Reported Decision : 173 LGERA 155 Land and Environment Court of New South Wales CITATION : Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2009] NSWLEC 219 APPLICANT: Walker Corporation Pty Ltd PARTIES : RESPONDENT: Sydney Harbour Foreshore Authority FILE NUMBER(S) : 30024 of 2003 CORAM: Biscoe J KEY ISSUES: COMPULSORY ACQUISITION OF LAND :- compensation - market value - industrial land - potential for residential use for older people or people with a disability under State Environmental Planning Policy No. 5 - potential for residential use on basis of existing use rights - potential for residential use on basis of the disregard in s 56(1)(a) Land Acquisition (Just Terms Compensation) Act 1991 County of Cumberland Planning Scheme Ordinance 1951 Crown Lands Consolidation Act 1913 Environmental Planning and Assessment Act 1979, ss 53 – 72H, 94, 106, 107, 108, Part 3 division 4. Environmental Planning and Assessment Regulation 2000, cll 41, 42, 45, Part 5 Frustrated Contracts Act 1978 LEGISLATION CITED: Land Acquisition (Just Terms Compensation) Act 1991, ss 3(1)(a), 10(1), 54, 55, 56 Leichhardt Local Environmental Plan 2000 Leichhardt Planning Scheme Ordinance 1979 Public Works Act 1912, s 124 State Environmental Planning Policy No. 5 – Housing For Older People or People with a Disability 1998, cll 3, 4, 5, 9, 12, 13, 14, 25(f), Part 2 State Environmental Planning Policy No 56 – Sydney Harbour Foreshores and Tributaries, cll 2, 7, 11, 14, 21, Part 4, Schedule 1, Schedule 2 Sydney Harbour Foreshore Authority Act 1998 A Woodbury v Wyong Shire Council [2006] NSWLEC 48 AMP Capital Investors Ltd v Transport Infrastructure Development Corporation [2008] NSWCA 325, (2008) 163 LGERA 245 Boland v Yates Property Corp Pty Ltd [1999] HCA 64, (1999) 74 ALJR 209 Commissioner of Succession Duties (SA) v Executor Trustee and Agency Co of South Australia Ltd (1947) 74 CLR 358 Commonwealth Custodial Services Ltd v Valuer General [2007] NSWCA 365, (2007) 156 LGERA 186 DEM (Aust) Pty Ltd v Pittwater Council [2004] NSWCA 434, (2004) 136 LGERA 187 Eaton and Sons Pty Ltd v Council of the Shire of Warringah (1972) 129 CLR 270 Georgakis v North Sydney Council [2004] NSWLEC 123, (2004) 140 LGERA 379 Housing Commission of NSW v San Sebastian Pty Ltd [1978] HCA 28, (1978) 140 CLR 196 Leichhardt Council v Roads and Traffic Authority (NSW) [2006] NSWCA 353, (2006) 149 LGERA 439 Lemworth Pty Ltd v Liverpool City Council [2001] NSWCA 389, (2001) 53 NSWLR 371 Liverpool City Council v Commonwealth of Australia (1993) 81 LGERA 405 Maidment v Roads and Traffic Authority (NSW) [2006] NSWLEC 606, (2006) 153 LGERA 249 McDonald v Roads and Traffic Authority (NSW) [2009] NSWLEC 105 McRoss Developments Pty Ltd v Caltex Petroleum Pty Ltd [2004] NSWSC 183 Mona Vale Pty Ltd v Pittwater Council [2003] NSWLEC 74, (2003) 124 LGERA 449 Moore Development Group Pty Ltd v Pittwater City Council [2003] NSWLEC 130, (2003) 127 LGERA 27 Parramatta City Council v Brickworks Ltd (1971 - 1972) 128 CLR 1 Pointe Gourde Quarrying and Transport Co Ltd v Sub-Intendent of Crown Lands [1947] AC 565 Port Macquarie West Bowling Club Ltd v The Minister [1972] 2 NSWLR 63 Q & R Developments Pty Ltd v Sutherland Shire Council [2001] NSWLEC 250, (2001) 117 LGERA 438 Redeam Pty Ltd v South Australian Land Commission (1977) 17 SASR 508 CASES CITED: Roads and Traffic Authority of New South Wales v Perry [2001] NSWCA 251, (2001) 52 NSWLR 222 Royal Agricultural Society of New South Wales v Sydney City Council (1987) 61 LGRA 305 Royal Sydney Golf Club v Federal Commissioner of Taxation (1954 - 1957) 97 CLR 379 Sandhurst Trustees Ltd v Roads and Traffic Authority of NSW [2006] NSWLEC 243 Smith v Roads and Traffic Authority of New South Wales [2005] NSWLEC 438 Spencer v The Commonwealth (1907) 5 CLR 418 Spicer v Valuer-General (1963) 10 LGRA 319 Starray Pty Ltd v Sydney City Council [2002] NSWLEC 48 Sydney Harbour Foreshore Authority v Walker Corporation Pty Ltd [2005] NSWCA 251, (2005) 63 NSWLR 407 Sydney Harbour Foreshore Authority v Walker Corporation Pty Ltd [No 2] [2006] NSWCA 386, (2006) 68 NSWLR 487 Sydney Water Corporation v Caruso [2009] NSWCA 391 The Crown v Murphy [1990] HCA 42, (1990) 64 ALJR 593 The Minister v Stocks and Parkes Investments Pty Ltd (1973) 129 CLR 385 Trust Company of Australia Ltd v Valuer General [2007] NSWCA 181, (2007) 154 LGERA 437 Turner v Minister of Public Instruction (1955 - 1956) 95 CLR 245 Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2004] NSWLEC 315, (2004) 134 LGERA 195 Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2004] NSWLEC 535, (2004) 136 LGERA 164 Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2006] NSWLEC 138 Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2008] HCA 5, (2008) 233 CLR 259 Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2008] NSWLEC 247, (2008) 161 LGERA 86 Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority Pty Ltd [2008] NSWLEC 282 Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2009] NSWCA 178, (2009) 168 LGERA 1 Wattle Park Pty Ltd v Commissioner of Highways (1973) 6 SASR 69 Wilson v Liverpool Corporation [1971] 1 WLR 302 DATES OF HEARING: 9 - 18, 20 November 2009 DATE OF JUDGMENT: 22 December 2009 APPLICANT: Mr I. Jackman SC with Mr R. Beasley and Ms J. Taylor SOLICITORS: Minter Ellison LEGAL REPRESENTATIVES: RESPONDENT: Mr B. Walker SC with Mr A. Galasso SC and Mr E. Hyde SOLICITORS: Deacons JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES BISCOE J 22 December 2009 30024 of 2003 WALKER CORPORATION PTY LTD v SYDNEY HARBOUR FORESHORE AUTHORITY CONTENTS Paragraph Introduction 1 – 14 History of the Proceedings 15 – 22 The Statutory Scheme 23 – 28 Valuation Approaches 29 – 41 Planning History 42 – 59 Characteristics of the Land 60 – 61 SEPP 5 Value 62 – 141 Existing Use Rights Value 142 – 171 Section 56(1)(a) Value 172 – 202 Industrial Value 203 – 228 Conclusion 229 – 230 INTRODUCTION 1 HIS HONOUR: Walker Corporation Pty Ltd (Walker) claims compensation under the Land Acquisition (Just Terms Compensation) Act 1991 (Just Terms Act) for the compulsory acquisition on 26 September 2002 of land at Ballast Point, Birchgrove on Sydney Harbour (Land) by the Sydney Harbour Foreshore Authority (Authority). The Land was acquired for the purposes of the Sydney Harbour Foreshore Authority Act 1998, in particular to convert it into a new waterfront public park. 2 The proposed compulsory acquisition of the Land was announced by the Premier of NSW in a news release on 19 February 2002 under the heading "NSW GOVERNMENT RETURNS BALLAST POINT TO PUBLIC": "One of Sydney Harbour's most significant headlands – Ballast Point – is to be opened up to the public and preserved for future generations, under a plan announced by the State Government today... The State Government will now commence negotiations to purchase Ballast Point on the Birchgrove Peninsula. Currently, Caltex Petroleum owns the 2.5 hectare site. For some 80 years, Ballast Point has been used as a fuel depot, but the Government now intends to return the land to the public by creating a harbourside park. The acquisition will neatly complete the work begun by former Premier Jack Lang who, in 1926 – directly opposite Ballast Point – returned Balls Head to public ownership. The two headlands will now form permanent