Land and Environment Court New South Wales Medium Neutral Citation: Dibb v Transport for NSW [2023] NSWLEC 114 Hearing dates: 29, 30 May, 1, 2, 5, 6, 7, 8, 9 June, 7 July 2023 Date of orders: 26 October 2023 Decision date: 26 October 2023 Jurisdiction: Class 3 Before: Pain J Decision: See below in [444]. Catchwords: COMPULSORY ACQUISITION – market value of acquired land – underlying zoning at acquisition date low density residential – numerous constraints on development of land for 26-lot subdivision in mind of hypothetical purchaser – river on land with need to obtain approval to pipe and traffic access and topography constraints affect consideration of risk in valuation process – relatively risk free 7-lot subdivision should be valued – disputed comparable sales adjustments considered – disturbance claim that actual use of land for land banking accepted Legislation Cited: Coffs Harbour Local Environmental Plan 2013 (NSW), cl 7.6, Land Use Table Coffs Harbour City Local Environmental Plan 2000 (NSW) Interpretation Act 1987 (NSW), s 33 Land Acquisition (Just Terms Compensation) Act 1991 (NSW), ss 42, 54, 55, 56, 59, 61, 66 Local Government Act 1993 (NSW) North Coast Regional Environmental Plan 1998, cl 38 Rivers and Foreshores Improvement Act 1948 (NSW), s 2 Valuation of Land Act 1916 (NSW), s 6A Water Management Act 2000 (NSW), ss 91, 91E, Dictionary Water Management (General) Regulation 2018 (NSW), reg 3, Sch 2 Cases Cited: Attard v Transport for NSW (2014) 205 LGERA 396; [2014] NSWLEC 44 Azzopardi v Gosford City Council (2002) 123 LGERA 118; [2002] NSWCA 234 Blacktown Council v Fitzpatrick Investments Pty Ltd [2001] NSWCA 259 Boland v Yates Property Corporation Pty Ltd (1999) 74 ALJR 209; [1999] HCA 64 Chaudry v Liverpool City Council [2008] NSWLEC 251 Coffs Harbour City Council v Noubia Pty Limited [2022] NSWCA 32 Everest Project Developments Pty Ltd v Minister Administering the Environmental Planning and Assessment Act 1979 (2010) 177 LGERA 43; [2010] NSWLEC 88 G Capital Corporation Pty Ltd v Roads and Maritime Services (2019) 103 NSWLR 543; [2019] NSWCA 243 G&J Drivas Pty Ltd v Sydney Metro [2023] NSWLEC 20 Harrison v Perdikaris [2015] NSWLEC 99 Hoy v Coffs Harbour City Council [2015] NSWLEC 128 Knezovic v Shire of Swan-Guildford (1968) 118 CLR 468; [1968] HCA 38 Olefines Pty Ltd v Valuer-General (NSW) (2018) 234 LGERA 444; [2018] NSWCA 265 Roads and Traffic Authority (NSW) v Mosca (2006) 146 LGERA 335; [2006] NSWCA 159 Rocco Fraietta v Roads and Maritime Services [2017] NSWLEC 11 SNS Pty Ltd v Roads and Maritime Services (2018) 232 LGERA 224; [2018] NSWLEC 7 Spencer v the Commonwealth of Australia (1907) 5 CLR 418; [1907] HCA 82 Speter v Roads and Maritime Services [2016] NSWLEC 128 Sydney Water Corporation v Caruso (2009) 170 LGERA 298; [2009] NSWCA 391 SZTAL v Minister for Immigration and Border Protection (2017) 91 ALJR 936; [2017] HCA 34 Woollams v the Minister (1957) 2 LGRA 338 Yates Property Corporation Pty Ltd (In Liq) v Darling Harbour Authority (1991) 24 NSWLR 156; 73 LGRA 47 Zouki v Water Administration Ministerial Corporation (2001) 118 LGERA 229; [2001] NSWLEC 258 Texts Cited: Alan Hyam, The Law Affecting the Valuation of Land in Australia (6th ed, 2020, Federation Press) Austroads, Guide to Road Design Part 3 – Geometric Design (February 2021) Coffs Harbour City Land Urban Capacity Assessment 2004 Coffs Harbour Urban Development Strategy 1996 Coffs Harbour Rural Residential Strategy 1999 Development Specification Design 0074 Stormwater Drainage (Design) Natural Resources Access Regulator, "Guidelines for controlled activities on waterfront land – Riparian corridors" (May 2018) M Taylor and R Stokes, "Up the creek: what is wrong with the definition of a river in New South Wales?" (2005) 22 EPLJ 193 Macquarie dictionary, revised 3rd ed, 2001 Our Living City Settlement Strategy 2008 Pacific Highway Planning Strategy Discussion Paper Category: Principal judgment Parties: Raymond Joseph Dibb (First Applicant) Wendy Lynn Dibb (Second Applicant) Transport for NSW (Respondent) Representation: Counsel: I Hemmings SC with L Nurpuri (Applicants) J McKelvey with H Grace (Respondent) Solicitors: Pikes & Verekers Lawyers (Applicants) Maddocks Lawyers (Respondent) File Number(s): 2022/137180 Index Land Acquisition (Just Terms Compensation) Act 1991 (NSW) Issues Evidence Applicants' evidence Respondent's evidence Issue 1: What would the land have been rezoned at acquisition date? Expert town planning evidence Applicants' submissions Respondent's submissions Finding on underlying zoning Issue 1: Conclusion Issue 2: Lot yield if land rezoned low density residential at acquisition date Development risk arising from hydrological features on land Water Management Act 2000 (NSW) Water Management (General) Regulation 2018 (NSW) Coffs Harbour Local Environmental Plan 2013 (NSW) Applicants' evidence Respondent's evidence Expert hydrology evidence Expert town planning evidence Applicants' submissions Respondent's submissions Finding on development risk arising from hydrological features on the Land Issue 2: Conclusion Issue 3: Valuation MFI 3 Expert valuation evidence Expert valuation oral evidence Applicants' submissions Respondent's submissions Finding on valuation Issue 3: Conclusion Issue 4: Disturbance Applicants' evidence Respondent's evidence Applicants' submissions Respondent's submissions Finding on disturbance Issue 4: Conclusion Costs Orders JUDGMENT 1. Mr and Mrs Dibb the Applicants seek compensation under the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) (Just Terms Act) for the compulsory acquisition of their property in Bruxner Park Road, Korora (the Land). The Land was acquired on 30 July 2021 for the Coffs Harbour Bypass Project. 2. The Land is a slightly irregular shaped lot situated on the northern side of Bruxner Park Road, about 200m west of the A1 (Pacific Highway) with a total area of 2.719ha. It is located approximately 3.7km north-east of Coffs Harbour central business district. Compensation in the amount of $5,500,000 is sought plus disturbance. 3. The Court went on a view of the Land and properties identified by the valuers as comparable. The Land was occupied by the Respondent and extensive work had been undertaken on it in pursuit of the public purpose. Land Acquisition (Just Terms Compensation) Act 1991 (NSW) 1. The Just Terms Act provides relevantly as follows: Part 3 Compensation for acquisition of land … Division 4 Determination of amount of compensation 54 Entitlement to just compensation (1) The amount of compensation to which a person is entitled under this Part is such amount as, having regard to all relevant matters under this Part, will justly compensate the person for the acquisition of the land. (2) If the compensation that is payable under this Part to a person from whom native title rights and interests in relation to land have been acquired does not amount to compensation on just terms within the meaning of the Commonwealth Native Title Act, the person concerned is entitled to such additional compensation as is necessary to ensure that the compensation is paid on that basis. 55 Relevant matters to be considered in determining amount of compensation In determining the amount of compensation to which a person is entitled, regard must be had to the following matters only (as assessed in accordance with this Division)— (a) the market value of the land on the date of its acquisition, (b) any special value of the land to the person on the date of its acquisition, (c) any loss attributable to severance, (d) any loss attributable to disturbance, (e) the disadvantage resulting from relocation, (f) any increase or decrease in the value of any other land of the person at the date of acquisition which adjoins or is severed from the acquired land by reason of the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired. 56 Market value (1) In this Act— market value of land at any time means the amount that would have been paid for the land if it had been sold at that time by a willing but not anxious seller to a willing but not anxious buyer, disregarding (for the purpose of determining the amount that would have been paid)— (a) any increase or decrease in the value of the land caused by the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired, and (b) any increase in the value of the land caused by the carrying out by the authority of the State, before the land is acquired, of improvements for the public purpose for which the land is to be acquired, and (c) any increase in the value of the land caused by its use in a manner or for a purpose contrary to law. (2) When assessing the market value of land for the purpose of paying compensation to a number of former owners of the land, the sum of the market values of each interest in the land must not (except with the approval of the Minister responsible for the authority of the State) exceed the market value of the land at the date of acquisition. (3) If— (a) the land is used for a particular purpose and there is no general market for land used for that purpose, and (b) the owner genuinely proposes to continue after the acquisition to use other land for that purpose, the market value of the land is taken, for the purpose of paying compensation, to be the reasonable cost to the owner of equivalent reinstatement in some other location. That cost is to be reduced by any costs for which compensation is payable for loss attributable to disturbance and by any likely improvement in the owner's financial position because of the relocation. … 59 Loss attributable to disturbance (1) In this Act— loss attributable to disturbance of land means any of the following— … (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), … (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. … 61 Special provision relating to market value assessed on potential of land If the market value of land is assessed on the basis that the land had potential to be used for a purpose other than that for which it is currently used, compensation is not payable in respect of— (a) any financial advantage that would necessarily have been forgone in realising that potential, and (b) any financial loss that would necessarily have been incurred in realising that potential. … Division 5 Objections and appeals to Land and Environment Court 66 Objection against amount of compensation offered (1) A person who has claimed compensation under this Part may, within 90 days after receiving a compensation notice, lodge with the Land and Environment Court an objection to the amount of compensation offered by the authority of the State. (2) If any such objection is duly lodged, the Land and Environment Court is to hear and dispose of the person's claim for compensation. …. (4) If the Land and Environment Court decides that the amount of compensation payable (without the addition of interest) does not exceed by more than 10% the amount of compensation offered by the authority of the State, the Court may cancel or reduce the amount of interest that has accrued under this Act in respect of the compensation since the institution of the proceedings. 1. The location of the Applicants' Land and the Coffs Harbour Bypass Project are identified on the map below. 2. The Land is currently zoned SP2 Infrastructure under the Coffs Harbour Local Environmental Plan 2013 (LEP 2013). Issues 1. The following issues arise for determination: 1. Underlying zoning at date of acquisition disputed by parties. The Applicants contend the Land would have been zoned low density residential (R1 General Residential (R1) or R2 Low Density Residential (R2)). The Respondent contends the Land would have been zoned rural residential (R5 Large Lot Residential). If zoned R5 town planners and valuers agree assumed yield for valuation purposes is two large lots (1ha minimum). The valuers disagree how to value these lots. 2. If zoned low density residential town planners and valuers disagree the assumed yield (400m-500m2 blocks) for valuation purposes. 1. If stormwater can be piped, assumed yield is 26 lots on Applicants' case (25 small lots and one large lot). The Respondent contends for 20 small lots. 1. Hydrology – what is the allowance for risk of a river flowing west-east across the Land and whether it could be piped? 2. Road access - whether impact on lot yield and risk. 3. Topography – whether impact on lot yield and risk. 1. If stormwater cannot be piped, the assumed yield of six residential lots and one large rural residential lot is agreed. The valuers disagree how these should be valued. The Applicants contend the hypothetical purchaser would value the Land higher than the 7-lot subdivision. 1. Lot value of R1 and R5 sales disagreed based on valuers' approaches to R1 and R5 comparable sales and how the valuers account for risk. 2. The parties disagree the loss attributable to disturbance under s 59(1)(f) of the Just Terms Act. The Respondent contends that the Applicants were not in the business of subdivision, while the Applicants contend they were. 1. The Court is acting as the judicial valuer in this case: Sydney Water Corporation v Caruso (2009) 170 LGERA 298; [2009] NSWCA 391 (Caruso) at [3], [35], [37], [146] and [150] and Yates Property Corporation Pty Ltd (In Liq) v Darling Harbour Authority (1991) 24 NSWLR 156; 73 LGRA 47 (Yates). A well-established principle of valuation for a dispossessed owner is that property should be compensated for on the basis of its highest and best use: Boland v Yates Property Corporation Pty Ltd (1999) 74 ALJR 209; [1999] HCA 64 (per Callinan J) at [271]. The concept of highest and best use was described in Olefines Pty Ltd v Valuer-General (NSW) (2018) 234 LGERA 444; [2018] NSWCA 265 by Basten JA at [16] (there referring to s 6A of the Valuation of Land Act 1916 (NSW) as the most financially rewarding use permitted. 2. The Land must be valued in the condition in which it existed at the acquisition date with regard to its potential for redevelopment: Yates at 175-176. The parties are assumed to be "perfectly acquainted with the land, and cognizant of all circumstances which might affect...[its] value": Spencer v the Commonwealth of Australia (1907) 5 CLR 418; [1907] HCA 82 at 441 per Isaacs J. They are to be taken to be "fully informed" and as having made "all proper inquiries": Everest Project Developments Pty Ltd v Minister Administering the Environmental Planning and Assessment Act 1979 (2010) 177 LGERA 43; [2010] NSWLEC 88 at 58. 3. As a general principle, in determining compensation doubts should be resolved in favour of the applicant. However, "[t]hat does not … detract from the need to engage with and evaluate evidence and competing witnesses": Caruso at [3] per Allsop P. The Court must evaluate the expert evidence in the usual way: Caruso at [4]. Evidence Applicants' evidence 1. The Applicants tendered the following evidence inter alia: 1. Court book (Ex A); 2. Two volume evidence book (Ex B); 3. Seven volume tender bundle (Ex C); and 4. Applicants' bundle of documents tabs one to five (Ex D). Respondent's evidence 1. The Respondent tendered the following evidence inter alia: 1. Respondent's supplementary tender bundle (Ex 3); and 2. Site inspection itinerary and maps (Ex 4). Issue 1: What would the land have been rezoned at acquisition date? 1. The first issue is but for the public purpose what would the Land have been zoned at the acquisition date. 2. By Amendment 34 to Coffs Harbour City Local Environmental Plan 2000 (NSW) (LEP 2000) on 15 June 2012 the Applicants' land was zoned Special Uses 5A Community Purposes Zone. That was the first time a public purpose zoning was applied to the Land. According to the Applicants, setting aside the public purpose the Court must determine what would the Land have been rezoned upon the making of Amendment 34 to the LEP 2000 on 15 June 2012. 3. A chronology of relevant strategic planning decisions contained in the evidence (evidence book, tender bundle, the Applicants' bundle of documents and the Respondent's supplementary tender bundle) referred to by the parties is set out in summary form below. Coffs Harbour Urban Development Strategy 1996 1. In 1996 the Coffs Harbour City Council (The Council) prepared the Coffs Harbour Urban Development Strategy 1996 (CHUDS). The Coffs Harbour Urban Development Strategy Five-Year Plan 1996-2001 identified the Korora Basin and West Korora as a "special investigation" area for urban and rural residential potential. Coffs Harbour Rural Residential Strategy 1999 1. In Coffs Harbour Rural Residential Strategy 1999 the Council identified "preferred development areas" being considered for rural residential development. The Land was located within the preferred "Korora Investigation Area" as shown on the preferred area map below: Coffs Harbour City Local Environmental Plan 2000 1. When the LEP 2000 was made, the Land was zoned Rural 1A Agriculture Zone. The parties agreed this zoning was not influenced by the public purpose. Amendment 3 to LEP 2000 gazetted 2004 1. Draft Amendment 3 to LEP 2000 was exhibited on or around 12 April 2001. On the rezoning map (extracted below) the Land was shown as Rural 1B Living Zone (being rural residential living) and along the northern boundary Rural 1A Agriculture Zone (being general rural) due to existing vegetation: 2. In September 2001 the Roads and Traffic Authority (now Transport for NSW) placed the Pacific Highway Planning Strategy Discussion Paper on public exhibition. 3. On 24 January 2002 the Council considered draft Amendment 3 to LEP 2000 on the zoning of rural residential lands in Korora. The Council officer's report on draft Amendment 3 before the Council on 24 January 2002 stated: Background: The Coffs Harbour Rural Residential Strategy 1999 identified a demand for rural living opportunities in Coffs Harbour. The Rural Residential Strategy was undertaken to provide a strategic direction to planning for rural residential development. The Korora rural residential area is the first release under the Strategy. Rural residential development has the potential to provide an alternative lifestyle option of low density living in a rural setting. The Korora area was selected to provide opportunity for rural living close to urban areas, allowing access to employment, commerce, recreation and community facilities. … 5. Impact of the Coffs Harbour Highway Planning Strategy – Inner Route – on the study area. The Inner Route of the Coffs Harbour Highway Planning Strategy is shown to cross lands in the West Korora Road area and to connect with the current alignment of the Highway immediately north of the Bruxner Park Road intersection. The western "edge" of this inner route extends to the north to the Korora Nature Reserve, thus having a potential impact on properties on the north of Bruxner Park Road. The lands in the west Korora area are identified to be "deferred" from the rezoning pending further investigations. This could coincide with the decision process for the highway route selection and eventual by-pass construction. The Bruxner Park Road (and north) lands will remain included in this rezoning, however the Highway Planning Strategy may impact upon these lands. 1. An area of land south of Bruxner Park Road was identified as deferred in draft Amendment 3 before the Council. The Land did not form part of the "deferred area" as shown on the map extracted below from draft Amendment 3 (attached to the agenda to ordinary meeting of the Council on 24 January 2002): 2. The Council adopted the following recommendation in the minutes of the ordinary meeting of the Council on 24 January 2002: PED1 DRAFT AMENDMENT NO. 3 TO LOCAL ENVIRONMENTAL PLAN 2000: RURAL RESIDENTIAL LANDS, KORORA RECOMMENDED (Palmer/Ovens) that Council: 1. Adopt Local Environmental Plan 2000 (Amendment No. 3) as attached to PED1 for the Korora area and forward it to planning NSW for gazettal. 2. Defer from the Local Environmental Plan (Amendment No. 3) all that area shown as 'Deferred Area' on the map attached to PED1 until issues relating to potential urban land and Pacific Highway Planning Strategy are resolved. 3. Adopt the Korora Rural Residential Development Control Plan, as circulated to Councillors. 4. Place the amended Developer Contributions Plan, as circulated to Councillors, on exhibition for a period of one month. 5. Advise all landowners in the Korora Investigation Area of Council's decision. 1. In a letter sent from the Council to the Department of Planning on 2 April 2002 a copy of the LEP 2000 (Amendment 3) was enclosed for gazettal. The letter noted that part of the area had been deferred from rezoning. 2. On 16 May 2002 the Department of Planning sent a reply letter to the Council stating: More importantly, there are difficulties in processing a plan for any land releases in this area before the Pacific Highway Planning Strategy is complete. I appreciate that some of the land has been deferred for consideration after decisions on the highway route have been made. However, I believe it is premature to process the plan for any of this area [Korora] until decisions on the highway's location are finalised. 1. On 20 May 2002 the Council responded to the letter stating the Council considered "the most appropriate mechanism to deal with the highway issue was to defer the land identified [see above in [22]] as likely to be impacted by the proposed highway realignment." 2. In a report to the Council dated 15 August 2003 addressing draft Amendment 3 under the heading Highway Issues deferred areas were identified in accordance with the map below: [I note the deferred area north of Bruxner Park Road is referred to as the "Triangle" in the town planners' oral evidence and the parties' submissions.] 3. On 27 February 2004 Amendment 3 to LEP 2000 was made. The Land was located within the deferred area. Coffs Harbour City Land Urban Capacity Assessment 2004 1. In 2004 the Council prepared the Coffs Harbour City Land Urban Capacity Assessment 2004 (CHCLUCA). The Land was not included in the urban investigation or release areas under CHCLUCA. Our Living City Settlement Strategy 2008 1. In 2004 the Council prepared a draft Our Living City Settlement Discussion Paper that did not include the Land within an area described as "possible area for urban expansion". The draft discussion paper considered the possibility of three development scenarios being the "compact city", the "expanding city" and the "dispersed city". 2. Council staff made the following recommendations for the Our Living City Settlement Strategy (OLCSS) to the Council in an ordinary meeting on 1 December 2005 based on community feedback: • Rural Residential Development Council has gradually been releasing rural residential land stocks in recent years in accordance with its Rural Residential Strategy 1999. The most recent has been the Korora rural residential release area, and land at Coramba and Nana Glen. A number of submissions in support of the compact city development scenario have criticized rural residential development, particularly on steeper land in the coastal hinterland. Several have stated that if people wish to live a rural type lifestyle we should provide this style of development in our rural hinterland in proximity to Coramba and Nana Glen. Several of the government authorities have also questioned the need for rural residential development, and the difficulties it has created in terms of ribbon development along the Pacific Highway. There are serious long-term implications with respect to rural residential development in terms of its footprint over the land, environmental impacts, underutilisation of a scarce resource and subsequent pressure on Council for the servicing of such land. It is recommended that Council consider no future rezonings for rural residential development in the coastal part of the LGA with the exception of residue land in Council's Rural Residential Strategy 1999. This would mean that land at Bonville proposed for rural residential development could still be undertaken in accordance with the existing Rural Residential Strategy, and given a Priority 2 listing for release, which is consistent with the release timing in that Strategy. Residue lands at Tiki Road and West Boambee are no longer considered appropriate and are not to be included in this strategy. It may be appropriate to consider additional rural residential development in proximity to Coramba and/or Nana Glen in future years, to cater for people who want a true rural residential lifestyle, rather than for people who want to live on larger residential lots close to existing urban centres. A number of submissions have been received from people with small lot rural lands and banana lands who request rural residential subdivision because their banana lands are no longer viable. Often these lands have significant constraints in terms of steepness and vegetation, and the subdivision of such land proves difficult in terms of environmental sustainability (the Korora rural residential land release is a case in point). It is considered more suitable that a Sustainable Agriculture Strategy be developed by Council to address the viability of small lot horticulture, rather than simply allowing these lands to be subdivided for residences. • Development and Release Areas The Land Capacity Assessment 2004 identified a number of lands along the coastal strip that are capable of urban development, and which are not overly constrained by environmental or servicing issues. These lands have been shown on a map in the Discussion Paper, and listed as "Possible Development Areas". That map did not define whether these uses should incorporate residential, rural residential or employment zones. This was done to make the community aware the Settlement Strategy was in very draft form, and to encourage community comment. Now that it is recommended that Council choose the Compact City option, the following analysis is provided for various areas of the LGA. Map 1 attached shows the recommended urban investigation areas, and gives priority release recommendations based on Priority 1 (short term within less than 5 years), Priority 2 (mid term within 5 – 10 years) and Priority 3 (longer than 10 years). Additional lands are noted as long-term urban investigation. Demand and supply analyses have not yet been completed until Council confirms its direction for these release areas. This work will be completed prior to the finalisation of the Draft Strategy. West Korora and Mastracolas Road Many submissions have been received from landholders in this general vicinity. There have been many requests that this area be zoned for residential development. Whilst there are significant constraints for parts of the land (generally in terms of slope, future highway noise and vegetation), parts of it are suitable for development. This land would form a logical extension of Coffs Harbour urban area and could be given a Priority 1 listing. The matter of Submission No. 28 was reported to Council on 18 August 2005, and Council offered its support in principle for urban development of this land, upgrading of the site, and its inclusion in the Settlement Strategy. Council's City Services staff have confirmed that the 55m AHD contour is the upper limit for development in this location. Lands higher than this are unable to be serviced, without significant and costly upgrades, which are not included in Council's current servicing program. This constraint therefore divides the land into two land release parcels – land fronting West Korora Road and land fronting Mastracolas Road, which would be linked via land near The Summit development area. It is recommended that this entire area below the 55m AHD contour be included in the Settlement Strategy, and given a Priority 1 listing. Environmental studies prior to rezoning will confirm the capacity of this land for urban development and the final lands that should be rezoned. 1. On 1 December 2005, the Council resolved: 1. That Council adopt the principle of a Compact City scenario, in order to progress a draft settlement strategy. 2. That Councillors undertake a workshop with Council staff to progress the details of the Compact City scenario, prior to completing the draft Settlement Strategy. 3. That Council adopt the development areas as outlined in Map 1. 4. That Council adopt the priority release recommendations outlined on Map 1. 5. That all persons who made submissions to the Settlement Strategy be advised of Council's resolution. 1. In the Council meeting minutes dated 1 December 2005 the Land was mapped as Priority 1 – Residential in the "Coffs Harbour North Development Area" as shown below in red. Urban investigation of Priority 1 areas was recommended within 5 years: 2. The draft OLCSS was publicly exhibited in June 2006. Exhibited map 6A extracted below shows the Land as Priority 1 for "investigation areas for urban purposes": 3. The draft OLCSS identified the Land within an area of "possible residential expansion" in Korora on the map extracted below: 4. On 5 July 2007 the Council resolved to send the OLCSS to the Department of Planning "for endorsement". 5. On 6 November 2007 the Department of Planning responded to the Council pursuant to cl 38 of the North Coast Regional Environmental Plan 1998 extracted below: PART 4 – URBAN DEVELOPMENT DIVISION 1 – Strategic Planning … 38. (1) "the council shall not decide to prepare a local environmental plan which permits development which constitutes in the opinion of the Council (subject to directions given by the Director of Environment and Planning) significant urban growth unless it has prepared an urban land release strategy for the whole of its local government area." (2) A local environmental plan referred to in subclause (1) shall be generally consistent with the strategy referred to in that subclause. (3) The strategy referred to in subclause (1) shall- (a) be based on a land release program and population projects agreed between the council and the Director; (b) give preference to area which are the most economic to service; (c) not include for development land that is unsuitable due to any environmental hazard unless the council has made an assessment of the risk and considered it to be minor or alternatively has made provision for the control or reduction of that hazard; and (d) not include for development land which has conservation value or which has heritage, environmental or cultural significance. And shall be exhibited for public comment and be available for public inspection, without charge, at the office of the council during normal office hours. 1. The Department of Planning granted an interim agreement for OLCSS on 6 November 2007 as follows: I understand that Council is currently undertaking various planning tasks to address its immediate growth needs and in order to allow Council to continue this process I am proposing to grant an interim agreement to the Our Living City strategy. However, for the longer-term planning identified in Council's strategy it is more appropriate that the Mid North Coast Regional Strategy planning be completed prior to my considering the rest of Council's strategy. As a result, pursuant to clause 38(3) of the North Coast Regional Environmental Plan, I issue an interim agreement to cover the following specific short-term 2006-2011 areas and minor housekeeping matters identified in the Our Living City strategy: (i) the two priority 1 areas identified as proposed agreed growth areas for residential development at Korora and shown red on map 6B; … 1. The OLCSS was published in February 2008 (and amended in November 2010 following the development of the Mid North Coast Regional Strategy). The Korora proposed growth area, granted interim agreement by the Department of Planning, is identified on map 6B extracted below: [I note Map 6C constraints identifies a small section on the northern boundary of the Land constrained by existing vegetation.] Thakral Lands 1. An adjoining property to the south and east of the Land (the Thakral Lands) was the subject of a private proponent-lead planning proposal to rezone land. The Thakral Lands were zoned Rural 1A Agriculture Zone, Environmental Protection 7A Habitat and Catchment Zone and Environmental Protection 7B Scenic Buffer Zone under LEP 2000. A Local Environmental Study dated 18 June 2010 found the Thakral Lands were most suitable to be rezoned to allow for a mixture of urban development, open space and recreation and environmental impacts. Local Environmental Study Amendment 34 2010 and 2011 1. The Council prepared the first draft of Local Environmental Study (LES) dated 7 October 2010 of the North Coffs Release Area for Amendment 34 of the LEP 2000. The North Coffs Release Area was the proposed growth area identified in the OLCSS as a potential area for future urban growth (see above [39]). The draft LES stated: The study area is mapped in the OLCSS as being an investigation area for urban purposes. It was previously identified as being a potential area for urban development in the Coffs Harbour Urban Development Strategy. This indicates that although the study area contains viable agricultural land, development for urban purposes is considered to be a more optimum land use. 1. The opportunities and constraints map that also identifies the study area of the draft LES is extracted below: 2. The structure plan in the draft LES identified potential residential precincts. The North Coffs Release Area Structure Plan and precinct R5 identified for low density residential zoning are shown on the map extracted below. The draft LES stated that "standard residential lots within this precinct [R5] would be an appropriate form of development." 3. The land to the east and south of precinct R5 are the Thakral Lands (identified on the map below and excluded from the study area so that the study area does not follow the Pacific Highway corridor) progressed by a separate private planning proposal for a change of zoning. 