site and with the past excavation, all of that in my opinion would go into a clause 4.6 variation request and I think probably more than anything else, the excavation of the site would be seen as something which isn't reflected in eight point - I don't think any reasonable authority would look at the excavation on the site and say, "We insist that the height be 8.5 from here", which is largely what Mr Aspinall has done with his eastern slipway drawings and elevations. I think that the responsible authority and reasonable authority would look at the topography of the adjacent land and would see that the existing high levels, for example on the eastern slipway, are two and a half metres below adjoining ground level, and I don't think that would be held against an applicant. I think an applicant would be given the benefit of a well‑prepared 4.6 and I think it would be, I think it would be supported. EASTMAN: How it's perceived from the street is very important to that answer, is it not? WITNESS CHAMBERS: How it, how it's perceived from the street and from the public domain, whether it's from the street or whether it's from the water is an important consideration in the determination of a, of a DA. EASTMAN: You said from the street, it looks like it's two-storeys? WITNESS CHAMBERS: And what I'm trying to get across is that the height of the building is compliant on the northern part of the site, and that compliant height manifests itself as two-storeys with a picture of - it's less than the 8.5. EASTMAN: And so, from that part of the street, that's how it would be perceived, two-storeys? WITNESS CHAMBERS: Yes, above ground level. EASTMAN: Yes, but-- WITNESS CHAMBERS: If it was B3, you'd have a shop or a commercial or a cafe, a restaurant at the ground level with residential above, but it's - you'll see in Mr Rowe's design, it's closer to the street at the north eastern corner than it is at the north western. It steps back. EASTMAN: The reason this property has such commanding views is because it is in a location where it can see a lot of things, the Harbour Bridge? WITNESS CHAMBERS: True. EASTMAN: The Opera House? WITNESS CHAMBERS: True. EASTMAN: All of the buildings in the CBD that are high enough? WITNESS CHAMBERS: True. EASTMAN: And the obverse of that - converse of that, I should say, is you can see it from them? You can see that it is a highly visible building in a park on this B1 scenario. Correct? WITNESS CHAMBERS: Yes, it's, it's visible within a park but it's seen, it's seen against the backdrop of the sandstone wall. Sorry, I don't - I, I, I failed to refer to that when I was talking about the clause 4.6 because clause 4.6 is often succeed or fail if there's a non-compliance and that non-compliance is taking away a view. Because of the sandstone cliff being 13 metres high, the dwellings above the cliff will not have any impedance of their existing views as a consequence of a - not height non-compliance on the subject site. Consideration 1. It is not necessary, for present purposes, that I draft and critique what would be encompassed in the detail of a cl 4.6 dispensation request prepared by the professional advisers to the hypothetical purchaser. It is sufficient, I consider, that I set out the contextual matters requiring to be discussed in such a request on the assumption that the request would be competently professionally prepared. 2. The determinative factors that would be addressed for the purposes of demonstrating satisfaction of each of the four elements contained in the constituent parts of cl 4.6(3) and (4) of the 2013 LEP are, in a B1 hypothetical development context: 1. The isolation of the site as a consequence of it being surrounded by the existing public reserve elements – in this regard, the potentiality for the users of the park to be able to view the heritage items from the park areas to the east and west; 2. The backdrop of the cliff on the northern side of Henry Lawson Avenue would be cited to demonstrate the lack of impact on the outlook from any of the residences on the southern side of Warung Street located at the top of the cliff; 3. The agreement by the town planning witnesses in these proceedings that a three‑level presentation of a development to the harbour was acceptable would also be anticipated by the professional advisers to the hypothetical purchaser; and 4. For a B1 hypothetical development, the dispensation request would also describe the presence of the Moreton Bay Fig Tree and the softening effect that the presence of that tree's canopy would have on the visual presentation of such a hypothetical development when viewed from either the harbour or from the more eastern portion of the existing public reserve. 1. For present purposes, it is sufficient to conclude that the hypothetical purchaser would be advised that there was a sufficiently good prospect of a successful cl 4.6 height dispensation request that the necessity to make such a request would not act as a disincentive to transacting with the hypothetical vendor. It is not necessary for there to be absolute certainty that such a dispensation request would be granted. In all the circumstances, I am satisfied that the hypothetical purchaser, relying on proper professional advice, would accept that there was a sufficiently good prospect of such a height dispensation request being successful that the prospective purchaser would conclude that a purchase price based on the assumption that a hypothetical B1 development would achieve approval from the Council and would transact on that basis. 2. However, such a hypothetical purchaser would also be advised to (and would) make an allowance for risk that the cl 4.6 dispensation request might be unsuccessful. Although being advised that this risk was a modest one, nonetheless, the prudent hypothetical purchaser would adjust the price at which that purchaser would transact to reflect that risk. This is discussed further in the valuation exercise with respect to this hypothetical development. Any issues associated with parking requirements 1. The site (although only two parking spaces would likely be accommodated on it in the hypothetical B1 development) does not have, in my assessment, any parking issues in any assessment of the development potential of the site for the hypothetical three-level BI development with which I am dealing (a similar position would also apply with respect to the R3 zoning development). This is because I am satisfied that the Council would conclude that the immediately proximate availability of a regular bus service from the ferry wharf and of the ferry service itself from the ferry wharf would mean that that public transport availability was a sufficient offset of any insufficiency of parking on the site when developed. The planning role of the 2013 DCP 1. It is also to be noted that, in the assessment of any hypothetical B1 development for the site, the matters set out in 9.8.8 of the 2013 DCP will also need to be considered. The terms of this provision have earlier been set out. However, one element of its terms requires to be noted and one to be discussed specifically. The provision to be noted is that the 2013 DCP expressly says that a two or three storey built form is acceptable. The present hypothetically approvable built form is, subject to being granted a cl 4.6 dispensation, of a three-storey built form. There is, therefore, no conflict between the proposed hypothetical B1 development and the terms of this element of the 2013 DCP. However, the 2013 DCP also sets a control which would impact the hypothetical development's built form here being considered. That provision is in the following terms: P3 Until the site is purchased for public use, the site may continue to be used as a boat building or repair facility with ancillary residential accommodation. No more than 50% of the gross floor area may be used for residential purposes and must be located above the ground floor level. 1. The way that a development control plan is to be approached was dealt with by the Court of Appeal in Zhang v Canterbury City Council (2001) 115 LGERA 373; [2001] NSWCA 167 (Zhang). The leading judgment was delivered by the then Chief Justice, Spigelman CJ, from which, at [75] of his Honour's decision, three propositions emerge: 1. The first is that although this Court has a wide-ranging discretion in dealing with development applications, the discretion is not at large and is not unfettered; 2. Second, the provisions of a DCP are to be considered as a fundamental element in, or focal point to, my decision-making process, particularly when there are no countervailing issues relating to compliance with the local environmental plan; and 3. The third proposition is that the provisions of a DCP directly pertinent to the application are to be given significant weight but are not to be regarded as determinative. 1. However, s 4.15(3A)(b) of the EPA Act was a provision inserted in that Act in response to, in part, the decision of the Court of Appeal in Zhang. It contains what might be regarded as a modestly more permissive position than that which is to be derived from Zhang as I have earlier observed. The provision reads: If a development control plan contains provisions that relate to the development that is the subject of a development application, the consent authority: (a) … (b) if those provisions set standards with respect to an aspect of the development and the development application does not comply with those standards - is to be flexible in applying those provisions and allow reasonable alternative solutions that achieve the objects of those standards for dealing with that aspect of the development. 1. There are two matters which would be advanced in support of the proposition that this two-level, 50% + 50% development proscription should not constitute a barrier, in the circumstances, to a hypothetical approval. 2. First, it is clear that the terms of cl 9.8.8 of the 2013 DCP were clearly intended to be directed at the re-establishment of a possible IN4 working waterfront style of development on the site rather than the hypothetical B1 zoning development that would be the subject of the hypothetical application to the Council. 3. Second, given that the question of height exceedances and the necessity for a cl 4.6 dispensation to have addressed in detail the various tests in cl 4.6(3) and (4), it would be expected that the elements of that dispensation request would also have sought to validate the acceptability of non-compliance with the 50% + 50% element in the 2013 DCP's controls for the site. 4. In this context, Mr Chambers' evidence – particularly concerning the acceptability of such a development when viewed from the harbour and against the backdrop of the cliff on the northern side of Henry Lawson Avenue – could be expected to be accepted. However, this element of the 2013 DCP is also an additional facet of the risk necessary to be taken into account in the process of deriving the valuation to be ascribed to the site for the hypothetical B1 development. Conclusion on the form of the hypothetical B1 development 1. I have earlier explained why I have rejected the propositions advanced by Mr Aspinall as to why no three‑level hypothetical redevelopment of the site would be capable of being approved. I have also accepted the agreed position between Mr Chambers and Mr McKenzie that the built form of such hypothetical development could be permitted to breach the height of the existing structures on the site, resulting in a modestly improved floor-to-ceiling height (and thus amenity) of the three‑level B1 schematic prepared by Mr Aspinall and attached to Exhibit 6. 2. I have also concluded that, for issues of acceptability of the visual impact of a three-level design, when viewed from vessels on the harbour or from the southern shores of the harbour opposite the site, a raked, sloping roof of the nature proposed by Mr Aspinall is likely to be preferable to the hipped roof form (with its resultant higher ridgeline) proposed by Mr Rowe in the TKD schematics. 3. I am also satisfied that, to the extent that Mr Aspinall has expressed concerns about reflectivity from the extent of the glazing that would exist on the southern façade of a three-level hypothetical redevelopment, such concerns could be resolved at the detailed design stage in the fashion discussed in his oral evidence. These broad conclusions are equally applicable to any hypothetical redevelopment of the site, whether one hypothesised to be responsive to an underlying R3 zoning or to an underlying B1 zoning. 4. Given that I have concluded, for the reasons earlier explained, that the proper construction of the statutory framework within which this acquisition has taken place necessitates the conclusion that the existing reserve areas to the east and west of the site along the foreshore do provide the physical setting for the counterfactual assessment of what development might be permitted on the site, this leads to the conclusion that an R3 hypothetical zoning is for those reasons to be rejected and a B1 hypothetical development of the three-level form proposed by Mr Aspinall in his B1 zone schematic attached to Exhibit 6 (but with a higher roof level) is that which is capable of approval and is to be adopted for the purposes of deriving the appropriate valuation outcome for the site. 5. However, achieving a hypothetical development within the building envelope for which I have concluded it is potentially available for a B1 development on the site is contingent on a successful dispensation request made pursuant to cl 4.6 of the 2013 LEP. Success in such a hypothetical dispensation request is not without risk even though the assumption is to be made that such a request would be properly and professionally prepared. 6. Although it would be advanced on the basis described by Mr Chambers in his responses to questioning from Mr Eastman, there can never be any certainty that such a dispensation request would succeed given the evidence of Mr Chambers as to the rate of success of such requests made of the Council. For this reason, although valuation of this B1 hypothetical development should be undertaken on the basis of the form I have concluded is likely to be acceptable, a valuation allowance will need to be made for the risk arising from the necessity for this height dispensation request. Quantification of that risk is addressed in the next portion of this judgment. Valuation of the B1 hypothetical development The Applicants' purchase of the property 1. The Applicants purchased the property by an exchange of contracts in June 2009, with settlement taking place some nine weeks later. A copy of the contract for this transaction is in evidence, becoming Exhibit 12. The contract price recorded in the contract is $7.5 million. 2. During the course of his questioning of Mr Dale, Mr Eastman put the proposition to Mr Dale that the contract was not a simple one confined to a transaction purely for acquisition of the freehold title to the site. This line of questioning was in response to the suggestion in his expert report that the transaction by which the Applicants acquired the site was the best evidence of its market value (subject, always, to adjustments for time). It is also to be noted that Mr Garnsey had expressed the view that he considered that the Applicants had paid too much for the site on a freehold transaction basis. 3. Mr Eastman took Mr Dale through the terms of the special conditions forming part of the purchase contract. It is not necessary to set out the detail of the matters contained in the special conditions to the acquisition contract. It is sufficient to note that these conditions contained additional elements that were separate from the mere acquisition of the freehold title to the site. This included, for example, the vendor assisting the Applicants to obtain a relevant lease from the Maritime Services Board (as it was then known). 4. There is no evidence as to what might be the value of these ancillary benefits provided by the vendor to the Applicants. It is sufficient, for the present, to note that I am not satisfied that the transaction by which the Applicants became the owners of the property provides any proper basis of how the value of the property might be derived for the purpose of these proceedings. The B1 hypothetical development valuation evidence The attack on Mr Garnsey's evidence – his mathematical imprecision 1. At the commencement of the concurrent oral evidence of the valuation experts, Mr Eastman asked Mr Garnsey whether there were any corrections which he needed to make to his calculations. Mr Garnsey replied that there were, with him identifying the nature of, and report locations where recorded, the corrections which he needed to make. A sheet correcting the two tables where errors had been identified became Exhibit 10. 2. In response to subsequent questioning by Mr Tomasetti, Mr Garnsey accepted that he had not discovered one significant set of errors but had only understood that he had recorded a number of value elements in one of his tables as negative elements when they should have been positive ones after this error was pointed out to him by Mr Eastman in a pre-hearing conference. 3. These errors and other matters arising out of Mr Garnsey's written and oral evidence caused Mr Tomasetti to submit, in his closing oral submissions, that I should place no reliance on Mr Garnsey's evidence. Mr Tomasetti's oral closing submissions provide an adequate summation of the basis upon which he advanced this proposition (Transcript 22 June 2023, page 545, line 41, to page 546, line 27): TOMASETTI: What's even more compelling about my submission here is that Mr Garnsey made some tables which contain critical errors in mathematics. He had the adjustments for time around completely the wrong way, and he had the totals in the column of the table completely wrong by 10%. And when you did the analysis, it gave different end results to the comparable sales. But it didn't lead him to change his $12 million figure one iota. It didn't seem to matter what the figure was that he arrived at through his comparable sales method. That figure of $12 million was cast in stone and I makes no sense. It's not the comparable sales method. There must be a change to that figure of 12 million if you correct your table and make substantial corrections, I think to the tune of some millions of dollars in some instances, there must be a change if you are doing the method faithfully. I also need to observe that Mr Garnsey, it appeared he was aware of some of his errors in the table. One error, I think I've got it right, the adjustment for time he became aware of a long time ago. It doesn't really matter. He became aware of the adjustment in the summation, I think through the assistance of Mr Eastman, who was no doubt preparing his case assiduously as he always does. And he drew that to the attention of Mr Garnsey, close to Mr Garnsey giving his evidence. But Mr Garnsey was aware of the other error - I think he said in his case - for some considerable time. He might've even said a week or more. Before the site view says my junior. But he didn't tell anybody about it. And we were ready to cross-examine him. Your Honour would've seen that and inferred that from the cross-examination of Mr Garnsey about these mathematical errors, only to find that the table was corrected at the last minute as he got in the witness box. But those corrections don't strike at the heart of the problem, so far as Mr Garnsey is concerned. And that is the adjustments that were made in light of the corrections made no difference to his end value. Some may say in light of the mathematical errors in those tables, how can I place any confidence in anything that you say, Mr Garnsey? I submit you can't. There were other tables that Mr Garnsey had errors in as well and we've addressed those in our written submissions. 