green beacons on the western harbour corridor ... To create the new Ballast Point park, it would be necessary for the State Government to take planning control for the land. Ballast Point will be added to the list of state-significant sites with Planning Minister, Dr Refshauge as the consent authority. In addition, it is likely that compensation will need to be paid to Caltex and, possibly, to McRoss Developments Pty Ltd, which has an option to develop the site..." 3 Walker was formerly called McRoss Developments Pty Ltd. In 1997 Caltex entered into a call option agreement with a company related to Walker entitling that company or its nominee to purchase the Land for $16.5 million. Shortly before the Premier's announcement that company nominated Walker as its nominee. On 19 April 2002, after the Premier's announcement, Walker as nominee exercised the option. The next day it entered into a contract to purchase the Land. Although the sale was not completed at the acquisition date, compensation was payable to Walker for its interest in the Land under the Just Terms Act. 4 The contract of sale was frustrated by the compulsory acquisition and Caltex was obliged to refund the deposit to Walker pursuant to the Frustrated Contracts Act 1978: McRoss Developments Pty Ltd v Caltex Petroleum Pty Ltd [2004] NSWSC 183. Caltex was compensated under the Just Terms Act for the compulsory acquisition of its interest in the sum of $14,375,000. This was calculated by deducting from the purchase price the estimated cost of remediation of the Land which it was contractually obliged to carry out. 5 The Land is located at the eastern end of the Balmain peninsula on the southern side of Sydney Harbour. It is approximately two kilometres west of the Sydney Central Business District and the Sydney Harbour Bridge and about seven kilometres by road. It is strategically located opposite Balls Head, on the northern side of the Harbour. The Land is roughly triangular shaped, bound on its western boundary by the residential suburb of Birchgrove and on its northern and southern boundaries by the waters of Sydney Harbour. It comprises a fairly flat, sandstone central ridge or plateau, which falls dramatically by excavated cliffs to relatively narrow foreshores on its northern and southern boundaries. Access is by old, narrow roads through residential areas. 6 At the acquisition date the Land was zoned "Industrial" under the Leichhardt Local Environment Plan 2000 (LEP 2000). From 1928 it was used as a bulk terminal for the storage and distribution of petroleum products. 7 Walker's claim for compensation is for the market value of the Land and disturbance loss. Only market value is in issue, as disturbance loss has been determined at an earlier stage of the proceedings. 8 Notwithstanding the Land's industrial zoning at the acquisition date, Walker contends that its market value should be assessed on the basis of its residential development potential by the construction of 138 units, on three alternative bases: (a) at $60 million on the basis that the hypothetical buyer and seller would have considered it certain that the Land would be developed for residential accommodation for aged or disabled persons pursuant to State Environmental Planning Policy No. 5 – Housing for Older People or People with a Disability 1998 ( SEPP 5 ). The $60 million is calculated on the basis of 138 residential units at the agreed rate of $600,000 per unit site less the yield risk discount of 27.5 per cent adopted by the Court at earlier hearings; (b) at $54 million on the basis of existing use rights, being the said sum of $60 million less a risk discount of ten per cent. In oral submissions, Walker suggested that the Court could adopt a discount of fifteen per cent, which would reduce this market value to $51 million; (c) at $60 million on the basis of s 56(1)(a) of the Just Terms Act whereby, it is said, the industrial zoning is to be disregarded and a residential zoning notionally substituted. 9 Alternatively, Walker contends that market value should be assessed at $33 million on the basis of its industrial use. 10 To determine compensation, there has to be deducted from the market value the purchase price of $16,500,000. 11 The Authority contends that: (a) SEPP 5 and s 56(1)(a) were inapplicable and any existing use rights were too restricted in area to assist Walker's proposed residential development; (b) in any case, the chance of obtaining development consent was poor and, if consent could be obtained, the residential unit yield would be much lower than that propounded by Walker; (c) the market value of the Land at the acquisition date was its industrial value of $15,500,000 plus any premium for the slight prospect of using the Land for a higher use on the basis of existing use rights or for SEPP 5 development; (d) if SEPP 5 applied to the Land, market value should be assessed at $11,300,000. This is calculated on the basis of a yield of 40 units at the agreed rate of $700,000 per unit less a risk discount of 40 per cent. (e) alternatively, if SEPP 5 applied to the Land, market value should be assessed at $30 million. This is calculated on the basis of 83 units at the agreed rate of $600,000 per unit less a risk discount of 40 per cent. 12 Walker's proposed residential development is for 138 units of 150 m2 each, with a floor space ratio of 0.8:1, in two, three or four storey buildings on the plateau as well as on the foreshore below the northern and southern cliffs, a large area of public open space on the eastern point, and public foreshore access ways on the northern and southern shores. This follows recommendations regarding the Land in a 1991 Commissioners of Inquiry report to the local council, Leichhardt Municipal Council (Council). The inquiry was held to consider public submissions with respect to four draft local environmental plans for several sites on the Balmain Peninsula, one of which related specifically to the Land. The main issues in the inquiry included land use and density of use. 13 Walker's proposed 138 unit development proposed in these proceedings contrasts with Walker's November 2001 development application for stage 1 of a staged development for 83 units in two storey buildings with an FSR of 0.55:1, to which the council did not consent. That application under the Environmental Planning and Assessment Act 1979 (EPA Act) was expressed to be based on existing use rights and also to be compliant with SEPP 5. Walker's Class 1 merits appeal to this Court from the council's deemed refusal, together with its Class 4 application for a declaration that there were existing use rights over the Land, were pending when the Minister, in February 2002, announced the Authority's proposal to acquire the Land. The announcement made both those proceedings academic and they were discontinued. 14 Walker's claimed market value of $60 million at the acquisition date in September 2002 contrasts with the purchase price of $16.5 million under Walker's April 2002 sale contract. However, allowance has to be made for the fact that this price was struck some five years earlier pursuant to the 1997 option agreement, and the fact that market conditions for development of residential properties were heated at the acquisition date. HISTORY OF THE PROCEEDINGS 15 The proceedings have had a remarkably long and active history, journeying thrice to the Court of Appeal and once to the High Court. 