4. The recommended zoning map in the draft LES is extracted below: [The Land is identified as Rural 1A Agriculture Zone and precinct R5 is identified as Residential 2A Low Density Zone.] 5. In the second draft of the LES dated 8 June 2011, there were no changes to the opportunities and constraints mapping (see above in [42]). Precincts R4 and R5 were not recommended for rezoning and not included in the North Coffs Release Area Structure Plan based on advice from the Department of Industry and Investment dated 3 July 2006 and 21 December 2010 as follows: Upon its review of the draft LEP no. 31, I&I expressed concerns regarding potential development sites located along West Korora Road, and also a potential development site adjoining the Thakral Lands of Bruxner Park Road. I&I were not in favour of the disjointed nature of these potential development sites. I&I reiterated the need to apply 150m buffers between urban development and agricultural banana land uses due to the high potential for land use conflict. I&I recommended that the potential development sites/ areas in question are not included in the North Coffs release area structure plan nor the rezoning recommendations for urban development. Amendments 34 and 38 to LEP 2000 1. Amendment 34 was adopted by the Council on 9 February 2012. The Land was rezoned Special Uses 5A Community Purposes Zone on 15 June 2012 when Amendment 24 was made. The Thakral Lands were rezoned Residential 2A Low Density Zone in Amendment 38 to LEP 2000 on 1 June 2012. Expert town planning evidence 1. The following expert town planning evidence was filed in this proceeding: 1. Expert report of Mr Connelly town planner called by the Applicants dated August 2022 (Connelly #1); 2. Expert report of Mr Rowan town planner called by the Respondent dated 12 August 2022 (Rowan #1); 3. Joint expert report (JER) of Mr Connelly and Mr Rowan dated 2 September 2022 (town planning JER #1); 4. Expert Report of Mr Connelly on lot yield dated February 2023 (Connelly #2); 5. Expert Report of Mr Hams subdivision engineer called by the Respondent on lot yield dated 17 February 2023 (Hams #1); 6. Supplementary expert report of Mr Rowan dated 21 February 2023 (Rowan #2); 7. Supplementary expert report of Mr Connelly dated March 2023 (Connelly #3); and 8. Joint expert report of Mr Connelly, Mr Hams and Mr Rowan dated 2 May 2023 (town planning JER #2). 1. The evidence of Mr Hams is largely relevant to lot yield rather than underlying zoning. Report of Mr Connelly (Connelly #1) 1. In Connelly #1 Mr Connelly's opinion was that the Land was destined for residential zoning had it not been for the highway by-pass. The highway alignment was the only constraint on the Land. Alternatively, he envisaged that following Amendment 38 for the Thakral Lands or an owner-initiated planning proposal the Land would have been zoned for residential purposes. In his opinion that process would have been a straightforward and cost-efficient exercise given the research that had already been compiled for Amendments 34 and 38. I note the Applicants do not submit that the land would have been rezoned in an owner-initiated planning proposal. Report of Mr Rowan (Rowan #1) 1. In Rowan #1 Mr Rowan opined that absent the public purpose the Land would have been zoned R5 Large Lot Residential under LEP 2023 at the date of acquisition for the following reasons: a. the subject land would not have been precluded from the zoning map to which Amendment No.3 to LEP 2000 as was gazetted in 2004 (' Amendment No.3 '); b. the subject land would have retained a zoning of 1B under Amendment No.3 as had been publicly exhibited, and subsequently adopted by resolution of Council post­ exhibition on 24 January 2002, to be so upon final gazettal of the instrument. The subject land was not identified at the time of the Council resolution for inclusion in a Deferred Area that was identified for future urban investigation, i.e. comprising land south of Bruxner Park Road that was therefore precluded from the draft instrument ('Deferred Area'); c. the subject land was only identified in the Deferred Area due to the public purpose. Subsequent actions of the Department (in reply to a Council request for the gazettal of Amendment No.3 in accordance with the Council resolution of 24 January 2002) were due to the influence of the public purpose. Those actions resulted in a subsequent modification of the draft zoning map of Amendment No.3, i.e. the footprint of the Deferred Area adopted the indicative alignment of the public purpose for its western and northern boundaries. As a consequence, the Deferred Area was extended northwards of Bruxner Park Road which included the subject land, i.e. so precluding it from being rezoned under Amendment No.3; and being subsequently evaluated for future urban investigation; d. absent the public purpose, the subject land would have been initially zoned under Amendment No.3 to Zone 1B Rural Living and be subject to a 1 ha minimum lot size under LEP 2000. A portion of the subject land, along its northern boundary would have retained its former 1A Agriculture (or potentially resulted in a 7A Environmental Conservation zoning (to reflect an area of identified koala habitat vegetation on the land as was initially identified on the adopted draft zoning map of 24 January 2004); and e. the subject land would have been zoned in a like manner to other land which had been initially proposed for rezoning to 1 B under Amendment No.3 as per the Council resolution of 24 January 2004 (absent any influence of the public purpose); and thereafter zoned in that manner within LEP 2000. Those properties were consequently zoned RS Large Lots Residential in the making of LEP 2013; and remained subject to a minimum lot size provision of 1 ha for land subdivision. 1. Mr Rowan summarised the consideration and impact of community submissions on Amendment 3 as follows. 38. On 24 January 2002, the Council prepared a report that considered public submissions to Draft Amendment No.3. The officer report included: a. the consideration of submissions by some landowners who had requested their land be considered for residential zoning. In response to those submissions, it was advised that a preliminary investigation (by Council's engineers) of some land up 55AHD in the West Korora Area (to be referred to as Area B) had determined that such land could potentially be supplied with reticulated water, for which further investigation and detailed calculations were required (by consultants for the landowners). On that assumption, the officer report recommended that some land proposed to be rezoned under Draft Amendment No.3 be otherwise mapped as a Deferred Area 'to allow examination of their potential for residential development' (' Deferred Area'); … 43. Thereafter, in August 2003,21 regarding Draft Amendment No.3, Council considered, and resolved to adopt, an amended zoning map that differed from that which had been adopted by the Council on 24 January 2002 (for gazettal by the Department). The revised zoning map had been prepared following consultation with the RTA and the Department22 ('draft August 2003 map'). The western and northern extent of the Deferred Area on the draft August 2003 map was seemingly defined by the proposed alignment of the public purpose so-called Inner Corridor route; and its eastern boundary, the current highway (Image 18). Unlike that which been adopted on 24 January 2002, the modified footprint of the Deferred Area on the draft August 2003 map extended north of Bruxner Park Road to the location where the indicative alignment of the Inner Corridor route was shown (on public purpose mapping) to intersect with the existing highway north of Coffs Harbour. The revised footprint of the Deferred Area on the draft August 2003 map included the subject land (Image 18). … 44. In December 2003, the Council submitted the revised draft documentation for Draft Amendment No.3 including the draft August 2003 map, as had been adopted by the Council to the Department. The forwarded instrument excluded the Deferred Area as had been adopted on 21 August 2003 (including the subject land) from rezoning under that instrument. Thereafter, on 27 February 2004, Amendment No.3 to LEP 2000 was gazetted in that manner. The remaining footprint area of the Preferred Area (i.e. excluding the footprint of the Deferred Area) previously considered suitable for future 1ha subdivision in the Korora RRRA was primarily zoned 1B Rural Living (with some minor portions zoned 7A) in the final Amendment No.3 instrument under LEP 2000. Its related DCP was also adopted at that time. 1. Mr Rowan attached the following extract from a topographical mapping in a LES prepared in March 2001 for draft Amendment 3 to his report: Town planning joint expert report of Mr Connelly and Mr Rowan (town planning JER #1) 1. In the town planning JER #1 Mr Connelly and Mr Rowan agreed the timing of gazettal of Amendment 3 was delayed to 27 February 2004. Absent the public purpose Amendment 3 would have been gazetted and taken affect soon after the resolution of the Council at its meeting of 24 January 2002. Absent the public purpose the Land would not have been included within the footprint of the deferred area for future urban investigation. The experts also agreed the following about underlying zoning of the Land upon gazettal Amendment 3 to LEP 2000 in 2004: 21. As at 2002, upon finalisation of Amendment No.3, absent the public purpose, the underlying zone of the subject land would have been primarily 1B, and 1A along the northern boundary of the subject land under LEP 2000. 1. The town planning experts disagreed absent the public purpose as to whether the land would have been zoned for residential purposes in the finalisation of Amendment 34. Mr Connelly asserted the land would have been zoned for residential purposes. The Land was included in the draft OLCSS. The Land was below RL 55M AHD and that is the key strategic planning criteria in West Korora. Land below RL 55M AHD was suitable for residential development as later confirmed by the draft LES for Amendment 34. The Land was not identified as high biodiversity land, is not prime crop or pastural land and was not located within 150m of active banana farming land. The Land was proximate to the Pacific Highway intersection which was to be upgraded to facilitate the Thakral Lands development and will have excellent connectivity to the urban area of Coffs Harbour. 2. The Council had adopted a "compact city" approach to future urban development. All regional strategic planning since 1988 was leading to increase in the density of residential development proximate to Coffs Harbour primary urban area as supported by the Department of Planning. In Mr Connelly's opinion it would have been wasteful to provide for development only on the southern side of Bruxner Park Road. The mapping area for the North Coffs Development Area and the deferred area plan did not mimic each other in all instances. The boundary of the Norths Coffs Development Area adopted the RL 55M AHD contour or the highway bypass alignment. In summary, Mr Connelly's opinion was that if not for the public purpose the North Coffs Development Area would have generally included all land below the RL 55M AHD contour that enjoyed reasonable accessibility to the pacific highway. 3. Mr Connelly contacted Mr Fry an officer of the Council who oversaw the LES preparation process who advised precinct R5 was removed from the final draft of the strategy due to the costs involved in road and utility services. Based on the development considered in the draft LES, Mr Connelly calculated the development costs for precinct R5 in the order of $147,000/lot. Based on that figure Mr Connelly understood why the Council withdrew precinct R5 from the final LES, however he estimated a yield of 105 lots from a collaborative development with adjoining landowners that would reduce development costs depicted below in [63]. 4. Mr Rowan stated that absent the public purpose the Land would have been Rural 1B Living Zone and Rural 1A Agriculture Zone. He observed that none of the land zoned for residential purposes had been developed since Amendments 34 and 38 were made, and none of the road construction or works for Bruxner Park Road had been undertaken. The Council reasoning as to why former draft precinct R5 was removed is quite clear in the Council's final draft LES (see above in [46]) and in the report to the Council prior to exhibition of draft Amendment 34 (not in evidence). In his view there is no evidence that would alter the decision-making of the Council in the preparation of Amendment 34 to omit those lands absent the public purpose. He stated the Land could not be distinguished for strategic planning purposes from other land identified as precinct R5 prior to it being omitted from Amendment 34. Considerations for precinct R5 being omitted relate to agricultural concern and isolation from community services that also apply to the Land. 5. In response to the comments of Mr Connelly, Mr Rowan observed the Land is suitable for banana production and would not have been identified for residential zoning. While the Council acknowledged the Land was not subject to significant site constraints the Council still determined not to recommend the Land for residential zoning for broader strategic planning reasons unrelated to the public purpose. The draft LES and report to the Council that informed the proposed public exhibition of Amendment 34 also identified strategic planning reasons beyond those conveyed to Mr Connelly by Mr Fry for why precinct R5 was removed from Amendment 34. 6. The town planning experts disagree to the underlying zoning of the Land absent the public purpose at the date of acquisition. Mr Connelly's reasons for disagreement about the underlying zoning at the date of acquisition absent the public purpose were: 1. The Land would have been zoned R1 in an identical fashion to the adjacent Thakral Lands. The Land that was unconstrained, below RL 55M AHD and located further than 150m from banana farming would have achieved a residential zoning in accordance with regional and local strategic planning; 2. Alternatively, following the Thakral Lands LEP Amendment 38 or an owner-initiated Planning Proposal the land would have been zoned for residential purposes; and 3. The vegetation at the Land does not qualify for a conservation zoning pursuant to the criteria defined by the Northern Councils E Zone Review (finalised in March 2016) that guides zoning of land for environmental protection purposes. 1. Mr Rowan's reasons for disagreement were: 1. The same strategic planning matters that resulted in the Land being omitted from Amendment 34 were likely to have remained valid; 2. The Council was unlikely to revisit land that had been formerly considered under Amendment 34 for rezoning particularly in the absence of development on land zoned for residential development; 3. A planning proposal was unlikely to resolve the strategic planning issues that caused precinct R5 to be omitted from consideration for future urban development given residential land under Amendments 34 and 38 was yet to be developed and road works and construction had not been completed; and 4. The Land would have been rezoned primarily in the same manner as would have been existing in the initial making of LEP 2013 being Zone R5. Along the northern edge, the land would have been zoned RU2 or E2 due to existing vegetation. 1. Mr Rowan did not give any weight to the Northern Council E Zone Review relied on by Mr Connelly given its recommendations were not applicable to the Council's local government area. Report of Mr Connelly on lot yield (Connelly #2) 1. In Connelly #2 Mr Connelly attached an amended map that was originally produced in the JER to depict an owner-initiated planning proposal for the Land that relied on the collaboration of four landowners to yield 105 residential lots. The map was amended as extracted below to show areas Mr Connelly excluded from the potential development envelopes due to the proximity to existing banana cultivation uses by a broken purple coloured line. Town planning joint expert report of Mr Connelly, Mr Hams and Mr Rowan (town planning JER #2) 1. I note that the two different planning proposals were put forward by the town planners in the evidence and considered by the experts in town planning JER #2. The Applicants did not ultimately press a private planning pathway as a basis to rezone the Land. This evidence has not therefore been included in this judgment. 2. The following table prepared by Mr Connelly and Mr Hams detailed the estimated development costs for contribution planning for a planning proposal to rezone the Land: [Development costs are relevant to the valuation of the Land.] Mr Connelly's oral evidence 1. In cross-examination, Mr Connelly was referred to the chronology of strategic planning decisions he set out in Connelly #1. He agreed Amendment 3 was not chronologically included in his timeline of strategic planning decisions and stated that was an oversight. He agreed he knew about Amendment 3 which he referred to later in the report. 2. Referred to draft Amendment 3 attached to an agenda for a Council meeting on 24 January 2002, he agreed that Bruxner Park Road was basically the northern boundary of the deferred area (see above in [22]). He agreed that the Land was to be rezoned Rural 1B Living Zone. Referred to the minutes of the Council meeting on 24 January 2002, Mr Connelly agreed the Council were recommended to adopt the details proposed in the agenda item and to defer the deferred area (see above in [23]). 3. Referred to correspondence from the Council to the Department of Planning, he agreed the correspondence observed that part of the area had been deferred from rezoning. Referred to correspondence from the Department of Planning to the Council dated 16 May 2002, he took note of the paragraph extracted above in [25]. 4. Mr Connelly disagreed that the source of the "triangle" (deferred area north of Bruxner Park Road) was the Land being included in the deferred area under the heading "Highway issues" in Draft Amendment 3 as extracted above in [27]. He stated the "triangle" is part of the deferred area as it is land on the eastern side of that highway footprint. He agreed but for the highway alignment the Land would not have been in the northern deferred area. 5. Asked whether the documents show that but for the carrying out of the public purpose, or the proposal to carry out the highway, the Land would never have been deferred, he agreed that there was an additional deferred area because of the bypass. Referred to the OCLSS (see above in [39]), asked whether the western boundary of the investigation area is defined by the public purpose being the highway bypass, he agreed. 6. Asked whether he should have included the lengthy dissertation about Amendment 3 he was just referred to in Connelly #1, he answered that he did his best to compile all the things he thought were important. Asked whether this was the first instance that there has been a direct impact noted by the highway on the strategic planning direction for the Land, he answered yes. 7. Asked whether Mr Connelly considered the Land to be zoned R1 or R2 as at LEP 2013, he answered it would have been zoned R1. Asked at what point in time he thought it would have been zoned R1, he stated it would have been with the making of Amendment 34. He stated that in Connelly #1 he considered if he was wrong about Amendment 34 the Land could have been the subject of a privately initiated planning proposal. The planning proposal would have been resolved prior to the date of acquisition. 8. Mr Connelly agreed he did not have any evidence about why the Thakral Lands have not been developed. His opinion was that the Thakral Lands had not been developed in order to have the benefit of the public purpose including the construction of the intersection. 9. When asked whether the 26-lot subdivision layout (extracted below in [121]) is indicative of the "high water mark" yield on the Land, he agreed. Mr Rowan's oral evidence 1. In cross-examination, Mr Rowan agreed Amendment 3 was considering a change from Rural 1A Agriculture Zone to Rural 1B Living Zone being large lot residential. Asked whether RL 55M AHD had been identified as a relevant constraint for a change of zoning by 24 January 2022, Mr Rowan stated that the report to the Council (referred to above in [21]) introduced the constraint. Mr Rowan agreed that there was a series of concerned residents in the West Korora area who wanted their land to change from rural to residential. He agreed that as a consequence of the submissions by those landholders that the deferred area was initially identified. He agreed the consequence of the deferral was to make no decision in relation to its rezoning as part of Amendment 3 and retain its original zoning as Rural 1A Agriculture Zone. 2. Asked whether the next relevant event was the deferred area extending north of Bruxner Park Road, he replied yes. He disagreed with the proposition that the precise route of the proposed highway bypass was not known by that stage. He stated there was discussion between the Department of Planning and the Roads and Traffic Authority that led to the determination that western alignment of the light blue area as seen above in [27] reflected the corridor as it would be at that date. He understood the boundary followed a curvature of a potential highway route. 3. He agreed that by the end of the process of constraint mapping for Amendment 34 the precise area of the land required for the Pacific Highway bypass was known. He agreed that the "milky white land" was ultimately able to be zoned Special Uses 5A Community Purposes Zone in Amendment 34 (see LES constraints mapping above in [42]). He agreed that in 2002 when the deferred area and extended deferred area was considered there was knowledge of a highway option in the location of the western boundary. He agreed that the area of land required to provide for the highway upgrade was not known in detail until Amendment 34. 4. In response to the proposition that the Council turned its mind to rezoning the land in the urban investigation area due to urgings of concerned residents and to implement the requirements of the state government, Mr Rowan stated the public purpose created a new cadastral boundary separating the area to the north that was going to be zoned Rural 1B Living Zone which left a residue of land between the eastern and western boundary. That land got subsumed into the deferred area for investigation. 5. Referring to the plan above in [27] he agreed that the eastern side of the "triangle" was the western edge of the existing Pacific Highway. He agreed the western edge of the "triangle" was the anticipated location of the Pacific Highway bypass as anticipated in August 2003. He stated the area north of Bruxner Park Road was being deferred because of the public purpose. The area south of Bruxner Park Road was being deferred for a different reason. The Department of Planning would not allow the Council to progress the rezoning of the area north of Bruxner Park Road. The boundary line followed a curvature that did not follow the cadastral boundaries and suggests to him that somebody had drawn a line defining the road corridor. 6. Mr Rowan stated that Amendment 3 went on to rezone the area west of the blue area to become zone Rural 1B Living Zone (see deferred area map above in [27]). The Land was deferred in Amendment 3 to cater for the public purpose after discussion with the Roads and Traffic Authority. 7. Mr Rowan accepted that it is not surprising that there is no evidence of a coalition of landowners that would be seeking to prepare a planning proposal to set aside the public purpose. He agreed that there was a coalition of landowners south of Bruxner Park Road at the time of Amendment 3. He stated there were landowners north of Bruxner Park Road at the time of Amendment 3 who asked but were not included in the deferred area. He agreed the residents north of Bruxner Park Road became part of the deferred area. Applicants' submissions Land zoned low density residential by Amendment 34 1. After the preparation of the first draft of the LES for Amendment 34 (in order to implement the Department of Planning's interim agreement to the OLCSS) it is the inescapable conclusion that but for the proposal to carry out the public purpose the Land would have been zoned low density residential. Site unconstrained but for public purpose 1. The Land and precinct R5 are (1) within the potential development area, (2) not affected by native vegetation needing to be retained, (3) not affected by the 1:100 year flood event, (4) below the RL 55M AHD contour and (5) for the most part has a slope less than 25% as shown on the opportunities and constraints map (see above in [42]). The only constraint preventing low density residential zoning was the Pacific Highway Bypass Route. The adjoining land to the south of Bruxner Park Road (being the only land in proximity below RL 55M AHD and not covered by the Pacific Highway Bypass Route) was proposed zoning R2 in the LES for Amendment 34. The Thakral land adjoining that to the east was also proposed to be in the LES for Thakral Lands (and ultimately was in Amendment 38) zoned Residential 2A Low Density Zone. 2. After the preparation of the draft LES, and prior to the making of Amendment 34, no further constraints were identified that would have changed the conclusion that the Land would be low density residential. 3. There was a change to the remaining pockets of land in precincts R4 and R5 proposed to be zoned residential in the northern part of the West Korora precinct in the next draft of the LES. The reason that the recommendation for precinct R5 changed from residential to remaining rural following advice from the Department of Industry and Investment as set out above in [46] was caused by the proposal to carry out the public purpose. That change in zoning cannot result in departure from the conclusion that the land would be low density residential. 4. The Department of Industry and Investment submitted the precincts R4 on West Korora Road should be removed from the Norths Coffs Release Area Structure Plan (and rezoning) due to the disjointed nature of the land portions and possible land use conflicts arising between development and existing agricultural uses. In regard to precinct R5 the Department of Industry and Investment recommended minimum separation distances between residential areas and different types of agricultural activities. 5. The Applicants submit it is necessary to determine whether the Department of Industry and Investment would have made those recommendations but for the proposal to carry out the public purpose. But for the proposal to carry out the public purpose precinct R5 would not have been isolated or disjointed. But for the proposal to carry out the public purpose, precinct R5 would have a significant extent of land to its west and north (including the Thakral Lands to its east) that would have been similarly unconstrained and recommended for low density residential zoning. In those circumstances the need for buffer distances would not arise. 6. The Court would conclude that but for the proposal to carry out the public purpose: 1. The first draft LES would have included the Applicants' land (and the other land within the "triangle" below RL 55M AHD) as low density residential; and 2. In those circumstances the Department of Industry and Investment's concerns that led to the change of precinct R5 from low density residential to rural simply would not arise. 1. All of the land within the "triangle" was zoned Special Uses 5A Community Purposes Zone (reflecting the public purpose) with the consequential impact on precinct R5 that it was zoned Rural 1A Agriculture Zone. Land likely considered for rezoning without deferral under Amendment 3 1. The Respondent submits that but for that extension of the deferred lands from Amendment 3 the Land would not have been considered for rezoning. That submission would be rejected for a variety of reasons. 2. Firstly, even in its original form, although the deferred area was retained to the south of Bruxner Park Road it was acknowledged that "the Bruxner Park Road (and north) land will remain included in this rezoning, however the Highway Planning Strategy may impact upon these lands" (see above in [21]). 3. Secondly, the apparent driver for the initial deferred lands only being to the south of Bruxner Park Road was not any relevantly identified constraint, topographical feature or suburb boundary. Rather, it was that there had been submissions made by persons to the south of Bruxner Park Road. 4. Thirdly, Amendment 3 followed two of the Council's strategy documents (the 1996 CHUDS and the 1999 Rural Residential Strategy). It preceded the OLCSS. In order for the Council to consider the rezoning of land it was a necessary requirement of cl 38 of the North Coast Regional Environmental Plan 1998 that Council prepare an Urban Land Release Strategy for the whole of its local government area. Under the OLCSS the Land was considered specifically for upzoning from its deferred state and was identified as a Priority 1 growth area for residential development. The Department of Planning's interim agreement for the OCLSS in the response dated 6 November 2007 (see above in [38]) identified the land needed to meet the Council's immediate 2006-2011 growth requirements. There is simply no support for any suggestion that but for the extension of the deferred land into the "triangle" it would not have been considered as part of the OLCSS. 5. Fourthly, the OLCSS through its various versions has considered by reference to identified constraints those areas of the Council's local government area available for urban release. There is simply nothing that the Respondent can point to, to suggest that but for the proposal to carry out the public purpose that land in the "triangle" would have been excluded from the OLCSS consideration. 6. Fifthly, in any event, the decision to defer was a decision to not change the zoning of the land. If the extension of the deferred area into the "triangle" was caused by the public purpose, that merely meant that at that point in time the land remained Rural 1A Agriculture Zone where, but for the proposal to carry out the public purpose, it may at that time have been rezoned Rural 1B Living Zone. 7. There can be no suggestion that whether it was deferred, or had been rezoned Rural 1B Living Zone, that the land within the "triangle" would simply have stagnated. It would have been, and was, assessed in the subsequent OLCSS and the two versions of the LES for the making of Amendment 34. 8. There is nothing about Amendment 3, nor the areas deferred from it, that leads the Court to a different conclusion in relation to the underlying zoning of the Land. Respondent's submissions Land zoned large lot residential at the acquisition date 1. The Applicants' contention that the Land would have been zoned R1 or R2 at the acquisition date is speculative. In all likelihood, the Land would have been zoned R5 Large Lot Residential. Land would not have been considered for rezoning but for public purpose 1. As at 24 January 2002 the Land did not form part of deferred area which was proposed to be considered for rezoning (see above in [22]), which area included land south of Bruxner Park Road only. 2. This is highly significant because this is the last time that consideration was given to how the Land should be zoned absent the influence of the public purpose. It is the best evidence of how the Land would have been treated in the absence of the public purpose because it does not require the Court to speculate about what would have happened. Critically, it establishes that Council was not proposing to consider the Land for rezoning in the absence of the public purpose. Only land to the south of Bruxner Park Road was proposed to be deferred for that purpose. Council distinguished between land situated south of Bruxner Park Road that was suitable for rezoning and land north of Bruxner Park Road that was not. This is so notwithstanding that landowners to the north of Bruxner Park Road were actively seeking for their land to be included for consideration as residential land. 3. The town planning experts agreed above in [54] that the public purpose meant that the gazettal of the Amendment 3 was delayed until 27 February 2004. This is significant because between 24 January 2002 and 27 February 2004 the public purpose resulted in the Land being included in the deferred area (see above in [27]). 4. The town planning experts agreed above in [54] that absent the public purpose, the Land would not have been included within the footprint of the deferred area for future urban investigation. The deferred area only would have included land to the south of Bruxner Park Road and the Land would have been rezoned Rural 1A Agriculture Zone and Rural 1B Living Zone (along the northern boundary). The western and northern extent of the deferred area was determined by the public purpose. 5. The die was cast at this point. After this time the Land continued to be included in the areas for investigation for future rezoning because it was included in the deferred area in Amendment 3. The Land never would have been included in the deferred area were it not for the public purpose as the experts agreed. Land not suitable for rezoning under Our Living City Settlement Strategy 1. Under the Our Living City Settlement Strategy, the Land was not included in the "Possible Areas for Urban Expansion". The area earmarked for potential rezoning was limited to land that was located south of Bruxner Park Road. The Land's exclusion from the "Possible Areas for Urban Expansion" reinforces the view that the Council did not consider it to be suitable for rezoning. Site specific consideration for rezoning required; site constrained 1. The Council having considered the opportunities and constraints of the Land within the investigation area rezoned some parts of the Priority 1 land for residential purposes. Not all parts of Priority 1 land were rezoned, including precinct R5 that is zoned RU2 rural landscape. Regardless of the public purpose there could never be any assurance that any particular land would be rezoned for residential purposes. The rezoning depends upon a proper consideration of the opportunities and constraints of each parcel of land. 2. In that context, the reference to that part of the Investigation Area in the vicinity of the Land as the "triangle" is apt to mislead. It suggests an area of land in which the various parcels or lots of land have a high degree of similarity such that they would be treated the same. In this case the Applicants say the relevant unifying characteristic is whether a parcel of land is beneath the RL 55M AHD contour but that is an oversimplification. It ignores the need for a rezoning authority to have regard to the particular circumstances of each parcel of land, such as: 1. topography including steep slopes (which are present on the Land); 2. access (which presents a problem for the Land); 3. vegetation communities (which are present on the Land); 4. services and infrastructure (which are wanting in the area and would have been wanting but for the public purpose); 5. bushfire risk (which exists on the Land); 6. neighbouring land uses (which are rural and agricultural); and 7. demand and in particular demand in the location. 