1. I am not satisfied that the black/white proposition advanced by Mr Tomasetti with respect to Mr Garnsey's evidence is an appropriate approach to the extent to which I should approach the totality of Mr Garnsey's evidence. 2. However, I am satisfied that I should adopt a cautious approach to Mr Garnsey's evidence – a cautious approach reflected in my following analysis of the necessary valuation elements for the hypothetical B1 development for the site. A slightly higher B1 schematic development 1. In addition to the earlier described defects in Mr Aspinall's B1 zone schematic in Exhibit 6, I also considered it appropriate to seek the opinion of the valuers as to what adjustment, if any, each of them would make if a B1 zone development based on Mr Aspinall's Exhibit 6 schematic was permitted to have a roofline that was as far above existing ground level as the ridgeline of the existing development on the site as depicted in Mr Aspinall's schematic. As a consequence, I asked a question of the valuers on this point. The question and their answers were (Transcript 15 June 2023, page 408, line 15 to page 409, line 46): HIS HONOUR: Gentlemen, for both of you, in your consideration of Mr Aspinall's three level height compliant developments that are in his schematics in exhibit 6 for both B1 and R3, what difference, if any, would it make to your valuation conclusions, in either an R3 or a B1 hypothetical, if those designs were permitted to be constructed to the height of the existing buildings on the site, with resultant amenity improvements because there would be slightly greater floor to ceiling heights available for each level? WITNESS DALE: Your Honour, can I sight the actual plans we're talking about? HIS HONOUR: Yes, I think they're in exhibit 6. WITNESS DALE: Are they in the court book or? HIS HONOUR: They're attached to the joint architectural and planning expert's report that was the subject of the examination. TOMASETTI: I have a copy of exhibit 6 if it helps. HIS HONOUR: Yes. Gentlemen, I would propose to explain what I'm talking about by taking them to UDG 018, which is the B1 plan, but it's not different at all between the R3 and the B1. WITNESS GARNSEY: Sorry, your Honour, what was the image number? HIS HONOUR: UDG 018. WITNESS GARNSEY: 018. WITNESS DALE: We have that, we have that image, your Honour. HIS HONOUR: Be careful with the microphone or you'll deafen the monitor. You have that? WITNESS DALE: We have that image? HIS HONOUR: You will see the blue dotted line is the 8.5 metre height limit, do you see that? WITNESS DALE: Yep. HIS HONOUR: If you go to the area immediately above the louvers at the left hand end, that is the seaward end of the development, you will see there is a faint dotted red line going up. Above the blue point-- WITNESS DALE: Yep, yep, yep. HIS HONOUR: You see that? It then turns and runs towards Henry Lawson Avenue? WITNESS DALE: Yep. HIS HONOUR: That is the roofline of the present structures on the site. You will see that that is somewhat across its full length, the blue dotted line. What I want to know is, if Mr Aspinall's development was to go upward to be compliant with the red dotted line, as opposed to the blue dotted line, thus permitting higher floor to ceiling heights on the three levels below the red dotted line, does that in any way materially alter your valuation conclusions for either the R3 or the B1 zone hypothetical that I have to deal with? WITNESS DALE: Your Honour, I've essentially operated off GFA, assuming a prestige development. So I've assumed that the GFA I've got to deal with would be prestige. So to answer your question succinctly, no, it wouldn't impact my valuation. Provided the GFA wasn't impacted, I would, I would be happy. HIS HONOUR: My understanding is, for Mr Aspinall's schematic, it does not alter the GFA. What it would do would permit, for example, the lowest level, which, from my memory of Mr Aspinall's level, would have a floor to ceiling of 2.45 metres, it would permit that to be raised a little and it would permit the 2.7 metres above also to be raised a little. WITNESS DALE: I proceeded on the basis that the accommodation that I'm dealing with would be prestige. So I've already assumed that it's good quality and I wouldn't seek to uplift my, my assessments. HIS HONOUR: Mr Garnsey? WITNESS GARNSEY: Yeah, I, I pretty well did the same thing and it, it may make a 2.5% adjustment to land value, GFA rate, maximum, but it'd be difficult to - without running through the figures, that would be just a high level. Mr Dale's valuation report in reply 1. Mr Dale provided a valuation report in reply dated 5 May 2023. It is unnecessary to set out the entirety of this document. However, there are two elements of it concerning a hypothetical B1 development which warrant reproduction. The first of them relates to what should be the conclusion I draw as to the nature of the hypothetical purchaser who might purchase the site to undertake a B1 development. The second element in this report addressed the valuation methodology, which had been adopted by Mr Garnsey. It is sufficient, for present purposes, that I set out the relevant portions of Mr Dale's report on these topics. These are extracted below: 9. Likely Purchaser The Respondents Valuation Report adopts a restaurant/café use for the purpose of assessing market value. The report states that "the appropriate valuation methodology is an indicative residual analysis of the proposed scheme together with direct comparison on a $/m2 of potential GFA to sales of development properties whilst acknowledging the limited comparability due to the unique nature of the subject property". "The residual method of valuation is an appropriate valuation methodology where there are limited homogeneous comparable sales to provide guidance as to market value". I agree that residual analysis is an industry accepted valuation approach in circumstances where there are no or very limited directly comparable sales evidence. There is however two points that need to be made in respect of assessing the market value of the Property, assuming an underlying zoning of B1, by reference to residual analysis: ▪ The utility and rigor of any residual analysis is entirely reliant upon the accuracy of the gross realisation. The Respondents Valuation Report has assessed the gross realisation based on developing to an FSR of 0.583:1. The McKenzie Report nominates an FSR of 1:1. Accordingly, I am of the view that the gross realisation of the proposed restaurant/café with a GFA of 221m2 is substantially underestimated. Consequently, the residual analysis is not robust. ▪ The derivation of market value by reference to residual analysis reflects the view that the most likely purchaser will be a developer seeking to develop the property for profit. I do not share this view. It is my view that the deep water harbourfront location and exceptional views of the Property are highly likely to command the greatest attention from residential owner occupiers whether the land is zoned R3 Medium Density Residential or B1 Neighbourhood Centre. These owner occupiers will not formulate their bids by reference to generating a development profit. Their pricing will first and foremost be guided by harbourfront residential sales and if available, harbourfront B1 sales. They will not be looking to develop the Property to generate a development profit but the opportunity to reside in a self-designed building in an exceptional location. Valuation Methodology 10. Respondent's Assessment The Respondent has assessed market value compensation, predicated on a B1 underlying zone, by undertaking two valuation approaches. The first approach utilises residual analysis wherein no residential component is contemplated and development costs including a profit and risk margin are deducted from the estimated gross realisation associated with the sale of the restaurant café upon completion. There are, as with any residual analysis, a multiplicity of assumptions including gross realisation based on an FSR of 0.583:1, development timeframe, development costs and profit margin. The robustness of the derived land value is susceptible to the accuracy of the assumptions. The derived land value is $4,300,000 which reflects $11,725/m2 of site area and $19,457/m2 of GFA (221m2). The second approach utilises comparable sales analysis. The report confirms that no directly comparable B1 zoned waterfront sales were sourced. Five sales were referenced, two in Bondi Beach that were zoned B4 Mixed Use and two in Manly that were zoned residential. None of these four sales had water frontage. The fifth sale was at Kurraba Point and was harbourfront. It involved a site of 4,240m2 zoned residential and the sale appears not to have completed. I will examine this sale further in preparing the Joint Expert Report. The sales evidence illustrated a broad range of capital rates including $11,792 to $56,114/m2 of site area improved and $13,035 to $22,591/m2 of potential GFA. No adjustments were undertaken for location, market movement, views or harbourfront access. A capital rate of $20,000/m2 of GFA was adopted as being reasonable for the subject property. A market value under this approach of $5,000,000 is adopted based on an FSR of 0.8:1 at $20,000/m2 = $5,877,400. Then 13% has been deducted from this sum to account for the risk of securing development consent. The residual amount is $5,000,000. This reflects $17,453/m2 of GFA. 11. My Concerns with Respondents B1 Assessment Succinctly, my concerns with these two approaches are: ▪ The residual analysis assumes the highest and best use will be as a development site for a restaurant/café with an FSR of 0.583:1. The purchaser will be a developer seeking a development profit. A residential component is not contemplated. In contrast, it is my view that the most likely purchaser and the purchaser most likely to pay the highest price, will be an owner occupier who will develop the property to reside and work in. ▪ The direct comparison approach is based on a different FSR of 0.8:1. The sales have not been adjusted for varying characteristics. The market value has been discounted for the risk of securing development consent. I am unaware of any planning evidence suggesting development consent may not be secured. 12. Dale - B1 Assessment I am advised by Mr Bob Chambers that in his opinion a 'shop top' residence could be developed on the Property to reflect an FSR of about 1:1 assuming an underlying zoning of B1 Neighbourhood Centre and the incumbent heritage conservation requirements. In association with his advice, he has provided potential layout drawings prepared by TDK architects (see copies overleaf). Mr Chambers has confirmed that of the potential GFA of 368m2, some 155.2m2 could be used for residential accommodation and 213.2m2 could be used for commercial accommodation. I am of the view that a prospective owner occupier would formulate their bid having regard to the necessity of two separate uses within the freestanding building. A residential use on the top level and a commercial use (albeit for their use) on the lower levels. This necessity under a B1 zone would be less attractive than a purely residential use under an R3 zone. The B1 zone would command a reduced market value relative to the R3 zone. I have assessed the market value for the Property based upon an R3 zone at $25,000,000. Based on an FSR of 1:1 this reflects about $67,935/m2 of GFA. I have ascribed $10,550,000 to that portion of the potential GFA under a B1 zone that could be used for purely residential purposes. My calculation is 155.2m2 of GFA @ $68,000 = $10,553,600, say $10,550,000. I have ascribed $4,800,000 to that portion of the potential GFA under a B1 zone that could be used for purely commercial purposes. My calculation is 213.2m2 of GFA @ $22,500 = $4,797,000 say $4,800,000. I have assessed the market value of the Property assuming an underlying zone of B1 at $15,350,000. My calculation is $10,550,000 for that portion of the potential GFA that can be used for residential purposes plus $4,800,000 for that portion of the potential GFA that can be used for commercial purposes. Critical to my assessment is the purchaser being an owner occupier of the whole development. Part of the development will be a prestige residence and part will be prestige commercial accommodation. 1. It is to be noted, in the calculations set out above by Mr Dale, he has made no allowance for construction costs, an allowance which, as I understand it, is necessary when undertaking a valuation on a hypothetical development basis when the values are derived from improved properties rather than from a vacant site. To the extent that the above elements of Mr Dale's B1 shop top housing hypothesis might be accepted, the valuation he derives would require further consideration because of this. Mr Garnsey's initial assessment of a B1 value 1. Mr Garnsey addressed the B1 hypothetical land value in section 9.2 of his expert report. At pages 24 to 28 of this document, he addressed sales evidence of existing leasehold properties, to derive values per square metre of NLRA. 2. Given that the appropriate basis, I am satisfied, for valuing the commercial portion of the site is to do so on a GFA basis as it is to be developed hypothetically for an owner/occupier, valuation on a rate per square metre GFA is appropriate. 3. At page 29 of Mr Garnsey's report, he commences the process of deriving a rate per square metre GFA for the site. He does so by considering five sales. Three of these five sales are of residentially zoned development sites whilst two of them are B4 mixed use development sites. 4. Mr Garnsey advances no credible evidence as to why it is appropriate to use the residential sites for this purpose. However, it is to be noted that he sets out his analysis in a table on page 37 in his report (section 9.4 Valuation Calculations – direct comparison) setting out the rates per square metre GFA he calculates for each of these five analysed properties. 5. It is unnecessary to set out the details of the entirety of this analysis. It is, however, appropriate to reproduce his commentary that he makes with respect to this analysis. It is in the following terms: The sales evidence illustrates a broad range of $11,792/m² to $56,114/m² of Site Area and $13,035/m² to $22,591/m² of GFA depending on property specifics such as; location, size, physical site characteristics, planning controls, development milestones achieved (i.e. planning risk profile) and redevelopment specifics (i.e. average apartment sizing, realisable unit value potential and unit mix). The subject property is considered to generally lie within the range outlined above as whilst it enjoys the superior aspects of being a waterfront parcel with expansive harbour views, it is limited to a lower capital value use of restaurant café which is inferior to residential use and also has heritage and practical site constraints. On balance, having regard to these considerations a GFA Rate of $20,000/m2 would be considered reasonable. There is also the issue that whilst a general FSR of 1:1 has been attributed to the site in the Town Planning Report, the achievable FSR has been assessed at 0.6:1 in the Architects Report. I consider that a hypothetical purchaser would assess that there is a potentially higher development yield outcome than that assessed and would consider that with such an unusual property there may be scope to obtain a DA somewhere between 0.6:1 and 1:1. I consider that whilst there is no certain formula for such a discount that 25% to the full FSR allocation would not be an unreasonable assumption for an upper range market value assessment of the property. 1. He then reproduces, in table 5 on page 38 of his report, his direct comparison calculations. He does so on the assumption of three different floor space ratio calculations (one for the 0.60 FSR advanced by Mr Aspinall; one based on a 1:1 FSR (effectively that which I have concluded reflects the appropriate development B1 hypothetical yield); and a third being at a midpoint struck between the other two. 2. He has, for each of these, adopted a land value per square metre of GFA of $20,000. With respect to the 1:1 FSR calculation, he has applied a 25% discount that he considers appropriate to be allowed for the risk of obtaining development consent to such a proposed development. I elsewhere explain both what I consider is the appropriate (significantly less) discount appropriate for such risk and why, in any event, such risk is priced into Mr Lawson's construction calculations. I therefore pay no heed to this element of Mr Garnsey's analysis. 3. However, I note, for present purposes, his adoption of a land value of $20,000 per square metre GFA as appropriate for the hypothetical B1 development with which I am dealing. The joint valuers' report on the B1 zoning assumption 1. Mr Dale's contribution to the joint valuers' report on the B1 zoning assumption was in the following terms: B1 Scenario 128. I disagree with Mr Garnsey that the market value of the Property in June 2021 was $5,000,000 based on an underlying zoning of B1. I also disagree with his assessment at Table 6 herein. I hold this opinion because: 129. Such an assessment is not supported by the most comparable sales evidence – the sale of the Property itself in June 2009 (twelve years earlier) for $7,500,000 in open market circumstances. Both valuers confirm that market values have grown significantly in the subsequent years. Furthermore, the actual sale in 2009 reflected an inferior zoning to the underlying zoning required for compensation assessment. 130. The assessment is predicated on the highest and best use of the Property being the development of a small-scale café/restaurant style premises for on-sale and profit. 131. The assessment is predicated on the purchaser being a property developer who would discount their bid to reflect acquisition, development and holding costs as well as a profit and risk margin. I disagree with the highest and best use being a small scale café/restaurant development as well as the purchaser being a property developer, motivated by profit generation. 132. Should the court find that the underlying zoning is B1, I am of the view that the highest and best use of the Property is for 'shop top housing' – a permitted use. I hold this view because the market value under this use would exceed the market value of the Property for a small-scale café/restaurant development for profit. The class of purchaser that would generate the strongest demand and market value for the Property would be an owner occupier. 133. The purchaser would not be motivated to undertake a small-scale development for profit but by developing a prestige freestanding residence and business premises, on Sydney Harbour, for owner occupation and use. 134. The owner occupier purchaser, in preparing their bid under a B1 zone, would have regard to sales of both prestige harbourfront residences as well as prominent, strongly located, business sites. 