16 Initially, Walker contended that the market value of its interest was $81 million. Talbot J determined market value at $60 million on the basis that under s 56(1)(a) the Land should be taken to be zoned residential: Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2004] NSWLEC 315, 134 LGERA 195 (LEC 1). The resulting market value compensation was that amount less Walker's purchase price of $16.5 million, that is, $43.5 million. The main steps in his Honour's reasoning were that the Council would have rezoned the Land residential had it not been of the view that the Land would ultimately be rezoned open space; the rezoning of the land as industrial was a step in the resumption process; therefore, pursuant to s 56(1)(a), the industrial zoning should be ignored and the Land should be taken to be zoned residential. 17 His Honour then separately determined the quantum of disturbance loss at $55,138.50: Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2004] NSWLEC 535, 136 LGERA 164 (disturbance judgment). There was no appeal from that decision. 18 The Authority appealed successfully against LEC 1: Sydney Harbour Foreshore Authority v Walker Corporation Pty Ltd [2005] NSWCA 251, 63 NSWLR 407 (CA 1) (Beazley, Basten and Stein JJA). Basten JA delivered the leading judgment. The Court of Appeal held that Talbot J had erred in law, set aside his orders and remitted the matter to this Court to be dealt with according to law. This Court was required to make findings as to what a hypothetical buyer and seller would have assessed as the chance of the Land being rezoned residential as at the acquisition date. The Court of Appeal identified the following errors in LEC 1: (a) it was an error to start with the assumption that the Land had in fact been rezoned residential: at [77], [86]; (b) where the effect to be disregarded is the failure to change an existing zoning, rather than the imposition of a zoning consistent with the public purpose, the market value is likely to depend upon an assessment of the prospect of rezoning: in most cases it will be inappropriate to treat the land as having been rezoned on the basis that this would have happened on the probabilities: at [83]; (c) it is far from clear that s 56(1) operates so as to require a failure to act to be disregarded. It was an error to assume that the opposite of industrial zoning was the appropriate basis for valuation: at [87], [88]. 19 On the remitter, Talbot J again assessed market value at $60 million on the basis that the chance that the Land would be zoned residential was 100 per cent: Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2006] NSWLEC 138 (LEC 2). 20 The Authority appealed successfully against the decision in LEC 2: Sydney Harbour Foreshore Authority v Walker Corporation Pty Ltd [No 2] [2006] NSWCA 386, 68 NSWLR 487 (CA 2) (Handley, Beazley and Basten JJA). The Court of Appeal in a joint judgment again found that his Honour had erred in law, set aside his orders and remitted the matter to this Court "for the market value of the land to be reassessed on the basis of the zoning which existed at the date of acquisition. The Court may also need to consider separate bases for valuation sought to be relied on by [Walker] and not yet addressed": at [65]. The Court of Appeal held: (a) to apply the market value in the chapeau to s 56(1), one must first identify relevant characteristics of the land. The critical characteristic in the present case is the industrial zoning, which imposes a legal constraint on possible development and hence market value: at [11]; (b) the critical question under s 56(1)(a) is whether the imposition or retention of the industrial zoning was part of the carrying out of the public purpose or part of the proposal to carry out the public purpose for which the Land was acquired: at [58] – [60]; (c) the Council, together with others, were actively involved in seeking to achieve the dedication of the Land as open public space. However, at a time when the State was unequivocally opposed to the idea, it is not possible, as a matter of law, to characterise the lobbying effort as part of the proposal to carry out the public purpose for which the Land was acquired: at [40]; (d) the precondition to notionally setting aside the zoning in place at the acquisition date under s 56(1)(a) is a determination that imposition or retention of that zoning was part of the carrying out of the public purpose or part of the proposal to carry out the public purpose for which the land was acquired. The precondition was not established. Talbot J erred in law in proceeding on the basis that the industrial zoning could notionally be set aside and a residential zoning substituted. His Honour's conclusion revealed an erroneous construction of s 56(1)(a): at [61], [64]. 21 Walker appealed unsuccessfully to the High Court against both CA 1 and CA 2: Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2008] HCA 5, 233 CLR 259 (HCA). Dismissing the appeals, the High Court said that this "still leaves standing the remitter order made by the Court of Appeal on the second appeal": at [8]. The High Court upheld the decision in CA 2 that "the proposal" to carry out the public purpose for the acquired Land was that of the Authority and not that of the Council or some aggregation over time of the policies of the Council and the State government: at [53] – [54]. 22 Before the third hearing in this Court commenced, I decided claims of client legal privilege over certain documents: Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2008] NSWLEC 247, 161 LGERA 86. I also declined to grant leave to Walker to make certain amendments and call certain further evidence: Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority Pty Ltd [2008] NSWLEC 282. Walker's appeal against the latter interlocutory decision was dismissed by the Court of Appeal: Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2009] NSWCA 178, 168 LGERA 1. THE STATUTORY SCHEME 23 The first object of the Just Terms Act, in s 3(1)(a), contains a guarantee: " 3 Objects of Act (1) The objects of this Act are: (a) to guarantee that, when land affected by a proposal for acquisition by an authority of the State is eventually acquired, the amount of compensation will be not less than the market value of the land (unaffected by the proposal) at the date of acquisition…" 24 Compensation has to be determined in accordance with ss 54, 55 and 56, which relevantly provide: " 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. 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, … (d) any loss attributable to disturbance, 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." 25 Because of the guarantee in s 3(1)(a), which is reiterated in s 10(1), the acquiring authority must pay at least the market value of the acquired land unaffected by the proposal: AMP Capital Investors Ltd v Transport Infrastructure Development Corporation [2008] NSWCA 325, 163 LGERA 245 at [63] and [72] per Hodgson JA; Leichhardt Council v Roads and Traffic Authority (NSW) [2006] NSWCA 353, 149 LGERA 439 at [41] per Spigelman CJ; Commonwealth Custodial Services Ltd v Valuer General [2007] NSWCA 365, 156 LGERA 186 at [4] – [5] per Spigelman CJ; Smith v Roads and Traffic Authority (NSW) [2005] NSWLEC 438 at [65] per McClellan J; McDonald v Roads and Traffic Authority (NSW) [2009] NSWLEC 105 at [14] per myself. 