1. The RL 55M AHD contour was a negative criterion: it identified what land would not be rezoned. It did not identify land that would be rezoned. That was the beginning of the inquiry not the end, as Mr Connelly appears to assume. Although the Land's elevation is relevant, it is only a threshold issue. The fact that the Land is beneath RL 55M AHD only meant that it qualified for consideration not that it would be viewed favourably: all land beneath RL 55M AHD was being investigated. 2. The Applicants try to cast all land in the "triangle" as the same and overlook the site specific constraints that make the Land uniquely unsuited to rezoning. These constraints were well known to the Council back in 2002 when Amendment 3 was originally prepared (see above in [53]). If these constraints are properly kept in mind it is easy to understand why the Land would not have been rezoned but for the public purpose. 3. The reasons given by the Department of Industry and Investment above in [46] to remove precinct R5, ultimately adopted by the Council, demonstrates that constraints other than the public purpose would apply to the Land and the surrounding areas. Costs of rezoning the Land prohibitive 1. At the time of Amendment 34 it would have been prohibitively expensive for the Council to rezone the Land. At this time, the Thakral Lands and nearby land had not been developed, the internal road to link Bruxner Park Road with West Korora Road via the Thakral Lands had not been constructed and none of the formerly identified roadwork to Bruxner Park Road and its intersection with the existing highway had been undertaken. Mr Connelly speculates that the costs would have been satisfactory if adjoining properties formed part of the Council led rezoning). He provides the Court with none of the information necessary to make informed judgment about that matter. He stated that Lots A, B, C and D would yield 105 lots but provided no basis for this hypothesis. He has not provided the Court with the information necessary to assess whether this would be a tenable proposal. Finding on underlying zoning 1. The question I am considering is what the prudent hypothetical purchaser and vendor would consider was the applicable zoning of the Land at the date of acquisition being 30 July 2021 setting aside the public purpose. This is often expressed as but for the public purpose what would the zoning of the Land have been. There is no dispute that the current zoning is a result of the public purpose and that zoning or similar has applied to the Land since 2012. Knowledge of the possible impact of the public purpose was known in the Coffs Harbor area many years earlier than 2012, since 2001 according to Mr Dibbs evidence, below in [402], and the release of the Pacific Highway Planning Strategy Discussion Paper in 2001. Given that this is a hypothetical scenario the likelihood of certain zoning existing at the acquisition date needs to be determined. Likelihood can be contrasted with mere speculation, the essential criticism of the Applicants' case by the Respondent. The public purpose affected the planning and zoning of the land for a considerable period before the date of acquisition. The town planners agreed that but for the public purpose in 2002 the land would have been zoned Rural 1B Living Zone and Rural 1A Agriculture Zone along the northern boundary. The Land was zoned Special Uses 5A Community Purposes Zone in Amendment 34 in June 2012 reflecting the effect of the public purpose and is zoned SP2 Infrastructure under the LEP 2013. 2. As outlined in the summary of the relevant council planning strategies and amendments to LEP 2000 above in [16]-[47], the Council has been considering how best to expand the residential capacity in and around Coffs Harbour for many years (decades). The evidence commences with the planning strategies embarked on from 1996, when Korora Basin and West Korora where the Land is located was identified as a "special investigation area" for urban and rural residential potential. The Land was included in the "Korora Investigation Area" in the 1999 rural residential strategy. It remained zoned Rural 1A Agriculture Zone when the LEP 2000 was made. In draft Amendment 3 publicly exhibited on or around 12 April 2001 the Land was shown as Rural 1B Living Zone and Rural 1A Agriculture Zone. The Land was ultimately included in the deferred area because of the highway upgrade proposal when Amendment 3 was made in 2004, as identified above in [27]-[28]. 3. The CHCLUCA 2004 did not include the Land in urban investigation release areas. The preparations of the draft OLCSS included submissions from council staff in December 2005 extracted above in [31] which identified that two parts of West Korora would be suitable for urban development other than those areas subject to steep slopes, future highway noise and vegetation (which presumably required protection). Areas along West Korora Road and Mastracolas Road were identified, being areas to the south of the Land. It was recommended that entire area below the RL 55M AHD be included in the settlement strategy. The region was identified as forming a logical extension of Coffs Harbour urban area and could be given a priority 1 listing meaning urban investigation is recommended in 5 years. The Land was also included in the area to be investigated as priority 1 in the plan above in [34], excluding land which was located above RL 55M AHD, that was publicly exhibited. 4. The draft LES for Amendment 34 in 2010 identified potential residential precincts including R5, very close to the Land, being directly across Bruxner Park Road from the Land. This was ultimately not progressed by the Council due to the submissions recommending against that course by the Department of Industry and Investment in June 2011 due to proximity to agricultural land and the creation of isolated pockets. That precinct R5 opposite the Land was not rezoned and is zoned RU2 rural landscape was emphasised by the Respondent. That decision was also affected by the public purpose in part because the public purpose caused the lands to be disjointed as the Applicants submitted above in [85]-[88], which I accept. That precinct R5 remained as a rural zone is not indicative of what would be likely to occur on the Land. 5. The likelihood that the Land would have been zoned low density residential is supported by the Council's approval of the Thakral land for low density subdivision immediately nearby, about which the parties made conflicting submissions. The Thakral Land was the subject of a private rezoning application and was not considered in the Council's strategic planning for residential development for that reason. The change of zoning of the Thakral Land to low density residential on 1 June 2012 supports the likelihood of the same zoning being applied on the Land over time. The Thakral Land is not affected by the proposed highway extension. The Thakral Land is very close to the Land and its development by way of private planning proposal for low density residential development does support a finding that this area would have been rezoned for low density residential use by the Council. That the Thakral Land has not yet been developed shows residential development may take place over an extended period, supporting the likelihood of long term planning for residential development in this area. 6. Further the evidence also shows that landowners to the north of Bruxner Park Road where the Land is located were lobbying the Council to have their land rezoned for residential use, in addition to landowners to the south of Bruxner Park Road, some of whose land was included in the Council's strategic planning identifying new areas for residential zoning (see above in [31], [81] and below in [403]). The focus of the inquiry is what the Council is likely to have done between 2002 to 2005, and 2021 at a broad strategic planning level. 7. Essentially Mr Rowan's opinion is that nothing is different about the Land in its locality in 2021 from the situation in 2002 to 2005 when the land was zoned Rural 1A Agriculture Zone to warrant finding that the zoning would have been any different at a later date but I consider that opinion is too static. The strategic planning being undertaken by the Council over a lengthy period does give rise to the likelihood that the land would have been zoned low density residential at the date of acquisition. 8. I do not consider the Respondent's approach of focussing on the circumstances in 2002 when the Land was zoned for non-residential uses as determinative of later zoning as that underestimates the impact of the public purpose over an extended period of many years. For the reasons given by the Applicants summarised above in [90]-[97] in relation to the Council's strategic planning processes considering the release of land for residential purposes over many years, I consider the zoning likely to have been in place at the date of acquisition was low density residential. I do not need to resolve if that zoning would be R1 or R2, subject to my consideration of constraints on the Land. 9. Turning to the Land itself, the Respondent sought to emphasise that numerous constraints existed on the Land which rendered it unsuitable for residential use, but I do not agree. It is not affected by the limit of RL 55M AHD applied in the Council's strategic planning for the identification of residential areas. The presence of vegetation on the northern boundary does not affect more than a small portion of the Land and the steep slope affects only a smaller portion of the Land and it is not unduly flood affected. Access to the Land is achievable from the public road network. The town planners agreed at least a 7-lot subdivision was possible on the Land in light of constraints, relying on extensive evidence, identified in issue 2. No prohibitive constraint of some form of low density residential development exists on the Land. Issue 1: Conclusion 1. The prudent hypothetical purchaser and vendor should be assumed to proceed on the basis the Land would be zoned low density residential. Issue 2: Lot yield if land rezoned low density residential at acquisition date 1. The town planning experts agreed that if the Land was zoned low density residential at the acquisition date and the stormwater system is assumed to be not piped, the yield informing the valuation of the Land is six residential lots (fronting Bruxner Park Road) and one large rural residential lot. Mr Hams provided the following 7-lot subdivision layout of the Land in Hams #1: 2. If the land is zoned low density residential and the stormwater is assumed to be piped on the Applicants' case the yield is 26 lots. The Respondent submits a yield of 20 lots should be assumed due to hydrology, road access and topography constraints. Mr Connelly provided the following 26-lot subdivision layout of the Land in Connelly #2: Development risk arising from hydrological features on land 1. The Respondent submitted that the Court must decide whether a fully informed purchaser would be aware of the nature and extent of the hydrological risk to achieving the Land's development potential (lot yield) and factor that risk into the amount that they would be willing to pay for the Land. The Applicants appeared to accept that statement. 2. As already identified above in [3], the Court went on a view of the Land which had already been occupied by the Respondent and substantial work undertaken so that it is no longer in the state it was at acquisition. Both hydrology experts inspected the Land after it was occupied by the Respondent and some construction works had commenced. Both experts were able to view the surface of the Land. 3. The hydrology experts agreed there are two water flow paths on the Land, the Applicants' expert accepting there is a topographic low point across the Land that water flows through in times of rain. One runs south-north and no valuation issue arises from its presence on the Land. One runs west-east across the whole of the Land (west-east watercourse) and its impact on valuation is in dispute. At issue in terms of development potential is whether hypothetical purchasers would assume stormwater flowing west-east across the Land can be piped as that has a substantial impact on a possible yield to be assumed (see above in [7]). Both hydrology experts attested to being able to walk with some difficulty the length of the west-east watercourse which we could not do on the view. 4. The hydrology experts annotated the map below with blue lines to represent the water flow paths and red to depict the boundaries of the Land: 5. The hydrology experts agreed that the west-east watercourse flows to the west through a culvert below Bruxner Park Road onto the Land and flows off the Land below the access driveway along the eastern boundary of the Land. 6. Issues that arise in the hydrologists' evidence according to the parties are: 1. In deciding if the flow of water can be piped, does a river run west-east through the Land? 2. If a river runs through the land and a controlled activity approval is required under the WM Act would a hypothetical purchaser think approval to pipe the river was likely to be granted? 1. During the course of the hearing the term watercourse was most frequently used in the evidence to label the water flow paths across the Land. I use the same label for consistency, noting that whether the water flow paths constitute a watercourse within the statutory definition of river is contested. Water Management Act 2000 (NSW) 1. The Water Management Act 2000 (NSW) (WM Act) provides relevantly as follows: Part 3 Approvals Division 1 Preliminary … 91 Activity approvals (1) There are two kinds of activity approvals, namely, controlled activity approvals and aquifer interference approvals. (2) A controlled activity approval confers a right on its holder to carry out a specified controlled activity at a specified location in, on or under waterfront land. … Division 1A Offences … 91E Carrying out controlled activity without, or otherwise than as authorised by, a controlled activity approval (1) A person— (a) who carries out a controlled activity in, on or under waterfront land, and (b) who does not hold a controlled activity approval for that activity, is guilty of an offence. (2) The holder of a controlled activity approval who carries out a controlled activity in, on or under waterfront land otherwise than as authorised by the approval is guilty of an offence.(3) Without limiting subsection (2), a person carries out a controlled activity otherwise than as authorised by a controlled activity approval if the person carries out such an activity while the approval is suspended. (4) This section does not prevent a person— (a) from constructing and using a water management work in accordance with a water management work approval, or (b) from carrying out an aquifer interference activity in accordance with an aquifer interference approval. … Dictionary … controlled activity means— (a) the erection of a building or the carrying out of a work (within the meaning of the Environmental Planning and Assessment Act 1979), or (b) the removal of material (whether or not extractive material) or vegetation from land, whether by way of excavation or otherwise, or (c) the deposition of material (whether or not extractive material) on land, whether by way of landfill operations or otherwise, or (d) the carrying out of any other activity that affects the quantity or flow of water in a water source. controlled activity approval means an approval referred to in section 91 (2). … river includes— (a) any watercourse, whether perennial or intermittent and whether comprising a natural channel or a natural channel artificially improved, and (b) any tributary, branch or other watercourse into or from which a watercourse referred to in paragraph (a) flows, and (c) anything declared by the regulations to be a river, whether or not it also forms part of a lake or estuary, but does not include anything declared by the regulations not to be a river. … waterfront land means— (a) the bed of any river, together with any land lying between the bed of the river and a line drawn parallel to, and the prescribed distance inland of, the highest bank of the river, or (a1) the bed of any lake, together with any land lying between the bed of the lake and a line drawn parallel to, and the prescribed distance inland of, the shore of the lake, or (a2) the bed of any estuary, together with any land lying between the bed of the estuary and a line drawn parallel to, and the prescribed distance inland of, the mean high water mark of the estuary, or (b) if the regulations so provide, the bed of the coastal waters of the State, and any land lying between the shoreline of the coastal waters and a line drawn parallel to, and the prescribed distance inland of, the mean high water mark of the coastal waters, where the prescribed distance is 40 metres or (if the regulations prescribe a lesser distance, either generally or in relation to a particular location or class of locations) that lesser distance. Land that falls into 2 or more of the categories referred to in paragraphs (a), (a1) and (a2) may be waterfront land by virtue of any of the paragraphs relevant to that land. … Water Management (General) Regulation 2018 (NSW) 1. The Water Management (General) Regulation 2018 (NSW) provides relevantly as follows: Part 1 Preliminary … 3 Definitions … minor stream means— (a) any stream or part of a stream— (i) the location of which is specified in the hydroline spatial data, and (ii) that is identified as a first or second order stream, or part of such a stream, as determined in accordance with the system set out in Schedule 2, and (iii) that does not maintain a permanent flow of water, being a visible flow that occurs on a continuous basis, or would so occur if there were no artificial abstractions of water or obstruction of flows upstream, and (iv) that does not at any time carry flows emanating from a third or higher order stream as determined in accordance with the system set out in Schedule 2, or (b) any stream or part of a stream the location of which is not specified in the hydroline spatial data. For the purposes of paragraphs (a)(i) and (b), a stream is specified in the hydroline spatial data if it is identified as a watercourse (however described) in accordance with the legend or terms of that data. … Schedule 2 Stream order of a watercourse The Strahler system The method of determining the stream order of a watercourse shown on a topographic map is the Strahler system. The Strahler system is as follows— (a) Any watercourse that has no other watercourses flowing into it is classed as a first order stream. (b) If 2 streams join, the resulting stream is— (i) the same order as the highest order of the 2 streams, or (ii) if the 2 streams are of the same order, the order greater than that of the 2 streams. … Coffs Harbour Local Environmental Plan 2013 (NSW) 1. LEP 2013 relevantly provides as follows: Part 7 Additional local provisions … 7.6 Riparian land and watercourses (1) The objective of this clause is to protect and maintain the following— (a) water quality within watercourses, (b) the stability of the bed and banks of watercourses, (c) aquatic and riparian habitats, (d) ecological processes within watercourses and riparian areas. (2) This clause applies to all of the following— (a) land identified as "Watercourse" on the Riparian Lands and Watercourses Map, (b) all land that is within 40 metres of the top of the bank of each watercourse on land identified as "Watercourse" on that map. (3) Before determining a development application for development on land to which this clause applies, the consent authority must consider— (a) whether or not the development is likely to have any adverse impact on the following— (i) the water quality and flows within the watercourse, (ii) aquatic and riparian species, habitats and ecosystems of the watercourse, (iii) the stability of the bed and banks of the watercourse, (iv) the free passage of fish and other aquatic organisms within or along the watercourse, (v) any future rehabilitation of the watercourse and riparian areas, and (b) whether or not the development is likely to increase water extraction from the watercourse, and (c) any appropriate measures proposed to avoid, minimise or mitigate the impacts of the development. (4) Development consent must not be granted to development on land to which this clause applies unless the consent authority is satisfied that— (a) the development is designed, sited and will be managed to avoid any significant adverse environmental impact, or (b) if that impact cannot be reasonably avoided—the development is designed, sited and will be managed to minimise that impact, or (c) if that impact cannot be minimised—the development will be managed to mitigate that impact. … Dictionary … watercourse means any river, creek, stream or chain of ponds, whether artificially modified or not, in which water usually flows, either continuously or intermittently, in a defined bed or channel, but does not include a waterbody (artificial). Applicants' evidence 1. The Applicants tendered the following evidence: 1. Five aerial images with a hydro line overlay dated February 2023 that the Applicants submitted in closing submissions were prepared by Mr Barthelmess. One image provides an overview of the Land and surrounding areas and four close-up images depict hydro lines across land developed for a house(s) within the overview area (Ex E); 2. NSW hydro line dataset information sheet extracted from the Location Information Knowledge Platform dated 1 June 2023 (Ex F); 3. Corrected figure 3B from Dr Martens expert report on hydrology (Ex G); 4. LEP 2013 terrestrial biodiversity, drinking water catchment and riparian lands and watercourses map (Ex M); and 5. Site survey data provided by the Respondent (Ex O). 1. The NSW hydro line dataset information sheet extract dated 1 June 2023 states: NSW Hydro Line defines the centreline of a water course. It is a line feature class of the NSW Digital Topographic Database (DTDB), within the Hydrography theme. … The DTDB is primarily used for planning, development activities, navigation and resource monitoring by emergency serves, the Defence Forces, environmental resource managers and engineers. This information is also commonly used by bushwalkers, canoeists, anglers and fossickers to establish a detailed picture of the local environment. … … Some capture methods are unknown which may occur where data was supplied by an external source where the data capture method is undefined. Depending on the capture source, capture method, digital update and control point upgrade, every feature instance reportedly has a positional accuracy within the range of 1m-100m. It is important to note that not all features may be captured within the database for each feature class, and may not be an accurate representation of the current state. 1. An extract of the LEP 2013 terrestrial biodiversity, drinking water catchment and riparian lands and watercourses map (Ex M) is set out below in relation to the Land: [Watercourses are identified by red lines. No watercourse is identified on the Land.] 2. The Natural Resources Access Regulator (NRAR) "Guidelines for controlled activities on waterfront land – Riparian corridors" dated May 2018 (NRAR guidelines) states that riparian corridors consist of the channel comprising the bed and banks of the watercourse and the vegetated riparian zone adjoining the channel. The NRAR Guidelines identified the recommended width of the vegetated riparian zone for a first order stream as 10m on each side of a watercourse and 20m for a second order stream. The NRAR guidelines note "where a watercourse does not exhibit the features of a defined channel with bed and banks, the NRAR may determine that the watercourse is not waterfront land for the purposes of the WM Act." Respondent's evidence 1. The Respondent tendered the following evidence: 1. Aerial photo of the Land dated 12 August 1964 (Ex 1); and 2. NRAR waterfront land tool dated May 2020 (Ex 2). 1. The aerial photo of the Land dated 12 August 1964 (Ex 1) is extracted below: 2. Relevant sections of the NRAR waterfront land tool dated May 2020 (Ex 2) are extracted below: Purpose of this document The Waterfront land tool (PDF version) has been developed to help applicants to determine what is waterfront land under the controlled activity provisions of the Water Management Act 2000. This tool has been developed: • as an interim tool prior to development of a web-based tool • to be used as a field guide for applicants and consultants to support field-based investigations and assessments. Rationale This tool identifies waterfront land based on consideration of three key factors: • the presence of defined bed and banks • evidence of flow and geomorphic features (whether water is present or not) • the presence of aquatic/riparian vegetation. The tool steps through a series of questions to ensure that the right information is assessed to determine the presence or absence of these features and whether the combination of features is indicative of waterfront land. … Desktop … 2.a) Using the Hydro Line spatial data map, identify if there is a blue line on your property or within 40 metres of the proposed work? Yes ☐ Go to question 3 No ☐ Go to question 2.b) … 3. Using the Determining stream order fact sheet at Appendix 4 and the Hydro Line spatial data map, what is the stream order of your watercourse? 1st or 2nd order ☐ Go to question 4.a) 3rd order or greater ☐ Go to question 8 … Site assessment … 4.a) Does the watercourse have a defined bed or bank? Yes ☐ Go to question 4.b) No ☐ Go to question 5.c) … 5.c) Using Appendix 6, are there any watercourse features present? Yes ☐ Go to question 5.d) No ☐ Go to question 12 … Supporting evidence • Current site photos looking up and downstream. Photos should be taken within one month of completing this tool and include a date stamp or metadata and a short location description. … 5.d) Using Appendix 6, check the box for each watercourse features present (select all that apply). Pools ☐ Riffles ☐ Go to question 8 Erosion and deposition ☐ Inside or outside bend ☐ … Supporting evidence • Current site photos looking up and downstream. Photos should be taken within one month of completing this tool and include a date stamp or metadata and a short location description. Expert hydrology evidence 1. The following expert hydrology evidence was filed in this proceeding: 1. Expert report of Mr Barthelmess civil engineer called by the Applicants dated 20 March 2023; 2. Expert report of Dr Martens civil engineer and environmental scientist called by the Respondent dated March 2023; 3. Joint expert report of Mr Barthelmess and Dr Martens dated 29 March 2023 (hydrology JER #1); and 4. Supplementary joint expert report of Mr Barthelmess and Dr Martens dated 21 April 2023 (hydrology JER #2). Report of Mr Barthelmess 1. Mr Barthelmess is the managing director of a regional consulting water and civil engineering firm specialising in hydrology and hydraulics. He was instructed to answer the following questions: a. What is the nature of the watercourse on the land? In answering this question please consider whether the watercourse is a river as defined under the Water Management Act 2000 having regard to relevant characteristics of the watercourse. b. Can the watercourse be piped? In answering this question please comment on the potential for rehabilitation of the watercourse. c. If the watercourse is piped, what are the engineering implications? In answering this question please comment on the nature, capacity and size of any necessary engineering structures. d. If the watercourse is not piped, what are the consequences for site development? In answering this question please comment on the potential to modify the riparian corridor. 1. In summary, Mr Barthelmess found in his expert report: 1. The west-east watercourse was a topographic low-point with no material fluvial features. 2. The west-east watercourse could be readily piped for reasons set out below in [147]. 3. The engineers agreed the engineering implications of piping the Land in the hydrology JER as summarised below in [154]. 4. If the west-east watercourse was not piped a flow path to manage the water would be required. Mr Connelly's alternative 21-lot indicative subdivision layout in Connelly #2 if the water could not be piped provided a feasible solution for such a flow path. [I note Mr Connelly has agreed if the watercourse is not piped a 7-lot subdivision is the yield that can be achieved on the Land). 1. Mr Barthelmess inspected the Land on 16 March 2023. How the Land was occupied by the Respondent at the time of his inspection is unclear. He referred to water draining under the works staging area and the Respondent's equipment trafficking the Land. He was given clear and unfettered access by the Respondent and was able to traverse the watercourse. Over the four days preceding his inspection Coffs Harbour recorded approximately 65mm of rain according to the Bureau of Meteorology instrument at Coffs Harbour Airport. He attached photos from various locations along the watercourse including near the western and eastern boundary of the Land as shown on a map. Some photographs show pools of water on the Land. 2. Mr Barthelmess stated in his report that he was provided with or sourced the following information: 1. Expert reports of the town planners being Connelly #1, Connelly #2, Rowan #1, Rowan #2 and Hams #1. In Rowan #2 and Hams #1, Mr Rowan and Mr Hams rely on advice of Dr Martens dated 10 February 2023; 2. site survey data provided by the Respondent (Ex O); 3. Nearmap aerial imagery of the Land dated August 2022; 4. Elevation data from Geoscience Australia; and 5. M Taylor and R Stokes, "Up the creek: what is wrong with the definition of a river in New South Wales?" (2005) 22 EPLJ 193 (Taylor and Stokes (2005)). 1. Mr Barthelmess stated the watercourse was piped upstream of the Land via a pipe under Bruxner Park Road. The watercourse was also piped immediately downstream of the Land to enable water to flow under the driveway of 14A Bruxner Park Road historically and to enable water to pass under the Respondent's works staging area currently. The upper half of the watercourse on the Land consisted of no observable bed or banks as noted in the Respondent's survey and was impenetrable without clearing of significant lantana growth. A man-made pool was located on the Land that was not fluvial, meaning it was not built by fluvial processes. The catchment of the watercourse was not larger than 20ha. 2. In concluding that the watercourse was not a river as defined under the WM Act, he considered the heads of consideration espoused by Taylor and Stokes (2005) to be best practice in forming such an opinion. He relied on his experience dealing with the NRAR on a range of land development projects in NSW over 20 years. In his experience the Taylor and Stokes (2005) methodology is accepted as best practice in lieu of NRAR having a procedure of its own. In his opinion the watercourse through the Land is not a river as defined under the WM Act. 3. Mr Barthelmess also considered the watercourse could be readily piped. The watercourse was not a candidate for rehabilitation making it appropriate for piping. There is not sufficient fluvial process on the Land to maintain the objectives of a rehabilitated riparian area which includes providing for habitat and movement corridors, maintenance of water quality and nature-based recreation and to reduce bank and channel erosion. Report of Dr Martens 1. Dr Martens is a principal engineer and environmental scientist with expertise including civil and traffic engineering, hydrology and water resources. He was instructed to answer the following questions: a. Question 1: What is the status of the watercourse(s) on the Acquired Land and where is the precise location of the watercourse(s) and the relevant riparian zone? In your response, please have regard to the Agreed Constraints Plan and the acknowledgements described above. b. Question 2: Is the Acquired Land, in your opinion, flood affected? And if so, to what degree and does that affect the development potential of the Acquired Land? c. Question 3: If the Acquired Land were to be redeveloped, could as part of that redevelopment, the watercourse(s) be contained in a pipe? In your response, please have regard to the watercourse(s) identified in your response to Question 1 and the extent of flood affectation as in Question 2. d. Question 4: If the watercourse is piped, what are the works required and engineering implications regarding how this would be achieved? e. Question 5: If the watercourse is not piped, what are the consequences for site development? f. Question 6: Having regard to your responses to questions 1-5 above, what advice would you give to the hypothetical willing but not anxious parties transacting the Acquired Land at the date of acquisition? 1. In summary, Dr Martens found in his expert report: 1. There are two unnamed watercourses on the Land, a west-east watercourse and south-north watercourse. The west-east watercourse had bed and bank features. 2. The Land is bisected by the west-east watercourse and is therefore flood affected. The engineers agreed the Land is identified on Council's indicative flood planning area map in the hydrology JER #1 below in [153]. 3. The west-east watercourse could be piped, however Council or the relevant department would not support the application. 4. The engineers agreed the engineering implications of piping the Land in the hydrology JER #1 summarised below in [154]. 5. If the west-east watercourse was not piped a vegetation riparian zone of 10m width to each top of the creek bank was required. 6. Approval to pipe the west-east watercourse was very unlikely to be achieved as the Council and the NRAR would object to such a proposal for reasons summarised below in [152]. [I note Dr Martens' expert report indicates a controlled activity approval would be granted by the Department of Planning and Environment, an approval formerly granted by the NRAR. As the parties tendered evidence and made submissions solely on the likelihood of the NRAR granting a controlled activity approval, the NRAR is the authority I will refer to in this judgment.] 1. Dr Martens inspected the Land and surrounds on 17 January 2023. No information about how the Land was occupied by the Respondent at the time of his inspection was provided in his report. He attached photos of the watercourse downstream from the Land to his report. He noted the watercourse is poorly defined within the Land likely due to past land use modifications. He estimated the location of creek beds based on the site LiDAR survey data. LiDAR stands for light detection and ranging and is an aerial remote sensing survey technique. He relied on the LiDAR survey data and his site inspection observations in concluding that a river existed on the Land. He stated the creek consisted of a broad shallow channel with several incised reaches. 