Supreme Court New South Wales Medium Neutral Citation: Transport for NSW v Registrar-General of New South Wales [2024] NSWSC 1186 Hearing dates: 18 September 2024 Date of orders: 18 September 2024 Decision date: 19 September 2024 Jurisdiction: Equity - Real Property List Before: Williams J Decision: See orders at [33]. Catchwords: LAND LAW – Community title – Community scheme – Where resuming authority seeks orders restructuring community scheme consequential upon resumption of part of a development lot in the community scheme – Requirement for resuming authority notified interested persons of the application – Orders to be made pursuant to s 73 of the Community Land Development Act 2021 (NSW) in circumstances where the value of the residue of the relevant development lot, and the relative values of the lots in the scheme, are unchanged by the resumption. Legislation Cited: Community Land Development Act 2021 (NSW), ss 72, 73, 74, 76, 79 Land Acquisition (Just Terms Compensation) Act 1991 (NSW) Cases Cited: Transport for NSW v Registrar-General of NSW [2022] NSWSC 1660 Transport for NSW v Registrar-General of NSW [2013] NSWSC 1272 Texts Cited: N/A Category: Principal judgment Parties: Transport for NSW (Plaintiff) Registrar-General of New South Wales (Defendant) Representation: Counsel: A Hemmings (Plaintiff) S Prent, solicitor (Defendant) Solicitors: Clayton Utz (Plaintiff) Office of the Registrar General (Defendant) File Number(s): 2024/179415 Publication restriction: N/A Judgment 1. The plaintiff commenced these proceedings on 15 May 2024 in relation to the resumption of an area comprising 4506 square metres, being part of Lot 3 in DP271278, for the purposes of the Parramatta Light Rail Stage 2 Project (the Resumed Land). 2. Deposited Plan DP217278 is a community scheme regulated under the Community Land Development Act 2021 (NSW) (the CLD Act), and situated at Wentworth Point, New South Wales (the Community Scheme). 3. The Resumed Land was acquired in accordance with the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) (the Just Terms Act) by publication of an acquisition notice in the NSW Government Gazette on 24 May 2024. 4. Prior to the resumption, the Community Scheme comprised three lots: 1. Lot 1 in DP271278 – a community property lot owned by the Community Association of the Community Scheme; 2. Lot 2 in DP271278 - now SP102274, a strata scheme the lots in which are owned by various owners; and 3. Lot 3 in DP271278 – a community development lot owned by SH Hill Road Development Pty Ltd. 1. The Resumed Land, which was excluded from the Community Scheme by express statement in the acquisition notice pursuant to s 79(2) of the CLD Act, is now proposed Lot 11 in the Plan of Acquisition DP1300365. 2. The residue of Lot 3 in DP217278 – an area of 7.273 hectares, which continues to be owned by SH Hill Road Development Pty Ltd and remains part of the Community Scheme - is proposed Lot 10 in DP1300365. 3. The Community Scheme is subject to a Community Management Statement. 4. These proceedings do not involve any question of compensation under the Just Terms Act. The only issue to be determined is what orders, if any, should be made under s 73 of the CLD Act as a consequence of the resumption of the Resumed Land. 5. Section 73 falls within Part 10 of the CLD Act, which applies because the Resumed Land was in a community scheme. [1] 6. Section 73 of the CLD Act relevantly provides: "(2) A resuming authority proposing to resume part of the land in a scheme parcel or strata parcel must apply to the Supreme Court for an order restructuring the scheme. … (4) The Supreme Court may, when making an order restructuring the scheme, also make any order it considers necessary, including— (a) to adjust unit entitlements, or (b) to amend any applicable— (i) development contract, or (ii) management statement, or (iii) by-laws under a strata scheme, or (c) if part of a lot is to be resumed— (i) to make the residue of the lot a lot in the scheme, or (ii) with the consent of the owner of the residue of the lot, to vest the residue of the lot in the relevant association or strata corporation as association property or common property." 1. The plaintiff in these proceedings, Transport for NSW, is the resuming authority. By its Amended Summons filed on 13 September 2024, the plaintiff seeks orders pursuant to s 73 of the CLD Act that, as a consequence of the resumption of the Resumed Land: 1. there is no adjustment to the schedule of unit entitlements for Community Scheme DP271278 or to the schedule of unit entitlements for the subsidiary strata scheme SP102274; 2. there is no adjustment to the management statement for Community Scheme DP271278 or to the management statement for the subsidiary strata scheme SP102274; 3. proposed Lot 11 in DP1300365 shall be excluded from Community Scheme DP271278 as a consequence of the resumption; 4. the residue of Lot 3 in Community Scheme DP271278, being proposed Lot 10 in DP1300365, is to be defined as a lot in Community Scheme DP271278 as specified in the replacement sheets for DP271278; and 5. the easement numbered 2 in the section 88B instrument in DP1220111 affecting Lot 3 in DP271278 be registered over proposed Lot 11 in DP1300365. 1. The defendant, the Registrar-General of New South Wales, appeared at the hearing on 18 September 2024 and consents to those orders. 2. At the conclusion of the hearing, I made orders substantially in those terms, but stayed their operation for a period of 14 days reserving liberty for the Community Association DP271278 to apply during that period, because the plaintiffs did not notify the Communication Association of the Amended Summons until the day before the hearing, and I was not satisfied based on the evidence adduced at the hearing that the Community Association had determined that it did not wish to be heard. 