26 There is a curious shift in language between ss 3(1)(a) and 10(1) ("a proposal for acquisition") and s 56(1)(a) ("the proposal to carry out the public purpose for which the land was acquired"). The Court of Appeal criticised the primary judge for repeatedly referring to "the proposal to acquire the land" instead of focusing on the language of s 56(1)(a): CA 2 at [33]. 27 The statutory definition of market value in the chapeau to s 56(1) reflects the classic test of market value in Spencer v The Commonwealth (1907) 5 CLR 418, while s 56(1)(a) reflects the principle in Pointe Gourde Quarrying and Transport Co Ltd v Sub-Intendent of Crown Lands [1947] AC 565. However, it is the terms of the legislation that are determinative: HCA at [47], CA 2 at [10]. The High Court said in HCA at [51] (omitting citations): "The opening words of the definition in s 56(1) (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) reflect what for a century has been taken from Spencer v The Commonwealth . That case arose under the tersely expressed provisions of the first federal legislation in the field, the Property for Public Purposes Acquisition Act 1901 Cth. Section 19(1) thereof spoke merely of 'the value of the land taken'. The result of the judicial exegesis in Spencer was summed up by McHugh J in Kenny & Good Pty Ltd v MGICA (1992) Ltd as follows: 'Value is determined by forming an opinion as to what a willing purchaser will pay and a not unwilling vendor will receive for the property. In determining that value, there must be attributed to the parties a knowledge of all matters that affect its value. Those matters will include the predicted impact of future events as well as the experience of the past and the rates of return on other investments. As Isaacs J pointed out in Spencer v The Commonwealth : 'We must further suppose both to be perfectly acquainted with the land, and cognisant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property. (Emphasis added.)' The market for the property is, therefore, assumed to be an efficient market in which buyers and sellers have access to all currently available information that affects the property." 28 It has become conventional to say that resumed land is to be valued according to its "highest and best use", although I do not think that "highest" adds anything to "best": cf Turner v Minister of Public Instruction (1955 - 1956) 95 CLR 245 at 274, 282 ("best use"); Spicer v Valuer-General (1963) 10 LGRA 319 at 320 ("best or most profitable potential use"), cited in Trust Company of Australia Ltd v Valuer General [2007] NSWCA 181, 154 LGERA 437 at [32] ("highest and best use"); Boland v Yates Property Corp Pty Ltd [1999] HCA 64, 74 ALJR 209 at [271] ("highest and best use"). VALUATION APPROACHES 29 As usual in this jurisdiction, there is a great range in the values reached by the expert valuation witnesses, largely because of the different assumptions upon which they relied. 30 Walker invokes the familiar general principle that in determining compensation to a dispossessed owner doubts should be resolved "in favour of a more liberal estimate": Commissioner of Succession Duties (SA) v Executor Trustee and Agency Co of South Australia Ltd (1947) 74 CLR 358 at 374. The general principle should be understood in the way recently explained in Sydney Water Corporation v Caruso [2009] NSWCA 391 at [3] – [4]: "3 The general principle that in determining compensation to a dispossessed owner doubts should be resolved in favour of a more liberal estimate is well-known… 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. That process is not to be abandoned..." 31 Walker and its valuers, as well as the Authority's valuer at the LEC 1 hearing, adopted the "top down" valuation methodology whereby the Land was valued as though its potential residential use was certain and then, if appropriate, a deduction made for any risk that that potential would not occur. 32 The Authority submits that I should adopt, as did its valuer at the LEC 2 hearing, a "bottom up" valuation methodology whereby the Land is valued on the basis of its actual industrial zoning and a premium added for any chance of residential use. However, the Authority acknowledges that it is open to me as the judicial valuer to adopt a top down valuation and makes submissions as to top down value in the SEPP 5 scenario. 33 The convenient descriptions "bottom up" and "top down" were coined in Sandhurst Trustees Ltd v Roads and Traffic Authority of NSW [2006] NSWLEC 243 at [74] – [75], followed in Maidment v Roads and Traffic Authority (NSW) [2006] NSWLEC 606, 153 LGERA 249 at [51] (both my decisions). In Sandhurst at [74] – [85] I reviewed the authorities relating to the two methodologies and observed that the choice between them depended on the circumstances. It is convenient to substantially repeat that review, as follows. 34 In Royal Sydney Golf Club v Federal Commissioner of Taxation (1954 - 1957) 97 CLR 379, the court was required, for the purpose of assessing land tax, to consider the unimproved value of land held by the golf club at Rose Bay, which was reserved for the purposes of parks and recreation areas under a planning ordinance. Consequently, residential development was prohibited. The owner of land restricted in this way could require the council to acquire the land. As the council had no funds to do so, the prohibition was suspended, allowing interim development to be carried out with the permission of the council. It was contrary to the council's policy to grant such permission, except in respect of very small areas of land. In the circumstances, Kitto J adopted the bottom up methodology as follows, at 391 (in a passage quoted in CA 1 at [45]): "In the result my opinion is that a notional intending vendor and purchaser, treating about the appellant's land on 30th June 1951, and fully informed as to all relevant considerations, would have proceeded, in discussing price, on the footing that there was only a slender chance that it would ever become permissible to use any part of the land for other than recreational purposes. For that reason, I do not think that a method of valuation can be supported which aims first to ascertain what value the land would have had on the relevant date if it had been free from the restrictions of the Ordinance, and then to fix upon a deduction to be made from that value in order to reflect the depressive effect of the restrictions. That may be an acceptable method of allowing for restrictions which operate merely for a limited period; but it is not with restrictions of that kind that this case is concerned. I think the proper course is to inquire first what was the value of the land on the footing that there was no possibility of its ever being turned to other than recreational purposes, and then how much extra should be allowed for such chance as there was of securing permission for residential use at some future time." 35 In applying the bottom up methodology, Kitto J assessed value by reference to the land's then current