2. Dr Martens annexed the following sketch of the creek, riparian corridor and indicative flood planning area on the Land. The blue dash is the primary watercourse top of bank based on interpretation of available LiDAR survey data and site inspection observations. The yellow dash is the extent of the left and right bank riparian corridor taken as 10m from the mapped top of bank. Blue shading represents Council's indicative flood planning area as provided on the Council's online mapping system. 3. Dr Martens does not believe an application to pipe the natural watercourse would be supported by the Council or the NRAR as the watercourse upstream and downstream is not piped and has a high capacity for rehabilitation. Piping could have downstream impacts on habitat and properties. He would anticipate a number of engineering structures would be required within the Land including a culvert, an intake structure and outlet structure to pipe the watercourse. He would advise a hypothetical willing but not anxious purchaser that approval to pipe the watercourse was unlikely as the water course has high potential for rehabilitation and piping would be inconsistent with the objectives of the WM Act. Hydrology joint expert report (hydrology JER #1) 1. In hydrology JER #1 dated 29 March 2023 the experts agreed there are two first order watercourses mapped on the Land which join near the eastern boundary of the Land to become a second order watercourse. The experts agreed the Land has been mapped by the Council in an indicative flood planning area. Mr Barthelmess and Dr Martens agreed that it was possible to engineer a piped watercourse on the Land. They disagree about whether it is likely that approval would be granted to pipe the watercourses if the Land was developed for residential purposes for reasons summarised above in [147] and [152]. 2. The hydrology experts agreed the general engineering requirements on the Land are an overland flow capture system capturing the 1% AEP flow from Bruxner Park Road, an adequately sized pipe to convey the 1% AEP flow, a design to accommodate blockage and an outlet system designed so that there would be no impacts on adjoining landowners or environments. The engineered scheme on the Land would need to protect the inlet and outlet from scour and erosion and provide for an emergency overland flow path through the subdivision. Access for future maintenance would be required as well as easements where assets are on private land if the watercourses were retained. 3. Dr Martens' considered that Taylor and Stokes (2005) does not provide any alternative definition of river to that provided in the WM Act. He applied the Taylor and Stokes (2005) methodology and was satisfied based on that analysis that the west-east watercourse met all the criteria of a river for the purposes of the WM Act. He observed bed and bank features and pools and scour features during his inspection on 17 January 2023. He considered that the west-east watercourse met the definition of a minor stream under the Water Management (General) Regulation because it was specified in the hydro line spatial data, was either first or second streams in accordance with Sch 2 of the Water Management (General) Regulation, did not maintain permanent flow and did not carry flows from a third order or higher stream. 4. Dr Martens identified watercourse features on the Land on the aerial image below dated 4 September 2020: Figure B4: aerial photograph (4 September 2020) showing watercourse features (according to Dr Martens) Supplementary hydrology joint expert report (hydrology JER #2) 1. In hydrology JER #2 dated 21 April 2012 the experts were asked to consider any impacts the requirements for easements in the Council's Development Specification Design 0074 Stormwater Drainage (Design) dated 1 January 2009 (Stormwater Drainage Design Specification) would have on development of the Land. The requirement is extracted as follows: Easement in Private Property Where works are designed in such a way that the major system flows involve surcharge across private property, then the underground system (both pipes and inlets) shall be designed to permit flows into and contain flows having an ARI of 100 years from the upstream catchment which would otherwise flow across the property. A surcharge path shall be designed for systems even where 100 year ARI flows can be maintained within the system. Easements are to be provided in private property over pipe systems and surcharge paths. 1. Mr Barthelmess stated the Stormwater Drainage Design Specification is referenced by the Council's Development Control Plan in relation to subdivision design and is not a development standard for the purposes of a planning instrument. In his experience the requirements refer to inter-allotment drainage and do not apply in the circumstances of the piped watercourse. Strict adherence to a development control plan is unnecessary. The concept plan(s) in Connelly #2 are thorough, workable, considered and sufficiently documented that there is appropriate merit to enable a consent authority to approve the works via a development application. 2. Dr Martens' view was that the Stormwater Drainage Design Specification would apply to the development of the Land. In his experience any stormwater or trunk drainage assets located on private land require an easement that would need to cover the 1% AEP surcharge overland flow path. Mr Barthelmess' oral evidence 1. In cross-examination, Mr Barthelmess was unable to agree that the watercourse downstream from the Land, as seen on the view, was a river as he was not able to observe it given the vegetation in place. The photographs of that location taken by Dr Martens did not show sufficient detail to enable him to reach a conclusion. 2. Mr Barthelmess accepted that the use of the Land for agricultural purposes such as banana farming could have affected the topography of land and the topographic low point due to farm machinery use. Asked about how much water travels across the Land, he estimated 4.6m3 per second. In his experience that is a quantum of water that is readily managed through a residential subdivision. 3. Mr Barthelmess acknowledged that the NRAR waterfront land tool was a procedure aimed at determining if land was waterfront land. Asked whether he prepared his expert report with reference to the NRAR waterfront land tool, Mr Barthelmess stated in his experience especially around Wollongong and southern NSW the NRAR does not use the tool. He did not have face to face experience with NRAR officers in the Coffs Harbour region. He agreed the purpose of the tool was to provide supporting evidence prior to doing works that might otherwise be illegal if they required a controlled activity approval. When asked questions about the application of the NRAR waterfront land tool he agreed a hydro line was located on the Land and that was the first inquiry required under the tool in "desktop" (see above in [139]). 4. Mr Barthelmess agreed that a pool was located on the Land, one of the features identified in the NRAR waterfront land tool. He disagreed with Dr Martens' opinion that a pool on the Land was a fluvial feature. He stated the pool was a man-made dam that did not meet the definition of a pool for the purposes of the NRAR waterfront land tool or the Taylor and Stokes (2005) method. The Taylor and Stokes (2005) method focuses on fluvial features only. He interpreted the NRAR waterfront land tool to apply to fluvial pools formed by stream processes. He had no evidence that the pool was man-made. He considered the shape of the pool to be similar to a low point that has had some fill placed around and considered that the pool was not a shape that would be formed by fluvial processes. 5. Mr Barthelmess stated he would not look upstream or downstream of the west-east watercourse on the Land to determine if it is a river as the watercourse would be a headwater or first order stream and does not receive flows from other streams. Any characteristics of a river upstream or downstream do not influence his determination of what is on the Land in this circumstance. He agreed that he needs to achieve a high standard of satisfaction whether there is a river as an offence could result if his assessment was wrong. 6. Asked whether it was best practice to look at an entire system to determine if something is a river, he answered he would only look at other sites if the Land exhibited geomorphic characteristics and it did not. To determine whether a controlled activity approval was required he did not think it necessary to look at other sites, accepting farming machinery may have interfered with the topography of the water course. 7. Mr Barthelmess accepted that given a hydro line is identified on the Land the Council would be likely to raise a question of whether a NRAR controlled activity approval is required if a development application was lodged. 8. Mr Barthelmess provided an aerial image purporting to show a catchment of about 21ha (Ex G) in response to Dr Martens' evidence of a 24.67ha catchment. [I note this is a criteria referred to in Taylor and Stokes (2005) which neither party ultimately relied on in argument.] Dr Martens' oral evidence 1. In cross-examination, Dr Martens when asked about the state of the Land when he inspected it on 17 January 2023 stated a carpark was constructed on the Land and some buildings had been demolished. When asked about the accuracy of the hydro line spatial data on the Land Dr Martens stated the hydro line was probably located within 5m of the actual position of the river as the watercourse sits within a confined valley. He did not agree that the accuracy was very low. In his experience hydro lines are a reasonable representation of where a watercourse is likely to occur in most instances. 2. Asked about the aerial images showing hydro line spatial data over developed land in the general vicinity of the Land (Ex E), Dr Martens agreed possible reasons for those occurrences was that in ground truthing no watercourse was identified on land and the hydro line spatial data may have been incorrect. He agreed another reason could be that the watercourse was able to be piped or built upon. Dr Martens did not agree that the aerial images showed no riparian zone in some locations. 3. Dr Martens stated the brown contour lines on the sketch extracted above in [151] are derived from the LiDAR survey data, that is an aerial survey technique that collects a vertical level on a 1x1m grid. Dr Martens agreed the accuracy of LiDAR survey data in the order of 300mm vertically and 800mm horizontally were reasonable estimates. He went on-site to ground truth the hydro line spatial data. He stated the depth of the channel was approximately 500mm in his opinion. 4. Asked whether he took any photographs when he attended the Land, Dr Martens answered that he took photographs but did not put them in evidence. He disagreed with the proposition that he did not include any evidence demonstrating that he went on the Land. He included statements that reflected his observations on-site about the location and description of the creek. Dr Martens stated he inspected the creek and walked its length. He observed bed and banks materials, scour pools, erosion, a continuous channel and piping of the watercourse upstream and downstream of the Land. He attached the aerial image to hydrology JER #1 above in [156] as he thought that was of most assistance. 5. Asked about survey data from the Respondent, Dr Marten agreed that a surveyor may come to a different conclusion to a hydrologist as to whether a feature on land meets the definition of a river. He agreed if the lines on the survey data were meant to represent the top of the bank of the west-east watercourse the line depict an unusual arrangement for the banks of a watercourse. Dr Martens stated that as no legend is available and the photographs used for and timing of the survey was unknown the value of survey data was unclear. 6. Dr Martens agreed that Bruxner Park Road had been constructed above the existing natural landform on the western boundary forming a weir or blockage that obstructed the flow of water in the immediate downstream vicinity. Dr Martens accepted that if there was an incised creek on the Land in part it was a consequence of the capturing and concentration of the water through the culvert (not a consequence of natural processes) which would affect land downstream for some 20 to 25m. The unnatural characteristics of the water flow then are replaced by natural characteristics of the water flow. 7. Dr Martens agreed that he has obtained approvals to pipe part of first order watercourses on numerous occasions, generally for activity at the headwater rather than in the middle section of the watercourse. Criteria applied to determine whether there is a river 1. During cross-examination the experts were tasked with assessing whether a controlled activity approval was required for the Land by reference to the NRAR waterfront land tool (extracted above in [139]). 2. The experts agreed that a controlled activity approval is required if Dr Martens' evidence that there are beds, banks and pools is relied on (see above in [155]). If Mr Barthelmess' evidence that those geomorphic features are not present is relied on, then a controlled activity approval is not required (see above in [145]). The experts agreed the difference in the evidence is a question of whether the bed and banks and other fluvial features are present on the Land. Mr Barthelmess considers there are no bed and banks or other fluvial riparian characteristics present, and Dr Martens does. The experts agreed they would derive opposite outcomes applying Taylor and Stokes (2005) methodology due to their opinions on bed and banks and other fluvial features. 3. The Respondent asked the hydrology experts if their disagreement regarding the pools was whether the pools were man-made or naturally formed. Mr Barthelmess agreed that was the debate between the experts. Dr Martens answered no evidence has been produced for the experts to determine if the ponds were man-made. Dr Martens stated his opinions are based on many factors including the presence of a channel with incised portions and pools on the Land as well as the hydro line spatial data. 4. Asked by the Respondent whether fluvial features are only present in a river, Dr Martens stated (Mr Barthelmess agreeing) that fluvial is a broad term that defines the process of water moving over the landscape which has the capacity to remobilise and deposit sediments. Sediments can be generated into flumes that are fluvial features usually associated with rivers. Fluvial features can include the outwash of a gully or a deposit produced by a lake. Expert town planning evidence Report of Mr Connelly (Connelly #2) 1. In Connelly #2 Mr Connelly was asked to provide his opinion on town planning matters such as site constraints relevant to subdivision lot yield. The 26-lot subdivision layout he prepared is set out above in [122]. 2. A constraint is the west-east watercourse. Two approval regimes apply to watercourse management: (1) the specific controls adopted by the Council and (2) the guidelines published by the Office of Water concerning approvals under the WM Act. The Land is not mapped as a watercourse for terrestrial biodiversity considerations under the LEP 2013 (see above in [135]). Comparing the hydro line and LEP 2013 mapping, in Mr Connelly's opinion it is evident that a much more extensive plotting of watercourses occurs pursuant to the hydro line mapping than the drainage lines identified by the Council as watercourses for the purposes of LEP 2013. Clause 7.6 of the LEP 2013 does not apply as there is no watercourse mapped on the Land pursuant to LEP 2013. 3. The Office of Water administers the WM Act and is required to assess the impact of controlled activity carried out in, on or under waterfront land to minimise harm to waterfront land. Mr Connelly stated if the NRAR guidelines were applicable, the drainage line bisecting the property would be a first order riparian corridor. A 10m wide vegetation corridor is usually sought for such an area. Cycleways, detention basins, stormwater structures, stream realignment and any form of road crossing are permitted in relation to a first order stream. 4. Mr Connelly stated that to qualify as a watercourse, a drainage line must exhibit "bed and bank" characteristics. In Mr Connelly's view the Council has correctly identified drainage lines that exhibit clear bed and bank characteristics. Many of the lines on the hydro line mapping do not illustrate for their length clear bed and bank characteristics. They generally illustrate more swale-like character. Mr Connelly would advise a hypothetical purchaser that the west-east watercourse could be piped, and a 26-lot subdivision could be achieved on the Land. Report of Mr Hams (Hams #1) 1. In Hams #1 Mr Hams was asked to assume the Land is zoned R2 low density residential and provide his opinion on what is a realistic and achievable subdivision for the Land. Mr Hams attended the site on 17 January 2023 for an inspection. Given the advice of Dr Martens, Mr Hams assumed that the watercourse through the Land could not be piped and is required to be retained with a riparian buffer. It has been assumed that the creek could be crossed by a driveway/road if required to provide access to the remainder of the site by the construction of box culverts. 2. A review of Council's website indicates that a flood study has not been undertaken for the watercourse within the site. Preliminary "indicative" 1% AEP flood planning areas are provided on the Council's mapping. This flooding indicates that the lower, flatter areas on the north side of the watercourse within the site are likely to be affected by flooding. The culvert at the eastern boundary of the Land is insufficient to convey the 1% flood flows causing local flooding on the Land. 3. The remainder of the Land is highly constrained due to access and steep topography inter alia. Vehicle access to lots directly off Bruxner Park Road could not be assumed depending on whether traffic could be assumed to be travelling at 50km/h or 60km/h. He considered that this would limit the number of lots that can be assumed achievable. The topography rising up to the northern-western boundary corner is steep and access to lots 25 and 26 (see above in [122]) constrained, making development of these lots difficult. 4. Based on the site constraints, a strip of land along the southern boundary of the Site which could be developed for small Lot (400sqm) residential subdivision and a small portion on the northern side of the riparian zone could be used for a rural residential lot as depicted in the 7-lot subdivision extracted above in [126]. Town planning joint expert report of Mr Connelly, Mr Hams and Mr Rowan (town planning JER #2) 1. In town planning JER #2 for the scenario where the watercourse cannot be piped Mr Connelly, Mr Hams and Mr Rowan agreed: a. residential subdivision for the area north of the "Creek Centreline and Conservative Riparian Zone", as identified on the agreed Constraints Map, into residential lots for the Unpiped Scenario is not achievable (for engineering/ feasibility or site planning reasons); and b. the TH layout in the Unpiped Scenario, as contained in the AR evidence, represents the highest and best use of the subject land. 1. Mr Hams interprets Mr Barthelmess' piped solution as requiring the provision of a minimum 3m wide easement and Dr Martens as requiring the provision of a minimum 8m wide easement to comply with Council requirements. It is estimated that either the 3m or 8m easement would result in the loss of two lots from the 26-lot subdivision layout. Mr Hams stated that the provision of an easement for emergency flow path for Mr Barthelmess' piped solution and Dr Martens' piped solution would have a more significant impact and would result in the need to redesign the road grading to control the overland flow of water. The requirement for such an overland flow path and easement would need to be investigated. Mr Barthelmess' piped solution could result in a loss of a further two to four lots, and Dr Martens' piped solution could result in a loss of a further four to six lots. 2. Mr Connelly interprets Mr Barthelmess' advice in hydrology JER #2 to mean there is no need for any easements. If a minimum 3m wide easement is needed, he would have recommended to a potential purchaser the redesign of the 26-lot subdivision with the loss of two lots. If a minimum 8m wide easement is necessary Mr Connelly would have recommended to a potential purchaser the redesign of the 26-lot subdivision with the loss of four lots. 3. The experts also discussed the likelihood of access from Bruxner Park Road to potential lots in Mr Connelly's 26-lot subdivision layout being constrained, and whether steep topography would prevent access to lots 25 and 26 in Mr Connelly's 26-lot subdivision layout. Mr Connelly maintained in town planning JER #2 that up to 26 lots was achievable regardless of these constraints. 4. The present speed on Bruxner Park Road is presumably 100km/h as the road does not have a signposted speed limit. The experts agreed Bruxner Park Road would be considered a collector road. The assumption pressed by Mr Connelly was that this road would be signposted 50km/h and would not be a problem for driveway access and intersection design. Mr Hams opined that as a result of design speed the road may be 60km/h affecting driveway access and sight distances for intersections. The level of detail in relation to road access was far greater than any prudent hypothetical purchaser is likely to have obtained. Mr Hams a subdivision engineer referred to the Austroads "Guide to Road Design Part 3 – Geometric Design" dated February 2021 (tendered as Ex 13) on the application of speed limits on collector roads inter alia. Mr Hams' evidence was that driveway access to two lots in the 26-lot subdivision could not be guaranteed unless the speed limit was changed to 50km/h, nor would the two intersections in the 26-lot subdivision be compliant with road design requirements. One intersection would result in a loss of an unspecified amount of lots that would "severely affect the development yield". Mr Connelly maintained that his 26-lot subdivision layout was feasible in terms of access given Bruxner Park Road would comply with the Australian/New Zealand Standard 2890.1 "Parking facilities Part 1: Off-street car parking" dated 2004 (tendered as Ex H) and the Council's development specification design 0041 Geometric road layout dated 1 January 2009 (tendered as Ex J). 5. The impacts of topography in the steep portion of the Land was also the subject of detailed evidence. Mr Hams' opinion was that reasonable access to lots 25 and 26 in Mr Connelly's subdivision layout could not be achieved, noting a sizeable retaining wall for a flat building pad, or an unacceptably steep batter, was required on the Land. He provided an access plan for lot 25 to support his opinion that access to lot 25 would be difficult. Mr Connelly prepared a plan for lots 25 and 26 essentially to demonstrate how reasonable access could be achieved in his opinion. He stated that more detailed subdivision design would occur at the development application stage to account for any compliance issues raised by Mr Hams rather than when a potential buyer is investigating a property for potential purchase. 6. I do not need to weigh up the respective expert views to determine precisely what the hypothetical lot number should be assumed to be. I am assessing risk in the mind of a prudent hypothetical purchaser. The evidence of Mr Hams in particular suggests that such a purchaser would be mindful of issues such as traffic speed limits on driveway access and other road design features, and steep topography in assessing the likelihood of being able to achieve the lot yield. Mr Connelly's opinion that essentially as a matter of certainty there would be no such risks to lot yield is not accepted in light of the competing evidence and the nature of the Court's task. 7. Ultimately, the importance of the expert evidence other than valuation evidence is in informing the assumptions that the valuers make on matters such as risk. The approach of the valuers to risk of the achievement of lot yield is discussed below and differed substantially. I find below in [376] that the approach of Mr Lunney valuer to risk which I generally accept means that I do not have to resolve to any greater degree the differences between Mr Connelly, Mr Hams and Mr Rowan on constraints to lot yield Applicants' submissions There is no river 1. The Applicants submit whether there is a river potentially adds a layer of approval being required for development. The Court must decide how that affects risks and yield. Where there is doubt the judicial valuers should resolve that doubt in favour of the dispossessed: Caruso. The evidence supports a conclusion that there is no river. 2. A topographic low point through which water may flow is located on the Land rather than a river as defined under the WM Act. The definition of watercourse in Knezovic v Shire of Swan-Guildford (1968) 118 CLR 468; [1968] HCA 38 (Knezovic) at 475-476 should be applied. If an incised channel with defined bed and banks that was created by natural, not man-made, fluvial actions exists a controlled activity approval will apply, applying Knezovic, NRAR guidelines, Taylor and Stokes (2005) or the NRAR waterfront land tool. In Mr Barthelmess' experience the most frequently applied test to determine whether there is a river is Taylor and Stokes (2005). The NRAR guidelines also provide "where a watercourse does not exhibit the features of a defined channel with bed and banks, the NRAR may determine that the watercourse is not waterfront land for the purposes of the WM Act." 3. The hydro line is the start of an inquiry into the existence of a river of any land. Land must then be investigated to determine whether an incised channel, with defined bed and banks that has been created by natural fluvial actions can be found. This is the approach to be undertaken whether applying Knezovic, the NRAR guidelines, Taylor and Stokes (2005) or the NRAR waterfront land tool. 4. The hydro line spatial data is inherently inaccurate as the location of the line can be wrong by an order of 1m to 100m based on the NSW hydro line dataset information sheet extracted above in [134] (Ex F). The presence of a hydro line on a plan is indicative only for the Council's assessment of the treatment of first order watercourses in that local government area. Hydro lines are identified on aerial images with hydro line overlay in developed residential subdivisions in immediate proximity to the Land (Ex E). Dr Martens accepted these images indicate the hydro line spatial data is wrong, or that upon investigation there was no river or the river was piped (see above in [169]). 5. The LiDAR survey data can be inaccurate in the order of 300mm vertically and 800mm horizontally (see above in [170]). The LiDAR survey data is incapable of identifying the location of bed and banks and can only show a topographic low point. 6. The survey data (Ex O) provided by the Respondent to the Applicants does not show the location of a channel nor of defined beds or banks. Unusual markings and a dam that does not appear in aerial photographs have been identified on the survey plan. Dr Martens in cross examination expressed surprise that if the green lines were purporting to be banks, they could not be. It would be unusual for there to be identified parallel banks and then a further bank as appears from those plans (see above in [172]). 7. A thorough physical inspection as Mr Barthelmess has done provides the best evidence of the existence of naturally created bed and banks on the Land. He took photographs and provided detailed explanation of what he saw. The topographic low point that water flows through in times of rain explains why a different colour and what appears to be a channel can be seen in aerial photographs of the Land. No defined beds and banks are apparent in the aerial photographs. The Court would prefer Mr Barthelmess' evidence that there was no river on the Land. 8. There is no evidence of a defined bed and bank on the western side of Bruxner Park Road from where the experts agree the natural flow of water commences on the Land. Before the water leaves the Land it then once again gets captured and concentrated by the road along the eastern boundary. To the extent the land immediately to the west of that eastern boundary is either wet (or even possibly containing a pond of water) there is no suggestion that is a natural feature. Rather it is the consequence of the elevated roadway again capturing and concentrating water to discharge it through the culvert under that road. 9. Dr Marten's evidence should be rejected for the following reasons: 1. He attached no photographs of the Land to his expert report dated March 2023 or hydrology JER #1 for reason unexplained. He did not produce the photographs of the Land that he referred to in his oral evidence (see above in [171]). The Court is entitled to infer those photographs do not assist in the interpretation of whether there was a channel with defined bed and banks. 2. He accepted that Bruxner Park Road acts as a weir or blockage to the overland flow that is captured and concentrated through a culvert under the road and artificially discharged onto the Land. He accepted that to the extent he considers there are defined beds and banks in the western portion of the Land that it would not be the consequence of natural fluvial actions (see above in [173]). Even if there was defined beds and banks contrary to the evidence of Mr Barthelmess it would not be a river. The detailed survey material also does not identify defined beds and banks in the western portion of the Land. 3. He suggested that at some point across the Land the channel changed from an artificial channel to one created by natural fluvial actions (see above in [173]). This is a difficult proposition as the water has been artificially concentrated, the location where this change occurred could not be identified and before the water leaves the Land it is captured and concentrated along the eastern boundary. Mr Barthelmess' photographs show the surface ponding of water, not water in a channel. 4. He provided photographic evidence of a second order stream downstream of the Land that collects water from the south-north watercourse and topographic low point. This second order stream has a hydro line and a channel with beds and banks as the experts agree. 1. The hypothetical parties to any sale when considering the potential yield from a subdivision of the Land would be satisfied there is no river for the purposes of the WM Act. No controlled activity approval is required. 2. In reply to the Respondent's submissions, the discharge from the western culvert under Bruxner Park Road means any defined bed and banks are not the consequence of natural fluvial flows. Concentrating the water through a culvert under Bruxner Park Road was a man-made intervention. Mr Barthelmess has provided photographs that do not show beds and banks. Ponds seen in his photographs occur when there is a topographical low point on the Land. The Court can infer Dr Marten's photographs provide no assistance as they have not been provided in the course of the hearing. The Court cannot conclude definitively there is a river. 3. In reply to the Respondent's submissions below in [216], the Applicants submitted Mr Barthelmess prepared the hydro line mapping aerial imagery overlay (Ex E) and was available for cross-examination. In reply to the Respondent's submissions below in [219(3)], the Respondent did not challenge Mr Barthelmess on his expertise in cross-examination. Expertise cannot be decided only by education. Alternatively the river can be piped 1. If the hypothetical purchaser would conclude there was a river on the Land they would conclude it could be piped. The piping of first order streams to enable subdivision in Korora is common in the experience of Mr Barthelmess and Mr Connelly (see above in [147], [182]). While Dr Martens is pessimistic about piping the watercourse, he has obtained approvals for piping first order watercourses (see above in [174]). Dr Martens' concern about the presence of a watercourse to the west and east of the Land is misplaced. There is no evidence of a watercourse on the western side of Bruxner Park Road before the overland flow of water is captured and concentrated by Bruxner Park road and discharged through a culvert onto the Land. Any channel in the western portion of the Land is not natural. The south-north watercourse that is unknown and undefined in the eastern part of the Land is captured, concentrated and discharged through a culvert under the eastern boundary road to form part of a higher order stream downstream from the eastern boundary. In these circumstances the evidence of Mr Connelly and Mr Barthelmess that the likelihood of the NRAR granting the controlled activity approval is significant. 2. The watercourse is not a council constraint. Clause 7.6 of LEP 2013 requires specific consideration in relation to "riparian land and watercourses" (see above in [132]). The objectives of the clause are to protect and maintain water quality within watercourses inter alia. The clause only applies to a watercourse and land within 40m of the top bank of an identified watercourse on the riparian land and watercourses map. The Land is not identified on the riparian lands and watercourses map so cl 7.6 does not apply. Hypothetical purchasers would be satisfied that the Council would not require a naturally formed watercourse to be retained as there is no such requirement. 