3. I made those orders at the conclusion of the hearing on the basis that I would publish my reasons as soon as possible. These are those reasons. 4. It is convenient to begin by addressing s 74 of the CLD Act, which requires the plaintiff to serve notice of an application of this kind on the "interested persons" identified in s 74(1)(a)-(g). Section 74(2) of the CLD Act provides that an interested person is entitled to be heard on the application. 5. In the present case, the interested persons are the Community Association of the Community Scheme DP271278, the Owners Corporation of the subsidiary Strata Scheme SP102274, SH Hill Road Development Pty Ltd, the City of Parramatta Council, and the Registrar-General. 6. On 15 May 2024, the plaintiff served on each of those interested persons notice the Summons which the plaintiff had filed that same day commencing these proceedings. 7. The Summons was prepared before the plaintiff had obtained the expert valuation evidence on which it now relies in support of the application for the orders set out in the Amended Summons to which I have referred above. The relief sought in the Summons served on the interested persons on 15 May 2024 was limited to orders pursuant to s 73 of the CLD Act that, as a consequence of the resumption: 1. the schedule of unit entitlements in Community Scheme DP271278 is adjusted in the manner as determined by the Court; 2. the management statement for Community Scheme DP271278 is adjusted in the manner as determined by the Court; and 3. the residue of Lot 3 in Community Scheme DP271278, being proposed Lot 10 in DP1300365, is to be defined as a lot in Community Scheme DP217278 in the manner as determined by the Court. 1. Service of the Summons on the interested persons did not notify them of the substance of the different application that the plaintiff now makes by its Amended Summons filed on 13 September 2024 seeking the orders to which I have referred above. I therefore do not consider that service of the Summons on 15 May 2024 complied with the requirements of s 74 of the CLD Act in relation to the application that is now made by the Amended Summons. 2. The plaintiff complied with s 74 in relation to the Amended Summons by serving an unfiled copy of the Amended Summons on SH Rill Road Development Pty Ltd on 12 September 2024, and by serving the Amended Summons on all other interested persons on 17 September 2024. By the conclusion of the hearing on 18 September 2024, all interested persons other than the Community Association had informed the plaintiff's solicitors that they did not wish to be heard on the application. 3. The plaintiff tendered an email received by the plaintiff's solicitor on 17 September 2024 from the strata managing agent for the Community Scheme DP271278 and for the subsidiary Strata Scheme SP102774, in response to the letter sent be the plaintiff's solicitor earlier that day enclosing the Amended Summons and requesting an urgent response indicating whether the Community Association and Owners Corporation wished to be heard. The agent's email stated that the committee of the Owners Corporation "have been sent this and do not wish to be active in proceedings", and that "[i]n terms of the community, I have emailed it to Sekisui House for their position as they still hold majority as its in the initial stages". The plaintiff also tendered a further email received by the plaintiff's solicitor from the agent on 18 September 2024, stating: "Note Sekisui have declined to exercise their rights for the community area too." 4. I was not satisfied that those emails from the strata managing agent were a sufficient basis for the Court to be satisfied that the Community Association did not wish to be heard in relation to the application, notice of which had been served on it only one day prior to the hearing. Given that interested persons have a statutory entitlement to be heard, but bearing in mind that notice of the application had been served and that, given the terms of the orders sought in the Amended Summons, it was objectively unlikely that the Community Association would have any interest in being heard, the appropriate course seemed to me to be to allow the hearing to proceed, but to stay the operation of any orders for a period of 14 days reserving liberty to the Community Association to apply, out of abundant caution. 5. For the reasons that follow, I have determined that orders substantially in the terms sought in the Amended Summons should be made pursuant to s 73 of the CLD Act. In coming to that conclusion, I have been greatly assisted by the submissions of Counsel for the plaintiff. 6. As Peden J observed in Transport for NSW v Registrar-General of NSW [2022] NSWSC 1660 at [33]-[37], there is no provision in the CLD Act for the method of restructuring a community scheme following a resumption of land which previously formed part of that scheme. Section 76 of the CLD Act requires the Court to consider, inter alia, whether any amendment is required to a schedule of unit entitlements or a management statement, and to make any orders that the Court considers to be appropriate, just and equitable in the circumstances. I respectfully agree with Peden J that the question for the Court is the same as the question that arose under the now repealed Community Land Development Act 1989 (NSW), as articulated by Ball J in Transport for NSW v Registrar-General of NSW [2013] NSWSC 1272 at [10]. The question is whether the resumption has altered the relative value of the affected lots compared to other lots in the scheme and, if so whether unit entitlements and/or rights conferred on lot owners by the management statement need to be adjusted having regard to any change in the value of the affected lots. Insofar as the schedule of unit entitlements is concerned, I agree with Peden