zoning, and added a premium of five percent for increased value referable to the slender chance that approval might be obtained for a higher residential use. His Honour observed that quantification of that chance at a five per cent increase was necessarily a matter of guesswork, at 395: "How much should be allowed under that head is necessarily a matter of guesswork, for the hypothetical vendor and purchaser would have to engage in sheer speculation... I think they would more probably agree on the addition to the amount otherwise arrived at of a percentage of that amount. From what I have said it will be apparent that I regard the chance to be allowed for as one which negotiating parties would acknowledge but would not treat as more than a very speculative item in their deliberations. I think an increase of five percent is as near to the mark as one can get." 36 In Redeam Pty Ltd v South Australian Land Commission (1977) 17 SASR 508 the top down methodology was considered. Jacobs J held that there was uncertainty in realising the development potential of compulsorily acquired land even though a proposed plan of subdivision had been approved by council and conditionally approved by the public authorities responsible for the provision of services. All that stood in the way of development of the land for residential purposes was rezoning (at 516). His Honour held, at 512: "I have dealt at length and in detail with a description of the subject land and its potential for future subdivision, but the parties and their expert valuers now agree that, for the purposes of valuation, the land should not be regarded as ripe and ready for subdivision at the date of acquisition, or within a short predictable time thereafter, and that it would not be correct to attempt to ascertain the value of the land upon the basis of its value in hypothetical subdivision. The rejection of that method of valuation in the circumstances of this case, is plainly correct. The fact of the matter is that the land is still zoned as Rural A, and it would defeat the whole scheme and tenor of the Metropolitan Development Plan and the Zoning Regulations if such land were to be regarded as capable of being brought into residential subdivision while it remained so zoned ... The hypothetical subdivision of the land lies in the future with all the uncertainty that the future holds." 37 In Port Macquarie West Bowling Club Ltd v The Minister [1972] 2 NSWLR 63 the top down methodology was adopted. The holder of a special lease of land had applied under the Crown Lands Consolidation Act 1913 to convert the land to freehold. The restriction on the land resulting from its open space zoning was unlikely to remain in force for long. It was held to be appropriate to value the land on the basis of a virtually unrestricted zoning and then make deductions for the current zoning restriction and the possibility of a relaxation of that restriction. 38 There is a spectrum or notional scale along which land subject to development restrictions may be placed in order to decide whether the bottom up or top down valuation methodology is appropriate. The notional scale was described in Wattle Park Pty Ltd v Commissioner of Highways (1973) 6 SASR 69 at 94 – 95 by Wells J: "It seems to me that the cases in which the land to be valued is subject to restrictions may be ranged along a notional scale within which they differ from one another in degree. At the lower end of the scale, there would appear the sort of restrictions exemplified by those in the Royal Sydney Golf Club case, which are so far reaching and so securely entrenched in the structure of the relevant parts of our law, that the possibility of relaxation, although it exists, is remote. At the upper end of the scale, one would find the sort of restrictions that Else-Mitchell J was concerned with [in] the Port Macquarie West Bowling Club Case which, either because they are obviously intended to be temporary, or because, in the circumstances, they are unlikely to remain in force for long, may soon be relaxed, in whole or in part. Where land that is to be valued is subject to restrictions of the kind appearing towards the lower end, a reliable starting point for the valuer will probably be found in the value of the subject land in its unrestricted [sic] state and adjustment can then be made, with some reasonable assurance, to allow for the chances of relaxation. In such a case, the possibilities of error or of disagreement would be much greater if the land were first valued in its unrestricted state, and allowances were made in respect of the figure so arrived at. The situation, to my mind, would be far otherwise if the restrictions were more like those ranged at the upper end. There the restrictions would have a far less secure lodgement in the relevant law, and the possibilities of error or of disagreement would be greatly reduced by initially arriving at a value for the land in its unrestricted state, and making a deduction in recognition of the restrictions, as qualified by the likelihood of relaxation." The first reference to 'unrestricted' in this passage was, I think, a slip and was intended to be "restricted''. 39 In A Woodbury v Wyong Shire Council [2006] NSWLEC 48 the applicant's valuer adopted the top down methodology. He valued the land on the assumption that a rezoning had taken place and then applied a discount to allow for an anticipated delay in achieving the rezoning. Bignold J held that the bottom up methodology was more appropriate, at [49] - [50]: "...an additional very significant discount for risk would need to be applied to [the applicant's] valuation. But the magnitude of the required discount to cover the risk of the subject land not being rezoned according to Mr Kettle's opinion, is so high - something like 50 percent would, in my judgment, be appropriate - as to undermine the reliability of employing [the applicant's] valuation methodology. However, [the respondent's] valuation methodology of direct comparison with sales of lands situate either within the Town Centre site or within a short distance of the Town Centre site... offers a more reliable basis for valuing the subject land subject to some significant upwards adjustment in favour of the subject land reflecting its higher development potentialities compared with the sales lands by virtue of the subject land's superior location in relation to the new railway station and the proposed bus/train interchange as I have earlier described those additional potentialities of the subject land." 40 In Liverpool City Council v Commonwealth of Australia (1993) 81 LGERA 405 at 421 Wilcox J said: "In a case where the task of assessing compensation comes down to the evaluation of a chance, it will rarely be possible to demonstrate that any particular figure is correct. I certainly cannot do so in this case. I can only consider all the relevant factors and make a judgment about them; a `best guess' perhaps." 