135. Their bid would reflect the market related pricing associated with both elements of the premises to be owner occupied – a prestige harbourfront residence and prestige harbourfront business premises. 136. The demand for owner occupied residential/business premises on Sydney Harbour with iconic views would be very deep and pricing very competitive. 137. Purchasers of this class are not difficult to imagine as real-life examples are personified in the dispossessed owners. 138. I am of the view that Mr Garnsey has not provided a convincing explanation as to why the 2009 sale of the subject property, at 50% more than their assessed market value 12 years later, should be totally disregarded. With the exception of market movement, it is the most comparable sale. His sales at 3 and 5 Bay View Street, Lavender Bay are of elongated sites where the majority of the accommodation will not benefit from the harbour views. 1. Mr Garnsey's contribution to the joint valuers' report on the B1 zoning assumption was in the following terms: B1 Scenario 70. My B1 assessment is set out in my Statement of Evidence based upon a 2 level retail premises at 0.6:1 with a market value of $5,000,000. 71. Having regard to the Supplementary Joint Town Planning Report RC has advised that 72. Shop Top Housing at 1:1 FSR would have very good prospects of being achieved. The plans in Annexure C to the Supplementary Town Planning Report show 2 levels of commercial space with a 3 bedroom residence above. 72. I consider that shop top housing would require business premises or retail premises with public trade interface and as such there would be a clear delineation between the value of the lower floors versus the higher residential value on the top floor. 73. I have not had time to re-investigate the residential apartment market in McMahons Point, however I consider the upper limit of on completion values of completed prestige residential apartments would be $70,000/m2 of gross floor area. Adopting 1/3 of this rate as the land value component would result in a land value component of $23,333 which I have rounded up to $25,000/m2. 74. I would ascribe values based upon the 2 town planning scenarios as follows. NG Table 6 Valuation Calculations B1 Basis Site Area FSR GFA GFA Rate/m2 Market Value RC Scenario Commercial GFA 368.0 0.6 213.2 $15,000 $3,198,000 Residential GFA 368.0 0.4 155.2 $25,000 $3,880,000 Total GFA 368.0 1.0 368.4 $19,213 $7,078,000 GM Scenario Commercial GFA 368.0 0.6 221.0 $22,624 $5,000,000 Consideration Introduction 1. As can be seen from the above discussion concerning the hypothetical B1 shop top housing development of the site, there are several preliminary observations which need to be made as to the approach to be taken to derive a value for that hypothetical development. 2. First, as earlier set out, the Ministerial Corporation's Amended Points of Defence in response to the Applicant's Amended Points of Claim proposed that only a two-level B1 development was achievable on the site. The consequence of such a two-level development would necessarily require, for it to contain a residential portion, that the upper level be a single-storey "shop top housing" apartment. 3. I have also set out earlier the definition of "shop top housing" in the 2013 LEP. This definition warrants repetition in this valuation context. The definition is in the following terms: shop top housing means one or more dwellings located above the ground floor of a building, where at least the ground floor is used for commercial premises or health services facilities. 1. In my former role as Senior Commissioner, I had cause to consider the operation of this definition in the context of the 2013 LEP (Arco Iris Trading Pty Ltd v North Sydney Council [2015] NSWLEC 1113). Although here, unlike the issues that arose in that case (and in the other relevant cases there cited – Hrsto v Canterbury City Council (No 2) [2014] NSWLEC 121 and Blackmore Design Group Pty Ltd v Manly Council [2014] NSWLEC 164 – Blackmore v Manly), none of the potential definition occasioning hurdles requiring to be considered as potential barriers to "shop top housing" arise in the context of the hypothetical B1 development for the site. 2. The decision in Blackmore v Manly makes it clear that, for the purposes of any dwelling being designated as "shop top housing", a designated parking space for such development can be disregarded. Indeed, in present circumstances, nothing has been raised on behalf of the Ministerial Corporation suggesting to the contrary. 3. Although the definition of shop top housing is, apparently, self-explanatory, there is no statutory definition of "ground floor" contained in the 2013 LEP. Equally, the three shop top housing cases cited above were all heard and determined in circumstances where there was no dispute about what was the meaning of the term "ground floor". What required to be addressed, in differing fashions, was what was involved for residential development to be above the ground floor – the question of what comprised the ground floor, in each instance, not being in contention between the parties to the proceedings. 4. As best I have been able to ascertain, in addition to there being no statutory definition (past or present) in New South Wales that provides assistance with understanding the concept of "ground floor", there is equally nothing able to be ascertained, from my research, where there has been any judicial determination of how that concept is to be understood. This is particularly a matter of concern in the present circumstances where there is a slope across the Henry Lawson Avenue frontage of the site from the west toward the ferry wharf. 5. Neither the town planning nor the architectural evidence addressed, for the purposes of a hypothetical B1 development, what was able to be understood by the words "ground floor" in the definition of shop top housing. 6. Whilst there was an active contest between the parties as to whether or not a request made pursuant to cl 4.6 of the 2013 LEP for a hypothetical B1 development was likely to succeed and what should flow from such consideration (those matters already having been addressed by me in this judgment – the conclusion being that it was likely that such a dispensation request would succeed but gave rise to a risk factor requiring to be priced as part of the valuation exercise), there was no contest between the parties as to the maximum extent for which such a dispensation would be sought nor was there any evidence about, or consideration of, how high a roofline, at the Henry Lawson Avenue frontage would be permissible with such a dispensation. 7. It is not appropriate that I speculate, in any detail, as to what the detailed design form of an approvable B1 development might take. It is sufficient that I note the requirement in the definition of shop top housing requires that the commercial level be on the ground floor and that, to the extent that there is residential development above such a floor-to-ceiling height compliant ground floor commercial development, the maximum height of the overall development must be one capable of being approved after a successful dispensation application made pursuant to cl 4.6 of the 2013 LEP. These parameters must also encompass the entirety of the residential component being above the commercial element in the sense such requirement is to be understood from the limited range of decisions of this Court earlier cited (ones which explained how the concept of shop top housing was - or was not - to be understood). The nature of the developer 1. The position, implicit in the evidence given by Mr Garnsey, is that the hypothetical developer in a B1 scenario would be a professional developer who would seek to construct whatever shop top housing configuration was achievable and, subsequently, separately "on sell" the commercial and residential components of it. As a consequence, Mr Garnsey proposed that there be a significant profit and risk component necessary to be deducted from the realisable value of a hypothetical B1 development on the site in order to take account of this professional developer being the hypothetical purchaser of the site for such purposes. 2. On the other hand, Mr Dale advanced the proposition that the nature of the B1 hypothetical development capable of approval was such that its developer was to be assumed to be an owner/occupier. He adopted this position in his individual expert report and in his contribution to the joint expert evidence with Mr Garnsey when addressing the B1 scenario. 3. As I understood his evidence, this owner/occupier scenario was to be assumed to be the position whether the hypothetical B1 development was one of two storeys or one of three storeys. 4. I am satisfied that the position advanced by Mr Dale as to the hypothetical developer of the site being an owner/occupier is to be accepted. The likelihood of a separate commercial operation being appropriate from such residential component that is able to be approved is, under the circumstances of what would be the necessary design, to be accepted as fanciful. This is because, on any hypothetical design format proposed by either Mr Rowe for Mr Aspinall, the maximum potential parking on any such schematic depicted was for three vehicles. 5. Whilst I have elsewhere explained why the Council would accept that two parking spaces would be sufficient for an approved development on the site, such a position could only arise if the whole of the B1 hypothetical development was in common ownership and operation. There would be no realistic planning prospect that the Council would approve separate commercial and residential occupancies on the site with only two (or even if three) parking spaces were provided. This sets aside, separately, any consideration of whether an accessible parking space would need to be provided to serve any such development). 6. In this context, it is to be noted that the nearby Sales Restaurant provides its parking not on its Henry Lawson Avenue frontage but on its northern frontage as was observed during the course of the site inspection. 7. It is also to be accepted that parking limitations on Henry Lawson Avenue (there only being limited parking spaces on the northern side of the street and only along a limited portion of the street to the west of the site) also means that any operation of the hypothetical commercial portion of a B1 development must rely on patron access either by public transport or utilising the very limited on-site or off-site parking in the vicinity. All of these factors, I am satisfied, necessarily lead to the conclusion that the hypothetical B1 developer would be an owner/occupier. 8. In this context, noting the agreement of the planners that it was appropriate that any hypothetical development needed to be one which presented as being a two-storey development at the Henry Lawson Avenue frontage, the resultant hypothetical B1 design can still achieve a three-storey form for owner/occupied premises. Given that the commercial space must present as being ground floor, such a development can still include a basement level. 9. As a consequence, I remain satisfied that a cl 4.6 dispensation request would, as earlier discussed, likely be successful to the extent of permitting a floor to ceiling height of 2.7m rather than the minimum 2.4m for the residential apartment. Such a slight increase in floor to ceiling height would permit the construction of a more attractive residential component – one more befitting the site's location. Deriving a B1 site valuation outcome Introduction 1. It is therefore appropriate to derive a value for the hypothetical B1 development for the site on the basis that: 1. there will be two commercial levels with a basement and ground floor with two parking spaces – it being irrelevant whether one or both of those parking spaces was to be designated as being specifically for residential or commercial purposes; and 2. the uppermost level of the hypothetical B1 development should be valued on the basis of it being a single residence – there not having been any submission during the course of the hearing that any residential component on the site should be other than a single dwelling (for example, there was no suggestion that a single residential level what was capable or appropriate of being divided into two very modestly sized apartments). Given the totemic view, which provides the dominant purpose why the hypothetical purchaser would seek to transact to obtain title to the site, it is appropriate to assume that the residential component any B1 development would seek to capitalise on that view to the maximum extent possible in order to create as prestigious a dwelling as was possible. 1. As I later discuss in my contingent R3 valuation, I have accepted that, for the purposes of deriving an analysed value from the sale of 11 Bay View Street, Lavender Bay, it is necessary to make an adjustment allowance for the risks associated with seeking dispensation from compliance with cl 4.3 of the 2013 LEP by making a dispensation request pursuant to cl 4.6 of that LEP. For present B1 zone valuation purposes, I am satisfied that it is also necessary to make a modest adjustment to what is the appropriate derived value of the residential component of the hypothetical B1, "shop top housing" development for the site. Doing the best I can as the judicial valuer, I am satisfied that the allowance which should be made for this purpose is included in the cost of the residential component of the hypothetical B1 development of the same 2.5% adjustment I have determined is appropriate for that risk in the hypothetical R3 development scenario. For reasons later set out, I am satisfied that Mr Lawson's quantity surveying costings incorporate, for a three-level hypothetical development, a pricing element which includes the necessary cl 4.6 dispensation risk. 2. As I have now defined the parameters of the hypothetical B1 development capable of achievement on the site in the counterfactual position with which I am engaged, it is now necessary to determine how a single valuation outcome is to be derived for that hypothetical development. 3. During the course of his oral closing submissions, I had a lengthy exchange with Mr Eastman about whether or not it would be necessary, when I reached a conclusion on the nature of the B1 hypothetical development, to require further quantity surveying work in order to derive a valuation outcome. This exchange is recorded in the transcript of 29 June 2023 from page 604, line 28 to page 614, line 37. It is sufficient, for present purposes, to summarise what is to be drawn from this exchange, rather than setting out any lengthy extracts from it. The propositions he advanced can be summarised as follows: 1. Mr Lawson had costed, in his expert report dated 13 June 2023, the two-level Urbaine Design B1 scheme advanced by the Ministerial Corporation as the appropriate hypothetical design outcome and had similarly costed the three-level B1 design outcome from TKD advanced on behalf of the Applicants; 2. Mr Garnsey had done a residual valuation analysis of each of these designs incorporating Mr Lawson's costings with that analysis being set out in Table 9 (the Urbaine Design scheme) and Table 10 (the TKD design); 3. Mr Garnsey's residual valuation analysis adopted a conventional and appropriate methodology to value each of these schemes; 4. the valuation approach adopted by Mr Dale concerning the B1 valuation process was not such a residual valuation but was some form of un-nominated hybrid valuation utilising a process not conventionally recognised for the purposes of valuing a scheme which incorporated the residential and commercial components in a B1 scheme. As a consequence, Mr Eastman submitted Mr Dale's B1 valuation approach and outcomes were to be rejected; and 5. these factors, necessarily resulted in me being faced with a simple binary choice – this being whether I adopted the value derived by Mr Garnsey in Table 9 (thus accepting the Ministerial Corporation's proposed B1 outcome) or Table 10 (thus accepting the Applicants' proposed B1 outcome). 1. Although I accept the broad proposition of binary choice advanced by Mr Eastman, I am satisfied that it is not as simple as he proposed. There is, I am satisfied, a binary methodological choice between the more complex (and set out in detail) residual development valuation set out by Mr Garnsey in Tables 9 and 10 and the less precisely detailed approach adopted by Mr Dale (particularly noting that Mr Dale's outcome makes no allowance for deduction of the costs of constructing a hypothetical B1 development). In this regard, the choice is a simple one between the two approaches. 2. Because Mr Garnsey's approach is both structured as a conventionally undertaken residual valuation analysis and contains all relevant necessary computational detail, whereas Mr Dale's approach to the B1 analysis task lacks this detail and is one which, although superficially similar to a residual valuation analysis, as a matter of fact, is not such an analysis, it is appropriate to accept that Mr Garnsey's broad approach is to be accepted. 3. Given the conclusions which I have earlier set out in some detail as to the nature of the hypothetical B1 development to be adopted for the counterfactual valuation process on this underlying zoning, the inevitable conclusion is that the TKD hypothetical three-level design is that which is to be valued in the fashion advanced by Mr Garnsey. 4. That, therefore, demands consideration of Mr Garnsey's Table 10 in order to derive a value for the site in this counterfactual scenario. However, adopting the approach set out in Mr Garnsey's Table 10 does not mandate the adoption of the numerical inputs which he makes to derive his resultant valuation outcome. 5. I am satisfied that there are a number of deficiencies in Mr Garnsey's Table 10, deficiencies resulting in the necessity to identify changes required by either the removal of some of his hypothesised inputs or adjustments to other hypothesised inputs. I therefore now turn to address the detailed computational elements of Mr Garnsey's Table 10. Detailed consideration of Mr Garnsey's Table 10 Introduction The hypothetical development proponent 1. Mr Garnsey has based his analysis on the assumption that the hypothetical B1 development proponent would be a professional developer who would seek to build and then, separately, on-sell the commercial and residential components of the development. 2. I have earlier explained why I have accepted Mr Dale's proposition that the likely hypothetical B1 developer would be an owner/occupier of the site. The consequence of that earlier determination means that Mr Garnsey's 2% selling cost allowance and his 12% profit and risk allowance (ones only necessary to be allowed for his development proponent type) are to be discarded for the purposes of deriving a Table 10 outcome. 