3. Consistent with Mr Barthelmess' and Mr Connelly's experience, and the mapping of hydro lines through developed, subdivided land any water that passes over the Land could be piped. Respondent's submissions There is a river Statutory construction 1. The west-east watercourse on the Land is a river for the purposes of the WM Act. The definition is non-exhaustive and the term should be construed broadly. The use of the expression "includes" signifies that it is intended to enlarge the ordinary and natural meaning of the term: Zouki v Water Administration Ministerial Corporation (2001) 118 LGERA 229; [2001] NSWLEC 258 (Zouki) at 233. The Applicants' reliance of Knezovic which preceded the WM Act and was concerned with the proper meaning of watercourse that lacked a statutory definition under a different statutory scheme is misplaced. River is defined in the WM Act and should not be read down by reference to Knezovic. The WM Act definition includes any watercourses whether "perennial and intermittent" which suggests the Parliament was not seeking to adopt the watercourse definition in Knezovic that found a watercourse requires "continuity" and "permanence". 2. In Zouki Pearlman J rejected a submission to the effect that the definition of "river" in s 2 of the Rivers and Foreshores Improvement Act 1948 (NSW) (RFI Act) should be read down by reference to Knezovic. Her Honour concluded the definition of river and the words in the definition bear the ordinary meaning and that there was no error of law in the Commissioner's finding that "water body [that] carried stormwater runoff after rain and followed the line of the natural depression which drained the catchment" was a "river" for the purpose of the RFI Act. In Azzopardi v Gosford City Council (2002) 123 LGERA 118; [2002] NSWCA 234 (Azzopardi) at 125 Davies AJA held the expressions in the definition of river in the RFI Act should not be read narrowly. Preston CJ held the observations in Zouki and Azzopardi are applicable to the definition of river in the WM Act in Harrison v Perdikaris [2015] NSWLEC 99 (Perdikaris) at [23]-[25]. The definition of a river under the WM Act is much broader than Knezovic. 3. The proper approach to statutory construction requires the Court to have regard to the text, together with the legislative context and purpose, with context being regarded at the first stage and in its widest sense: SZTAL v Minister for Immigration and Border Protection (2017) 91 ALJR 936; [2017] HCA 34 (SZTAL) at [14], [35]-[40] and [82]. The objects of the WM Act provide a basis for construing the term "river" broadly because to do so would further those objects: s 33 of the Interpretation Act 1987 (NSW). Expert evidence on river 1. Dr Martens gave evidence the watercourse constituted a river for the purposes of the WM Act by reference to the criteria in Taylor and Stokes (2005) and the NRAR waterfront land tool. While these are useful guides to determining whether the watercourse is a river, the Court should not read the definition of river down by reference to these documents. 2. Dr Martens inspected the Land and relied on LiDAR survey data to form his view. He observed a broad shallow channel with several incised reaches. He stated the watercourse was upstream of a well-established watercourse. In his opinion the watercourse is a river because it appears as a hydro line in the hydro line spatial data, flows intermittently, is downstream of a mapped natural watercourse, has a catchment area that ranges from around 17.0ha at the top of the Land to 24.7ha at the bottom of the Land, has a defined channel, bed and banks, and has fluvial bedforms. There was evidence of drainage features including erosion and prolonged wetness. In cross-examination he stated he walked the length of the creek to make his observations (see above in [171]). The Court would accept the well-reasoned opinion of Dr Martens that the watercourse constituted a river. In his opinion the watercourses are first or second order streams for the purposes of the Water Management (General) Regulation. 3. Dr Martens' opinion concerning the hydro line mapping aerial imagery overlay (Ex E) is that it is a reasonable representation of where the watercourse is likely to occur and is likely to be accurate within 5m as the watercourse sits within a confined valley (see above in [168]). 4. Dr Marten's evidence in cross-examination on the aerial images overlayed with hydro line mapping (Ex E) (see above in [169]) should not be given any weight as it impossible to assess their accuracy and he was not asked an open question about possible explanations for why development appears over mapped watercourses. The most obvious explanation is that the images are inaccurate. The author of Ex E is unknown. Conclusions cannot be drawn from the images about the likelihood of development being approved as there is no evidence of when the various structures were approved or constructed. The likelihood of development being allowed over the west-east watercourse is a fact dependent enquiry turning on the circumstances of this case. The images also suggest that it is rare for development to be carried out where there are mapped watercourses upstream and downstream as is the case on the Land. 5. Mr Barthelmess had not applied the NRAR waterfront land tool because in his experience in Wollongong and southern NSW NRAR don't use the tool. He later conceded that he did not have any experience dealing with the NRAR in the Coffs Harbour region and that the NRAR waterfront land tool was relevant (see above in [162]). 6. Relying on Dr Marten's evidence a controlled activity approval is required applying the NRAR waterfront land tool whereas Mr Barthelmess' evidence concludes a controlled activity approval is not required. The experts agreed that the differences between them could be traced to their divergent views on (a) whether the watercourse had bed and banks as a matter of fact and (b) whether any pools had to be "fluvial". The experts agreed that those matters were dispositive regardless of whether the criteria in Taylor and Stokes (2005) or the NRAR waterfront land tool was being applied (see above in [176]). Characteristics of bed and banks and pools 1. The Court should prefer Dr Martens' evidence on the bed and bank characteristics, as well as the character of pools on the Land. The Respondent criticised Mr Barthelmess' evidence for reasons summarised below: 1. He did not inspect the watercourses that are upstream or downstream of the west-east watercourse. 2. He only focussed on the watercourse's present condition when considering whether the west-east watercourse was a candidate for rehabilitation. That is the wrong enquiry in circumstances where he admitted that the watercourse's present condition was likely the product of unnatural forces. 3. His experience as a "civil engineer specialising in the design, analysis and construction of private and public stormwater and flood-related engineering projects" does not appear to qualify him to give opinion evidence on such matters. 4. His factual observations were insufficient and/or a misapprehension of the applicable criteria. Mr Barthelmess inflexibly applies a criterion that Taylor and Stokes (2005) described as "flawed" and will not "accurately accommodate the geographic and climatic realities of watercourses" in NSW when considering the catchment area. Mr Barthelmess has not addressed whether watercourses are minor streams under the Water Management (General) Regulation. 5. Mr Barthelmess' assertion that any pools must have "fluvial" characteristics to qualify for the purpose of the NRAR waterfront land tool is not supported by the language of the NRAR waterfront land tool (see above in [163]). It merely refers to "pools". Waterfront land is more widely defined than river under the WM Act. Fluvial means "of or found in a river". The term pools in the NRAR waterfront land tool should not be read down to apply only in respect of pools that relate to rivers. One example of a pool in the NRAR waterfront land tool does not appear fluvial. His assumption about the meaning of the term "pool" is underinclusive and excludes features that indicate the presence of "waterfront land" on the Land. 1. Dr Martens' view that the term "pool" should be understood as having its ordinary and natural meaning as encompassing all pools rather than just those which are fluvial in character should be accepted. It would be an impractical tool for Applicants if the words that appeared within the statutory definition were intended to be read by reference to implied technical meanings. Dr Martens' observed a channel with incised portions and pools on his site inspection. He also relied on the hydro line mapping. The river cannot be piped 1. Dr Martens would advise a hypothetical purchaser that it is very unlikely the watercourse would be piped. In his view the Council or the NRAR would not support an application to pipe the watercourse. The watercourse is a natural system in its original location that is connected to a well-established and natural riparian corridor upstream and downstream that is not piped and has a high potential for rehabilitation. Piping the watercourse has the potential to cause loss of habitat and impact on properties and habitat downstream of the Land. Mr Barthelmess conceded that he could not guarantee that the Council or the NRAR would not come to the same view as Dr Martens. A prudent hypothetical purchaser would factor the risk that it may not be able to pipe the watercourse into the purchase price. Finding on development risk arising from hydrological features on the Land Likelihood of river on the Land 1. I am determining what a fully informed prudent hypothetical purchaser would consider in relation to risk to lot yield as a result of the physical state of the Land. I consider that in reality such a purchaser would be highly unlikely to obtain the detailed hydrology expert evidence I have before me. I consider such a purchaser would, firstly, observe the topography of the Land and would identify that it has a low point running west-east across the whole property. The Land rises reasonably steeply from that lowest point to the northern-western boundary corner. Any observation would be informed by what is happening beyond the land to the west (upstream) and to the east (downstream). Dr Martens' evidence in particular provided a description of these two areas to the effect that water appeared to flow in both areas. A hypothetical purchaser would be able to make similar observations. That a culvert exists under Bruxner Park Road to the west and under the access road to the east is likely to confirm that water flows across the Land. 2. Secondly, the hypothetical purchaser would rely on documents in the public domain. In this case (i) the hydro line spatial data, (ii) the Council's flood mapping, and (iii) the NRAR waterfront land tool (subject to observations in [226] below) would be considered highly material in my view. I will consider each of these documents in turn. 3. That a hydro line is located across the Land west-east in what is accepted to be a flow path for water after rain would be a matter a purchaser would be highly likely to consider in assessing risk. While the Applicants emphasised what they described as inaccuracies in the hydro line spatial data produced by NSW Spatial Services relying on aerial images with a hydro line overlay (Ex E apparently prepared by Mr Barthelmess date unknown), for the reasons given by the Respondent summarised above in [216] that criticism is not sustainable. I do not accept the Applicants' submission that hydro lines are inherently inaccurate. The degree of inaccuracy if any will depend on the location. Dr Martens' view summarised above in [168] that the hydro line is likely to be within 5m of the location on the Land given its topography is accepted. 4. The NRAR waterfront land tool provides a list of considerations which potential applicants for controlled activity approvals and their consultants can apply to determine if land is waterfront. The NRAR waterfront land tool extracted above in [139] incudes the location of a hydro line on land as one of the early indicators of waterfront land. Site assessment factors include the existence of a defined bed or bank and pools. Current site photographs looking upstream and downstream are required to be kept. 5. The NRAR waterfront land tool is available to the public but whether it is designed for use by non-experts is not the subject of evidence. It describes itself as available to applicants and consultants, as summarised above in [139]. Here the two experts applying it drew opposite conclusions from their analysis about whether waterfront land existed on the Land. Key differences were whether defined banks and fluvial pools (in contrast to man-made pools) existed on the Land. How a non-expert could be confident in its application is not clear if these experts differ on its application. 6. The Land is identified in an indicative flood planning area on council mapping. The sketch of the creek, riparian corridor and indicative flood planning area provided by Dr Martens extracted above in [151] identifies the application of the Council's flood mapping in the context of a creek and riparian corridor Dr Martens identified on the Land. Both experts agree that the area is flood prone (see above in [153]). 7. As identified above in [222] the topography of the Land and the land to the west and east suggests that water flows through the landscape. The presence of a watercourse which could be a river applying a plain and ordinary meaning to that term of "an abundant stream" (Macquarie dictionary, revised 3rd ed, 2001) is likely to have been apparent to a prudent hypothetical purchaser at the date of acquisition and that a controlled activity approval to allow it to be piped may need to obtained. Such factors would influence consideration of likely lot yield. Strictly speaking that should be the end of my consideration on the topic of whether a river runs across the Land. 8. Reluctantly turning to the expert evidence, there is substantial disagreement between the two engineers which the Court should seek to resolve. Caruso at [3], [4] set out the general principle for resolving competing expert evidence as follows: [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 469, 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... 1. The experts addressed whether they considered a river was likely to have existed at the date of acquisition. At that date the WM Act was in force which has a wide definition of river, extracted above in [130], which includes any water courses inter alia. The experts' analysis must be informed by the correct approach to the definition of river. The first issue which divided the parties and their experts was the definition of river which should be applied. The principles of statutory construction require that the ordinary meaning of words be viewed in their statutory context SZTAL at [14], [35]-[40], [82]. Curiously the Applicants made no reference to the definition of river in the WM Act in their substantive submissions focussing on Knezovic decided in 1968. Knezovic addressed the Local Government Act 1993 (NSW) which did not contain a definition of river. As the Respondent submitted, no statutory construction basis exists for narrowing the definition of river in the WM Act by reference to Knezovic. The definition of river in the WM Act is broad and should be applied on that basis, as occurred in the case of Perdikaris applying the observations in Zouki and Azzopardi referred to by the Respondent above in [210]-[211]. As Mr Barthelmess essentially applied the definition in Knezovic in focussing on the necessity for there to be readily identifiable bed and banks inter alia I consider his approach is likely to be too narrow. 2. Both experts inspected the Land before any substantial work was undertaken by the Respondent so that they could see it in a relatively unaltered state. An important difference in their approaches was whether they looked upstream or downstream of the Land. Mr Barthelmess provided photographs of what he saw on the Land in his report. He did not consider the land to the west or the east in drawing his conclusions as he considered that the culverts at each end of the Land affected the flow of water by concentrating it to flow unnaturally across the Land and there were no geomorphic features on the Land. Dr Martens also viewed the Land. He was criticised for not including photographs he took of the Land in his written evidence and the Applicants submitted that I should draw the adverse inference that had these been included they would not have assisted his evidence. I do not accept that submission given Dr Martens' written and oral evidence about where he went on the Land and what he saw (see above in [150], [155], [171]). I do not consider that the validity of his evidence as a well-qualified and experienced expert is undermined by the absence of photographs he took of the Land in his written evidence. Dr Martens did provide photographs of what he saw downstream of the Land and included aerial images which he considered relevant to depict the state of the Land. 3. Dr Martens considered the appearance of land to the west and the east, as reflected in the hydro line, was relevant to determine if the Land included the feature of a river as defined in the WM Act. This approach is orthodox and preferable to viewing the land in isolation as Mr Barthelmess did. That culverts were located upstream and downstream which concentrated the water on the Land according to Ms Barthelmess does not undermine that finding in light of all the other factors I have considered. Dr Martens considered the watercourse to be a first order stream under the Strahler system which requires a 10m riparian corridor on either side, Mr Barthelmess agreeing above in [153]. 4. The experts ultimately applied Taylor and Stokes (2005) and the NRAR waterfront land tool to assist in identification of a river or waterfront land as already referred to above in [146], [155], [175]-[176]. Mr Barthelmess relied in particular on the Taylor and Stokes (2005) methodology, published in an environmental law journal in 2005. The application of Taylor and Stokes (2005), and the NRAR waterfront land tool, does not permit a narrowing of the definition of river, as the Respondent submitted. 5. The experts considered both tools in the course of their evidence, drawing opposite conclusions as to whether a river was likely to have existed on the Land. Application of the NRAR waterfront land tool appears more appropriate given that it is a current procedure of a regulator of the WM Act and is publicly accessible. I do not consider that the Taylor and Stokes (2005) tool would be as publicly accessible in terms of awareness of its existence to a prudent hypothetical purchaser compared to the other documents identified above in [223] all of which are published by state and local government entities. Taylor and Stokes (2005) was also prepared when different statutory provisions were in effect and its guidance on matters, such as whether a catchment over 20ha exists, is not greatly utilised now according to Dr Martens. I do not consider the Taylor and Stokes (2005) methodology is of much assistance. 6. Turning to the application of the NRAR waterfront land tool, the existence of the hydro line on the Land has already been noted. At issue between the experts is the extent to which beds and banks should be identifiable, and whether pools must be fluvial in nature to be relevant. Criteria 5(d) does not require identification of fluvial pools as opposed to man-made pools, as the Respondent submitted above in [219(5)]. Dr Martens' evidence based on his observations, historic aerial images and the LiDAR survey data suggests there has been pooling of water over time on parts of the Land regardless of how those pools formed. Mr Barthelmess' provided photographs that depicted the ponding of surface water. One possibility in the evidence is that farming activity has altered the topographical surface of the Land. I accept Dr Martens' opinion that there is at least one pool feature on the Land. 7. Criteria 4(a) asks whether the watercourse has a defined bed or bank. I accept Dr Martens' evidence which identifies the presence of a defined bed and banks in some locations on the Land. 8. The survey data (Ex O) was said by the Applicants to not assist in identifying a river as no bed or channel is identified by it. This can be accepted but does not assist in taking the issue further in light of Dr Martens' evidence on bed and banks. 9. Dr Martens' interpretation of LiDAR data assisted him to reach his conclusion that a river existed. While potential inaccuracy of this data was emphasised by the Applicants' counsel it nevertheless is another indicator applied by Dr Martens which, taken collectively with other matters, enabled him to conclude the existence of a river contrary to Mr Barthelmess' view. I consider that Dr Martens' evidence should be accepted for the reasons above. 10. Based on my analysis of the available public information and confirmed by my finding on the disputed expert evidence, a prudent hypothetical purchaser would be likely to consider that a risk to potential lot yield arose at the date of acquisition because a feature of the Land included a river as defined in the WM Act. Put another way to reflect the Applicants' submissions, I do not consider such a purchaser would conclude there was no river on the Land and that therefore there was no risk to lot yield. Likelihood of controlled activity approval for piping 1. It is next necessary to consider whether the prudent hypothetical purchaser would consider it likely or not that a controlled activity approval under the WM Act for piping of the river would be granted by the NRAR. Essentially the expert evidence consisted of contrary opinions on whether or not the NRAR would be likely to grant a controlled activity approval. 2. The reliance on the four examples of aerial images with hydro line overlay in Ex E where a house(s) appears to have been built over a hydro line does not greatly assist in the absence of any other detail about those sites. As already identified above in [216], that such examples exist does not assist in knowing what might occur in the particular circumstances of the Land. At best the four enlarged images show examples where that has occurred. As observed above most of the hydro lines shown in the overall aerial photo in Ex E appear to be intact with no buildings over them. 3. The experts have opposite opinions on whether the NRAR is likely to issue a controlled activity approval. Mr Barthelmess consistent with his view that no river runs across the land considers that permission to pipe is likely to be forthcoming and that there are insufficient fluvial process on the Land to maintain the objectives of a rehabilitated riparian area. Dr Martens considers that given the relatively unaltered state of the upstream and downstream catchments, and the opportunity that presents for rehabilitation of the watercourses, that approval is very unlikely to be forthcoming. Once again it is worth repeating that I am determining what level of risk a prudent hypothetical purchaser is likely to apply to the hypothetical sale of the Land at the date of acquisition. I consider that there is some risk that approval would not be granted for piping by the NRAR. 4. I consider Dr Martens' approach of considering the upstream and downstream topography and geomorphic characteristics is the more realistic approach the NRAR is likely to take rather than considering the Land in isolation as Mr Barthelmess does. If the expert evidence is to be weighed, I prefer Dr Martens' overall approach as more reflective of the statutory regime applying under the WM Act, informed by the state of the Land and the land to the west and the east. On balance a prudent hypothetical purchaser would consider there is a real risk that piping of the river under a controlled activity approval would not be allowed by the NRAR. 5. The experts agreed that if the watercourse was to be retained a 10m wide riparian corridor would be required on both sides where development could not occur. Role of council 1. Separate to the role of the NRAR under the WM Act, the Applicants also addressed to a limited degree if I understand their case the likelihood of the Council granting development consent for stormwater piping of the Land. Clause 7.6 of LEP 2013 and an extract of the accompanying map set out above in [132], [135] was relied on by the Applicants. The map is part of a series identifying watercourses across the whole LGA. The map was prepared at a high level of generality and shows relatively few watercourses. It does not reflect for example the Strahler system of first, second and third order streams identified in Sch 2 of the Water Management (General) Regulation. Beyond noting the clause does not apply to the Land as a watercourse across it is not identified on the map I do not consider that the LEP provides assistance to a hypothetical purchaser in understanding the attitude of the Council to whether piping of stormwater on the Land would be approved. 2. The planners were also asked their opinion on likelihood of piping with differing views as to whether that would be forthcoming, Mr Connelly considering it would be and Mr Rowan and Mr Hams considering approval was unlikely. Strictly speaking given my conclusion about the likelihood of a river being considered to be present on the Land and that approval to pipe would not be assumed by a prudent hypothetical purchaser this issue does not arise. Issue 2: Conclusion 1. As the possibility that the watercourse will have to be retained is a consideration for the prudent hypothetical purchaser the town planners agreed lot yield of a 7-lot subdivision comprising 6 x 400m2 lots and 1 x large rural residential lot (2.07ha) as shown on the 7-lot subdivision prepared by Mr Hams (above in [121]) should be valued. 2. Additional evidence was tendered by the parties as briefly summarised above in [187]-[192] on the impact of easements for the piping of the watercourse on lot yield, and whether Bruxner Park Road's speed limit would impact on driveway access and subdivision design, and the steep topography towards the northern-western boundary corner of the Land would cause a loss of lots. On the basis of my finding above, in relation to the presence of a river and the real risk that piping of the river would not be allowed, this evidence does not need to be considered in relation to further risks to the development potential of the Land as the 7-lot subdivision is the assumption to be applied, subject to the following observations. The Applicants' closing submissions included as an option that the 26-lot subdivision should nevertheless be considered, applying a certain approach to development risk regardless of earlier conclusions reached. I will discuss this further in the context of the valuation evidence but as will become clear below I do not consider that I need to further resolve easement, access and topography issues in light of the approach of the valuers to risk. Issue 3: Valuation MFI 3 1. A document handed up by the Applicants' counsel (MFI 3) in closing submissions identified four bases contended for as possible valuations of the Land. 2. Options 1 and 2 of MFI 3 were: [1] Piped residential – Primary position 25 residential lots at $190,000 = $4,750,000 plus 1 large lot residential at $750,000 Total: $5,500,000 [2] Piped residential – Yield Risk 20 residential lots at $190,000 = $3,800,000 plus 1 large lot residential at $750,000 Total: $ 4,550,500 1. The first two bases assume that 26 lots (Mr Connelly's subdivision layout) or 20 lots (Mr Lunney's reduced lot yield in light of various constraints, for example, easements needed to accommodate pipes) was the appropriate lot yield for valuation purposes. These do not arise given my earlier finding that a prudent hypothetical purchaser could not assume piping of stormwater would be approved. 2. The Applicants' counsel's own valuation approach was identified in option 3 of MFI 3 which was: [3] Unpiped residential – Primary position 25 residential lots at $142,000 ($190,000 less 25% risk) = $3,562,500 plus 1 large lot residential at $750,000 Total: $ 4,312,500 1. No valuers adopted the approach in MFI 3 (option 3). It assumes the application of the hydrological engineers' evidence that the watercourse could be piped as a matter of engineering, see above in [154]. The Respondent criticised the approach for at least two reasons. The reduction of 25% for risk is said to be based on Mr Lunney's approach to the risk of a development application not being approved for a 20 or 26-lot subdivision but that is not correct application of the adjustment. Further, there is no basis in the valuation evidence to attribute a large lot value ($750,000) to the larger remaining lot, it should be valued the same as any other residential lot. As I discuss below in [277]-[282], Mr Lunney applied risk factors differently to what is set out in option 3 and I therefore need to determine if this is a valid approach in light of his evidence. As I also identify below in [275], Mr Rumble made no adjustment for any kind of risk in his analysis of market value of the Land. 2. MFI 3 option 4 is the minimum amount the Applicants consider they are entitled to as follows: [4] Unpiped residential – Floor Value 6x residential lots at $190,000 = $1,140,000 plus 1 large lot residential at $750,000 Total: $1,890,000 Expert valuation evidence 1. The following expert valuation evidence was filed in this proceeding: 1. Expert report of Mr Rumble called by the Applicants dated May 2023; 2. Expert report of Mr Lunney called by the Respondent dated 17 May 2023; 3. Joint expert report of Mr Rumble and Mr Lunney dated 28 May 2023 (valuation JER #1). 4. Supplementary valuation joint expert report dated June 2023 (valuation JER #2) (Ex K); 5. Mr Rumble's corrected and updated tables and calculations to the valuation JER #2 dated 6 June 2023 (Ex L); 6. Hypothetical residual calculation prepared by Mr Lunney dated 7 June 2023 (Ex 8); and 7. Two valuation tables prepared by Mr Lunney to replace tables 1 and 1.1 in Ex K (Ex 14). 1. The Applicants' tendered two valuation reports for #19 246 Shepherds Lane Coffs Harbour. One valuation report was prepared by Lunney Watt and Associates Pty Ltd dated 6 April 2020. One valuation report was prepared by Donoghue Property Valuations and Consultancy for the Valuer General (Valuer General's Report) dated 18 October 2022 (Ex P). 2. The Respondent's tendered the valuation review memorandum dated 12 February 2021 and draft contract for sale and purchase of land for #4 14a Bruxner Park Road Korora (Ex 9) inter alia. The land value identified in the memorandum for #4 14a Bruxner Park Road Korora was $520,000. I do not need to refer to most of the other exhibits tendered on valuation by the Respondent. 3. The expert valuation evidence evolved significantly over the course of the hearing. Exhibits L (replacing some of Ex K) and 14 (replacing some of Exs K and L) were filed during the course of the hearing to correct the valuation JER #2 (Ex K). This evidence, along with limited evidence from the expert reports of Mr Rumble and Mr Lunney, is summarised below in the judgment. Two additional sales were added late by Mr Rumble being #23 111 Bruxner Park Road and #24 259C Bruxner Park Road Korora. 4. By the end of the hearing the competing valuations were as follows: Scenario Lots Lunney Rumble $1,142,000 $1,890,000 R1 "Unpiped" 7-lot subdivision comprising 6 x 400m2 lots and 1 x rural residential lot (6x $122,000/lot, (6 x $190,000/lot, 1x $750,000/lot) 1x $410,000/lot) 1. In MFIs 1 and 2 Mr Rumble stated that the value of the large rural residential lot was $750,000 if assessed on a per lot basis. The Applicants did not press Mr Rumble's rate/m2 sales approach. The Applicants are seeking at a minimum $750,000 for the large rural residential lot, and a total of $1,890,000 in the "unpiped residential = floor value" scenario (MFI 3 option 4). 2. The Court saw numerous sales on the view, the relevance of many of which dropped away in the course of the hearing and need not be referred to. The comparability of some R1 and R5 sales remain to be considered as the valuers made different adjustments in relation to the Land. R1 sales 1. The valuation experts jointly prepared the following tables identifying the R1 sales they each rely on and adjustments they made to those sales to value the Land (Exs K, L): [I note I have annotated the tables to include the adjustments of both experts where relevant]. Table 2 - R1 Sale – Market Adjusted Prices (Ex L) (table agreed) Site Address Sale Price Sale Date Land Area %Δ Market Itinerary (% Market adjustment as agreed) Adjusted Price 17 (R & L) Lot 2 Tasman St, Corindi $4,900,000 5/04/2022 2.7090 -12.5% $4,287,500 19 (R) 246 Shephards Ln, Coffs Harbour $2,857,273 10/12/2021 1.3600 -6.5% $2,671,550 20 (R & L) 11 Blue Wren Cl, Coffs Harbour $1,750,000 18/12/2021 1.2630 -7.0% $1,627,500 22 (R) 6 Domain Dv, Coffs Harbour $2,890,000 30/08/2019 2.2680 34.5% $3,887,050 Table 2.1 - R1– Sales and Lot Number Potential and Adjustments (Methodology by Mr Lunney) (Ex K) Site Itinerary Market # Lots $/potential lot Location Size & Topography $/potential lot Adjusted Price of finished lots 17 $4,287,500 34(L) 31(R) $126,103 (L) 10.00% (L) -10.00% $126,103 (L) $138,300 (R) 30% (R) $190,000 (R) 19 $2,671,550 $200,000 20 $930,000 9 $103,333 15.00% 0.00% $118,833 22 $3,887,050 Table 2.3 - R1– Mr Rumble - Sales for $Rate/potential lot and adjustment for average lot size (Methodology by Mr Rumble) (Ex K) Site Itinerary Total agreed Number of Potential Lots $Rate/Lot Average Lot Size Average Lot Size Adjustment Adjusted $Rate/potential lot Adjusted Price 17 $5,145,000 31 $165,968 672m2 15% $190,863 19 $2,671,550 12 $222,629 1127.5m2 -15% $189,235 20 $1,139,250 - 22 $3,692,698 - 1. I note there appears to be an error by Mr Rumble in Table 2.3 (Ex K) for the total agreed adjusted price of #17 Lot 2 Tasman St Corindi Beach (#17 Corindi Beach) shown as $5,145,000 given the later Table 2 (Ex L) shows an agreed market-adjusted price of $4,287,000 which also appears in Table 2.1 (Ex K). I do not need to consider this further. 