41 While accepting that the choice between the bottom up or top down methodologies is mine as the judicial valuer, the Authority suggests that there were indications in CA 1 favouring the bottom up methodology. Reference is made to CA 1 at [79] where it was said that, "if the land had been acquired compulsorily in 1991, it would have been appropriate to assess compensation by reference to the value of the site with its then current industrial zoning, but with an allowance for increased value referable to the prospect that approval might be obtained for residential use. That is the approach adopted by Kitto J in Royal Sydney Golf Club v Federal Commissioner of Taxation (at 391)." The Court of Appeal's comments were made in the context of rejecting a construction of s 56(1)(a) which disregarded the industrial zoning and assumed a residential zoning. The Court of Appeal certainly did not exclude the use of the top down methodology and did not have to consider its use in the SEPP 5 and existing use rights valuation contexts. As Spigelman CJ said in Commonwealth Custodial Services Ltd v Valuer General [2007] NSWCA 365, 156 LGERA 186 at [3]: "There are a number of different ways in which the task of approaching valuation can be undertaken, each of which is perfectly rational. More than one means may be adopted for the purpose of checking the value arrived at by any other means. This Court should be very slow to interpret legislation so as to exclude a rational mode of valuing land, particularly in view of the difficulties that may attend any single mode of valuation". In the present case, the parties accept that it is open to me to adopt the top down methodology and there was valuation evidence on both sides which adopted it. PLANNING HISTORY 42 The planning history of the Land from the 1920's is traced in some detail in LEC 1 at [81] – [105], as well as in CA 2 at [33] – [52]. The main milestones are briefly identified below. 43 In 1951 the Land was zoned "Waterfront Industrial" under the County of Cumberland Planning Scheme Ordinance 1951. In 1979 the Land was zoned "Waterfront Industrial" under the Leichhardt Planning Scheme Ordinance 1979 except for a sliver on its north western boundary that was zoned residential. Leichhardt Local Environmental Plan 2000, made on 22 December 2000, repealed the Ordinance and zoned the Land "Industrial". 44 From 1928, the Land was used as a terminal for distribution of petroleum products. Later and until the early 1990's, the use changed to a lubricants manufacturing facility. Thereafter, it was used for bulk storage of oils and to supply fuel to commercial vessels: LEC 1 [67]. 45 In November 1989, the Land's then owner, Caltex, demonstrated a wish to change the use to a residential use when an application was submitted on its behalf for the Land to be rezoned to permit residential development by the construction of 163 units. In December 1989 the Council resolved to prepare a draft local environmental plan in respect of the Land. In May 1990 the Council resolved to place a moratorium on the residential rezoning of the Land and four other sites on the Balmain Peninsula for which rezoning applications had been received, to enable the preparation of a comprehensive planning study for the Balmain Peninsula. In June 1990 the Minister for Local Government and Planning issued a statutory direction to the Council requiring it to submit a draft local environmental plan for the five sites. In August 1990 the Council resolved to exhibit a draft local environmental plan and hold a public hearing. 46 In August 1990 the Minister appointed a Planning Administrator to administer all the functions of the Council under the EPA Act within the Balmain Peninsula. The Administrator rescinded the August motion and resolved to exhibit draft local environmental plans. In February 1991 the Court of Appeal ruled invalid the appointment of the Planning Administrator. 47 In March 1991 Commissioners of Inquiry conducted public hearings. The main issues in the Inquiry included land use and land density. The Commissioners' report of July 1991 addressed four draft local environmental plans, one of which related specifically to the Land. The report's recommendations included recommendations in relation to the Land for residential development by the construction of 138 units of 150 m2 each, with a floor space ratio of 0.8:1. 48 A statutory direction required the Council to submit the draft local environmental plan for the Land to the Department of Planning in September 1991. In November 1991 the Council decided not to adopt the draft local environmental plan for the Land and to reject State intervention into its affairs. In December 1991 the Council resolved to seek government funding to acquire the Land. On 6 February 1992 a Mayoral minute stated that council's first priority for the Land was that it should all be open space and that letters to the Commonwealth and State governments seeking funds to acquire the site remained unanswered. 49 There followed two unsuccessful attempts by the State government to make regional environmental plans under which the Minister became the consent authority and the Land was zoned residential. Both plans were declared invalid by the Court of Appeal. The first plan was made and declared invalid in 1992. The second plan was made in 1993 and declared invalid in 1995. 50 Meanwhile, in October 1992 the Council resolved to advise the Minister in the strongest possible terms that the current development application for 157 dwellings at Ballast Point was contrary to the Council's clearly stated position that it be purchased for inclusion in the Sydney Harbour National Park and for open space. 51 In 1995 Caltex obtained development consent from the Minister for the construction of 134 medium density dwellings with an FSR of 0.803:1 but it was rendered nugatory when the Court of Appeal subsequently declared the second regional environmental plan invalid. 52 Between 1995 and 1998 local environmental plans were made in respect of the other former industrial sites the subject of the Commissioners of Inquiry report. 53 In 1996 the Council wrote to the Prime Minister seeking funding support towards the purchase of the Land as part of Sydney Harbour National Park. 54 In 1998 a report by Council planners commented that given the different viewpoints of stakeholders, the Land should retain its industrial zoning. 55 On 21 August 1998 State Environmental Planning Policy No 56 – Sydney Harbour Foreshores and Tributaries (SEPP 56) was gazetted. Its aims include coordinating the planning and development of the foreshores of Sydney Harbour and its tributaries by establishing a clear set of guiding principles for the development of all land on those parts of the foreshores to which the policy applied, by requiring the preparation of master plans for strategic foreshore sites to ensure that the guiding principles are met, and by establishing clear consultation procedures for the planning and development of all strategic foreshore sites: cl 2. Those sites are identified in Schedules 1 and 2. Except with the approval of the Minister, development consent can only be granted if there is a master plan for the land, the consent authority has taken the master plan into consideration and the development is consistent with the master plan: cll 11, 14. The Minister is the appropriate authority for adoption of a master plan for land in Schedule 1 and the relevant council is the appropriate authority for Schedule 2 land: cl 21. The guiding principles require all decisions made in the administration of the EPA Act or an instrument under the EPA Act relating to the planning and development of land to which the policy applies to take into consideration (among other things) increasing public access to, and use of, land on the foreshore: cl 7. The Land was originally listed in Schedule 2 as a site of strategic significance. There it remained until 19 February 2002 when it was listed in Schedule 1. 