3. I explain below why the risk associated with seeking a cl 4.6 of the 2013 LEP height compliance dispensation (and the necessary cost allowance to be made for it) are encompassed in Mr Lawson's costing analysis. There is no necessity, therefore, to cost that risk element separately as an item in Mr Garnsey's Table 10 analysis. The entirety of this profit and risk element can therefore safely be removed from Mr Garnsey's valuation of the TKD three-level scheme. The southern residential terrace absence deduction 1. Given the comparatively modest size of the three-bedroom apartment capable of being incorporated as the shop top housing element of the B1 hypothetical development, the development proponent would not seek to incorporate a south facing balcony (despite the spectacular views which would be obtained from it) because of the lack of solar amenity of such a space and the necessity to observe an appropriate foreshore building line setback. 2. As a consequence, to the extent that Mr Garnsey has incorporated a discount in his derived residential component value for this, that discount is to be removed in the necessary recalculation to derive a Table 10 valuation outcome. It therefore follows that the value for the residential component in Mr Garnsey's Table 10 should be the same as the value he ascribes for the residential development component in his Table 9. Valuation of the commercial space 1. Mr Garnsey has primarily valued the commercial space on the basis of a hypothetical rental valuation based on a rate per square metre of net lettable area (NLA) in the joint expert report. That approach is only appropriate in the professional developer proponent model – a model which I have rejected. The appropriate approach to the commercial element is not one based on any NLA calculation, but one which is to be derived by adopting a rate per square metre GFA for this space in a conventional fashion for an owner/occupier hypothetical B1 outcome. Given that, as I have adopted an owner/occupier site development, it is appropriate to adopt the approach advocated by Mr Dale for separate valuations of the residential and commercial portions. I am satisfied that it is appropriate to accept the commercial value per square metre GFA advanced by Mr Dale for this purpose. Mr Dale's explanation of his derivation of this rate is not implausible and, taking a Caruso approach (Sydney Water Corporation v Caruso and Ors [2009] NSWCA 391), is to be accepted (noting the not too dissimilar rate of $20,000 per square metre GFA derived by Mr Garnsey as earlier set out from his individual report). 2. It therefore follows that the rate of $22,500 per square metre GFA should be applied to the two levels of commercial development incorporated in the B1 hypothetical development I have concluded is achievable on the site in the counterfactual case. Mr Lawson's pricing includes the relevant risk 1. Mr Lawson's second expert quantity surveying report (13 June 2023) set out a number of items at paragraph (9) explaining the methodology which he had adopted for the purposes of preparing that report. At (9)(h), he said: 2. Based on my understanding of the project, the extent of design undertaken and experience on similar projects, I have allowed a percentage allowance (15%) which recognises a provision for unknown and known risks that the project will have to accommodate. 3. At paragraph (22), Mr Lawson listed nine items which he had excluded from his costing advice. It is not necessary to set out these exclusions. For present purposes (in the context of what I have set out from Mr Lawson's paragraph (9) concerning risks), it is sufficient to note that Mr Lawson has not listed costs associated with obtaining development consent from the Council for the proposed project. 4. In his detailed costing of the Applicants' B1 scheme (Attachment 2 to this report), Mr Lawson includes, in addition to a contingency allowance of over $650,000, significant costs for preliminaries; for design and consulting; and for statutory fees and charges. These further items total over $1m. 5. Given that development approval process costs were not listed in Mr Lawson's exclusions, the necessary inference is that those costs are incorporated in Mr Lawson's costings (likely to be encompassed in one or more of the just listed costing items). As a consequence, to the extent that I have earlier noted that a risk allowance of 2.5% needs to be made for the risk associated with the necessity for a cl 4.6 dispensation for non-compliance with the otherwise applicable height of building limit, I am satisfied that these items in Mr Lawson's costings must necessarily incorporate such development application costs and, therefore, encompass the 2.5% risk margin I have identified as necessary. 6. The consequence of this conclusion was earlier discussed in my detailed consideration of the risk elements contained in Mr Garnsey's Table 10 – being his residual analysis calculations for the TKD B1 hypothetical development which I have concluded is that for which it is probable (subject to the cl 4.6 risk) would receive development consent from the Council. An adjustment to Mr Lawson's TKD B1 scenario costing 1. Mr Lawson's costings of this hypothetical development, however, are not to be accepted uncritically. To the extent that Mr Lawson's costings are based on the observation on page 4 of his 13 June 2023 report concerning the existing fig tree, Mr Lawson noted: Existing Fig Tree The existing fig tree located at the western boundary will most likely be significantly impacted by TDK's [TKD's] proposed redevelopment design. Without specialist advice the exact extent of tree pruning is not known, however, it is expected to be extensive. Given the maturity of the fig tree, I have included a provisional allowance of $50,000 for the arborist advice and tree lopping services. 1. The assumption which underpins Mr Lawson making this allowance is contrary to the written and oral arboricultural evidence earlier addressed in my consideration of the potential impacts (or lack of significant impacts) that redevelopment of the site would have on that fig tree. Given the conclusion of the arboricultural evidence and drawing on my experience in my former roles as a Commissioner and, subsequently the Senior Commissioner, in hearing and determining hundreds of applications made pursuant to the Trees (Disputes Between Neighbours) Act 2007, (and the evidence given in a range of those cases concerning pruning cost estimates given by arborists) there is no validity in this allowance. The appropriate allowance – erring on the side of caution – would be $15,000 for the cost of both the limited pruning which would be required and the limited extent of arboricultural supervision needing to be undertaken, from time to time, during construction processes. As a consequence, Mr Lawson's costs in that regard need to be reduced by $35,000. 2. This adjustment also needs to be made to Mr Lawson's costings before those costings are carried forward to underpin the final valuation calculation to be derived from Mr Garnsey's Table 10. The R3 hypothetical development A contingent residential valuation Introduction 1. I have earlier explained why the determination of the public purpose and, thus, the triggering of the statutory disregard in s 56(1)(a) of the Land Acquisition Act defines a path to a valuation outcome necessarily based on a hypothetical B1 underlying zoning. 2. Resolving that issue inevitably led to the exclusion of the necessity to determine what would be the quantum of market value compensation to which the Applicants would be entitled had the outcome been an R3 underlying hypothetical zoning. 3. My conclusion rejecting an underlying residential zoning arose, as earlier explained, from what I considered to be the proper construction of the statutory basis upon which the site was compulsorily acquired by the Ministerial Corporation. That conclusion is potentially amenable to appeal pursuant to s 57 of the Court Act as a question of law. 4. During the hearing on 22 June 2023, I indicated to the advocates that I was prepared to contemplate, if they considered it appropriate, writing a section of this decision addressing what would be the resultant valuation outcome on the basis of the rejected public purpose. I proposed that this, if I was able to undertake it in a timely fashion, had the potential to assist the parties resolve an outcome on the alternative valuation path if I was held to be in error in my conclusion concerning the public purpose. The advocates subsequently advised me that such an approach, if I was able to adopt it, would be appropriate. 5. I therefore now turn to consider the valuation path if the hypothetical underlying zoning was R3 Medium Density Residential. 6. After the completion of the field visit, the legal representatives of the Applicants prepared a document which set out the location of the comparable sales relied upon by the valuers; the sale price of each sale; and the date of that sale. This document contained not only a photograph taken toward each of the properties but also (with one exception) photographs taken during the course of the field inspection looking outward from each sale property to provide a record of the view enjoyed from the sale property in each instance. This document became Exhibit P. 7. The exception noted above was that no outward view of what would be seen from the combined property sale at 2-4 Stannard Street Neutral Bay was inadvertently omitted from Exhibit P. To rectify this omission, a copy of such a photograph depicting the outward view from this sale was tendered, becoming Exhibit Q. 8. Although the field inspection notes set out earlier discussed the progress of the inspections and referenced the sites viewed, it is convenient to set them out here as a single list: South of the harbour 6 Castra Place, Double Bay 2A Castra Place, Double Bay 42 Wolseley Road, Point Piper 1 Wingadal Place, Point Piper 4 Cove Street, Watsons Bay North of the harbour 17 Elamang Avenue, Kirribilli 27 Elamang Avenue, Kirribilli 2-4 Stannards Place, Kirribilli 11 Bay View Street, Lavender Bay 3 Bay View Street, Lavender Bay 5 Bay View Street, Lavender Bay The site 1 Henry Lawson Avenue McMahons Point Consideration of the appropriateness of the sales relied upon Introduction 1. It is appropriate to repeat, in this context, the description advanced on behalf of the Applicants of the site and its residential development potential. Mr Tomasetti, in his opening oral submissions, submitted (Transcript, 5 June 2023, page 7, lines 16 to 31): TOMASETTI: We have to identify how the land would have been zoned but for the proposal or the carrying out of the public purpose, and the applicants' case is it would have been zoned R3 medium density. The respondents' case is that it would not have been zoned for residential purposes, it would have been zoned IN4, an industrial waterfront type, light industrial type zoning. Alternatively, it would have been zoned B1, neighbourhood business, or E2, environmental conservation. We reject those alternates. What we say in the amended points of claim, that given this subject, the subject site, and given the likely development as Mr Chambers says that would have occurred in the 60s, 70s, and 80s, this area of foreshore would have been developed for residential purposes. We have to accept the land as it is at the date of acquisition in its then state, zoned as the Court finds as it would have otherwise been zoned, but for the public purpose, and then we have to imagine how the market would have responded to the offer of the subject land if a for sale sign was placed on it, settlement 11 June 2021. 1. The potential for residential development on the subject site was submitted by Mr Tomasetti to be in the following terms (Transcript, 5 June 2023, page 7, lines 46 to 47): TOMASETTI: Possibly, we would venture to suggest, the most valuable land in Australia in terms of a residential opportunity. 1. This statement of what would be the residential potential and its outlook has not been the subject of any substantial challenge during the course of the proceedings. Whilst any such residential development would be subject to the building envelope constraints earlier addressed in my discussion of the B1 hypothetical development, this does not, in my assessment, derogate in any relevant fashion from the broad development aspiration hypothesised by Mr Tomasetti as described above. 2. Even in the hypothesis advanced on behalf of the Applicants that there would have been existing residential development along the south-facing waterfront of McMahons Point in an underlying hypothetical R3 zoning, there can be no doubt, I have concluded, that the anchoring attraction of the site is not the quality of the building and its internal finishes which might be hypothesised but the iconic views able to be achieved from a three‑level residence capable of hypothetical development on the site. 3. For their various comparable sales' analyses, both Mr Dale and Mr Garnsey made adjustments for each of the other sales they considered in order to make an allowance for the differences in outlook from each of those comparable sales relied upon when compared to the view available from the site. It will be necessary, later in this consideration, to discuss further how that anchoring view might define the nature of the potential hypothetical purchaser of the site and the market within which the hypothetical transaction would take place for the purposes of the transaction mandated by s 56(1) of the Land Acquisition Act. The built form of a residential development 1. I have earlier explained why a three‑level development was acceptable as the foundation for valuation in a B1 Neighbourhood Centre development hypothesis. Given that the requirement in the DCP for the floor-to-ceiling height of the primary level of a commercial development to be 3.2m does not apply to a residential development and the more conventional 2.7m floor-to-ceiling height could be adopted for levels of a residential development, a three-level hypothetical residential development could easily be accommodated within the building envelope I have determined is appropriate in my consideration of the B1 Neighbourhood Centre hypothetical development. 2. Indeed, postulating a residential development within the building envelope I have determined would be acceptable for a B1 hypothetical development and would enable slightly higher floor-to-ceiling heights than 2.7m in an R3 development – leading to the ability to develop a residence appropriate to the market positioning that would be warranted as a consequence of its iconic view outlook. The valuers' comparable residential sales Introduction 1. Although Mr Garnsey flirted with a process of defining a residential hypothetical development on the basis of deriving a residential rate per square metre GFA, I am satisfied that such an approach does not warrant any detailed consideration. The entirely conventional approach to be adopted is that of an analysis of such comparable sales as were appropriate, adjusting those sales as necessary to derive a value for the site. The attack on Mr Garnsey's evidence – his residential sales evidence 1. I have earlier addressed Mr Tomasetti' attack on Mr Garnsey's evidence because of matters of mathematical imprecision that he was obliged to acknowledge during the course of the hearing. 2. For the purposes of the valuation of the B1 hypothetical valuation exercise, I have indicated that I felt constrained to consider Mr Garnsey's evidence with an appropriate degree of caution. The same proposition relates to my consideration of Mr Garnsey's analysis and adjustment of the 11 Bay View Street, Lavender Bay sale in deriving an adjusted value of the site on an R3 Medium Density Residential basis. 3. In reality, Mr Garnsey's evidence comprised not only the mathematical matters which where he had acknowledged errors or where Mr Tomasetti made criticism of his approach (the adoption of the $11 million-$12 million range being an instance of this) but his evidence also encompassed his reasoning as to why he regarded some of the sales which he and Mr Dale had discussed in joint conferencing were not truly comparable for the purposes of the valuation exercise required in these proceedings if the underlying zoning of the site was R3 Medium Density Residential. Although Mr Tomasetti's valid criticism of Mr Garnsey's mathematical approaches warrants a deal of caution in my approach to his evidence, when considering whether I should adopt Mr Garnsey's approach or Mr Dale's approach, I am not satisfied that I should adopt a blanket rejection of the entirety of Mr Garnsey's residential valuation evidence. 4. However, I later approach Mr Garnsey's analysis and adjustment of the 11 Bay View Street, Lavender Bay sale with the appropriate degree of caution. Defining the pool of the comparable sales 1. The pool of potential comparable sales must be considered through the conceptual lens set by s 56(1) of the Land Acquisition Act, this being the requirement that the hypothetical transaction is to be between a willing but not anxious vendor and a willing but not anxious purchaser. Necessarily implicit in such a hypothetical dealing is that any real-world sale relied upon for the purpose of analysis, adjustment and derivation of the relevant value to assist in proceedings such as these is that any transaction relied upon for such a purpose must be in a market in which a hypothetical vendor and hypothetical purchaser would transact. 2. Although I have had, in past Class 3 proceedings, occasional valuation experts who have advanced the proposition that any two transactions of a broadly similar type can be addressed for such a value‑derivation process, such a high, wide and handsome approach is not to be accepted. 3. For present purposes, it is necessary to consider what sales have been relied upon by Mr Dale and/or Mr Garnsey for their residential valuation analyses and whether they are all appropriate to be relied upon for the purposes of the necessary analysis and adjustment process. I now turn to that task. 4. As can be seen from the notes of the field inspection earlier set out, a range of sale sites relied upon by Mr Dale and/or Mr Garnsey were inspected from the water. During the course of this inspection, at my request, the valuers took photographs from our inspection vessel outward from the location of each of the inspected sales. This was done because the images which had been reproduced in their written reports had been ones taken looking toward the relied‑upon‑sale properties. Because of the importance of the available views from the site and the necessity to have regard to such views as were available, in comparison, from each of the relied upon sales, that outward view was, for reasons later addressed, critical in my consideration of whether or not the various sales relied upon were truly sufficiently comparable to be able to be subject to the analysis and adjustment process necessary. 