2. Table 2 identifies the agreed adjusted market price of four R1 sales the subject of the evidence. In the course of the hearing Mr Rumble placed primary reliance on the sale of #17 Corindi Beach as the most comparable of the four properties. In cross-examination, Mr Lunney agreed that sale was the only relevantly available and adjustable comparable sale. 3. I note that in closing submissions the Applicants relied on #17 Corindi Beach and #19 246 Shepherds Lane Coffs Harbour (#19 Shepherds Lane). The Respondent relied on #20 11 Blue Wren Close Coffs Harbour (#20 Blue Wren Close) in closing submissions. Number 22 6 Domain Drive Coffs Harbour was not relied on and I do not therefore need to consider it. #17 Lot 2 Tasman Street, Corindi Beach 1. The experts agree #17 Corindi Beach is comparable to the Land, flatter and would involve less extensive (and less costly) subdivision works in comparison to the Land. 2. In Mr Rumble's opinion as at the date of sale #17 Corindi Beach was sold on a 31-lot concept drawing and that is the appropriate basis for analysis. Mr Rumble disagreed with the location adjustment of 10% of Mr Lunney, making a 30% adjustment. As at July 2021, the median housing price difference between Korora and Corindi Beach was 19%, while the adjoining northern suburb of Sapphire Beach was 32%. Mr Rumble opines that Sapphire Beach represents a more likely representation of an applicable adjustment. In support of this, Mr Rumble relied on a location adjustment of 15% to properties #19 246 Shepherds Lane and #20 11 Blue Wren Close Coffs Harbour. In one of the valuations of #19 246 Shepherds Lane (Ex P), the valuer made a location adjustment of 15% in respect to #17 Corindi Beach. The addition of these two adjustments suggests that an adjustment of 30% in respect to the Land is fair. 3. In Mr Lunney's opinion, although #17 Corindi Beach is in an inferior location, the proposed lots are larger and would realise similar values to those in a subdivision of the Land. Ultimately the adjustments for location (10%) and differential lot sizes (-10%) cancel each other out. Mr Lunney analysed the sale on the basis 34 lots will be yielded from the site, as the purchaser submitted a development application on a 34-lot concept drawing following the purchase. Other R1 Sales 1. Number 19 Shepherds Lane a compulsory acquisition sale was relied on by Mr Rumble to confirm in his view his adjustments to the sale of #17 Corindi Beach as there are so few comparable sales. 2. Mr Lunney maintained his opinion that #19 Shepherds Lane being a compulsory acquisition is not a sale. It was compulsorily acquired and the "sale price" was the statutory determination which Mr Lunney assumes was accepted by the former owner. In Mr Lunney's opinion this transaction is materially different to a negotiated acquisition wherein an agreement is reached between an acquiring authority and a former landowner as to the market value of a particular property. 3. In Mr Lunney's opinion the statutory valuation appears to have ignored or overlooked the fact that the property was above the "hard constraint" contour of RL 90M AHD and incapable of being serviced by water. If the sale were to be analysed on the assumption that it was suitable for subdivision into 12 lots (as assumed in the Valuer General's report), Mr Lunney would analyse and apply the sale as follows: "Sale Price": $2,857,27320 Less adjustment for time $2,685,837 (market movement at 6%) 12 Lots $223,820/potential lot englobo Adjustments: Location: +10% Views: -20% TOTAL: -10% ($201,438/potential lot englobo) 1. Mr Lunney observed that this lot value materially exceeded the headline rate of $122,000/lot englobo he has applied. If Mr Lunney were to place significant weight on this "sale" Mr Lunney's valuations on an R1 basis would be as follows for the 7-lot subdivision: 6 x $200,000/lot = $1,200,000, plus 1 englobo rural residential lot @ $ 410,000 [Total =] $1,610,000 1. Regarding #20 Blue Wren Close, (it appears to Mr Lunney that Mr Rumble implicitly assumed that the highest and best use was for demolition and redevelopment) Mr Lunney originally thought the highest and best use was the retention of a dwelling on surplus land in his expert report. On reflection and having considered different subdivision outcomes he considered that many purchasers may consider the highest and best use to be demolition and redevelopment. Mr Lunney ultimately considered a subdivision of #20 Blue Wren Close that could yield 15 equivalent small residential lots in Ex K. 2. At the time of the adjusted sale price of $1,627,500 for #20 Blue Wren Close, Mr Lunney stated this transaction would reflect an englobo value of $118,500/potential lot in Ex K similar to his adjusted rate of $103,333/lot in his expert report. This sale did not cause Mr Lunney to revise his headline rate of $122,000/lot. Mr Rumble ultimately did not provide any adjustments for the sale of #20 11 Blue Wren Close Coffs Harbour. Yield and Risk Mr Rumble 1. Mr Rumble's valuations did not apply any adjustments for yield risk, development costs or the risk of a 26-lot subdivision not being achieved on the Land. Mr Rumble disagreed with Mr Lunney's understanding of Mr Rumble's assumptions set out below in [278] stating he made no such assumptions. It is otherwise unclear what assumptions for risk Mr Rumble made. 2. Mr Rumble stated he did not form an opinion in respect to the non-valuation expert reports as he is not an expert in town planning, hydrology or engineering matters. Mr Rumble is of the opinion the experts vary too greatly in opinion. Mr Rumble does not consider that a valuer should determine which expert evidence a hypothetical purchaser would rely on. Hence Mr Rumble applied $190,000/lot to 26 lots with seemingly no deduction for risk of any kind. Mr Lunney 1. If the 26-lot subdivision is relevant Mr Lunney assumed a yield of 20 residential lots. This reflects a reduction in yield of more than the two to four lots conditionally conceded by Mr Connelly in town planning JER #2 above in [189]. It is a yield reduction which is significantly less than the 14, 16 or 18 lots which Mr Lunney considered was the effect of Mr Hams and Mr Rowan's evidence in town planning JER #2. 2. Mr Lunney understood that Mr Rumble assumed that the Land was rezoned, services would be available, that there would be no voluntary planning agreement costs incurred and that there would be no atypical development costs incurred in undertaking a subdivision of the Land in the manner contemplated by Mr Connelly. 3. A hypothetical purchaser would also need to consider the financial implications of both atypical off-site infrastructure costs in addition to significant on-site subdivision costs in the 26-lot subdivision. Mr Lunney has assumed in the 26-lot subdivision that there would be atypical on-site development costs incurred, for example the piping of the watercourse, as canvassed by the town planning experts. Without the benefit of any engineering or QS costings in evidence in these proceedings, an adjustment of at least 25% would need to be applied to the Land to account for a cost penalty suffered in the 26-lot subdivision. Mr Lunney applied an adjustment of $55,000/lot for atypical off-site infrastructure costs. 4. Mr Lunney also applied an adjustment for atypical development risk of 25% as appropriate allowances would be made for the perceived time, costs and risk associated with achieving a development outcome. In Mr Lunney's opinion that 25% would be the minimum adjustment applied having regard to the possibility of a material reduction in development yield based on the matters raised by Dr Martens, Mr Hams and Mr Rowan. Mr Lunney considers that a hypothetical purchaser would be concerned about the risk that the piping of the water course would not be supported by the consent authorities for the reasons articulated by Dr Martens, Mr Rowan and Mr Hams. 5. When Mr Lunney made the adjustments for risk he considered necessary he derived a potential lot value of $50,000/lot as follows [footnotes omitted]: Headline Rate: $122,000/lot englobo Adjustment for atypical off-site infrastructure costs: $55,000/lot $67,000/lot Adjustment for atypical development risk at 25%: $17,000/lot $50,000/lot 1. Mr Lunney would multiply $50,000/lot by 20 residential lots to reflect the yield risk in achieving the 26-lot subdivision, deriving a total value of $1,000,000 for the Land. Mr Lunney does not make any allowance for risk for the 7-lot subdivision as that is relatively risk free and worth $122,000/lot. R5 sales 1. The experts jointly prepared the following tables identifying the R5 sales they each rely on and adjustments they made to those sales to value the Land (Exs L, 14): [I have annotated the tables to include the adjustments of both experts where relevant]. Table 1 - R5 Sale – Market Adjusted Prices (Ex 14) (table agreed) R5 Site R5 Sales Analysis Sale Price Sale Date Land Area %Δ Market Itinerary Address (ha) (% Market adjustment as agreed) Adjusted Price 4 (R) 14A Bruxner Park Rd, Korora $ 900,000 11/03/2021 0.9864 7.0% $ 963,000 10 (L) 130 Bruxner Park Rd, Korora $ 2,200,000 2/11/2022 4.1800 -22.5% $ 1,705,000 11 (R) 259B Bruxner Park Rd, Korora $ 780,000 23/06/2021 1.0020 1.8% $ 794,040 14 (R) 97 Sealy Lookout Dv, Korora. $ 850,000 16/06/2021 3.5900 1.5% $ 862,750 15 (L) 10 Hardy Cl, Korora $ 980,000 18/03/2021 3.8900 5.0% $ 1,029,000 16 (L) 69 Rippingales Rd, Korora $ 630,000 14/02/2020 3.3300 27.5% $ 803,250 23 (R) 111 Bruxner Park Rd, Korora $ 1,380,000 17/02/2022 1.0900 -10% $ 1,242,000 24 (R) 259C Bruxner Park Rd, Korora $ 985,000 2/09/2021 1.0600 -1.7% $ 968,255 Table 1.1 - R5 - Sales and Lot Number Potential (Ex 14) R5 Site Itinerary Market Adjusted Price Improvements Assessed Land Value # Lot Potential $/lot 4 $963,000 $200,000 (R) $763,000 (R) 1.00 $763,000 (R) $380,000 (L) $583,000 (L) $583,000 (L) 10 $1,705,000 $610,000 $1,095,000 3.00 $365,000 11 $794,040 $15,000 $779,040 1.00 $779,040 14 $862,750 $ - $862,750 1.00 $862,750 15 $1,029,000 $330,000 $699,000 2.00 $349,500 16 $803,250 $150,000 $653,250 2.00 $326,625 23 $1,242,000 $300,000* $942,000 1.00 $942,000 Table 1.2 - R5 – Adjustments for Potential Lot Basis (as determined to be Mr Lunney's "Highest and Best Use" methodology) (Ex L) R5 Site Itinerary Location Land size Topography Views Public DA Total Final Potential lots Purpose - Access $/lot 4 0.0% -10.0% 0.0% 10.0% 0.0% 0.0% 0.0% $903,510 10 0.0% (L) 5.0% (R) 0.0% 5.0% -10.0% -5.0% 0.0% -10.0% (L) $328,500 (L) -5.0% (R) $365,000 (R) 11 10.0% -5.0% 20.0% -10.0% 0.0% 0.0% 15.0% $895,896 14 25.0% -20.0% 20.0% -10.0% 0.0% 0.0% 15.0% $992,163 15 22.5% 0.0% 15.0% (L) 20.0% (R) 0.0% 0.0% -5.0% 32.5% (L) $463,088 (L) 37.5% (R) $487,333 (R) 16 22.5% 0.0% 17.5% -5.0% (L) 0.0% (R) 0.0% 0.0% 35.0% (L) $440,944 (L) 40.0% (R) $457,275 (R) 23 5.0% -5.0% 20.0% -10.0% 0.0% 0.0% 10.0% $1,036,200 24 10.0% -5.0% 20.0% -10.0% 0.0% 0.0% 15.0% $1,113,493 1. I note there appears to be errors in the final rates/lot in Table 1.2 (Ex L) based on rate/lot identified in the later Table 1.1 (Ex 14). These errors need not be considered given how the evidence has proceeded. Mr Rumble's R5 sales 1. Mr Rumble relied on the following R5 sales: 1. #4 14A Bruxner Park Road, Korora (negotiated agreement); 2. #11 259B Bruxner Park Road, Korora; 3. #14 97 Sealy Lookout Drive, Korora; 4. #23 111 Bruxner Park Road, Korora; and 5. #24 259C Bruxner Park Road, Korora. 1. All these sales have no subdivision potential and all but one (#14 97 Sealy Lookout Drive) are approximately 1ha. Mr Rumble derived a value of $750,000/lot. #4 14A Bruxner Park Road, Korora 1. Number 4 14A Bruxner Park Road was a negotiated acquisition by the Respondent adjoining to the east of the Land. Mr Rumble considers it has similar location attributes to the Land. He considered it an inferior sale noting access is over a right of way easement and the land is encumbered with a 5m wide easement for effluent reuse and water main. 2. The experts disagree on the appropriate analysis of the sale. Mr Lunney relies upon the information provided to him by the Respondent, that the market value was assessed on the basis of land value of $520,000 and an added value of structural improvements of $380,000. Mr Lunney noted that the documents provided to the valuers indicate that the following values were assigned in respect of #4 14A Bruxner Park Road: [Mr] Hollinshead - TfNSW [Mr] O'Rourke – former Landowner Land Value $450,000 $460,000 Improvements Value $305,000 $490,000 TOTAL $755,000 $950,000 1. Mr Lunney noted that the value of infrastructure assigned by the purchaser (the Respondent) of $380,000 was approximately mid-point of the range assigned by the respective valuers. Mr Lunney notes that Mr Rumble relies on his own analysis to derive a lesser value of $200,000 in respect of the structural improvements the basis for which is unclear. That difference in the value of the improvements is the substantial difference between the value/lot amounts of $763,000 (Mr Rumble) and $583,000 (Mr Lunney). #11 259B Bruxner Park Rd, Korora #24 259C Bruxner Park Road, Korora 1. Number 11 259B Bruxner Park Road and #24 259C Bruxner Park Road resulted from the subdivision of a larger allotment. 2. According to Mr Rumble #11 259B Bruxner Park Rd has no potential for redevelopment unless permitted with consent as a result of its size. The lot has coastal views and is accessed by a right of way easement over a shared concrete driveway. 3. Limited if any analysis of the sale #24 259C Bruxner Park Road was provided in Exs K, L and 14. #14 97 Sealy Lookout Drive, Korora 1. Mr Rumble considers #14 97 Sealy Lookout Drive inferior to the Land noting it is situated above RL 55m AHD and has no potential for redevelopment unless permitted with consent as a result of its size. #23 111 Bruxner Park Road, Korora 1. Limited if any analysis of the sale #23 111 Bruxner Park Road was provided in Exs K, L and 14. Mr Lunney's commentary on Mr Rumble's sales 1. Mr Lunney stated that none of Mr Rumble's sales enjoyed the potential for any further subdivision and are not comparable to the Land whose hypothetical purchaser would subdivide it. Each of Mr Rumble's sales represented a "block value" and the most significant driver of the value of those properties was the extensive coastal views enjoyed by them. Broadly speaking, when adjusted for market movement and added value of structural improvements, these sale properties would reflect a "block value" in the range of $800,000 to $1,000,000. 2. If contrary to Mr Lunney's opinion any attempt was made to adjust Mr Rumble's sales to render them comparable, Mr Lunney considers that the sales could potentially be applied on a "block value" basis in which adjustments are made to determine the market value of the Land as a large single lifestyle block. Despite Mr Lunney's reservations about the use of Mr Rumble's sales at all, in a bid to assist the Court, Mr Lunney applied the following adjustments to each of those sales totalling -70%, to derive the appropriate englobo rate/lot to apply to calculate the market value of the Land: 1. Subdivided v englobo: -30% 2. Views: -40% 1. If a typical value of $900,000 adopted for a 1-hectare homesite with extensive coastal views were to be adjusted in this manner, an englobo value of $270,000/potential lot would be derived from this exercise. In Mr Lunney's opinion, this would understate the market value of the Land. Mr Lunney has assigned a value of $410,000/potential lot. In Mr Lunney's opinion this simple exercise demonstrates the difficulties in attempting to analyse, adjust and apply these sales of prestige rural lifestyle lots to derive the market value of the Land. Mr Lunney's R5 sales 1. Mr Lunney relied on the following sales: 1. #10 130 Bruxner Park Road, Korora; 2. #15 10 Hardy Close, Korora; and 3. #16 - 69 Rippingales Road, Korora. 1. The adjustments for sales #10 130 Bruxner Park Road, #15 10 Hardy Close and #16 69 Rippingales Road relied on by Mr Lunney have been agreed in the table above unless otherwise indicated. Mr Lunney derived a value of $410,000/lot for the Land based on these sales. 2. Mr Lunney maintained his opinion that the highest and best use of the Land, if zoned R5, would be as a two-lot subdivision. On this basis, he considers the most likely prospective purchaser would be a purchaser seeking to acquire the property, subdivide it and on sell the lots, like the purchaser of #15 10 Hardy Close Korora who has subdivided the land and had the newly created lots on the market for sale. 3. Mr Lunney considered this to be the case not only for the Land but also the comparable sale properties he relied on, which enjoy the potential for further subdivision. Mr Lunney noted that the neighbouring sales #10 130 Bruxner Park Road and #16 69 Rippingales Road Korora were marketed for sale on the basis of their subdivision potential. Mr Lunney considered that the subdivision market would likely be prepared to outbid the "single lot" market (who would purchase the R5 sales Mr Rumble relied on). If, contrary to Mr Lunney's opinion, the Land was considered to have a "highest and best" use as a single lot, he would derive a lower value as summarised above in [297]. #10 130 Bruxner Park Road, Korora 1. According to Mr Lunney #10 130 Bruxner Park Road Korora is a larger sized allotment in a comparable location with potential for a 3-lot subdivision. Number 10 130 Bruxner Park Road Korora has slightly inferior topography and ocean views with superior access to the Coffs Harbour central business district on account of the public purpose. Mr Lunney derived an adjusted value/lot of $328,500 based on his adjustments identified in Table 1.2 above in [283]. 2. Mr Rumble did not agree an allowance for better access due to the public purpose applies for #10 130 Bruxner Park Road Korora and suggests the property will be adversely affected due to visual and noise pollution instead. Mr Rumble has allowed 5% for location as it is located 450m up the hill from the Land (Mr Lunney made no adjustment for location). This would reflect an adjusted value/lot of $365,000. #15 10 Hardy Close, Korora 1. According to Mr Lunney #15 10 Hardy Close is a larger sized allotment than the Land in an inferior location with inferior topography. The sale property is located 2.8km north-west of the Land and was sold with development consent for a two-lot subdivision. Mr Lunney derived an adjusted value/lot of $463,088 based on his adjustments identified in Table 1.3 above in [283]. 2. Mr Rumble is firm that the properties with averages slopes of 30% or more, as is the case for #15 10 Hardy Close, should reflect a 20% adjustment in comparison to the Land (Mr Lunney made an adjustment of 15% for topography). This would reflect an adjusted $/lot of $487,333. #16 69 Rippingales Road, Korora 1. The experts agreed #16 69 Rippingales Road has ocean views. According to Mr Lunney #16 69 Rippingales Road is a slightly larger sized allotment located in an inferior location 2.5km north of the Land. Marketing at the time of sale indicates potential for three-lot subdivision. In Mr Lunney's opinion given the topography and shape of the sale property, a two-lot subdivision yield is more likely. Mr Lunney derived an adjusted value/lot of $440,944 based on his adjustments identified in Table 1.2 above in [283]. 2. Mr Rumble suggested the views of #16 69 Rippingales Road are limited, similar to the Land, and the sale property is located 2km away from the view compared to the Land being 1km from the view. Mr Rumble considers the adjustment for views should be zero (Mr Lunney made a -5% adjustment for views). This would reflect an adjusted $/lot of $457,235. 3. In Mr Lunney's opinion the sale at #10 130 Bruxner Park Road Korora is the most relevant and the most comparable. By placing greater weight on it than the other two sales (which require a greater degree of adjustment), Mr Lunney considers that his valuation, assessed at the rate of $365,000/potential lot englobo is within acceptable market parameters. Despite this, recognising the subjectivity involved in some of the adjustments, and in a bid to resolve the benefit of any genuine doubt in favour of the Applicant, Mr Lunney has revised his valuation up from $365,000/potential lot englobo to $410,000/potential lot englobo. Mr Rumble's response to Mr Lunney's criticism of 1 hectare lot sales 1. Mr Rumble responded to Mr Lunney's criticism of his market approach by reference to his valuation methodology set out in his expert report as follows: In determining market value, I have relied primarily on the Direct Comparison or Market Approach methodology. After market adjustment, I have made further percentages adjustments to sales evidence based on location, topography, size, and development potential where required, and in respect to R5 sales, additional adjustments to accessibility, views, and development potential, to derive the most comparable rate for the subject property. 1. Mr Rumble considered that there was a lack of directly comparable sales evidence caused by the Coffs Harbour Bypass Project justifying his approach to valuing the Land. Mr Rumble stated that Mr Lunney's R5 sales were too confined in the established rural residential area and relatively unaffected by urban pressure. Mr Lunney's sales required an extreme adjustment for comparability. Expert valuation oral evidence Mr Rumble oral evidence R1 sales 1. In cross-examination, Mr Rumble in his analysis of #17 Corindi Beach stated he made a 30% location adjustment. The adjustment had regard to the distance of #17 Corindi Beach from the Land, not Coffs Harbour. He agreed that #17 Corindi Beach is located close to the beach. Mr Rumble stated the Land is close to the Beach and Coffs Harbour, agreeing access requires walking up or down a hill. Number 17 Corindi Beach is not walking distance to Coffs Harbour. 2. Mr Rumble agreed the compensation payable for #19 246 Shepherds Lane Coffs Harbour was determined by the Valuer General and is the opinion of another valuer in effect that could "get it wrong". R5 sales 1. Mr Rumble agreed that a subdivider would not buy land that could not be subdivided. He agreed when subdividers purchase land they know they will need to obtain a development consent, complete subdivision works, subdivide the land and then sell it for a higher price, as the purchaser of the land that was subdivided into #11 259B and #24 259C Bruxner Park Road would have hoped. He agreed time, cost, profit, goods and services tax, stamp duty, development contributions and interest costs would be included in the price of a subdivided lot. 2. Mr Rumble agreed that a purchaser buying the Land in order to subdivide would not pay based on the value of the finished lots, #11 259B and #24 259C Bruxner Park Road are sales of finished lots. This explained in part the variation in R5 lot values between the valuers. He agreed the sales he relied on which could not be subdivided had a value double that of Mr Lunney's sales #10 130 Bruxner Park Road, #15 10 Hardy Close and #16 69 Rippingales Road that could be subdivided. 3. Mr Rumble disagreed with Mr Lunney's adjustments for #10 130 Bruxner Park Road Korora of -5% for public purpose influence and 0% for location. Mr Rumble made a location adjustment of 5% as the sale property was located 450m northwest of the Land. 4. For #15 10 Hardy Close Mr Rumble stated he adopted a 20% adjustment for topography where a sale had slopes over 30%. The Land has better topography than the sale property. His total adjustments for the sale of #15 10 Hardy Close, Korora were 37.5%. 5. Mr Rumble opined the adjustment for views for #16 69 Rippingales Road should be zero as its views were limited and the sale was twice the distance away from the ocean than the Land was. 6. Mr Rumble disagreed that the improvements for #4 14A Bruxner Park Road should be $380,000. He inspected the sale property in 2020 and considered a 2016 valuation report prepared by Acumentis that had a breakdown of improvements. Asked why he preferred information of a valuer in 2016, as opposed to the two valuation reports considered in the actual transaction of the property, he stated the later valuation reports did not reflect the condition and number of improvements he observed at the inspection in 2020. He accepted that the parties to the sale of #4 14A Bruxner Park Road accepted the value of improvements was $380,000. Mr Lunney oral evidence R1 sales 1. In cross-examination, Mr Lunney agreed that #20 Blue Wren Close was a difficult sale to analyse in order to determine a rate/lot. Initially he had assumed the highest and best use of the sale property was a partial rural residential lot and subdivision of remaining land. Upon reflection he considered an alternative subdivision of the sale property that had not been tested by any of the experts in the proceedings and formed the view a purchaser would demolish the dwelling and redevelop the land. He agreed the cooperation of three adjoining landowners was required to achieve the subdivision outcome for #11 Blue Wren Close he considered. 2. Mr Lunney agreed there is a level of risk reflected in any transaction for developable land. Mr Lunney's opinion is that the lot value of the Land and #17 Corindi Beach would be the same. He agreed that the purchaser of #17 Corindi Beach had lodged a development application for 34 lots rather than 31 lots. The headline rate of $122,000 is based on a yield of 34 lots. Mr Lunney agreed that a component of that price reflected the risk a developer is willing to accept to achieve profit from the sale property. Mr Lunney stated the purchaser bought the land with an expectation of 34 lots and there was no approval to indicate 31 lots was a more certain outcome. Mr Lunney disagreed that 34 lots is inherently riskier than 31 lots. 3. Asked about his adjustment for lot yield in his valuation to 20 lots, Mr Lunney stated (tcpt 7 June 2023, 437(12)-(19)): …what I'm trying to do in this valuation is to place most weight on Connolly [sic], Hams and others said you'd lose about half the 26, so I distanced myself from that. I read Connolly [sic] as saying you'd lose either two or four, depends on which constraints he was – was grappling with at the time, and then, I said well, I can't ignore the others, but I'm – I'm going to strike a figure that's close to the 22 or 24 that that Connolly [sic] would give me, but reflecting some of the risk that the others were citing, and landed on 20. 1. Asked about the adjustment of $55,000/lot Mr Lunney applied for atypical off-site infrastructure risk, Mr Lunney agreed that to the extent he made an adjustment for atypical off-site infrastructure he assumed the Land was rezoned in a private planning proposal. He agreed it would not be appropriate to make that deduction if the Land had been rezoned in a way that did not incur the developer of the Land any liability for off-site infrastructure costs. 2. Asked about the 25% adjustment for atypical development risk he applied, the deduction reflected a 25% chance the landowner would not get approval for the development accounting for the risks identified by the Respondent's town planners and hydrologist, as well as Mr Connelly's evidence that although there were challenges on the Land achieving a 26-lot development yield was possible. He stated the 25% deduction was not applied to the 7-lot subdivision layout as it was a relatively uncomplicated development outcome. The 7-lot subdivision is risk free or has an equivalent risk profile to #17 Corindi Beach. 3. Mr Lunney agreed the vendor would understand there was potential for extra value beyond the 7-lot subdivision if piping and approval for the 26-lot subdivision could be achieved. Mr Lunney could see an argument that perhaps a differential value could potentially be applied to the 6 more certain lots against the 14 riskier lots. He stated the vendor would want the highest price if he had advice from Mr Connelly. The purchase price would ultimately depend on where the vendor and purchaser meet in their assessment of risk. 4. In examination in chief, asked what a hypothetical purchaser would do if there was no certainty about a river, Mr Lunney answered a properly informed purchaser would speak to a hydrological expert and would prudently adopt the more conservative approach to development potential. R5 sales 1. In cross-examination, Mr Lunney accepted 40% of #15 10 Hardy Close was not developable due to slope and conservation zoning resulting in a 0% adjustment for size (he had made a 10% adjustment in his earlier expert report). He stated some parts of the Land were steep and would have utility constraints. He agreed #15 10 Hardy Close also adjoined state forest. Mr Lunney stated most of the value in a rural lifestyle block is in the dwelling entitlement. 2. Mr Lunney agreed #16 69 Rippingales Road was two separate lots. He did not make any adjustments for the sale property being two lots. He stated the two lots were an advantage for the sale property being one less hurdle to overcome for development. The two lots are more useable than #15 Hardy Close. Asked whether that suggested something went wrong in his analysis that produced a lower rate for #16 69 Rippingales Road than #15 10 Hardy Close, he replied the lower rate could be for a variety of reasons. A significant adjustment for market movement was made for #16 69 Rippingales Road. 3. Mr Lunney agreed as at the acquisition date the only transactions he was able to rely on are #15 10 Hardy Close and #16 69 Rippingales Road. He could not consider #10 130 Bruxner Park Road if he looked at the acquisition date alone. Mr Lunney stated #10 130 Bruxner Park Road was the best R5 sale to rely on. He agreed that #10 130 Bruxner Park Road had been on the market since August 2021 and took 15 months to find a purchaser. He accepted that there were a limited number of relevantly comparable sales of R5 land. He disagreed that a sale that took 15 months to sell was having difficulty finding a purchaser. Mr Lunney stated there are many reasons why properties take time to sell, for example a vendor having an unrealistic expectation as to the purchase price. The sale of #10 130 Bruxner Park Road was offered on two alternatives. 4. Mr Lunney was asked whether the highway would impact the value of #10 130 Bruxner Park Road because of a perception in the market of the highway's noise and visual impact on the sale property. He replied the highway would have a positive impact on the sale, accounted for in a 5% adjustment, as access would be better. He did not make an adjustment for the visibility of the highway. Mr Lunney stated the Land has always been proximate to the highway. Mr Lunney agreed the Land does not have a view of the highway. Mr Lunney does not give weight to the impact of the highway and the 15-month sale period on his analysis of the sale in circumstances where the other R5 sales are less physically comparable to the Land. 5. Mr Lunney stated the adjustments to #15 10 Hardy Close and #16 69 Rippingales Road were significant though not to the extent that he could not have confidence in the derived outcomes. Mr Lunney agreed in relation to #15 10 Hardy Close that he made a -5% adjustment for the development application (contrary to the rule of thumb that -10% adjustments are made for developments with the benefit of development consents). The adjustment was made as obtaining a development consent to subdivide a property of above standard size is a simple exercise and the sale property had an old development consent the purchaser would need to modify to give effect to. He agreed the hypothetical purchaser would consider they had very high prospects of obtaining a development consent for a two-lot subdivision, with no other subdivision works required. Mr Lunney stated a purchaser would pay $820,000 for the two lots. 6. On Mr Lunney's analysis of #23 111 Bruxner Park Road the sale property could be purchased for approximately $820,000 and immediately has the potential value of $1.2 million as each lot in a two-lot subdivision would be sold for $600,000 yielding a 50% profit. Asked whether this profit margin demonstrated there is something wrong with Mr Lunney's $410,000 rate, Mr Lunney replied it does not as the underlying rate is common to the three sales (#10, #15 and #16) that all had the same subdivision potential. Number 15 10 Hardy Close was purchased for $980,000. The owner effected the subdivision, the vacant blocks were on sale for $550,000 to $600,000 and the occupied block was on sale for $1,200,000. Mr Lunney agreed that if one mocked up a hypothetical development calculation on the case of #15 10 Hardy Close and #16 69 Rippingales Road they would both show a high margin of profit and risk. 7. Mr Lunney would not consider the 1ha sales to derive a lot value (even with a paucity of sales) as 1ha sales are a different product in a different market. If contrary to his position the 1ha sales were to be analysed, he analysed #11 259B and #4 14A Bruxner Park Road with an adjustment of 40% for views. Beyond analysing those sales, his adjustments for the 1ha R5 sales are estimates informed by his expertise. Any level of inquiry will show that the market is paying very significant premiums for views. 8. In examination in chief, Mr Lunney stated he sought to compromise with a topography adjustment of 15% for #15 10 Hardy Close as he was initially going to make a 10% adjustment. Mr Lunney stated that part of #16 69 Rippingales Road had a better view than the Land. Applicants' submissions Yield and risk 1. The Applicants' submissions were directed to an assumption of 26 lots (which I have found above in [247] should not be assumed). I will identify the Applicants' submissions on risk of achieving that yield as reflected in MFI 3 option 3 of a reduction of 25% should be applied needs to be determined. This required consideration of Mr Lunney's approach to risk in some detail. 2. In any transaction for a development site the price includes an element of "normal risk" as to whether development of the site will achieve profit. Risk forms a component of the englobo land sale price and is reflected in the rate/lot. The rate/lot for #17 Corindi Beach sale as marketed for 31 lots is $138,000. Number 19 Shepherds Lane can be analysed in the same way as there was reasonable anticipation of 12 lots for that subdivision. Mr Lunney analyses #17 Corindi Beach on a more aggressive basis of 34 lots being the yield the purchaser hoped for increasing risk and lowering the rate/lot which is an incorrect approach. 3. Yield rate includes a typical development risk. Mr Lunney impermissibly adjusted for risk more than once in his consideration of #17 Corindi Beach. Either the lot yield should be adjusted down to account for that risk or the risk should be accounted for in the rate/lot. Mr Lunney impermissibly does both. 4. Mr Lunney then accounts for risk again in applying a further 25% "atypical development risk" for the piping of the watercourse, a massive adjustment without foundation. 5. Mr Lunney makes a further adjustment for "atypical off-site infrastructure costs" such as supplying water and sewer to the Land at the acquisition date. It is an adjustment that would amount to an error of law for two reasons: 1. On the Applicants' primary approach to the valuation task the land was rezoned as part of Amendment 34. All of the off-site infrastructure costs therefore form part of the Council's release of the area for residential subdivision. Like any other lot made available through a Council led rezoning the costs for the provision of infrastructure are met by the Council, not by the individual persons subdividing their land. The Council then recovers the costs of the provision of that infrastructure through its contribution plans; and 2. Upon the application of Woollams v the Minister (1957) 2 LGRA 338 (Woollams), the surrounding lands would have but for the proposal to carry out the public purpose proceeded to be developed in accordance with its residential zoning. In those circumstances the reasonable expectation is that the Council would have installed the off-site infrastructure to support its rezoning of the land as residential. 