56 In December 1998 the Department of Urban Affairs and Planning and the Council agreed on a co-ordinated approach to the preparation of a master plan. However the Council re-iterated its position to support retention of the industrial uses on the Land until such time as it became available for open space, a position maintained throughout 1999 while the master plan was being prepared. The Department identified the master planning process as involving an assessment of the land use potential of the Land and alternative land use options. 57 The Minister issued a "Sydney Harbour Regional Action Plan". It identified "priority projects", one of which was the Land. It required a "framework plan" for each site. By September 2000 the Department had developed a draft framework plan for the Land. It was non-committal as to the Land's future land uses and development opportunities, except to say that any proposals should comprise a significant element of public open space and that an element should be retained for harbour uses to best utilise existing infrastructure. The plan noted that enabling development "could include a variety of uses, including industrial, business and/or residential". 58 In a submission to the Minister for Urban Affairs and Planning on 18 October 2000 the Authority sought to have the Land incorporated within its area boundary by transferring it to Schedule 1 of SEPP 56, thereby making it a site of State significance and replacing the Council with the Minister as consent authority. 59 As stated earlier, on 22 December 2000 LEP 2000 was made. CHARACTERISTICS OF THE LAND 60 In order to apply the well-understood principle of market value encapsulated in the chapeau to s 56(1), the relevant characteristics of the Land must be identified. 61 The Land is in an excellent harbour-front location and has fairly been described as a trophy site. A critical characteristic is the industrial zoning which imposed a legal constraint on possible development and hence market value: CA 2 at [11]. Other characteristics and constraints were listed in LEC 1 at [137] – [138]. Some of the supplementary comments offered by the Authority may be accepted as relevant considerations, as follows: (a) any development proposal would have to substantially landscape the edges of the Land and carry through to the plateau; (b) the importance of views from the waterway is primarily established by SEPP 56. New buildings might be required not to diminish the predominant character of natural landscape. It is likely that fingers of greenery would be required between buildings; (c) development should not be out of context with development on the adjoining residential lands; (d) there was an existing tree canopy on the plateau under which building form might be required to be located; (e) the council's foreshore building line was about 10 metres under LEP 2000 but some of the Authority's experts considered that a foreshore building line in the order of 20 to 30 metres would be required having regard to the context of the site and adjoining residential development; (f) any development would be required to ensure public access to the foreshore area; (g) any development would have to provide for a significant degree of open space; (h) the intervention into the sandstone form are significant heritage legacies which form a reminder of the previous activity that occurred on the site and therefore might have to be incorporated into any design; (i) the provision of view corridors from within the site were likely to be required as part of any development; (j) as a site identified as being of strategic importance in Schedule 2 of SEPP 56, any development application would be addressed by the Sydney Harbour Design Review Panel; (k) there was a history and intensity of local opposition to redevelopment of the Land for anything other than open space; (l) consideration of a development application should take into account the development form on the other four sites the subject of the Commissioners of Inquiry report. Common to both Walker's and the Authority's planning witnesses' evidence was an aversion to the densities, built form and location of the built form of these developments; (m) the need for an internal access road; (n) topography was relevant in terms of the degree of excavation required for the provision of basement parking commensurate with the intensity of development; (o) the orientation of the promontory in terms of solar access was relevant to whether residences would be permissible on the southern portion of the Land, beneath the cliffs, where solar access is poor; (p) traffic generation associated with the level of development should take into account that in the surrounding road network many of the streets are narrow . SEPP 5 VALUE 62 Walker's primary case is its SEPP 5 case that the hypothetical buyer and seller at the acquisition date would have considered that: (a) it was certain that SEPP 5 applied to the Land; (b) it was certain that Council consent would be obtained for a SEPP 5 development; (c) on a top down approach, a yield risk discount of 27.5 per cent should be applied to a yield of 138 residential units at the valuers' agreed rate of $600,000 per unit, as adopted in LEC 1 at [147], resulting in a market value of $60 million. 63 The Authority takes a very different position on all points, contending that the hypothetical buyer and seller at the acquisition date would have considered that: (a) there was only a slender chance that SEPP 5 applied to the Land; (b) consent could not have been, or it was extremely unlikely to have been, granted to a SEPP 5 development on the Land having regard to its provisions; (c) consequently, no value can be given for a potential SEPP 5 development; (d) on a top down approach, a risk discount of 40 per cent propounded by the authority's valuer Mr Wood should be applied to the yield of 40 units propounded by the Authority's planner Mr Shiels, at the agreed rate of $700,000 per unit site, to arrive at a value of $11,300,000. This calculation is understated because Mr Wood erroneously reduced this valuation by $5,500,000 for remediation; (e) alternatively, on a top down approach a risk discount of 40 per cent propounded by the Authority's valuer Mr Woods should be applied to a yield of 83 units, being the yield proposed in Walker's 2001 SEPP 5 development application, at the agreed rate of $600,000 per unit, resulting in a value of $30 million. Whether SEPP 5 applied to the Land 64 SEPP 5 commenced in 1998. If SEPP 5 is inconsistent with any other environmental planning instrument, it prevails to the extent of the inconsistency: cl 5. 