5. I had an exchange with Mr Tomasetti about the reservations I held concerning whether or not, in broad terms, the sale at Stannards Place was in the same market as 11 Bay View Street (accepting that the Bay View Street sale was an appropriately comparable one for present purposes) and also the broad proposition concerning whether or not the eastern suburbs sales relied upon by Mr Dale were validly to be regarded as comparable for present purposes. The exchange was in the following terms (Transcript, 22 June 2023, page 570 line 13, to page 571 line 37) HIS HONOUR: It would seem to me, and it's not unusual for this to happen in the role of a judicial valuer, to say, "Look, I think that the following comparable sales relied on by valuer X or valuer Y or both of them do not in fact reflect sales that would be in the market engaged with by the hypothetical purchaser and the hypothetical vendor for the subject site. TOMASETTI: Yes, I accept that and agree, but the question then is does the sale tell us anything of relevance? In my submission at least this can be deduced from the sale, because it has a land size of 1,258 square metres which is apparent, summed up in table 3 on p 995, and because the 11 Bay View Street sale has a site area of 1,404 square metres, obviously they're not identical, but they're both large parcels. The one at Stannards Place I think we would, the Court would readily accept the submission that the improvements upon seem past their usable life. That's why Mr Garnsey has placed only $140,000 on the added value of those improvements in the table. You had a sale there in October 2020 and you go across to 11 Bay View Street, Lavender Bay, which was a sale that occurred later in time. It can be adjusted for time and was, and it can be adjusted in terms of the value of the improvements on 11 Bay View Street, but admittedly not with great ease. But you can notionally come up with a comparison of 11 Bay View Street with 2-4 Stannards Place, that hypothetically they might be seen as having a different land value by a significant margin. HIS HONOUR: No, I understand all of that. TOMASETTI: And they had the same areas. HIS HONOUR: I understand that but-- TOMASETTI: What's the reason for that, we would respectfully, rhetorically ask. It can only be location as shown in exhibit Q. HIS HONOUR: Yes, I understand that. But the more, I suppose the different proposition I'm putting to you is if the Stannards Place property was put on the market and the 11 Bay View Street property was put on the market, apart from people who were tyre kickers as it were, you wouldn't expect the potential purchaser of one to be a potential purchaser of the other. TOMASETTI: I entirely accept that. HIS HONOUR: All right, and it seems to me at least on some of what I understood Mr Garnsey was saying about the Eastern Suburbs, the same on his view potentially applied there, whereas I didn't understand - although I stand to be corrected on this - that Mr Dale or Mr Garnsey questioned the proposition that 11 Bay View Street, subject to the necessary adjustments, wasn't something that would be considered by a purchaser of the subject site as well as the purchaser of 11 Bay View Street. TOMASETTI: Yes. HIS HONOUR: Given our different nature of development size and all the rest of it that had to be adjusted for. But if somebody is going to want to essentially purchase them new at the site, they are purchasing the same view, effectively, subject to all the other adjustments that are necessary at 11 Bay View, and it occurred to me, at least, that on one basis of argument, I'm not expressing a conclusion, 11 Bay View is the most appropriate comparable of all sales, that is that with which either valuer engages, whether I accept the adjustments that are proposed or not. TOMASETTI: Mr Dale that 2-4 Stannards Place was not really comparable, and he discarded it, and we would urge your Honour to do the same thing. As to the closest comparable being 11 Bay View, indeed, that site is the closest site to the subject land. It has much the same sort of view. The difficulty with the sale, as a comparison, is that it's a developed site and it has a larger site area. HIS HONOUR: I understand that. TOMASETTI: And they are the things which stand in the way of its easy comparison and easy adjustment. HIS HONOUR: I understand. 1. It is to be noted that, in the context of potential differentiation between sites observed as relied upon by the valuers for their comparative analyses, there has been a consistent emphasis on the iconic nature of the view from the site as differentiating the site from all other relevantly potential properties. The valuers placed emphasis on what was said to be the unique nature of the view toward the southern shore of Sydney Harbour and, in particular, the iconic view of the Opera House being framed by the Sydney Harbour Bridge in the middle ground between the site and that iconic structure. The Applicants' case had, as a foundational element of the basis for the value asserted for the property in either hypothetical underlying zoning scenario, the proposition that this view was the dominant driver underpinning and establishing the significant value said to attach to the site. A north/south market divide 1. In his individual expert valuation report in reply, Mr Garnsey addressed the question of whether the various sales relied upon by Mr Dale, ones which were located on the southern side of Sydney Harbour, were, in fact, ones which would transact in the same market in which the site, if offered for sale, would also transact. He said (Evidence Book, folio 944, paragraph 22 to 24): 22. I consider that in general terms the eastern suburbs are considered to be Sydney's most exclusive and valuable prestige residential real estate, most particularly Point Piper which is considered Australia's most prestigious suburb borne out by record prices. 23. Further, Point Piper is a separate market sitting above the general Sydney prestige market as it is has the cache of being Australia's premier residential address, home to many wealthy individuals and mansions such as Fairwater and Elaine and landholdings on Point Piper would be considered significantly superior to McMahons Point by this discerning market. 24. There should therefore be a downward adjustment for north shore locations. 1. Mr Garnsey further addressed this question by comparing the average sale price between the North Shore and the Eastern Suburbs. He said (Evidence Book, folio 947, paragraph 37): 37. I have not adjusted the sales for time and site characteristics however I am of the opinion that the average sale price $/m2 improved of site area of approximately $25,000/m2 of the Kirribilli sales compared to the average sale price $/m2 improved in the Applicant's Valuation Report of approximately $44,000/m2 highlights the superiority of the eastern suburbs over the north shore. 1. This observation was repeated in the first joint expert report he prepared with Mr Dale (Evidence Book, folio 988, paragraph 21) in the following terms: 21. I consider that the eastern suburbs of Sydney are superior to the lower north shore in terms of prestige residential real estate values and using these sales for comparison adds a layer of subjectivity and complexity to the valuation exercise. 1. Mr Dale's response to this opinion expressed by Mr Garnsey was in the following terms (Evidence Book, folio 999, paragraph 98): 98. I note that Mr Garnsey has only utilised three comparable sales in undertaking his $12,000,000 market value assessment, pursuant to an underlying R3 zone. All of the sales are on the lower North Shore and none have the iconic views of the Property. I disagree that Eastern Suburbs harbourfront sales should not be considered. A larger evidentiary pool provides rigour to the assessment, particularly in circumstances where none of the lower North Shore sales are directly comparable. Consideration of market division 1. Although, as will later be addressed in my consideration of a concluding analysed and adjusted market value, it is sufficient to note here that, toward the end of his oral closing submissions, Mr Tomasetti indicated that the two comparable sales upon which the Applicants placed primary reliance were those of 11 Bay View Street, Lavender Bay and 6 Castra Place, Double Bay. It will later be necessary to consider the sale of 11 Bay View Street in some detail. 2. The transcript recorded the following exchange that occurred between Mr Tomasetti and Mr Garnsey in relation to whether the sales located south of the Sydney Harbour would have taken place in a comparable market to the sales located north of the harbour (Transcript, 15 June 2023, folio 382, line 50 to folio 384, line 10): TOMASETTI: The sales that you refer to in your appendices are all North Shore sales, aren't they? WITNESS GARNSEY: Well, Northern Beaches and North Shore, yeah. TOMASETTI: Mosman, Northbridge, Mosman. They're on the North Shore, aren't they? WITNESS GARNSEY: Yeah. Palm Beach and Newport aren't. TOMASETTI: And then Palm Beach and Newport are beyond the North Shore and up in the Northern Beaches area? WITNESS GARNSEY: Correct, yeah. TOMASETTI: Mr Dale's residential sales are gathered together in a table at PDF 850, court book 852. He's got Castra Place, Double Bay, two sales there. One at Point Piper - sorry, two at Point Piper and Cove Street, Watsons Bay. If one is going to do the sort of exercise you've done at page 958 of your copy of the evidence book, 960, you look at 6 Castra Place, 26 million. We'll jump over 2A for the moment. 42 Wolseley Road, 22 million. Wingadal Place, Point Piper, 38 million. Cove Street, Watsons Bay, 27 million. These prices are all in the same ballpark, aren't they? WITNESS GARNSEY: They are, yeah, but they're typically smaller properties. TOMASETTI: They're all in the same ballpark, aren't they? WITNESS GARNSEY: They're in the - the capital value is, but the size of the land isn't. TOMASETTI: Some of them are waterfront and some of them aren't? WITNESS GARNSEY: They'll all waterfronts here. TOMASETTI: The one that you quoted for 33 million is not waterfront? WITNESS GARNSEY: Which - sorry, the - the Balmoral sale, yeah. TOMASETTI: Yes. WITNESS GARNSEY: Yeah. TOMASETTI: Balmoral slopes, that wasn't waterfront? WITNESS GARNSEY: No, it's not. TOMASETTI: And then around the corner in 11 Bay View Street is a sale for $42 million? WITNESS GARNSEY: Yes. TOMASETTI: Only a stone's throw away from the subject land? WITNESS GARNSEY: That's right. TOMASETTI: It all depends on the site, the site characteristics, the advantages of this site over that site. It's not dependent on location, eastern suburbs or North Shore, is it? WITNESS GARNSEY: It's - in my opinion, it definitely is. 1. Mr Tomasetti invited Mr Dale to comment on the same question that was asked of Mr Garnsey above (Transcript, 15 June 2023, page 384, lines 12 to 28): TOMASETTI: It definitely is, I see. Now, Mr Dale, do you want to have a comment on that topic in accordance with his Honour's invitation earlier? WITNESS DALE: Yes. TOMASETTI: You don't have to if you don't want to but-- WITNESS DALE: No, I'll say something. When, when contemplating location, I think - I, I, I think you need to stand back and picture the, the park on either side of the subject property as established residential housing and then you need to take into account the iconic views that have been discussed at length in the Court over recent days. I - and then you need to take these eastern suburbs harbour front locations. And I, I'm of the view that the actual location at McMahons Point, in the context I've just described, would be, would be one of the, if not, the premier residential location in, in the country. So I'm reluctant to make any type of substantial downward location adjustment moving from the eastern suburbs to McMahons Point under that context. 1. Having considered all of the comparable sales in the eastern suburbs that have been considered by Mr Dale and Mr Garnsey, particularly their views as depicted in the outward images in Exhibit P, I am satisfied that the complete lack of comparability of those views with the views enjoyed from the site, when coupled with sociodemographic differences between the properties which are south of the harbour and those which are to the north of the harbour, renders these properties which would not be ones which the hypothetical s 56(1) Land Acquisition Act purchaser would contemplate as a potential alternative to a purchase of the site. Under these circumstances, I am satisfied that it is unnecessary to consider any of the analysis and adjustment calculations undertaken by either Mr Dale or Mr Garnsey concerning the properties located on the southern side of the harbour. This removes the necessity for any detailed analysis of the sale at 6 Castra Place, Double Bay, upon which Mr Tomasetti placed some emphasis (a matter to which I will return). The properties on the northern side of the harbour Introduction 1. I have also carefully reviewed all of the sales on the north side of the harbour which were addressed by Mr Dale and Mr Garnsey in their evidence. For this purpose, I have paid detailed attention to the outward views from each of these properties contained in Exhibit P and also the outward view from the property at 2-4 Stannards Place which was depicted in Exhibit Q. The only property within this suite of sales that has an aspect affording an iconic view in a near identical fashion to that which is able to be obtained from the site is the sale at 11 Bay View Street, Lavender Bay. Although it is to be noted that the view obtained from this property under the Harbour Bridge and towards the Opera House is slightly obliquely to the south across its setback from its deep‑water frontage to the harbour and the view from the site to those same two icons is slightly obliquely to the east, I am satisfied that that difference is modest and almost immaterial (but not sufficient to remove need for any adjustment) in the circumstances. 2. It is to be observed that, as will need to be discussed in more detail later, there are significant differences in the other attributes in undertaking any analysis and adjustment of the sale of 11 Bay View Street, Lavender Bay to render it comparable to the site. 3. It is also to be observed that the outward views from all of the other potentially comparable sales addressed by Mr Dale and Mr Garnsey had quite radically inferior views and, certainly, views which did not encompass the iconic outlook elements which I am satisfied would be the determinative attractor for the hypothetical purchaser contemplating a transaction as envisaged by s 56(1) of the Land Acquisition Act. 4. As consequence, I am satisfied that the only property relevant for a comparative sales analysis for deriving a value for the site on an R3 residential basis is the sale of 11 Bay View Street, Lavender Bay. In this context, although I have rejected the potential relevance of sales on the south side of the harbour, I do note that the sale of 11 Bay View Street, Lavender Bay is the only one of the sales on the northern side of the harbour upon which Mr Tomasetti placed any reliance. The valuation evidence – 11 Bay View Street, Lavender Bay 1. It is appropriate, first, to set out the relevant portion of the joint expert valuers report concerning 11 Bay View Street, Lavender Bay. In his points of disagreement in that report, Mr Garnsey's consideration of the property was in the following terms (Evidence Book, folio 988, paragraphs 23 to 25): 11 Bay View Street, Lavender Bay 23. I consider 11 Bay View Street, Lavender Bay to be superior to the subject and also the most valuable property within close proximity to the subject. 24. It has a fully restored and modernised 5-bedroom, 2 storey sandstone residence, 2 car spaces side by side at street level, a 1,404m2 site, 30 metre water frontage, boatshed residence and excellent views to the Opera house similar to the subject although likely partially obscured from the residence by trees and position of the residence. 25. Whilst it has 5 land titles, further subdivision is not possible as it was heritage listed in the late 1990's. It is situated with the protection of Lavender Bay and the residence would obtain superior sunlight on average compared to the subject. The time adjusted sale reflects $36,720,000 and I consider the property to be in a superior category of prestige residential real estate to the subject making sales comparison difficult due to the high level of adjustments required. 1. In that same report, Mr Dale's consideration of 11 Bay View Street was in the following terms in his points of disagreement (Evidence Book, folio 999, paragraph 99, to folio 1000, paragraph 101): 11 Bay View Street, Lavender Bay 99. I agree with Mr Garnsey that this sale property is superior to the subject Property. It has a larger site area that cannot be subdivided and developed due to its heritage status. The views from the guest house are similar to the views from the subject Property. The views from the residence are inferior. They are inferior because the residence is set back and enclosed by vegetation. Further the historic residence incorporates windows of a design that do not facilitate the same access to natural light and views as modern glazing. The advertising does not feature expansive harbourfront views from the residence. I am of the opinion that the views from a modern residence situated on the subject Property would be significantly better than the views from the sale residence. 100. I am of the view that this is an important sale because it sold for a higher sum than all of the Eastern Suburb's sales that I considered. As such, it brings into question how much discounting, if any, is required for location adjustment when comparing Eastern Suburbs harbourfront positions with Lower North Shore harbourfront positions. 101. RP Data confirms a site area of 1,581m2 which Mr Garnsey used this for his Reply Report and 1,404m2 herein (DP). The property was advertised for sale with a site area of 1,418m2 which I have used for my analysis. 102. I have summarised the adjustments each valuer has made to this sale as follows: 103. Mr Garnsey and I are not significantly apart on our assessed land values. Nor are we significantly apart on our adjustments for suburb location, site size, site configuration, deep water frontage or heritage constraint. 104. We are apart on other adjustments, where I disagree with Mr Garnsey for the following reasons: ▪ Site Position: I have not adjusted for this factor Mr Garnsey has adjusted by negative 5% or $1,884,000. The subject Property has a southerly aspect and the sale has an east, southeast aspect. The sale aspect is marginally better. The subject Property is situated closer to ferry services. On balance, I am of the opinion that a prospective purchaser would not mark the subject property down by 5% for Site Position. ▪ Market Movement: I have adjusted by negative 5% and Mr Garnsey has adjusted by negative 13%. The data for median house price movement in McMahons Point is as follows: I calculate an adjustment of about 6.8% is required to bring the December 2022 sale into alignment with values in June 2021. I have used 5% because of the size of the sale (i.e. $42.2m v $3.68m. I have made no other adjustment for the quantum of capital outlay). ▪ Getting a DA: In my opinion, it is incorrect to adopt a negative 5% site value or $1,884,000 adjustment for having to get a DA. Purchasers would welcome the opportunity to have design input into their new prestige harbourfront residence and in my opinion would not discount the land value by 5% to reflect the cost of the opportunity. Competition to acquire the subject Property would be very strong and prospective purchasers would be motivated to formulate their bid competitively. Finally, the cost of securing a DA would be substantially less than $1,884,000. ▪ Views: I have adjusted by 15% and Mr Garnsey has adjusted by 5%. The views from the heritage residence on the sale property are significantly inferior to what would be available from a new residence on the subject Property. I am of the opinion that the quality of the views is a key driver of market value on harbourfront residences. I hold this view because prestige residential agents confirm this. The sale property has iconic views (similar to the subject Property) from the guest house and sections of the yard but not the main residence. I am of the opinion that a 15% adjustment for views is appropriate and 5% is inadequate. ▪ Parking: I have made no adjustment for parking, Mr Garnsey has adjusted by 5% or $1,884,000. I note the advertising for the sale indicated a double garage (at street level). A double garage (stacker) is incorporated in the potential plans for the subject Property (Annexure B Supplementary JER Planning). I disagree with Mr Garnsey's adjustment because the two parking spaces under the main roof of the subject Property. 