1. An adjustment for off-site infrastructure works cannot be made as it would give regard to a decrease in value which has been caused by the proposal to carry out the public purpose. MFI 3 option 3 1. The Applicants submit that a hypothetical purchaser would not pay the minimum value represented in the "unpiped residential – floor value" (MFI 3 option 4) unless there was no prospect of the river being piped. A prudent vendor would not sell for the floor value. If there was some possibility the river would be piped the Applicants submit a 25% discount for risk should be applied to the value/lot for a hypothetical lot yield of 25 residential lots plus 1 rural residential lot (MFI 3 option 3). 2. Mr Lunney's approach to the "unpiped" scenario where the watercourse cannot be piped is to apply his rate/lot to the six lots on Bruxner Park Road and then to apply his rural residential rate to the balance. That is to undervalue the Land. 3. If the Court is considering value on the "unpiped" scenario that is because the Court has determined that there is additional risk in relation to piping and the ability to achieve the additional yield. However, even in those circumstances, the Court could not on the evidence conclude that it is so risky that there is no prospect of achieving that additional yield. Indeed, even applying Mr Lunney's approach, he has only suggested that the risk of achieving the additional yield is 25%. 4. In those circumstances the "unpiped" value properly represents a "floor" value, a minimum value. No properly informed vendor would agree to sell the Land for that minimum value only. It would provide a windfall to the purchaser in circumstances where (on the assumptions for this scenario) although piping is not a certainty it is a possibility which will provide the purchaser with an additional 19 residential lots. That value must be accounted for. 5. The Applicants accept that this approach was not adopted by Mr Rumble. Mr Lunney's 25% for atypical development risk is appropriate to account for the prospect of piping risk. MFI 3 option 3 was not an approach to valuation undertaken by Mr Lunney who only considered it in in cross-examination. This approach can be taken into account citing Coffs Harbour City Council v Noubia Pty Limited [2022] NSWCA 32 at [94] to the effect that the task of the Court is to derive an amount that justly compensates evaluating the expert evidence. Acquiring authority sales 1. Mr Rumble relies on properties which were acquired by the Respondent as there were a lack of comparable sales, citing Hoy v Coffs Harbour City Council [2015] NSWLEC 128 (Hoy) at [67]. Mr Lunney agreed there is a paucity of sales. Value of residential lots (R1) 1. In relation to residential R1 sales, #17 Corindi Beach is the only residential englobo sale available. The #20 Blue Wren Close sale is difficult to analyse. Due to the inadequacy of the sale pool, reliance should also be placed on #19 246 Shepherds Lane a compulsory acquisition. 2. The sale of #17 Corindi Beach should be divided by 31 lots as "normal risk" is a component of the sale for reasons set out above in [335]. Based on an analysis of 31 lots, the rate/lot on Mr Lunney's figures is $138,000 and on Mr Rumble's figures is $190,863. Mr Rumble's figures had initially adjusted the market price for location and topography and after the subdivision made an adjustment for the average size of lots. 3. As there is a paucity of residential sales it is appropriate to have regard to the compulsory acquisition at #19 Shepherds Lane to determine if the adjustments made to #17 Corindi Beach sale are appropriate. Proper analysis of #19 Shepherds Lane sale shows that Mr Rumble's adjustments are appropriate, Mr Lunney's are not. He adjusts the transaction sale price for market movement, location and views then derives an englobo rate of $201,438. That analysis of #19 Shepherds Lane sale shows that Mr Rumble's derived rate of $190,000 per residential lot is to be preferred. Value of rural residential lot (R5) 1. In relation to the R5 sales identified by Mr Lunney, the #15 10 Hardy Close and #16 69 Rippingales Road transactions are in vastly different locations, require adjustment for the value of their improvements and then require, as was agreed by Mr Lunney "significant" adjustment (see above in [330]). 2. Number 10 130 Bruxner Park Road is also a very difficult sale. The property was put on the market in August 2021. It did not sell until some 15 months later in November 2022. That was so even though the vendor was willing to sell either the whole of the property or part of it only. Reliance upon a sale occurring 16 months after the acquisition date is to be treated with caution in the best of circumstances. A significant additional problem with the sale of #10 130 Bruxner Park Road is that the sale is directly affected by the Pacific Highway. The sale property is in close proximity and directly overlooks the Pacific Highway that has a visual and acoustic effect on the sale. That is an impact particularly likely to affect value in circumstances where it is anticipated the sale was for the creation of three rural residential lifestyle lots. 3. Mr Lunney's approach to this sale is actually to suggest that its value has been increased because of the carrying out of the public purpose works (and facilitating better road access) (see above in [283], [329]). He makes no account of any decrease in value caused by the blight of the highway. There is no ability to confirm the effect on the market of the close proximity to the highway due to the paucity of sales. The #10 130 Bruxner Park Road sale needs to be treated with caution. 4. Mr Lunney's rate for the R5 lots at $410,000/lot suffers from the following problems: 1. does not properly consider the difficulties with #10 130 Bruxner Park Road above in [355]; 2. rejects as relevant the 1ha sales; and 3. does not account for the difference in size of the lots (compared to the 1ha sales including #4 14A Bruxner Park Road). 1. It is for that reason that regard should be had to the 1ha sales relied on by Mr Rumble, properly adjusted. That includes the need to rely upon the transaction for #4 14A Bruxner Park Road. 2. Number 4 14A Bruxner Park Road may be a compulsory acquisition, however, it was one which involved negotiation between the parties and consideration of expert valuation reports, including an analysis of sales to remove the cost of improvements. It being reasonably proximate in time and immediately next door it is a transaction that the Court would rely upon. 3. Number 4 14A Bruxner Park Road provides a value of $520,000 for a 1ha lot (see above in [257]). Although there may not be a linear relationship between changes in size, plainly the market would pay more for a 1.35ha rural residential lot immediately next door. As a result, the Court would be satisfied that the rate/lot to be applied to the subject is at least the $520,000/lot applied to #4 14A Bruxner Park Road. 4. The most proximate transaction is #4 14A Bruxner Park Road. After accounting for the minimal redevelopment risk but acknowledging each of the subject lots are larger than #4 14A Bruxner Park Road the rate/lot must be in excess of the $583,000 derived by Mr Lunney from #4 14A Bruxner Park Road in Table 1.1 above in [283]. Mr Rumble derived a value of $763,000/lot. 5. Mr Rumble determined value on a rate/lot of $750,000 similar to the value of $763,000/lot he derived for #4 14A Bruxner Park Road. The Court would be satisfied that having regard to the paucity of evidence, the inherent problems in the few transactions available and then looking at amounts already paid by the acquiring authority for immediately proximate sites, that Mr Rumble's rate appropriately resolves doubts and results in just compensation on a R5 basis. Respondent's submissions Yield and Risk; MFI 3 option 3 1. The Respondent contends that MFI 3 option 3 is difficult to apply as it is a Frankenstein valuation adopting Mr Rumble's rates (that are more favourable to the Applicants) and some of Mr Lunney's approach to risk. MFI 3 option 3 does not sufficiently account for the variety of risks in subdividing the Land. Mr Rumble has made no allowance for risk in achieving the 26-lot subdivision in his valuation. 2. Mr Lunney's adjustments for risk set out above in [277]-[282] should be preferred as it comprehensively addresses the various risks including lot yield, off-site infrastructure costs and atypical development risk. Mr Lunney dealt with the expert evidence as a hypothetical purchaser would. The Respondent submits the 25% discount for risk the Applicants now seek to apply in MFI option 3 only works if a yield risk adjustment has been made as well. 3. Applying his adjustments for risk Mr Lunney considered the value of the Land in the 20-lot subdivision was $1,000,000 (see above in [281]-[282]), less than the value of the 7-lot subdivision. Consequently, the hypothetical purchaser would purchase the Land for the higher value of the 7-lot subdivision that is also more certain. Mr Lunney's evidence should be preferred 1. The Respondent's valuer Mr Lunney gave generally consistent valuations that are well supported by the objective materials and sound valuation principles. The Court would prefer Mr Lunney's evidence to that of Mr Rumble for the following reasons: 1. Mr Rumble maintained that the 1ha rural lifestyle lots were the most comparable R5 sales despite conceding in oral evidence that it was inappropriate to compare subdivided lots with lots that are capable of being subdivided (see above in [314]); 2. Mr Rumble relied on the compulsory acquisition of #19 Shepherds Lane even though it is not a sale, the purchaser had no say in the purchase price, the vendor was not selling willingly, the purchase price was determined by the Valuer General and Mr Rumble admitted that the Valuer General's valuation may be wrong (see above in [312]); 3. Mr Rumble adjusted the sale of #17 Corindi Beach by 30% because of its distance from the Land, which makes no sense. He was given ample opportunity to clarify his evidence in this regard and his maintenance of non-sensical position is indicative of the unreliability of his evidence (see above in [267], [311]); and 4. His evidence fluctuated to a concerning degree between his first report and MFI 2 for the 2-lot subdivision if the Land had been zoned R5 Large Lot Residential ($3.6m to $1.5m). He refused to make reasonable concessions in cross-examination in relation to #4 14A Bruxner Park Road. He abandoned the hypothetical development "check" method. Value of residential lots (R1) 1. Mr Lunney valued the Land using the sale of #17 Corindi Beach and #20 Blue Wren Close which produced a range of $126,103/lot and $118,833/lot. Mr Lunney analysed the sale of #17 Corindi Beach on the basis of 34 lots while Mr Rumble analysed the sale on the basis of 31 lots. Although marketed as having 31 lots capability, valuation on the basis of 34 lots was more appropriate given that the purchaser would be able to obtain consent for 34 lots easily and inexpensively, as Mr Lunney has done. Mr Lunney's evidence is more closely aligned to the basis on which the sale would have transacted as a matter of fact. Mr Lunney did not disavow reliance on #20 Blue Wren Close notwithstanding he accepted that it was a difficult sale to analyse (see above in [319]). 2. Mr Lunney derived an R1 value of $1,142,000 on the "unpiped" scenario based on 6 x residential lots at $122,000/lot and 1 x large rural lot at $410,000/lot (this being consistent with his valuation of a rural residential lot). 3. Mr Rumble arrives at a rate of $190,000/lot as a result of his non-sensical 30% adjustment to #17 Corindi Beach and reliance on #19 Shepherds Lane. Although #17 Corindi Beach is further from Coffs Harbour it is closer to the coast and a short, almost level, walk to the beach. Its location is not significantly inferior to the Land. It would be an error for this Court to rely on #19 Shepherds Lane because it is not a sale. 4. Mr Lunney's valuation that the Land would have a market value of $122,000/residential lot fits comfortably within the available range and should be preferred. Value of rural residential lot (R5) 1. The value of the rural residential lot is derived from the value/lot of the Land if it were zoned R5. Regarding the R5 lot value, Mr Lunney based his valuation on R5 market sales with potential for subdivision unlike Mr Rumble who largely relied on 1ha rural lifestyle lots. Mr Rumble also relied on a sale to an acquiring authority. Mr Rumble agreed in oral evidence (see above in [314]) that a hypothetical purchaser would not pay an amount equivalent to the value of the subdivided lots that he had relied on. He also accepted that this explained the discrepancy in the value of the sales on which Mr Lunney relied, which ranged from $326,000/lot to $365,000/lot, and the sales on which he relied which ranged from $779,040/lot to $968,255/lot (see Tables 1.1 and 1.2 above in [283]). 2. The Court would find that Mr Rumbles' sales are not comparable. The most comparable sales are #10 130 Bruxner Park Road, #15 10 Hardy Close and #16 69 Rippingales Road, which have a range of $328,500/lot to $463,088/lot when adjusted. Mr Lunney's valuation of $410,000/lot fits comfortably within this range. Acquiring authority sales 1. The Applicants rely on one sale by negotiated agreement (#4 14A Bruxner Park Road) and rely on the compulsory acquisition of #19 246 Shepherds Lane. Woollams makes it plain that sales to the acquiring authority are admissible. Sales to an acquiring authority must be treated with caution: Chaudry v Liverpool City Council [2008] NSWLEC 251 at [21]-[28], Rocco Fraietta v Roads and Maritime Services [2017] NSWLEC 11 at [98] (Fraietta). 2. To the extent the Court relies on #4 14A Bruxner Park Road, rather than relying on the valuation review memorandum dated 12 February 2021 and draft contract for sale and purchase of land for #4 14a Bruxner Park Road (Ex 9), Mr Rumble relied on a 2016 valuation report by Acumentis, the effect of which is to inflate the unimproved value of 14A Bruxner Park Road. To the extent the sale can relied on at all as being comparable to the Land, Mr Rumble's analysis is unsound and should be rejected in favour of Mr Lunney's analysis that reflects the facts of the transaction. 3. Number 19 Shepherds Lane was compulsorily acquired. The transaction was not the result of a negotiation with an acquiring authority. The Respondents could not identify another case where a compulsory acquisition had been admitted to the Court as evidence of value. A compulsory acquisition simply cannot meet the definition of a transaction between a willing but not anxious purchaser and a willing but not anxious vendor. This is because the vendor has been compelled to sell and the purchaser was anxious to buy. Further, the purchaser has no say in the price that it must pay (the Valuer General's determination being required to be offered by s 42 of the Just Terms Act). 4. The fact of a dispossessed landowner's acceptance of the Valuer General's determination (as in #19 Shepherds Lane) does not resolve the issue. The Court does not have any evidence before it as to why the dispossessed owner of #19 Shepherds Lane accepted the Valuer General's determination. The fact that the only alternative to acceptance is litigation means nothing can or should be read into that acceptance. The Court should reject the Applicants' reliance on the sale in its entirety. Finding on valuation 1. The achievement of a 7-lot subdivision yield on the Land is relatively risk free according to Mr Lunney and valued on that basis by him. The issue of risk arises as I am considering the 26-lot subdivision option in MFI 3 where the Applicants' counsel seeks to apply a 25% reduction for risk to a lot yield of 25 residential lots plus one rural residential lot (option 3). As identified above in [253] no valuer adopted this approach. Considering that option gives rise to the issue of how risk should be considered in the valuation process. Mr Rumble made no allowance for risk in circumstances where development consent for the 26-lot subdivision would have to be obtained by a prudent hypothetical purchaser, an unrealistic assumption in my view and not one that a prudent hypothetical purchaser would make. Only Mr Lunney has adjusted for risk in the 26-lot subdivision scenario. He is criticised by the Applicants for making too much adjustment for risk. 2. The first criticism made by the Applicants of Mr Lunney's approach was in the yield risk rate which Mr Lunney adopted in the context of #17 Corindi Beach, being the difference between a 31-lot yield ($138,000 – Mr Rumble) and a 34-lot yield ($122,000 – Mr Lunney). The Applicants' counsel submitted that the rate/lot identified by the valuers includes a "normal" risk of achieving a certain yield reflected in the sale price paid, which Mr Rumble's rate did in applying the lot yield which was the basis the sale was put to the market. I accept that submission. I find below in [385] that the 31-lot yield as the marketed development potential of the land the subject of that sale should be applied and so do not adopt Mr Lunney's yield rate which applied a yield of 34 lots sought after the sale. That criticism of Mr Lunney's approach to yield risk rate in #17 Corindi Beach can be accepted. 3. Mr Lunney also adjusted for risk by (i) reducing the lot yield valued from 26 to 20 lots, (ii) making a $55,000/lot reduction to allow for off-site infrastructure costs and (iii) making a 25% reduction for atypical development risks (not obtaining development consent). Fourthly, reference was made in his evidence to further possible allowances being necessary for on-site subdivision costs because development costs could be particularly high, for example the piping of the watercourse and the amount of fill required. That risk did not appear to be specifically accounted for in his valuation calculations (see above in [279]). 4. Mr Lunney's written calculations in relation to risk are set out above in [281]-[282]. Mr Lunney's evidence in relation to risk is based on his consideration of non-valuation evidence and in that regard his evidence is superior to Mr Rumble's as Mr Rumble did not engage with the non-valuation evidence, as identified above in [276]. Mr Connelly accepted in oral evidence that 26 lots was a "high water mark" as a lot yield (see above in [74]). 5. The overall reduction in yield from 26 to 20 lots appears justified, not least because Mr Connelly accepted that the easements needed for piping of stormwater would affect two to four lots above in [189]. The evidence of Mr Hams and Mr Rowan was to the effect that far more lots, up to 18 lots according to Mr Lunney (see above in [277]) would be considered risky. Mr Lunney did not adopt that view but rather considered all the evidence in determining that a yield of 20 lots was reasonable. His oral evidence, extracted above in [321], was to the effect that he sought to apply Mr Connelly's yield as far as possible rather than reduce the assumed lot yield to reflect the evidence of Mr Hams in particular. Mr Lunney's approach to reducing the lot yield reflects a reasonable view of the non-valuation evidence. In light of Mr Lunney's evidence I do not need to, and have not, determined above when considering the non-valuation evidence on potential constraints concerning road access and steep topography whether that large number of 'risky' lots is what a hypothetical purchaser should be assumed to apply. An adjustment of lot yield for risk of some amount would appear to be a matter of good valuation practice, informed in this case by evidence about the constraints for developing the Land. That evidence supports the adjustment by Mr Lunney of 26 to 20 lots as reasonable. The lot yield adjustment for risk in his evidence is accepted. 6. Mr Lunney also made an allowance for the risk of having to provide off-site infrastructure costs on the assumption that the Land was zoned in a private planning proposal. He agreed in oral evidence (see above in [322]) that such a deduction would not be appropriate if the Land was rezoned so that a developer did not need to include any liability for off-site infrastructure costs. I have found that the underlying zoning as at the acquisition date should be assumed to be low density residential (see above in [120]). Mr Lunney's assumption of risk was criticised by the Applicants because the assumption should be made that the Council would have provided all of the necessary infrastructure costs in the intervening years and there would be no need for these to be provided by a hypothetical purchaser, relying on Woollams. 7. The Applicants counsel did little to explain why Woollams applied to support this submission. According to Alan Hyam, The Law Affecting the Valuation of Land in Australia (6th ed, 2020, Federation Press) (Hyam) at 573 Woollams was applied in Roads and Traffic Authority (NSW) v Mosca (2006) 146 LGERA 335; [2006] NSWCA 159 (Mosca) by Handley JA at [50] to the effect that a court must disregard the effect of the public purpose as a blight on land and take into account development which would otherwise have occurred in the area. At [56] the Court of Appeal in Mosca held that what could have been anticipated but for the resumption process is a question of fact, not a question of law. The judge at first instance had assumed that the land was in a condition which would have enabled its residential potential to be realised (on appeal being found to have erroneously considered that to be a matter of law when it was a matter of fact). 8. In the cases discussed in Hyam at 572-576 courts have considered that any blight caused by the public purpose which caused loss of value of the acquired land should be set aside. The matter of blight being caused by the public purpose does not appear to equate to a finding as a matter of certainty for a hypothetical purchaser that the Council would have provided the necessary services to enable residential development of the Land as at the acquisition date so that no allowance for that risk ought be made. I would not consider that factor to be a blight on the value of the Land arising from the public purpose, relating more directly to the assumption of costs to the hypothetical purchaser to develop the Land for the purpose of low density residential development. At issue is whether an allowance for off-site infrastructure costs would be likely to be taken into account by the hypothetical purchaser. Mr Lunney's allowance is large, accepting that he has taken a necessarily broad approach in adopting $55,000/lot albeit that appears to reflect the evidence of Mr Connelly and Mr Hams on development costs above in [65]. I am considering the risk of such matters being in the mind of a hypothetical purchaser and I consider that would include the possible provision of off-site infrastructure regardless of my finding in relation to underlying zoning. No basis exists for assuming there would not be a need for a hypothetical purchaser to consider off-site infrastructure costs. 9. Mr Lunney made a further reduction of 25% for atypical development risks (not obtaining development consent). This was criticised as excessive by the Applicants but once again no other evidence is before the Court and such an allowance for the Land given its challenges is warranted. I consider some amount for such a risk is justified. Mr Lunney alone has provided evidence on that aspect of risk, which I consider distinct from the yield reduction of 26 lots to 20 lots. 10. Mr Lunney's approach valued the 26-lot subdivision at about $1,000,000, below the value of the relatively risk free 7-lot subdivision. Even if his allowance for risks of off-site infrastructure costs and atypical development risks and considering uncosted on-site subdivision costs are too great I consider the combination of risk factors is likely to mean that the 26-lot subdivision cannot be assumed to be more valuable than the relatively risk free 7-lot subdivision about which I do have the evidence. I do not apply option 3 in MFI 3. 11. It is necessary to determine the value of the six lots whose highest and best use is low density residential, and separately the value the rural residential sized (R5) lot in relation to the 7-lot subdivision. Value of residential lots (R1) 1. The principal R1 sale to consider is #17 Corindi Beach which both valuers accepted was the most comparable sale to the Land. That sale is in Corindi Beach to the north of the Land and Coffs Harbour. The adjustments of the valuers are identified in the tables above in [262]. Adjustment for timing in the market was agreed in Table 2. 2. A major difference in adjustment between the valuers concerned location. Any location adjustment is usually intended to reflect the distance of a particular site from the nearest major urban development here Coffs Harbour. Mr Lunney conventionally adjusted in comparison to the Land which is closer to Coffs Harbour by 10% on that basis. Mr Rumble's approach (written and oral) to a location adjustment of 30% in applying the sale to the Land was very difficult to understand. I was unable to follow his logic in arriving at 30% in referring to other locations such as Sapphire Beach. He seemed to adjust the location of #17 Corindi Beach relative to the Land, as set out above at [374]. As I cannot follow his logic, I cannot accept his adjustment of 30%. I accept Mr Lunney's adjustment of 10% for location. 3. The other major difference between the valuers concerned the number of assumed lots for #17 Corindi Beach, which I have already referred to above in [373]. The approach to number of lots, 31 (Mr Rumble) versus 34 (Mr Lunney), should reflect the sale price, which reflects 31 lots as the subdivision potential of the sale property was marketed. Accordingly, this sale shows $138,000/lot otherwise adopting Mr Lunney's adjustments identified above in [262]. 4. For the reasons given by the Respondent #19 Shepherds Lane is not comparable as a compulsory acquisition, being distinguished from a negotiated agreement with an acquiring authority. In Hoy which the Applicants relied on I stated at [67] that sales to acquiring authorities can be considered with caution. A negotiated sale with an acquiring authority may be able to be applied. A compulsory acquisition however is not an acceptable comparison for the reasons given by the Respondent above in [370]-[371]. 5. There are in any event substantial difficulties in adjusting #19 Shepherds Lane as identified by Mr Lunney above in [270]-[271] and I do not need to further consider this sale. 6. Number 20 Blue Wren Close was maintained as a relevant sale to a lesser degree by Mr Lunney and the Respondent although Mr Lunney accepted that its application was difficult in oral evidence (see above in [319]). In particular Mr Lunney accepted his analysis required the cooperation of neighbouring landowners in undertaking a joint development. Mr Rumble did not provide written adjustments for this sale above in [262]. Number 20 Blue Wren Close derives a rate/lot of $118,833 based on Mr Lunney's analysis. Given that it is a difficult sale to apply to the Land and that a more comparable sale exists I will not apply this sale. 7. There is a paucity of sales but given the agreement that #17 Corindi Beach is comparable it is appropriate to apply it on the basis I have accepted above in [384]-[385]. The adjusted amount is $138,000/lot which can be rounded up to $140,000 for those parts of the Land that are assumed to be low density residential, namely six lots. Value of rural residential lot (R5) 1. The rate/lot derived by the valuers for R5 land ranges from $750,000 (Mr Rumble) to $410,000 (Mr Lunney) for the large lot which the parties agreed can be valued as having rural residential zoning. The valuers' adjustments made to the R5 sales are identified in the table above in [283]. The market adjusted price was agreed but some further adjustments were not. 2. Mr Rumble largely relied on 1ha lots with no further subdivision potential identified above in [285] (and no risks concerning future development). One sale #14 97 Sealy Lookout Drive was larger but further subdivision was not possible in any event. That lot had particularly spectacular views. Mr Rumble's sales generally had good to great views and were "lifestyle" blocks. Mr Lunney relied on sales identified above in [298] that had subdivision potential. The Land has no district views from most of it, with a lessor ocean view available from the steepest corner of the Land. 3. The experts disagree about the comparability of Mr Rumble's sales to the Land and whether or not they would appeal to the same market of prospective purchasers as the Land which has subdivision potential. How these sales may be potentially analysed and adjusted to create equivalence or comparability with the Land was not adequately addressed in Mr Rumble's evidence, he seemed to assume they could be applied directly provided there was an adjustment for size inter alia. While he rejected Mr Lunney's criticism of the sales he applied he did not address the issue of different markets. According to his cross-examination as submitted by the Respondent, Mr Rumble accepted that a hypothetical purchaser would not pay an equivalent to the subdivided lots he had relied on (see above in [314]). Mr Lunney set out his adjustments which he considered had to be necessarily large, identified above in [296] and which he preferred not to have to do. 4. Mr Rumble's 1ha property sales are not strictly comparable as their purchasers will be a different market to those seeking to buy land to subdivide and I agree with Mr Lunney in this regard. The sales with no further development potential were showing rates almost double that of Mr Lunney's sales of lots with development potential (and also risk), which Mr Rumble accepted in cross-examination (see above in [314]). That doubling in value reflects the prestige rural lifestyle value of Mr Rumble's sales, which is not the same market of hypothetical purchasers for the Land who will seek to subdivide. Mr Lunney's considered adjustment of these sales to render them comparable is identified above in [296]-[297] and shows a greatly reduced value. I was unable to understand how Mr Rumble adjusted the 1ha sales in a way that reflected the different markets in which the Land should be assessed as a subdividable area. I am not therefore assisted by these sales in valuing the Land. 5. Mr Lunney's three key sales (#10 130 Bruxner Park Road, #15 10 Hardy Close and #16 69 Rippingales Road) need to be considered as more comparable in terms of the market for the Land. As adjusted by him they show rates of $328,500/lot (#10 130 Bruxner Park Road) to $463,088/lot (#15 10 Hardy Close). Two sales are close to the acquisition date, #15 10 Hardy Close and #16 69 Rippingales Road, but are less physically comparable to the Land than #10 130 Bruxner Park Road according to Mr Lunney. The large adjustments that had to be made to #10 130 Bruxner Park Road for time and because the sale took 15 months to complete was the subject of cross-examination above in [328]-[329] above. I consider these criticisms have merit so that Mr Lunney's lowest rate based on #10 130 Bruxner Park Road is too low. The sales of #15 10 Hardy Close and #16 69 Rippingales Road are relatively close in rate suggesting a minimum $465,000/lot rounding up Mr Lunney's rate/lot of #15 10 Hardy Close. 6. That leaves the rates derived from sales #15 10 Hardy Close and #16 69 Rippingales Road. Mr Lunney adjusted #15 10 Hardy Close by 32.5% to apply to the Land deriving a rate of $463,088. Mr Rumble adjusted this sale upwards by 37.5% as he adjusted topography by 5% more than Mr Lunney. Mr Lunney agreed in oral evidence that 40% of #15 10 Hardy Close was steep and had utility constraints (see above in [326]). Mr Rumble's adjustment for topography can be accepted and therefore his adjusted rate of $487,333, which can be rounded up to $490,000/lot, is applied. Issue 3: Conclusion 1. The value of the Land with low density residential zoning assumed is $840,000 and is $490,000 for the large lot assumed to be zoned R5, totalling $1,330,000. Issue 4: Disturbance 1. The Applicants seek the following loss attributable to disturbance items in the Amended Schedule of Losses dated 5 June 2023 (Ex N): 2. The amount claimed for valuation and town planning fees under s 59(1)(b) of the Just Terms Act is $21,975. The Respondent has already contributed to a portion of those costs, and the Applicants accept that an adjustment to account for that contribution will need to be made. The parties agree the adjusted amount is $10,050. 3. The Respondent disputes stamp duty and legal costs for a replacement property (under s 59(1)(f) of the Just Terms Act) is compensable as it does not accept that the Applicants are in the business of developing land for subdivision and that the Land could be characterised as stock in trade. Applicants' evidence 1. The Applicants read the following lay affidavits: 1. Mr Dibb First Applicant sworn 22 and 26 May 2023; and 2. Mrs Dibb Second Applicant sworn 26 and 29 May 2023. 1. Relevant paragraphs of the affidavit of Mr Dibb sworn 22 May 2023 are extracted below: Disturbance Losses – s59(1)(f) 15 Wendy and I purchased the Land in 1988 for the sole purpose of 'land banking', with the intention of developing it into residential allotments once future zoning for the Korora Basin changed to meet the housing and/or facility demands for the region. 16 Our objective was to hold the land for about 15 to 20 years and then immediately proceed with owner/development to subdivide the property into residential allotments when it became possible to do so. Our estimate of 15 to 20 years was based on enquiries with the Planning Department of Coffs Harbour City Council, availability at that time of development properties, population growth estimates and discussions with local real estate agents. 17 Once developed, we intended to build and reside on one lot and continue to hold the remaining allotments as a continued real estate investment and release them for sale in accord with the demand cycle for §uch lots andj"'//nanagement [sic]. 