J that the main concern for the Court is that, after the resumption, it continues to reflect the relative values of the remaining lots. 7. The plaintiff relied on an expert report of Mr David Lunney, a certified practising valuer, dated 22 August 2024. Mr Lunney has assessed the impact of the resumption on the value of the two development lots in Community Scheme DP271278, being Lots 2 and 3 (now proposed Lot 10 in DP1300365) . Mr Lunney's analysis of the unit entitlements for Lots 2 and 3 prior to the resumption indicates that the unit entitlements for each lot were allocated in a manner that is proportionate to the potential gross floor area (or GFA) that could be yielded from a development of each of Lots 2 and 3. Mr Lunney has opined that the resumption of part of Lot 3 will not result in the loss of any potential GFA that can be yielded in the future from a development of the residue of Lot 3, and that the market value of that development lot is therefore identical before and after the resumption. Thus, in Mr Lunney's opinion, the relative value between the two development lots in Community Scheme DP271278 has not changed by reason of the resumption. Accordingly, no change to the schedule of unit entitlements is required as a consequence of the resumption. 8. Mr Lunney's valuation report has been provided to the Registrar-General and to SH Hill Road Development Pty Ltd. Neither of them has sought to be heard to raise any issue with the report, or to adduce any valuation evidence contrary to Mr Lunney's evidence. I accept Mr Lunney's opinions. 9. For those reasons, it is appropriate, just and equitable to make the order sought in prayer 1 of the Amended Summons that no adjustment be made to the schedule of unit entitlements for Community Scheme DP271278, or to the schedule of unit entitlements for the subsidiary strata scheme SP102274, as a consequence of the resumption. 10. No party suggests that the resumption affects any rights conferred on lot owners in Community Scheme DP271278 under the management statement for that scheme, or any rights conferred on lot owners in the subsidiary strata scheme SP102274 under the management statement for that scheme. In those circumstances, it is appropriate, just and equitable to make the order sought in prayer 2 of the Amended Summons that no adjustment be made to those management statements as a consequence of the resumption. 11. I am satisfied that it is appropriate to make an order in terms of prayer 3 of the Amended Summons, which effectively confirms what has already occurred pursuant to s 79(2) of the CLD Act on publication of the acquisition notice. [2] 12. Section 73(4)(c)(i) of the CLD Act confers power on the Court in cases such as the present case where part of a lot is resumed to make an order making the residue of that lot a lot in the Community Scheme. The replacement sheets referred to prayer 4 of the Amended Summons identify as Lot 4 in DP271278 the land that comprises the residue of the former Lot 3 that has not been excluded from the Community Scheme by the resumption. I am satisfied that it is necessary and appropriate to make an order in terms of prayer 4 of the Amended Summons, subject to specifying that the residue of Lot 3 is now Lot 4 (as opposed to "a lot") in DP271278, and subject to varying the wording of the order slightly so as to more precisely identify the replacement sheets referred to. 13. The effect of proposed order 5 is that the Resumed Land will continue to be burdened by an easement that burdened the whole of Lot 3 prior to the resumption. As Counsel for the plaintiff submitted, the acquisition notice published in the Gazette expressly described the land being resumed as excluding any existing easements. I am satisfied that it is necessary and appropriate to make an order in terms of prayer 5 of the Amended Summons. 14. The plaintiff agrees to pay the Registrar-General's costs of these proceedings in accordance with s 77 of the CLD Act. 15. For all of those reasons, the orders of the Court are: 1. Order pursuant to s 73 of the Community Land Development Act 2021 (NSW) that, as a consequence of the resumption of land described as part of Lot 3 in Community Plan DP271278 by the plaintiff, being proposed Lot 11 in DP1300365, at Wentworth Point in New South Wales (the Resumption): 1. There is no adjustment to the schedule of unit entitlements in Community Scheme DP271278 or to the schedule of unit entitlements for the subsidiary Strata Scheme SP102274. 2. There is no adjustment to the management statement for Community Scheme DP271278 or to the management statement for the subsidiary Strata Scheme SP102274. 3. Proposed Lot 11 in Deposited Plan 1300365 shall be excluded from Community Scheme DP271278 as a consequence of the Resumption. 4. The residue of Lot 3 in Community Plan DP271278, being proposed Lot 10 in Deposited Plan 1300365 is to be defined as Lot 4 in community scheme DP271278 as specified in the replacement sheets for DP271278 tendered as part of Exhibit 1 in these proceedings. 5. The Easement numbered 2 in the section 88B instrument in DP1220111 affecting Lot 3 in DP271278 be registered over proposed Lot 11 in Deposited Plan 1300365. 1. Order 1 is stayed for a period of 14 days, reserving liberty to the Community Association for Community Scheme DP271278 to apply during that period to vary or set aside order 1 in the event that they wish to be heard. 2. Direct the plaintiff to serve a copy of these orders on the Community Association by 5:00pm on 19 September 2024. 3. Order that the plaintiff is to pay the defendant's costs of the proceedings, as agreed or assessed. 4. Reserve liberty to any party to apply in the working out of these orders. ********** Endnotes 1. CLD Act, s 72(4)(a). 2. See [5] above. 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: 19 September 2024