105. In conclusion, I am of the opinion that Mr Garnsey's negative adjustment of 64% to the assessed land value is excessive. I have adjusted my land value of $38,092,000 to $24,549,279 (i.e. negative 35%) and am of the view that this is more reflective of market activity, including the harbourfront sales situated in the Eastern Suburbs (particularly 6 Castra Place). 1. However, given that Mr Dale, in his written evidence concerning 11 Bay View Street, Lavender Bay, also indicated that he placed particular reliance on the sale at 6 Castra Place, Double Bay, and that Mr Tomasetti submitted that he placed particular reliance on this Double Bay sale in addition to 11 Bay View Street (Transcript 22 June 2023, page 575, lines 38 to 44), it is also appropriate to set out what Mr Tomasetti summarised, in his closing oral submissions, were the negative attributes of the Castra Place sale. He summarised these in the following terms (Transcript 22 June 2023, page 567, line 21 to page 568, line 7): TOMASETTI: The only sale that Mr Garnsey relied upon to suggest that you couldn't rely on the Eastern Suburbs sale was the sale at 6 Castra Place. I take your Honour back to that property on page one of Exhibit P. That property sold for $26 million. It has an area of just 495 square metres. It has a waterfront boundary, I think on the evidence, which was around six metres. It adjoins a public beach, so it doesn't actually have a private interface with Sydney Harbour at all. It's adjoining the Point Piper Marina. One would expect there to be movement and traffic associated with that marina use and one would expect there would be the public moving back and forth along the beach at Double Bay from time to time and there was some reference to malodorous smells coming from the drain at the eastern end of the beach. It's very difficult to adjust - sorry, Double Bay Marina, not Point Piper Marina. My instructing solicitor corrects me. It's very difficult to adjust this sale by reference to precise mathematical analysis without venturing to some degree of subjectivity. I have to concede that. But Mr Dale, who's an experienced valuer, did it, made the adjustments that he saw fit, and thought it informed quite adequately, the sale price for the subject land. Of course, if it is to be amalgamated with 2A Castra Place, and that's imponderable, we don't know the answer to, it would be occupied potentially by a single owner on a site which has been accumulated at a price of close to $60 million. Number 2A has a right of way across its front and has the negatives to which I've referred, and you can see in the photograph that both properties have some obscuration of the view of the harbour from vegetation and then you can see over the page on p 2 that the views of the harbour which are very distant views across to Clifton Gardens and beyond, I think the photo has to be taken into account having regard to the optics of the lens, et cetera. But you get no view of the harbour, Sydney Harbour Bridge, that I can seem, and you get no view of the Opera House. You do get a view of Clark Island. It's not comparable to the subject site in terms of view, it's clearly inferior. Yet the two parcels of land were put together at a price of $60 million. 1. Rather than being factors which would simply give rise to negative adjustments in the analysis and adjustment process to derive what might be regarded as the relevant value for comparability purposes, I am satisfied that these negative factors are such that the hypothetical s 56(1) purchaser would not contemplate purchasing this property at 6 Castra Place in any hypothetical market which included the site. 2. As a general observation concerning expert evidence, experts giving evidence in proceedings are required to express the opinions in their relevant area of expertise by setting out the facts upon which they rely; the assumptions which they make with respect to those facts; and the conclusions to be derived from the application of the assumptions to the facts. That is, in summary, the full reasoning process that provides the basis of an opinion by an expert. 3. In addition to the mathematical imprecisions in Mr Garnsey's evidence as earlier described, Mr Tomasetti also criticised Mr Garnsey for what Mr Tomasetti submitted was the failure of Mr Garnsey to expose the entirety of his reasoning processes (Transcript 22 June 2023, page 546, lines 44 to 50): TOMASETTI: I intend to conclude the submissions by dealing with valuation evidence but I was, just before the morning tea, indicating that I'm trying to set up our submissions, and saying at the outset, regrettably in this particular case, Mr Garnsey's evidence should be ignored. I was focusing on some real difficulties in his evidence with regard to those errors, which I won't go over, but there's another problem with his evidence. He never sets out what his assumptions were when he valued the land. 1. Mr Tomasetti advanced this point further, submitting (Transcript 22 June 2023, page 547, lines 35 to 39): Returning back to Mr Garnsey when he expressed his B1 valuation, it was no residence in the first instance. He didn't set out what his assumptions were about the rest of the park, so we were led to believe that he was assuming, as per Mr McKenzie's evidence, that it was a B1 zoning on the subject land in an RE1 context with the park as it is. 1. As can be seen from the above specific evidence concerning how each of the experts approached the analysis and adjustments each made to the sale of 11 Bay View Street, although dealt with in comparative brevity, Mr Dale's analysis and reasoning is more comprehensive than that provided by Mr Garnsey. On that basis, subject to my specific comments below concerning elements of Mr Dale's adjustment process, I prefer the evidence of Mr Dale over that of Mr Garnsey concerning this sale. In expressing this preference, I also have regard to the fact that, as earlier set out, Mr Garnsey's mathematical imprecision causes me to approach his evidence with a deal of caution (noting, in this specific context, that I am not to be taken to be suggesting there is any arithmetical inaccuracy in Mr Garnsey's 11 Bay View Street calculations). Consideration 1. Of relevance, particularly to my conclusion that 11 Bay View Street is the only one of the comparable sales considered by the valuers that could be analysed and adjusted to provide a proper basis for understanding a value for the site, it is appropriate to set out the primary matter from the evidence which explains my conclusion in this regard. It is appropriate, although an element of Mr Dale's analysis that is contrary to my conclusion, to set out an image from his individual expert report in which he postulates that the primary outlook from this property was toward elements of the Luna Park amusement site at Milsons Point. The image depicting this from his report is reproduced below: 1. Mr Dale was questioned on this point by Mr Eastman. The relevant exchange in the transcript records the following (Transcript 22 June 2023, folio 501, line 25 to folio 503, line 32): EASTMAN: --there's a 10% difference between you on 11 Bay View Street and the subject property. Can I show you the marketing photos from 11 Bay View? I'm sure you've seen those before. May I have Mr Rogers approach and provide a copy of that? HIS HONOUR: Yes. EASTMAN: And your Honour if that's okay. HIS HONOUR: Thanks. WITNESS DALE: Thanks very much. EASTMAN: If you turn to the third page? WITNESS DALE: Yes. EASTMAN: You'll see the famous framed view of the Opera House underneath the Harbour Bridge. WITNESS DALE: Yes. EASTMAN: And that's a view that's accessible from the external ground level of 11 Bay View? WITNESS DALE: It's - sorry it's from the what? External. EASTMAN: That shows the yard. WITNESS DALE: From the - from the yard, yes. EASTMAN: If you turn one page over that's from the boat house? WITNESS DALE: Correct. EASTMAN: But if you go back to the front page where you see the sold sign, that view is from the principal house. WITNESS DALE: It's from the front door, yeah. EASTMAN: Yes, of the main house. WITNESS DALE: Yes, it is. EASTMAN: The assessment you provided on page 1002, page 18 of 27, PDF104, why did you draw those two lines looking directly at Coney Island? WITNESS DALE: I wanted to bring to the Court's attention that the view from the residence in my mind is constricted by a number of factors. First of all it's constricted by the vegetation, it's constricted by the setback, and it's also constricted by the - by the heritage building itself, the windows are smaller. And whilst I acknowledge that that photograph is from the front door, if you stand back inside the residence the views are far more constricted than what they are from the boat house. EASTMAN: Can you find the picture of the bathroom, the wine cellar? WITNESS DALE: Do you want me to go to the wine cellar? EASTMAN: Yes, I do. It's really just a marker so I can get you to turn to-- WITNESS DALE: I've go the wine cellar, yes. EASTMAN: I'm not going to ask you any questions about that. Then you see the bath on the next page. WITNESS DALE: Yes. EASTMAN: And then you see an internal bedroom on the following page. WITNESS DALE: Yes. EASTMAN: And you see the Opera House and the Harbour Bridge. WITNESS DALE: Yes. EASTMAN: And I would ask you to say that your depiction of the view lines on page 18 of 27 of the joint report is inaccurate because it points to Coney Island and not to the view that's accessible from the main dwelling. WITNESS DALE: I'm not going to concede it's inaccurate. I mean, you and I would literally have to stand inside that residence to get a proper appreciation of exactly what those views are like relative to the views from the subject property. EASTMAN: The arrows that you've marked on the photograph on page 1002 indicates that you are looking at Luna Park and not at the Harbour Bridge and the Opera House, is that right? WITNESS DALE: That is correct. EASTMAN: That is inaccurate because one sees the Harbour Bridge and the Opera House from inside the main dwelling. WITNESS DALE: It's a - it's a generalisation, I mean it's not a specific thing. It's the, the, the thrust of the views in a straight line from the residence are in line with those arrows. EASTMAN: You're making a 15% adjustment for views, which equates to what, about $4.5 million? WITNESS DALE: Somewhere around there, yeah. EASTMAN: This photograph is inaccurate in the way that you've depicted it, do you agree? WITNESS DALE: I think the photograph talks in generalisations, and I - and I'm reluctant to call it inaccurate. 1. As can be seen in the above transcript extract, Mr Eastman showed Mr Dale sales promotion material for the sale of this property. Mr Eastman subsequently tendered that material with it becoming Exhibit 13. For present purposes, in order to understand the conclusion I have reached that this is the sole sale relevant for present valuation purposes, it is appropriate to reproduce the image on the third page of this exhibit, a page which shows the nature of the view from this property (albeit from the outside of the heritage‑listed dwelling and noting that the fenestration of this dwelling would not provide as expansive viewing options of this iconic outlook as would be available from a hypothetical residential development on the site). The image depicting the view from 11 Bay View Street is reproduced below: 1. As can be seen from the earlier reproduced table from the joint expert report of the valuers, the starting values adopted by Mr Dale and Mr Garnsey for 11 Bay View Street are different. 2. There are two reasons for the $412,000 difference in their starting values. The difference arises as a consequence of different assumptions they have made about the area of this property and about the value that they have ascribed to the dwelling and other structures erected on it. 3. The relevant extracts from their joint report, explaining these differences are set out below: ASSUMPTIONS (Evidence Book, Valuation Report in Reply by Nicholas Garnsey dated 30 March 2023, PDF page 947) 11 Bay View St, Lavender Bay 33. There would need to be significant adjustments to this sale price being a deduction for the added value of the substantial sandstone dwelling, boatshed, jetty, landscaping etc to establish a land value, then adjustments for the size of the site which is approximately 4 times the size of the subject, adjustment for the 31-metre frontage to Lavender Bay, location / aspect / views and DA risk on the subject land and time of sale. (Evidence Book, Joint Expert Report dated 29 May 2023, PDF page 1002) 11 Bay View St, Lavender Bay 101. RP Data confirms a site area of 1,581m2 which Mr Garnsey used this for his Reply Report and 1,404m2 herein (DP). The property was advertised for sale with a site area of 1,418m2 which I have used for my analysis. ______________________________________________________________ CALCULATIONS (Evidence Book, Valuation Report in Reply by Paul Dale dated 5 May 2023, PDF page 972) 11 Bay View St, Lavender Bay According to Paul Dale (on the basis of a site area of 1,418m2 and $/m2 of site area improved = $29,760): Sale price ($42,200,000) - value of improvements ($4,108,000) = land value ($38,092,000) (Evidence Book, Joint Expert Report dated 29 May 2023, PDF page 990) 11 Bay View St, Lavender Bay According to Nicholas Garnsey (on the basis that a 1:1 FSR is achievable on a site area of 1,404m2 and $/m2 of site area improved = $30,057): Sale price ($42,200,000) – value of improvements ($4,520,000) = land value ($37,680,000) 1. I have no valid evidentiary basis upon which I can resolve these two issues in order to have a determined starting point for the process which I must undertake, as the judicial valuer, in analysing and adjusting the sale of 11 Bay View Street to derive the appropriate R3 value to be adopted for the site. 2. In Sydney Water Corporation v Caruso and Ors [2009] NSWCA 391, Allsop P said, at [3]-[4]: 3. The general principle that in determining compensation to a dispossessed owner doubts should be resolved in favour of a more liberal estimate is well-known: see generally A Hyam The Law Affecting Valuation of Land in Australia (4th Ed 2009 Federation Press) at 316-318. That does not, however, detract from the need to engage with and evaluate evidence and competing witnesses. If, however, upon engagement and assessment, the judicial valuer finds, for example, as Anderson J did in Cook and Edwards v City of Sterling (1991) 4 WAR, that the reasoning of both valuers was not fallacious, that their respective capitalisation rates were open, that none took into account irrelevant considerations and no errors otherwise appeared, the proper conclusion might be that there are simply two open views on the relevant issue ‑ as there can be in ascribing a value: cf Fenton Nominees Pty Ltd v Valuer-General (1981) 47 LGRA 71 at 76-77. In such circumstances, applying the general principle would be uncontentious. 4. It is not helpful to examine the scope of the general principle in the abstract beyond saying that it is not a licence to accept one expert over another without undertaking the task of assessing the evidence in the usual way. If a judge properly undertakes that task, the evaluation of the evidence may well persuade the judge to accept the evidence favouring the resuming authority. That would be a product of assessing the evidence. That process is not to be abandoned as the statement of the judge at [81] of her reasons would suggest she did. 1. This approach is one now conventionally adopted, as a matter of course, when there is, in an evidentiary weighing process, a choice to be made between rationally available and potentially justified positions and where one of them would lead to a more beneficial outcome for the person whose interest in land was being compulsorily acquired for a public purpose. It is a broad principle and, as is the general framework of the Land Acquisition Act, one which addresses any acquisition of an interest in land (as defined) for a public purpose and the resulting dispossession of the holder of the interest in the land. 2. As a consequence of the earlier explained evidentiary deficiency on this topic and the scope of the remaining evidence, I am satisfied that circumstances of the type described in Caruso here arise. It therefore follows that the position proposed by Mr Dale is that from which I should approach my consideration of this sale. Alterations necessary to be made to Mr Dale's adjustments Introduction 1. For the above reasons, I broadly accept the analysis and adjustments applied by Mr Dale to the sale at 11 Bay View Street, Lavender Bay in order to derive a value for the site. However, there are three specific aspects of his adjustments, which I am unable to accept and which require my intervention with his calculations in order to derive the relevant outcome value. View adjustment 1. The first area where I am unable to accept Mr Dale's adjustments is the extent of the superiority of the views available from the site when compared to the views available from 11 Bay View Street. As can be seen from the above reproduced photographs, although there is a marginal qualitative improvement of the views from the site toward the harbour bridge at the opera house (these comprising the primary iconic elements of the views) because the Bay view Street views are slightly oblique, that difference is not so sufficiently great as to warrant the size of adjustment proposed by Mr Dale. I am satisfied that this factor only warrants an adjustment of 5% as has been proposed by Mr Garnsey. Market movement 1. The second area where I am unable to accept Mr Dale's adjustments is the 5% adjustment he adopted for market movement. 2. I have earlier set out in my extract from Mr Dale's contribution to the joint expert valuers' report, his explanation as to why he has made an adjustment of 5% for market movements between June 2021 and December 2022 in order to bring the 11 Bay View Street transaction in December 2022 back to the date of acquisition of the site in June 2021. He noted that the precise adjustment would be 6.8% rather than the 5% he has adopted. It is to be observed that Mr Dale does not provide any reasoning as to why he should step away from the precise adjustment disclosed by the ABS figures. Given that the additional 1.8%, if applied, results in a substantial consequent monetary adjustment, I can see no valid basis why the 6.8% disclosed by the ABS data should not be utilised. 