18 The subject property was one of three properties that we owned and held for future development. The other two properties are: a) Lot 2 in DP232037 - The Mountain Way Sapphire Beach, NSW, which is 8.3ha vacant land zoned non-urban that we are land banking; and b) Lot 1 in RP201710-1374 Mt Cotton Road Burbank, Qld, which is 12.52ha vacant land zoned non-urban that we are land banking. 19 As a consequence of the acquisition of the Land by Transport for NSW, Wendy and I intend to replace the Land to carry out the objective referred to in the preceding paragraphs. 20 It is also necessary that we purchase a replacement property to rollover any requirement to pay Capital Gains Tax (CGT). I have been advised that the CGT amount could be approximately $950,000 'but for' the acquisition. This is not a payment that would need to yet be made. 21 In purchasing a replacement property, we will incur costs in relation to: a) Stamp duty; and b) Legal fees. … 1. In the affidavit of Mrs Dibb sworn 29 May 2023, Mrs Dibb deposed to reading the affidavit of Mr Dibb sworn 22 May 2023 and agreed with the contents where Mr Dibb had referred to him and Mrs Dibb jointly as expressing a view, intention or agreement. 2. Relevant paragraphs of the affidavit of Mr Dibb sworn 26 May 2023 are extracted below: Purchase of Subject Property … 11. From late 1986 until the time of purchase [1988], the Subject Property was the only acreage property available for sale that was closest to the Coffs Harbour CBD and to the surfing beaches. I am aware of this as I would regularly research property sales listings in that area. 12. Our objective was to hold the Subject Property for about 15 to 20 years and then immediately proceed with owner/development to subdivide the Subject Property into residential allotments when it became possible to do so. Our estimate of 15 to 20 years was based on enquiries with the Planning Department of Coffs Harbour City Council, the availability at that time of development properties, population growth estimates and discussions with local real estate agents. 13. Once developed, we intended to build and reside on one lot and continue to hold the remaining allotments as a continued real estate investment and release them for sale in accord with the demand cycle for such lots and tax management planning. 14. Prior to its purchase, Wendy and I researched the viability of the Subject Property for future residential subdivision and found that it favourably met the criteria for such due to its location, substantial road frontage and the absence of hard physical and environmental constraints, and it also aligned with the then requirements for future urban land release, which was subsequently detailed at cl. 38(3) of the North Coast Regional Environmental Plan 1988. 15. Wendy and I have had a close connection with the Coffs Harbour region since 1976 and have always held a high level of confidence about the future potential of the Korora region as it represented the most desirable and prestigious area of the Coffs Harbour region. 16. Also, as the Subject Property is located within one kilometre from Korora and Charlesworth Bay beaches and is at the gateway of the Korora hinterland, it indicated to me a future potential for tourist-related development as it was in close proximity to resorts that included Sapphire Pines, Nautilus, Opal Cove, Pelican Beach, Aanuka, Charlesworth Bay Resort, Korora Bay Village and an abundance of various tourist accommodation that fronted the west side of the Pacific Highway. 17. Wendy and I considered our purchase of the Subject Property as a vital long term financial investment that would crystallise by the time we reached our mid-fifties and would serve as the basis for our early retirement and lifestyle change. … Our holding of the subject property 19. In the 33 years that we held the Subject Property: a. at no time did we reside there; b. we leased the property to 2 tenants for only a fixed nominal rent primarily for the purpose of preventing squatters, and to keep the pasture down and weed free; … 20. In 1991, Wendy and I declined an offer from Pacific Bay Resort, which had land holdings on the east and west side of the M1 ln close proximity to the subject property. The offer was to purchase the Subject Property for $450,000 ($75,000 per acre) to utilise as a housing estate that would be part of a proposed golf course development on the west side of the highway on an area known as 'Thakral Lands'. … 28. As a part of the Strategy [Coffs Harbour Urban Development Strategy dated 25 October 2004], CHCC identified a cluster of properties located in the S/E corner of Korora, west of the Pacific Highway, which included the subject property ('the Cluster"), as having the best short-term potential for urban development. 29. This Cluster, which comprising of 14, 14A, 19-19A, 28, 58, 70, B4 & 100 Bruxner Park Road, were all relevantly not considered to be of high scenic conservation value as are the elevated east-facing slopes of the Korora Mountain backdrop. 30. In 1996, several landowners of properties within the Cluster wrote to CHCC to request assessment of their properties and approval that would allow them to apply for residential sub-division. A copy of these letters are annexed hereto and marked "C". Knowledge of the Public Purpose … 34. In 2004, the Bypass route was formally announced and all the Cluster properties, including the Subject Property, were consequently re-zoned 5A - Community Purposes', which effectively prohibited any 'better use' development being made for those properties. 35. The 5A zoning allowed the landowners of properties within the Cluster to seek early acquisition of their properties under hardship grounds, pursuant to Clause 20 under Part 4 of the Coffs Harbour City Local Environmental Plan 2000. 36. Wendy and I both agreed that we could not consider early acquisition under hardship grounds whilst there remained potential that the Subject Property would not be required for the Bypass. 37. In 2005, the NSW Government-owned Country Energy registered a power line easement over several of the properties within the Cluster, including the Subject Property, after these properties were already identified for future acquisition for the Bypass. 38. The Respondent first notified us on 24 September 2008 that the Subject Property was 'directly affected' by the Bypass proposal although Wendy and I knew it was within the proposed Bypass route since 2001. … Our intention to subdivide 57. Wendy and I purchased the Subject Property to subdivide it into allotments, being a process that we believed we are amply qualified and competent to undertake. 58. At all times since we purchased the property, we stood ready to immediately proceed with subdivision once we were permitted to do so, which we were certain would have occurred between 2004 and 2009. 59. We did not have any doubts as to the Subject Property's eligibility for subdivision by that time. 60. Since 2006, we have had the ability to easily and quickly raise capital of up to about $5 million through funding from our eldest son Justin, who resides abroad and is the founder of Allied Gold Corp, an operating mining company with holdings in Africa and Egypt. 61. If Wendy and I were not placed in a holding pattern by the Public Purpose, and its change in zoning deferred, I believe we would have subdivided the Subject Property into 26 lots by the date the Subject Property was acquired. 1. Mr Dibb annexed letters sent by several landowners of properties in Korora (referred to in pars 28 to 30 above) to the Council in 1996 and 2001 to his affidavit sworn 26 May 2023. The letters requested the Council consider their properties suitable for residential zoning in the Council's strategic planning documents. The Coffs Harbour Urban Development Strategy dated 25 October 2004 and a letter from the Respondent dated 24 September 2018 were annexed to Mr Dibb's affidavit. 2. In the affidavit of Mrs Dibb sworn 26 May 2023, Mrs Dibb deposed to reading the affidavit of Mr Dibb sworn 26 May 2023 and agreed with the contents where Mr Dibb had referred to him and Mrs Dibb jointly as expressing a view, intention or agreement. Oral evidence of Mr Dibb 1. In cross-examination Mr Dibb when asked what made him want to move to Coffs Harbour answered that they purchased the Land with the intention of residing there. Asked why he chose Coffs Harbour, he answered that they have known the region since about 1976 and they felt it was a lifestyle change they would have enjoyed in later years. He agreed he currently lives in Queensland. 2. Asked what he meant by housing and/or facility demand for the region at par 15 in his affidavit of 22 May 2023, he answered that Coffs Harbour was on the precipice of expanding in the 1980s being a beach side city with proximity to Sydney and Newcastle. There were good opportunities for investment in Coffs Harbour. Visiting Coffs Harbour since 1976, they decided to focus on that area and made inquiries for about 12 months to look for acreage properties. They believed that the housing requirements and population growth for the area that was being advertised indicated that there was going to be residential housing development to meet the growing population needs. 3. Mr Dibb agreed the Sapphire Beach property (see par 18 above in [400]) is not far from the Land and is zoned R5 Large Lot Residential and C2 Environmental Conservation. He agreed that the Burbank property (see par 18 above in [400]) is located in Queensland and was purchased in 2011. He confirmed the Burbank property was currently used as a rescue facility and is zoned environmental management. He agreed a trustee company owns the Burbank property. The Applicants are trustees and their five children are the beneficiaries of that Trust. 4. Asked whether he had submitted any request for the Land to be zoned residential (in light of the letters to the Council by several landowners in Korora referred to above in [403]), he answered he had not. Asked whether the $5,000,000 he could raise for subdivision of the Land (see par 60 above in [402]) was how much he understood any road works and civil works would cost, he stated the amount of $5,000,000 reflected the line of credit available to him. Mr Dibb has not carried out a subdivision, nor obtained a development consent for the subdivision of any land he has owned. 5. Mr Dibb has not taken any steps to acquire a replacement property. When the Applicants were advised that the Land was going to be resumed in 2019, the Applicants went to Coffs Harbour for two reasons: (1) to search for a replacement property and (2) research the property market. He had five real estate agents in Coffs Harbour come up with a list of suitable properties. Asked whether he made any offers on a replacement property, he answered there were no properties that met his criteria. 6. He agreed that it was necessary to purchase a replacement property to roll over any requirement to pay capital gains tax (CGT). He understood that he has 12 months following a CGT event to purchase a replacement property to gain the benefit of the CGT rollover based on advice from accountants and legal representatives. The Australian Taxation Office (ATO) advised him that the 12 month period to buy a replacement property commences when he accepts consideration from the Respondent. For that reason he has not accepted the advance payment from the Respondent that is being held for him on trust. 7. Shown an extract from the ATO website summarised below in [415], he agreed the Respondent has taken possession of the Land. He agreed he was relying on a special circumstance extension. Asked whether he would replace the asset if not given a special circumstance extension, he thinks the Applicants would still replace the property but is unsure whether they would purchase it for the full compensation amount. He will decide once the known amount of funding is available. 8. Asked whether he would have disposed of the Land after developing it sometime between 2004 and 2009 and bought another a property, he answered no. The Applicants would have built (and lived) on the north-western corner of the Land and retained the subdivided properties as an investment to trickle sell the subdivided lots over the time. If they had developed in 2009, they may or may not have sold all the lots by the present time. 9. Asked whether he would have held up to $5,000,000 worth of debt to trickle sell, he answered yes. Asked whether he would have bought another property when all the parcels were sold, he answered most likely as the Applicants have a bias towards property investment as opposed to share investments. Respondent's evidence 1. The Respondent tendered the following evidence relevant to disturbance: 1. Aerial image of Mountain Way, Sapphire Beach property (see par 18(a) of Mr Dibb's affidavit sworn 22 May 2023 above in [400]) (Ex 5); 2. Aerial image of Cotton Road, Burbank property (see par 18(b) of Mr Dibb's affidavit sworn 22 May 2023 above in [400]) (Ex 6); 3. Extract from the ATO website on involuntary disposal of a CGT asset (see below in [415]) (Ex 7); and 4. Respondent's amended reply to Applicants' amended schedule of losses attributable to disturbance dated 7 June 2023 (Ex 12). 1. The extract from the ATO website detailed that when an asset is compulsorily acquired by an entity the time of the CGT event is the earlier of first receiving compensation from the entity or the entity occupying or taking possession of the asset. The website stated that to be eligible for the CGT rollover when purchasing a replacement property, expenditure must be incurred acquiring another CGT asset for the same or similar purpose by the end of the income year in which the CGT event occurs. That period may be extended in special circumstances. Applicants' submissions 1. The Applicants submitted the Land was held for land banking per Fraietta and stamp duty and legal fees incurred in the purchase of a replacement property is claimed. 2. The principle established in Blacktown Council v Fitzpatrick Investments Pty Ltd [2001] NSWCA 259 (Fitzpatrick) at [4]-[5] is that use of land does not have to be a physical use and that the holding of land for the purpose of a land development business is an actual use of land for the purpose of s 59(1)(f) of the Just Terms Act. If this kind of use can be established on the facts, as it can with the Land, the fact that the Land may have been leased to tenants does not alter the position: G Capital Corporation Pty Ltd v Roads and Maritime Services (2019) 103 NSWLR 543; [2019] NSWCA 243 at [17(b)], [25]-[27]. 3. Mr Dibb (with Mrs Dibb agreeing) deposed to the circumstances surrounding the purchase of the Land above in [400], [402]. The Land was purchased in 1988 by the Applicants for the purpose of land banking with the intention of developing it into residential allotments once the zoning changed, which they estimated to be in 15 to 20 years' time. Since 2006 they have stood ready and able to subdivide the Land, with access to sufficient financial resources to enable it to be carried out. The Land was purchased after significant research undertaken by Mr Dibb of the Coffs Harbour region. The Applicants' maintained their intention with the Land, as evidenced by their rejection of an offer from Pacific Bay Resort in 1991. 4. Land banking the Land was not unusual to the Applicants. The Applicants hold the Sapphire Beach property (a short distance away from the Land) which they are similarly land banking until zoning permits its subdivision. This is no different to the circumstances accepted by Robson J in Fraietta. 5. The fact that no active steps had been undertaken by the Applicants to subdivide the Land is not a relevant matter in circumstances where, since 2001, the public had knowledge of the public purpose. From then, the Applicants were placed in a "holding pattern" which, but for the public purpose, would not have occurred, and the Applicants would have proceeded with subdividing the Land. The Respondent's contentions that the Applicants are not in the business of land development are misplaced and should be rejected. 6. The Applicants intend to purchase a replacement property and have undertaken searches within the Coffs Harbour region. In cross-examination summarised above in [409], Mr Dibb explained the Applicants have not found a suitable property to purchase in their searches. 7. Mr Dibb's intention to purchase a replacement property was further challenged in cross-examination in the context of the CGT rollover provisions. The Applicants have the benefit of the ruling by the ATO to rollover any CGT liability on the purchase of replacement property. Subject to meeting eligibility criteria, the Applicants can seek a special circumstance extension to apply the rollover provisions. If they do not receive that extension, they will be liable to pay CGT which may affect their ability to purchase a replacement property. Those matters have not yet crystalised, and there is no evidence to suggest the Applicants will not obtain an extension from the ATO. 8. The Applicants have made clear their intention to purchase a replacement property. The Applicants' ability to purchase a replacement property will depend upon a number of factors including whether their claim for stamp duty in these proceedings is accepted. If it is not, it will naturally depend upon the Applicants' financial ability to meet that cost themselves. That cost is not insubstantial on a replacement value equal to the Land. However, that cost remains one that might reasonably be incurred (adopting the words of s 59(1)(f)). 9. Having regard to the use of the Land, and the Applicants' intentions to replace it, the Applicants are entitled to be compensated for stamp duty costs on the purchase of a replacement property of up to equal value to the market value of the Land under s 59(1)(f). Once that proposition is accepted, there ought be no dispute that the Applicants will also incur legal fees on the purchase of a replacement property. The amount of $7,150 for legal fees has not been challenged by the Respondent, and ought to be accepted in full. 10. Finally, the application of s 61 as contended by the Respondent would not be a bar to awarding disturbance costs. Section 61 applies where the land had potential to be used for a purpose other than that for which it is currently used where that potential remained unrealised: G&J Drivas Pty Ltd v Sydney Metro [2023] NSWLEC 20 (G&J Drivas) at [417]. However, it is only in respect of a financial loss that would necessarily have been incurred in realising that potential under s 61(b) of the Just Terms Act. 11. The Applicants' evidence is that they would have subdivided the Land and kept one subdivided lot to reside on. The basis upon which the Land is being valued is entirely consistent with this intention. Stamp duty is therefore not a financial loss that would necessarily have been incurred in realising that potential upon which the market value has been assessed, but rather an additional cost that might reasonably be incurred relating to the actual use of the Land, as a direct and natural consequence of the acquisition. Section 61, properly construed, is not engaged in the present circumstance. The purpose of the use of the Land (which is the relevant enquiry in s 61) for residential subdivision remains the same. Respondent's submissions 1. The Applicants' claim for stamp duty and legal costs for the purchase of a replacement property under s 59(1)(f) must fail. The Land was not held by the Applicants for land banking but as passive investors. The Applicants must be more than a passive investor to seek costs under s 59(1)(f): Fraietta at [175] citing Speter v Roads and Maritime Services [2016] NSWLEC 128 (Speter) at [91]. Holding land as an investment rather than as trading stock is not an actual use of the land: Fraietta at [175] citing Speter at [91]. 2. The evidence of Mr Dibb that the Applicants were land banking the Land should be rejected. There is no evidence that the Applicants were developers such that the Land could be characterised as stock in trade: Fitzpatrick at [30]-[35]; SNS Pty Ltd v Roads and Maritime Services (2018) 232 LGERA 224; [2018] NSWLEC 7 at [345]-[347]; G&J Drivas at [383]). Of the two properties relied upon by the Applicants to demonstrate a property portfolio, they only own the Sapphire Beach property and otherwise are trustees of a trust that owns the Burbank property under which they are not beneficiaries. They have never completed or obtained a development consent a subdivision of land that they have owned. They are not in the business of property development. They did not make submissions to the Council seeking a rezoning of the Land. At best, the characterisation of the Applicants' interests in property is passive. In the absence of an actual use of the Land, the claims must fail under s 59(1)(f) . 3. In addition, Mr Dibb was equivocal in his oral evidence as to whether a replacement property would be purchased following the determination of compensation. He accepted that it would depend on whether he received an extension of time from the ATO to be able to use the CGT rollover that is permitted following the compulsory acquisition of land. It is evident that the Applicants must satisfy the Court that stamp duty on a replacement property (assuming the Court accepts that the Applicants do have an actual use of the land) might reasonably be incurred. The Court would not be so satisfied on the evidence before it. 4. Further, and in any event, given that it was the Applicants' stated intention to subdivide the Land and live on one of the lots, the quantum of stamp duty would need to be reduced under s 61 of the Just Terms Act to account for the fact that it would not be the whole of the Land that the Applicants would seek to replace. The portion of stamp duty that would be attributable to the lot to be retained by the Applicants would be a loss they would simply necessarily incur in realising the subdivision potential and so s 61(b) would dictate a reduction in the quantum payable. Finding on disturbance 1. The Applicants seek to rely on s 59(1)(f) of the Just Terms Act to claim the costs of stamp duty payable for a replacement property and legal fees incurred in purchasing a replacement property. The essential elements of subs (1)(f) include that the costs incurred must be financial, these costs must be "reasonably incurred (or might reasonably be incurred)", an applicant must actually use the acquired land, the financial costs must relate to the actual use of the land and these costs must be incurred as a "direct and natural consequence of the acquisition", per Fraietta at [171]. In light of the parties' submissions the main element in contention is whether the Applicants were actually using the land at the date of acquisition. 2. In Fraietta the applicant held the acquired property with the intention of constructing a stone house. His claim for relocation costs was considered under s 59(1)(f), Robson J finding that subss (c),(d) and (e) did not apply as the applicant was not living on the land and did not therefore relocate from it. Robson J at [174]-[179] helpfully undertook an analysis of the relevant caselaw with respect to the actual use of land which I extract below and adopt: Actual use [174] Pursuant to s 59(1)(f) of the Just Terms Act, an applicant is entitled to seek financial costs which are either reasonably incurred or might reasonably be incurred, that both arise from the actual use of the land, and were incurred as a direct and natural consequence of the acquisition. [175] The principles relating to "actual use" were recently summarised in Speter, where this Court stated at [91]: This provision has been the subject of much judicial discourse, from which the following principles may be distilled: … (2) the actual use must exist in fact at the time of the acquisition, and cannot be either "a future use or potential use": Blacktown Council v Fitzpatrick Investments [2001] NSWCA 259 at [26]-[27] (Brownie AJA) ("Fitzpatrick"), Kirela at [12] (Cowdroy J); (3) actual use can include "land banking" for future development of that land (Fitzpatrick at [31] (Brownie AJA)) and construction that is being conducted on the land at the date of acquisition (Al Amanah College Inc v Minister for Education and Training (No 2) [2011] NSWLEC 254 at [44] (Biscoe J)); (4) an applicant must be more than "a passive investor": Fitzpatrick at [34] (Brownie AJA); and (5) holding land as an "investment rather than as trading stock" is not an actual use of the land: Cannavo v Roads and Traffic Authority of New South Wales [2004] NSWLEC 570 at [46] (Talbot J). [176] It has recently been determined, both in Speter at [94] and by Preston CJ of LEC in G. Suonaf Holdings Pty Ltd v Roads and Maritime Services [2016] NSWLEC 116 at [61], that properties held as tenanted investments did not involve the actual use of those properties. [177] Further to the principles above, it is also instructive to consider a number of authorities with similar factual scenarios in more depth. In Blacktown Council v Fitzpatrick Investments [2001] NSWCA 259, where the Court of Appeal considered whether land held by a company for a proposed subdivision was an "actual use", Brownie AJA stated: [23] S59(f) of the Just Terms Act used a different expression: "actual use". [The primary judge] found that the business of the respondent was "the development of land by subdivision"; that it held the acquired land "for the purpose of development by way of residential subdivision"; that the "actual use for which it held the acquired land [was] for the purpose of development by way of subdivision"; that by reason of the acquisition, the respondent "lost its developable land", and replaced that land by "acquiring other developable land"; and that but for the acquisition the respondent could have developed the acquired land. [24] …these findings of fact mean that "the use" to which the respondent put the land for its purposes, prior to the acquisition, was use for the purpose of residential subdivision. The acquired land formed part of what was called the respondent's "land bank", being land acquired and held for the purpose, when the time was ripe, of being subdivided and resold for profit. [178] In Kirela, Cowdroy J considered whether the applicant was engaged in the "actual use" of a block of land which was intended to be used either for overflow parking, or to increase the FSR of a development planned on an adjacent block of land. His Honour found at [12] that the land "was not being used for any purpose but rather was awaiting development for some future purpose" at the date of acquisition, and continued at [19]: The Court finds that the acquired land was not used in the sense referred to in Fitzpatrick Investments Pty Ltd v Blacktown City Council (No 2). There is no evidence of actual use of the land as a land bank. The proposal for its use remained only potential therefore the applicant is not entitled to recover compensation for stamp duty pursuant to s 59(f) of the Act. [179] In Al Amanah College Inc v Minister for Education and Training (No 2) [2011] NSWLEC 254 ('Al Amanah'), Biscoe J considered whether the applicant was "actually using" land on which a school was being constructed at the date the acquisition was announced. His Honour stated at [37]: …There is a distinction between land simply held in reserve for some future activity and land in respect of which work is being done — which does not have to be physical work on the land — preparatory to an intended use. The latter is, but the former may not be, an actual use of the land…The present case falls into the latter category. By the date of announcement of the acquisition on 20 July 2009, the applicant had caused work to be done preparatory to the intended use of the land as a school, for which it had incurred costs. The work included physical work on the land. 1. In Fraietta Robson J held that the applicant was more than a passive investor. The applicant was involved in the actual use of the land having undertaken work in preparation for its intended use of building a stone house (storing stones on the property to be used in construction) and had not let the land be idle (by managing weeds on-site). The applicant had also used the land in a manner similar to land banking with a specific development purpose in mind that but for the acquisition he would have carried out when the time was right, notwithstanding that the development was put on hold at the date of acquisition due to personal circumstances. 2. As emphasised by the various authorities referred to in Fraietta the activities of the Applicants must be considered to determine if any actual use of land was occurring at the date of acquisition, to be distinguished from holding land to use for future purposes. 3. The Applicants gave evidence that they intended to subdivide the Land, which they purchased in 1988, having held on to the Land in order to achieve that purpose once it was suitably zoned. The Applicants own one other property in the general area of Coffs Harbour at Sapphire Beach which they also intend to develop once rezoning to a residential use to enable that occurs. The Applicants have not undertaken subdivision development to date and have not applied for any subdivision development consent. 4. Mr Dibb's unchallenged explanation for why they have not undertaken subdivision on the Land to date is that the public purpose on becoming known as a possibility in 2001 resulted in their plans being put on hold, with advice in 2008 confirming that the Land was potentially within the path of the proposed Coffs Harbour Bypass Project. I have found above in relation to issue 1 that but for the public purpose the land would have been zoned for low density residential purposes by the date of acquisition likely from 2013 which would have enabled the Applicants to pursue their stated objective of developing the land using the line of credit from their son to build a subdivision development which they could "trickle" sell onto the market. This evidence supports a finding of actual use of land as recognised in Fitzpatrick at [24] as cited in Fraietta at [177] set out above in [432]. It was there described as land banking in the context of that case. That description applies to what the Applicants are holding property for, on what could be described as modest scale, but nevertheless reflects their actual use of land. The Respondent's submission that they are not land developers because they have no record to date of undertaking subdivision development is not accepted as reflective of their evidence. Their evidence confirms their current intention to subdivide the Land and separates them from a passive investor in land. 5. To return to the elements of s 59(1)(f) of the Just Terms Act, the claim is for financial costs which relate to the actual use of the Land. The written and oral evidence of Mr Dibb establishes that these costs might be reasonably incurred through the purchase of a replacement property. He has sought guidance from the ATO concerning the application of the special circumstance provision in relation to the GST rollover exemption and is awaiting the outcome of the proceeding to see how much money he has available to spend, a reasonable approach. Contrary to the Respondent's submissions I do not consider his oral evidence should be described as equivocal. These are relevant factors informing the Applicants' decision to purchase which cannot be finally resolved for them until the outcome of the proceeding is known. The overall tenor of Mr Dibb's evidence was that the Applicants would seek to purchase a replacement property and a search to that end has been commenced by them to do so. 6. Section 61 applies if the market value of land is assessed on the basis that land had potential to be used for a purpose other than that for which it is currently used. For the reasons given by the Applicants above in [425] s 61 does not apply to the circumstances of the Applicants. The development of the Land for residential subdivision purposes remained the same regardless of whether the Applicants had in the future occupied one of the subdivided lots on the Land. 7. It is helpful to look at Attard v Transport for NSW (2014) 205 LGERA 396; [2014] NSWLEC 44 (Attard) where Biscoe J held at [148] that "the idea behind s 61(b) is that if the owner would have to relocate anyway in order to sell land at its higher value based on its potentiality, then it is inconsistent (and therefore unjust) that the owner should also recover relocation costs as disturbance loss. The purpose of s 61 is to prevent that perceived inconsistency." The circumstances of the Applicants do not reflect the circumstances which s 61(b) is addressing, as highlighted by considering the extract from Attard. 8. The Applicants' claim for stamp duty and legal fees under s 59(1)(f) is awarded as compensation for disturbance. Issue 4: Conclusion 1. The Applicants are awarded their claim for: 1. Valuation and town planning fees under s 59(1)(b) of the Just Terms Act for the amount of $21,975 (the parties agree the outstanding payment amount is $10,050); 2. Stamp duty for replacement property under s 59(1)(f) of the Just Terms Act for an amount to be confirmed; and 3. Legal costs under s 59(1)(f) of the Just Terms Act for replacement property for $7,150. Costs 1. The Applicants submit that the usual course in compulsory acquisition proceedings is that the Respondent should pay the Applicants' costs as agreed or assessed. I will make an order that the Respondent pay the Applicants' costs as agreed or assessed in seven days unless the Respondent makes an application for an alternative order other than the costs reserved on the Applicants' notice of motion to amend points of claim dated 26 May 2023 which is yet to be determined. A timetable to do so will be agreed with the parties. Orders 1. The Court orders that: 1. Compensation pursuant to Part 3 Division 4 of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) for the compulsory acquisition of the Applicants' freehold interest in Lot 242 Deposited Plan 752834 known as 28 Bruxner Park Road, Korora is determined in the sum as follows: 1. $1,330,000 for market value under s 55(a); 2. $29,125 for disturbance under s 55(d); and 3. Stamp duty for replacement property under s 55(d) for an amount to be confirmed within seven days. 1. Costs reserved. ********** Amendments 31 January 2024 - Correction in accordance with the slip-rule r 36.17 UCPR in [398], [442] from '$10,500' to '$10,050'. 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: 31 January 2024