3. He described his use of the 5% as being because of the quantum of the sale price of 11 Bay View Street. However, in a statistical sense, the adoption of a median price measurement, as I understand it, is intended to provide an appropriate market movement indicator on a broad basis across the whole of McMahons Point. Given the fact that significant sums arise in these proceedings in my analysis and adjustment of 11 Bay View Street for even comparatively small adjustment percentages, I am satisfied that, adopting the precise adjustment of 6.8% derived from the ABS figures is appropriate. 4. The final area where I am unable to accept Mr Dale's evidence is his proposal that there would be no adjustment required to reflect the necessity to obtain development approval from the Council for the hypothetical development on the site. In this regard, Mr Garnsey proposed that there should be an adjustment of 5% to reflect the necessity to obtain such an approval. When seeking to obtain such an approval, the hypothetical purchaser would be advised: 1. This would require detailed consideration of how the existing fixed heritage items on the site were to be conserved and how any residential development would be impacted as a consequence; and 2. although for reasons earlier outlined, the hypothetical purchaser could be satisfied that there would be a sufficiently probable basis for the granting of a cl 4.6 dispensation request to increase the height of a residential development on the site, such a request likely require significant preparation costs and would not entirely lack risk (including the possibility of an application to the Council for such dispensation being rejected and the necessity to pursue the matter further in this Court). 1. Although I am satisfied that it is appropriate to make an adjustment for the risk of getting development application approval when deriving the site's value by comparison with 11 Bay View Street, I am not satisfied that an adjustment of 5% as advocated by Mr Garnsey is appropriate as a 5% adjustment to the sale price of 11 Bay View Street amounts to approximately $1.9m in rounded terms. 2. I am satisfied that an adjustment of that dimension is not warranted. However, given the importance of a successful cl 4.6 dispensation request to achieving the most desirable hypothetical development outcome on the site, I am satisfied that an adjustment of 2.5% is warranted. Whilst such an adjustment, in itself, still constitutes a significant monetary deduction, I am satisfied that the risk of not getting a dispensation from compliance with the maximum height of building otherwise constraining the site is sufficient to warrant an adjustment by that amount. 3. Mr Garnsey also, separately, proposed that there should be a small adjustment (1%) for differential potential heritage impacts on the site's developability. To the extent that there might be such impacts, I am satisfied that separate adjustment for this is unnecessary, as such risk is sufficiently encompassed, I am satisfied, by the enfolding of such heritage considerations in the adjustment necessary to reflect the risks of the development application process. An additional adjustment 1. During the course of his closing submissions, I raised with Mr Tomasetti my concern that it might be appropriate to make an additional adjustment between the 11 Bay View Street sale and the site to reflect what I saw on the field inspection of the existing maritime access facilities at 11 Bay View Street and the lack of such facilities at the site. As can be seen from the table of adjustments proposed by both valuers, neither of them proposed any adjustment for this factor. 2. I had contemplated, when I had initially considered this possibility, whether it would be appropriate to make an additional 10% adjustment to reflect what I considered to be the potential differences between the two locations. However, it is appropriate to set out the terms of my exchange on this topic with Mr Tomasetti, an exchange which enabled him to address some (but not all) of the differences I considered arose in this regard. That exchange is reproduced below (Transcript 14 July 2023, page 650, line 9 to page 653, line 9): TOMASETTI: Because my submission is this: Mr Dale is an experienced valuer and his credibility has not been impugned by my learned friend in any material way. He's applied his mind to all the necessary adjustments and he's made no adjustment, express adjustment, in terms of waterfront facilities. That doesn't mean to say he hasn't done it or hasn't turned his mind to the need to do it and arrived at a position. Bear in mind that the subject land has two slipways. Bear in mind also that‑‑ HIS HONOUR: Slipways that are heritage slipways. TOMASETTI: There's no evidence that would suggest you can't actually use the slipways if you wanted to replace the rails, steel rails. HIS HONOUR: There is no evidence that says that you could, is there? Nothing Mr Davies said or indeed was asked, was it, that dealt with in a residential sense the use of that? But the concern that I raised was not merely about slip rails; it's about the fact that - and if I go there, like, if I get to this, I will be explaining why, but there is no evidence about the ability to have a deep-water mooring, for example, off‑‑ TOMASETTI: There is. HIS HONOUR: ‑‑off the front‑‑ TOMASETTI: No, there is, with respect. HIS HONOUR: There was evidence about an attempt to do so. There was the evidence in the contract about assistance to seek but there is nothing, as I recollect - I haven't gone back to look at it all yet, you would appreciate - that there is in any contemporary sense the granting of the ability to moor, to sort of butt it off the front of your client's site that would be attended or what is possible to be moored at the jetty facility at 11 Bay View. TOMASETTI: When the site was sold it had nine moorings, nine commercial moorings sold with it and those moorings were directly outside the subject land. And they were removed when the use - where are you referring me to? There were nine mooring and they were removed when the commercial industrial use ceased. HIS HONOUR: Yes. TOMASETTI: Your Honour can have perfectly comforted that the waterway itself is sufficient to support a mooring. HIS HONOUR: Where do I find the evidence of that? TOMASETTI: It's in the contract, I believe. Just excuse my back for a moment. HIS HONOUR: There's a contract about assistance to seek a licence from - it's a bit like Transport - whatever its name was at the time, Maritime Services Board, whoever it was at the time. TOMASETTI: In the W8 zone around the waterfront which is in place, we didn't really explain whether the W8 - whether or not that zoning would be in place if the land was residentially zoned. So, we're just fixed with that W8 zoning. You are allowed to have a number of facilities including single moorings other than those associated with commercial mooring or boating facility. HIS HONOUR: Where's this evidence? TOMASETTI: In the Sydney Regional Environmental Plan. I think your Honour would have judicial notice of this anyway so I'm going to - but the map itself is in Mr Chambers' report, exhibit 2 at tab 14 - sorry, exhibit B, p 214. That's the map, your Honour may recall it, I'm holding it up. It shows in green the W8 zone. I handed up a copy of cl 9 of the Sydney Regional Environmental Plan. On the second page of that document under "Residential development" the next entry in the column in the table is single mooring. Does your Honour see that? HIS HONOUR: I do. TOMASETTI: Clause 18, we see the table. HIS HONOUR: I do. I'm with you. TOMASETTI: On the second page, I'm just drawing your attention to that single mooring entry. In the conservation management plan‑‑ HIS HONOUR: Is exhibit B at 214 this document or is that the map? TOMASETTI: That's the map, not the table. HIS HONOUR: Where does Mr Dale make any reference to it in his evidence? TOMASETTI: He doesn't. That's a slightly different point. Can I just complete what I was going to say? The conservation management plan which is in the applicant's bundle at tab 4 at p 344, the rail girders are referred to. The significance of the rail girders are said to be high and the plan says replace the rail girders which have been structurally compromised by corrosion with girders of the same form. "Rail girders there are within the literal zone are likely to require more extensive and frequent replacement than those below the low watermark". That's part of the conservation management plan and I think that was uncontroversial in these proceedings, that it reflected appropriate heritage management. The plans that were developed by Mr Rowe show in the residential context, I believe, the impression of a vessel on the slipway. But you can have a single mooring in the deep water and the contract for sale, as I recollect, which is in evidence expressly referred to the fact that with the sale went nine moorings that were then in existence. So we know that moorings can be placed there because they've been historically there. We know that they're permissible in the zone and in my submission, what the Court should do then is to not say the valuers haven't addressed this but to say the valuers have obviously addressed it and it's not a matter for which they make adjustment. You don't necessarily have to list every single thing that you're going to consider and then not adjust for, in my submission. HIS HONOUR: The problem I have with that proposition is that if you list it as having a zero adjustment, you have contemplated an adjustment and it is then open to me, provided I have proper cause to do so, to say, "I don't agree with zero. I am going to incorporate plus or minus X". Just as areas where there are adjustments that are made by the valuers that are different, it is open to me to accept one over the other or it is open to me, properly reasoned again, to explain why if somebody is at minus 3 and somebody is at minus 17 to decide that the answer is in fact minus 11, or provided I simply don't strike an average in the fashion that you have properly criticised. TOMASETTI: I accept that. I say that my first position is your Honour should be confident it's been considered and no adjustment is warranted. My second position is provided your Honour proceeds in the way not reflected by that transcript reference, it's open to your Honour to make an adjustment. But before I leave the topic, I just want to put this proposition and it's really, I suppose, from the bar table. I don't wish to give evidence. But the class of purchase that they were contemplating would be a high nett worth individual or a couple. They wouldn't necessarily want to have - see a big advantage in having a boat on a mooring just out the front. HIS HONOUR: It might so highly nett worth, Mr Tomasetti, that anything that was parked out the front would be too big anyhow. TOMASETTI: Possibly. They might like to have it in a marina where they can ring up and say, "Please provision, we're going out for the day", or, "Please clean up from our day yesterday", that sort of thing. We don't know at 11 Bay View that there was no boat in the facility. We don't know if that's just an embarking and disembarking facility or whether it's actually permissible to have a boat adjacent to the jetty as opposed to it just being a point of transfer. My instructing solicitor says that the table that I just handed up is in the applicant's bundle, p 9 and following behind tab 1. In my submission, I did note that your Honour had raised this possibility of an adjustment for the waterfront facility, something that your Honour was prima facie inclined to make an adjustment on and I wanted to make the submission that your Honour should feel comfortable about not making that adjustment accepting that the valuers had turned their mind to all relevant matters. So, in reply, I'm essentially submitting that it's perfectly open to your Honour to say that 11 Bay View was the most comparable. I've outlined the simple adjustments, they're not highly contentious, that could be made to Mr Garnsey's evidence as opposed to Mr Dale's where they both come up with a figure which is very close to the claim and where they've agreed on the land value stripped of improvements, almost. They're separate, not far apart. 1. Whilst I accept that the documents in evidence referenced by Mr Tomasetti (and his submissions concerning those documents) resolved my concerns about the ability to have a deep water mooring available to the occupants of the hypothetical R3 development, there is no basis upon which I could conclude that a jetty facility such as that observed at 11 Bay View Street would be permitted to be constructed at the site (indeed, the heritage evidence of Mr Brookes and Mr Davies - although not expressly addressing this matter - and the terms of the necessary conservation management plan make it certain that such a facility would not be permitted to be constructed to serve the hypothetical R3 residential development for the site). 2. As a consequence, whilst my initial disposition was to impose a further adjustment of 10% for the purpose of rendering the 11 Bay View Street sale properly comparable with the site, I am now satisfied that an adjustment of that size would be inappropriate. However, I am satisfied that an adjustment to reflect the difference between the two sites for access for waterborne activities is necessary but that the appropriate adjustment is 5% rather than the 10% I had originally contemplated. Conclusion on the derived value of the site 1. I set out below a table of my conclusions as to the appropriate adjustments to be made to the 11 Bay View Street sale to derive the R3 value for the site. 11 BAY VIEW STREET – LAVENDER BAY ASSESSED LAND VALUE $38,092,000 ADJUSTMENTS SUBURB LOCATION 0.0% SITE POSITION 0.0% SALE DATE – MARKET MOVEMENT -6.8% SITE SIZE -60% SITE CONFIGURATION 0.0% VIEWS 5.0% PARKING 0.0% HAVING TO GET DA -2.5% HERITAGE CONSTRAINT 15.0% DEEP WATER FRONTAGE -5.0% TOTAL ADJUSTMENT -54.3% INDICATED LAND VALUE $17,408,044 LESS DEMOLITION AND CLEARING $210,521 DERIVED VALUE $17,197,523 1. Making the above discussed changes to Mr Dale's analysis and adjustment process, a rounded-up value of $17,200,000 derived from the sale of 11 Bay View Street, Lavender Bay is the value to be adopted for the site if the underlying zoning is to be characterised as R3 Medium Density Residential (contrary to my earlier conclusion that that the site was to be regarded as having an underlying zoning of B1 Neighbourhood Centre). Disputed disbursement costs Introduction 1. The Applicants claim disturbance costs in the amount of $162,305.97 (including GST) pursuant to ss 55(d) and 59 of the Land Acquisition Act. The Ministerial Corporation accepts that $112,082.97 of the Applicants' claimed costs are to be reimbursed. 2. The remaining costs items were disputed as: (a) Costs of briefing multiple valuers - the Ministerial Corporation does not accept that the costs of retaining Mr Dempsey and Mr Dale were reasonably incurred as no adequate explanation has been advanced for the retention of those two valuers. (b) Costs of preparing for and commencing proceedings do not qualify as disturbance costs but could be the subject of an order for costs in the proceedings. (c) Some costs which appear to relate to a previous development application which was refused by the Court on 7 February 2020. Applicants' written submissions on disturbance costs 1. On 14 July 2023, Mr Tomasetti tendered a bundle containing the Applicants' further evidence of losses attributable to disturbance under ss 55(d) and 59(1)(a) of the Land Acquisition Act. This bundle became Exhibit R. 2. Exhibit R contained tabbed invoices in relation to the legal and valuation costs that were incurred by the Applicants prior to the commencement of the hearing. The Applicants claimed $140,927.58 (including GST) for disturbance losses under ss 55(d) and 59(1)(a) and/or (b) of the Land Acquisition Act. This amount was agreed to by the Ministerial Corporation save for the following items totalling $16,109.50: 1. The valuation fees of Peter Dempsey totalling $1,512.50 and Paul Dale totalling $11,011, in preparing a peer review report (7 April 2021). 2. The legal fees acquired in briefing the two valuers and reviewing their advice, totalling $3,586. 1. The Ministerial Corporation contested the above claimed items because it says: 1. the fees arising because of briefing multiple valuers are not justified; 2. no adequate explanation has been advanced for the retention of both Mr Dempsey and Mr Dale; 3. costs of commencing the proceedings do not qualify is disturbance costs but could be the subject of a costs order in the proceedings; and 4. some costs appear to relate to a previous development application which was refused by the Court on 7 February 2020. Relevant Legal Principles 1. Mr Tomasetti submitted that: "[T]he Court of appeal has found that the word 'reasonably, governs the word 'incurred' and therefore the question is whether the valuation fees are incurred reasonably and not whether the costs are reasonable in themselves" and that the valuation costs must also be incurred "in connection with the compulsory acquisition of the land." 1. He suggested that this is the case of the Applicants. To support this proposition he cited Eureka Operations Pty Ltd v Transport for New South Wales [2021] NSWLEC 41 (where Duggan J said, at [153], that "the dispossessed owner is not to be responsible for the costs of obtaining appropriate (reasonable) legal services relating to the acquisition" and, further, at [153] when it is determined that further advice from an additional qualified person is required to inform legal advice, "… it would be inconsistent with the legislative purpose to compensate the dispossessed owner for only part of the fees required to be incurred to enable the legal advice to be provided.") 2. Mr Tomasetti also cited Sales v Transport for NSW (No 2) [2021] NSWLEC 96 (where Robson J accepted, at [272], 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.") The Applicants' chronology concerning the disputed costs 1. Mr Tomasetti submitted that the relevant chronology was: 1. After receiving a letter on 21 March 2019 from the Minister for Planning, advising that the Respondent sought to commence negotiations regarding the acquisition of 1 Henry Lawson Avenue, McMahons Point (Property), the Applicants sought initial advice from Peter Dempsey. They chose not to proceed with Mr Dempsey (written submission C.14-15). 2. In mid-April 2019, the Applicants sought valuation advice from Lunney Watts & Associates Pty Ltd. 3. a report was prepared by Nicholas Garnsey on behalf of the Respondent (Garnsey Report). Mr Garnsey opined in the report that the market value of the Property was $5,700,000 (excluding GST), if the underlying zoning was B1 (written submission C.17). 4. The applicants submitted the following reports in response (written submission C.18): 5. A report by Anthony Alford of Lunney Watt & Associates date 25 June 2020, which concluded that given the assumption of underlying B1 zoning the market value of the Property would be $12,220,000. 6. A report by David Lunney (First Lunney Report) dated 11 March 2021 which concluded that the market value of the Property was $13,300,000, given a B1 zoning. 7. On 19 February 2021, Paul Dale was engaged to peer review the Garnsey Report, Alford Report and First Lunney Report on behalf of the applicants and produce a report for the Valuer-General. 8. On 7 April 2021, Mr Dale prepared this report (Dale Peer Review), which agreed with Mr Lunney's assessment of market value at $13,300,000, given an underlying B1 zoning. 9. The Alford Report, First Lunney Report and Dale Peer Review were submitted to the Valuer- General in support of the Applicants' claim for compensation. 10. On 1 June 2021, the Property was compulsorily acquired. 11. On 3 August 2021 a preliminary determination report prepared by David Knight (Knight Report) was issued by the Valuer-General. 12. Mr Lunney responded with a further report dated 26 August 2021 (Second Lunney Report) which concluded that the Valuer-General's preliminary determination of $9,150,000 underestimated the market value of the Property given a B1 zoning. 13. The Second Lunney Report was provided to the Valuer-General. 14. The Lunney Watt valuation fees have not been contested by the Respondent. The Applicants' position 1. Mr Tomasetti proposed that the Applicants be allowed Mr Dempsey's fees and the associated legal costs for the following reasons (written submission D.27-31): ○ These costs were reasonably incurred for the purpose of providing legal advice to the Applicants and therefore fall within the scope of s59(1)(a) and (b) of the Just Terms Act. ○ The fact that they did not proceed with Mr Dempsey does not mean that the costs incurred by engaging him were not reasonably incurred by the Applicants at that stage. ○ The Applicants' reasons for not continuing to engage Mr Dempsey are not relevant to whether the costs were reasonably incurred. ○ The Applicants were forced to engage a valuer to assist in negotiations with the Ministerial Corporation and should not bear the costs of Mr Dempsey or the associated legal fees as a result of undertaking the process of finding an appropriate valuer. 1. The costs associated with Mr Dale's peer review were reasonably incurred by the Applicants for the following reasons (written submission D.32): ○ It was necessary to obtain the opinion of another valuer to provide clarity on the market value of the site given that 3 significantly different valuations of the site had already been made (with a difference of $7.6 million between the values provided in the Garnsey report and the First Lunney Report). ○ The valuation exercise for the site is complex, given the unique nature of the site and absence of directly comparable sales. ○ The Ministerial Corporation, through its counsel in oral submissions, appears to rely on the Dale Peer Review. The costs associated with the Dale Peer Review were reasonably incurred in line with section 59(1)(b) of the Land Acquisition Act. 1. The Ministerial Corporation asserted that the costs of the Dale Peer Review would not have been reasonably incurred had Mr Dale agreed with the approach taken by Mr Alford and Mr Lunney. However, in preparing the Dale Peer Review, Mr Dale was to consider the pre-existing valuation reports and adopt the same assumptions as the earlier valuers, not to perform a valuation assessment of the site (written submission D.33). 2. Mr Tomasetti suggested that Mr Dale's conclusion was irrelevant to the question of whether the costs associated with the Dale Peer Review were reasonably incurred. The Ministerial Corporation's position 1. In reply to Mr Tomasetti on this issue, Mr Eastman for the Respondent agreed with the characterisation of the legal and valuation costs that remained in dispute. He also agreed with the total figure of such costs across the two disciplines. 2. However, Mr Eastman turned to the decision of Pepper J in Buhach v Transport for New South Wales [2022] NSWLEC 148 (Buhach). He submitted that the relative complexity and quantum of proceedings was not, in and of itself, a justification for obtaining two or more valuation opinions, submitting (Transcript 14 July 2023, page 656, line 26 to line 46): EASTMAN: Now can I just remind your Honour that what we'd said about this was that a straight application of Pepper J's decision in Buhach is what we relied on… …. EASTMAN: Your Honour sees that the submission mirrors the submission in this case, 284, "The applicants submitted that in proceedings of this complexity and quantum," and I pause there and say it's evident from the face of the judgment and obviously I was in that case, that was correct, however, it wasn't enough to satisfy her Honour, as you'll see in 285, that that justified in that case a second valuation opinion, let alone a third. The way her Honour disposed of it was to agree with Transport's [the Respondent's] submissions that it was "unreasonable and excessive on the evidence before the Court". 1. Mr Eastman rejected the proposition advanced by Mr Tomasetti that no inference should be drawn as to why the Applicant didn't proceed with Mr Dempsey as a valuation expert, submitting (Transcript 14 July 2023, page 657, line 5 to line 8): EASTMAN: What Mr Tomasetti also said was that there's no explanation otherwise as to why they went off to someone else. That is what's required in order to demonstrate the reasonableness of it, that's what Pepper J said in Buhach and that's what I'd ask your Honour to apply here. 1. Mr Eastman submitted that the legal costs arising from consideration of the Dempsey report were ancillary to the valuation costs. In this context, he concluded his reply by submitting that the legal costs relating to those valuation reports were also not reasonably incurred (Transcript 14 July 2023, page 657, line 12 to 23). Consideration 1. It is to be observed that Robson J also said, at the conclusion of [272] in Sales: 272. … 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. 1. It is also to be noted that, in oOh!media Fly Pty Limited v Transport for NSW [2023] NSWLEC 26, I concluded, at [474], that: 474. I am satisfied that Duggan and Robson JJ [in Eureka and Sales] were each not clearly wrong in the conclusion which they had reached concerning the appropriateness of ordering reimbursement for ancillary professional advice. Consistent with the approach by Duggan and Robson JJ (one which it would have been available to Transport to have challenged in the Eureka proceedings on appeal but was not - see Transport for NSW v Eureka Operations Pty Ltd [2022] NSWCA 56 at [62]) …. 1. It is appropriate to set out the entirety of the relevant portion of the decision of Pepper J in Buhach, at [484] to [487], as this makes it clear that the additional expert advice for which reimbursement had been sought was valuation advice with this being sought pursuant to s 59(1)(b) of the Land Acquisition Act. This portion of her Honour's decision is in the following terms: Dobrow Valuations Fees 284. The applicants submitted that in proceedings of this complexity and quantum, they have reasonably incurred the costs of obtaining a second opinion as "a reality check of the advice" that they had obtained by commissioning the Dobrow Valuations report, and therefore, the costs were claimable under s 59(1)(b) of the JT Act. 285. I agree with the submissions of TNSW that the commissioning of the Dobrow Valuations report was unreasonable and excessive on the evidence before the Court. There is nothing before the Court to demonstrate that these valuation costs are not, as they plainly appear to be, duplicate costs (cf Penfold and Bracey v Health Administration Corporation [2009] NSWLEC 157 at [135]-[136] per Biscoe J), or that there is some other circumstance that renders the additional report necessary (such as ill health of a valuer or the valuer not able to be a witness in the proceedings: see, for example, the facts in Cook v Roads and Traffic Authority of New South Wales [2007] NSWLEC 136 at [80] per Jagot J). 286. To the extent that the applicants relied upon the decision in Croghan v Blacktown City Council (2019) 100 NSWLR 757; [2019] NSWCA 248, that case does not assist them. That decision concerned a different issue, namely, a successful appeal against an award of costs by the trial judge on an ordinary and indemnity basis (the date from which the acquiring authority made an offer of compromise). 287. In summary, I find that there is insufficient evidence to demonstrate that the Dobrow Valuations fees have been "reasonably incurred" and, therefore, they are not compensable. 1. Here, the basis upon which reimbursement is sought, not merely for the additional legal costs of briefing counsel to advise on the earlier valuation advice together with the various (slightly differently context valuation advices) is that these fees fell within the scope of the reimbursement power in s 59(1)(a) in the fashion utilised by Duggan J in Eureka and followed by Robson J in Sales and by me in oOh!media. 2. Although Mr Eastman proposed (by necessary inference) that some explanation was necessary to be given as to why the applicants did not rely on Mr Dempsey for these proceedings, I am satisfied that it does not arise because the valuation advice given by Mr Dempsey was for the purposes of enabling the Applicants' legal representatives to be properly informed prior to the commencement of this litigation. Having commenced the litigation, the nature of the experts proposed to be relied upon for the proceedings involves legitimate forensic considerations – not ones requiring to be explored by me. 3. Although the distinction between the two bases of claim might be regarded by some as being a matter of fine distinction, this is not the case. Costs incurred and claimed pursuant to the first basis must be costs antecedent to, and in preparation for, litigation contesting the quantum determined by the Valuer General to compensate the dispossessed owner of the interest in land which has been acquired. Conventionally, the second provision is utilised to compensate for freestanding advice given direct to a dispossessed owner by a valuer whose qualifications are identified in s 59(2) of the Land Acquisition Act. 4. Here, the disputed amount totalling $16,109.50 has been claimed pursuant to s 59(1)(a) and is claimable under that provision. The Applicants are therefore to be reimbursed for this disputed amount pursuant to that provision. Overall conclusions 1. I have concluded that: 1. a proper consideration of the documents effecting the compulsory acquisition and consideration of the relevant statutory provisions enabling this to occur means that the public purpose required to be disregarded, as a consequence of s 56(1)(a) of the Land Acquisition Act, is the inclusion of the site in the existing foreshore reserve at the southern end of McMahons Point and thus accepting that, for hypothetical development purposes, the site is surrounded by the existing reserve (and that the Moreton Bay Fig Tree on the allotment to the west is, to the extent necessary, required to be considered as part of the framework for assessing the development potential of the site on a counterfactual basis); 2. as a result of the above determination and its application by the statutory disregard, the underlying zoning for hypothetical development consideration is B1 Neighbourhood Centre under the 2013 LEP; 3. a hypothetical B1 Neighbourhood Centre shop top housing development on the site would be of three levels with a three‑bedroom apartment atop two lower levels of commercial space (one level being a basement); 4. the hypothetical purchaser would be advised (and would accept the advice) that there was sufficient prospect of a successful application made to the Council (or by the Court on appeal), pursuant to cl 4.6 of the 2013 LEP, to be permitted to increase the maximum height of the hypothetical development beyond the otherwise applicable 8.5‑metre limit in order to be able to achieve this hypothetical development outcome; 5. the precise nature of the roof form for such a hypothetical development is a matter of detail which would be resolved during the development application process and is not a matter impacting on the potential approvability of such a hypothetical development; 6. the value to be found for the hypothetical B1, shop top housing development on the site is that to be derived from Table 10 in Mr Garnsey's expert report but with the adjustments to that table's values as I have earlier set out (to result in a higher value to be derived from Table 10 than that which is currently set out in Table 10); 7. if I am wrong in my determination that the statutory disregard requires the assumption that the site is to be regarded as having an underlying hypothetical zoning of B1 Neighbourhood Centre but it should have an underlying zoning of R3 after applying the statutory disregard, the value of the site would be $17,200,000; 8. for the reasons earlier set out, the Applicants are entitled to be reimbursed the disturbance costs which are in dispute; and 9. whatever the outcome of making the adjustments I have determined are required to Mr Garnsey's Table 10, for the reasons discussed below, the Applicants should have their costs of the proceedings. Costs 1. It is to be noted that, in compulsory acquisition compensation proceedings, costs do not follow the event, as might otherwise be expected, as r 42.1 of the (UCPR) does not apply in such proceedings (UCPR r 1.5, Sch 1). Costs are in the discretion of the Court (s 98(1) of the Civil Procedure Act 2005). 2. In Banno v Commonwealth of Australia (1993) 45 FCR 32 (Banno), Wilcox J observed, at 51, concerning compensation claims made by dispossessed owners of property which has been compulsorily acquired for a public purpose: But this is not ordinary litigation. The relationship between the parties giving rise to the litigation did not arise out of their mutual desire; it arose because of a unilateral decision of the Commonwealth to acquire the applicants' land in order to satisfy a perceived public need. The acquisition left the applicants in the position of either accepting the Commonwealth's assessment of the proper compensation or of having the Court rule on its adequacy. 1. His Honour's conclusion in those proceedings was that compulsory acquisition of private real property, when subject to curial proceedings to determine the quantum of compensation to be paid to the dispossessed owner, will usually be followed by a costs order in favour of the dispossessed owner. This has been adopted as applicable in this jurisdiction for compensation litigation pursuant to the Land Acquisition Act by the Court of Appeal in Dillon v Gosford City Council (2011) 184 LGERA 179; [2011] NSWCA 328 (Dillon), per Basten JA at [70] to [72]. 2. Even in circumstances where the result is a mixed one, where a dispossessed owner does not achieve complete success, but only succeeds on some elements, nonetheless, it is appropriate to make a costs order in favour of the dispossessed owner (Brock v Roads and Maritime Services (formerly Roads and Traffic Authority of NSW) (2012) 191 LGERA 267; [2012] NSWCA 404) per Tobias AJA at [95] to [98]. 3. Although, conventionally in Class 3 compensation proceedings, costs are only awarded to a dispossessed owner if that owner obtains a compensation result which is greater than that which had been originally determined by the Valuer General or proposed in the proceedings by the acquiring authority, that is not the universal position. I am given a broad discretion by s 98(1)(a) of the Civil Procedure Act 2005 to determine how costs of these proceedings should fall. 4. The unusual nature of the contest between the parties – particularly the resolution of what was the public purpose to which the statutory disregard was to be applied engages my consideration of this costs discretion whatever the financial outcome for the Applicants. 5. That these proceedings concerned statutory construction as applied to the facts, where it could not be said that the propositions advanced on behalf of the Applicants were so entirely lacking in merit as to be fanciful, means that there is no basis upon which I could conclude that the litigation was commenced and continued on behalf of the Applicants in any unreasonable fashion nor at unnecessary expense. 6. As a consequence, I am satisfied that, despite the overall result of the proceedings being that the Applicants may not have obtained an assessment of market value greater than that determined by the Valuer General (an observation I make as I am awaiting final computation of the B1 site value in the fashion earlier set out), I am nonetheless satisfied that it would be appropriate to order that the Ministerial Corporation pay the Applicants' costs of these proceedings. 7. Although a considerable portion of the evidence and of the time taken in the proceedings was devoted to consideration of development potentiality of either hypothetical underlying zoning and what would be resultant valuation on the R3 Medium Density Residential basis advanced for the Applicants and they were unsuccessful on these points, the unusual nature of the contest between the parties – one of dominance requiring the resolution of what was the public purpose as the starting point for the following valuation process – means that I can see no basis why any question of costs apportionment should arise (although this is possible - James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296). 8. I have also considered the potentiality that my conclusion as to the statutory disregard might be appealed unsuccessfully (my earlier valuation conclusion on an R3 basis being provided to assist the parties in the event of a successful appeal by the Applicants). In doing so, I have turned, on a contingent basis, to what might be the costs outcome in this jurisdiction should there have been any potentially relevant offer of compromise (whether on a Calderbank offer or UCPR r 42.15 basis being irrelevant) made which might potentially impact on costs outcomes. 9. Although applying to the specific circumstances, the position taken in a recent case in the Court of Appeal (Croghan v Blacktown City Council [2019] NSWCA 2480) resulted in the dispossessed owner - acting reasonably in all circumstances - still having a costs order in his favour for the costs of the hearing in the first instance despite rejecting a higher offer of compromise. 10. It strikes me that, given the nature of the contest before me, that this should also, prima facie, be the position arising if there are one or more offers of compromise in play here. Directions 1. I give the following directions: 1. The matter is listed for mention on 25 October 2023 at 9.00am; 2. The Ministerial Corporation is directed to provide orders (copied to the Applicants) giving effect to my determinations made concerning valuation of the hypothetical B1 development outcome and my disbursements determination with those orders to be provided to my Associate by 12:00pm on 23 October 2023; and 3. If direction (2) is complied with and the Applicants do not notify my Associate by 3:00pm on 24 October 2023 that the mention remains required for some reason, I will make orders in chambers and vacate the mention on 25 October 2023. ********** Amendments 23 October 2023 - Name of the Respondent changed from "Ministerial Planning Corporation" to "Planning Ministerial Corporation". 23 October 2023 - Name of the Respondent under the "Parties" heading changed from "Ministerial Planning Corporation" to "Planning Ministerial Corporation". 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: 23 October 2023