65 One of SEPP 5's three aims, which Walker emphasises, is to "increase the supply and diversity of housing that meets the needs of older people or people with a disability": cl 3(1)(a). Consistently with that aim, the objective of Part 2 (cll 9 – 19) of SEPP 5, entitled "Development Criteria", "is to create opportunities for the development of housing that is located and designed in a manner particularly suited to both those older people who are independent, mobile and active as well as those who are frailer, and other people with a disability regardless of their age": cl 9. Another aim of SEPP 5, emphasised by the Authority, is to "make efficient use of existing infrastructure and services": cl 3(1)(b). The relevant "existing infrastructure" in this case is public transport, as discussed below. 66 Clause 4 is at the heart of the argument as to whether SEPP 5 applied to the Land. The land to which SEPP 5 applies is described in cl 4 by reference to two criteria, both of which must be satisfied: "4(1) This policy applies to land within New South Wales: (a) that is zoned primarily for urban purposes, or that adjoins land zoned primarily for urban purposes; and (b) on which development for the purpose of any of the following is permitted: (i) dwelling-houses, (ii) residential flat buildings, (iii) hospitals, (iv) development of a kind identified in respect of land zoned for special uses including (but not limited to) churches, convents, educational establishments, schools and seminaries." 67 It is common ground that the Land and adjoining land were zoned primarily for urban purposes. The criterion in cl 4(1)(a) was therefore satisfied. 68 There is an issue as to whether the cl 4(1)(b) criterion was satisfied, which turns on the construction of cl 4(1)(b)(iv). Under LEP 2000, "educational establishments" were permissible with development consent in the Industrial Zone in which the Land was located. "Educational establishments" were also permissible in the Public Purpose Zone and the Residential Zone (as was "SEPP 5 housing"). The only other zones in LEP 2000 were the Business Zone and the Open Space Zone. For reasons that will become apparent, it is relevant to note that, unusually, there was no zone called Special Uses Zone in LEP 2000. 69 As educational establishments were permissible with development consent on the Land at the acquisition date, Walker submits that the hypothetical buyer and seller would be in no doubt that the criterion in cl 4(1)(b)(iv) of SEPP 5 was satisfied because: (a) of the construction of cl 4(1)(b)(iv) adopted before the acquisition date in Q & R Developments Pty Ltd v Sutherland Shire Council [2001] NSWLEC 250, 117 LGERA 438 at [27] – [32] (Pearlman J), later approved in DEM (Aust) Pty Ltd v Pittwater Council [2004] NSWCA 434, 136 LGERA 187 at [50] (per McColl JA); (b) acting prudently, they would have obtained advice from a planner as to whether SEPP 5 applied and Walker's planners, Professor Lyneham and Mr Ingham, did not think it was questionable; (c) acting prudently, they may have obtained legal advice, such as the opinion (in evidence) from eminent senior counsel in July 2001 (shortly before Q & R Developments was decided) that SEPP 5 did apply to the Land. 70 The Authority submits that the hypothetical buyer and seller, properly advised, would consider that there was only a slender chance that SEPP 5 applied to the Land, such that that potential would attract no significant additional value, for the following reasons: (a) cl 4(1)(b)(iv) is not satisfied because the Land was not zoned "Special Uses" in which educational establishments are identified as permitted. The only zones in LEP 2000 are Residential, Business, Industrial, Open Space and Public Purpose; (b) Q & R Developments was wrongly decided and ought not to be followed; (c) in any case, Q & R Developments is distinguishable because the Court there held that cl 4(1)(b)(iv) applies if development of the kind specified therein is identified as permissible in respect of land zoned special uses under the relevant instrument and is also development of a kind permissible in the particular zone in question. In the case of the Land, the first of those two conditions is not satisfied; (d) DEM does not alter the Authority's submission because not only was it decided after the acquisition date, it was concerned with cl 4(1)(b)(i) of SEPP 5; (e) senior counsel's advice in evidence to the effect that SEPP 5 applied to the Land was based on a mistaken assumption (based on his instructions) that educational establishments were identified as permissible in land zoned special uses, because LEP 2000 had no special uses zone; (f) the Authority's planner Mr Shiels would have advised the hypothetical parties that SEPP 5 did not apply to the Land. (g) Walker's own development application in November 2001 evidenced uncertainty as to the application of SEPP 5 to the Land because it described the proposed development as "residential development including but not limited to SEPP 5 housing" and its subsequent class 4 application sought a declaration as to existing use rights but did not refer to SEPP 5. 71 The Authority's submission that cl 4(1)(b)(iv) is not satisfied draws strength from the fact that it had been amended in 2000, shortly before the acquisition date. In its previous form it did not refer to zoning and was in the following terms: "(iv) Special uses including churches, convents, educational establishments, schools and seminaries." 72 In its amended form, para (iv) refers to zoning "development of a kind identified in respect of land zoned for special uses, including (but not limited to) …educational establishments". This is in contrast to the criteria in (b)(i), (ii) and (iii) which simply refer (without reference to zoning) to "dwelling houses", "residential flat buildings" and "hospitals". Therefore, the Authority argues, the intent was to introduce a zoning criterion; and since LEP 2000 has no Special Uses Zone, the criterion in cl 4(1)(b)(iv) could not be satisfied so far as the Land was concerned. 73 In Q & R Developments, which was not concerned with the Land, Pearlman J decided the construction of cl 4(1)(b)(iv) differently from that proposed by the Authority. Her Honour held that if development in cl 4(1)(b)(iv) is identified as permissible in respect of land zoned special uses under the relevant instrument, and is also development of a kind which is permissible in the particular zone in question, then the land falls within the description of land to which SEPP 5 applies: at [29]. Her Honour said that the whole matter (that is, the question of construction) was not free from doubt: at [30]. Although her Honour's decision on this point was obiter, it was fully reasoned, as follows: "[27] Mr Cole submitted that cl 4(1)(b)(iv) of the 2000 SEPP 5 is confined to land which is actually zoned for special uses. That follows, he submitted, from the language used, and by contrast with the language of the previous cl 4(1)(b)(iv) in the 1998 SEPP 5. The amendment made by Amendment No 1 was intended to limit the permissibility of SEPP 5 development. Mr Cole drew support for his submission from the explanatory notes, item 1 of which contains the following statement: 'The land to which SEPP 5 applies is set out in clause 4. Under the new clause 4(1)(b)(iv), SEPP 5 may apply on land zoned for special uses, including such land where development for the purposes of churches, convents, educational establishments, schools and seminaries are permitted.' [28] Mr Cole further submitted that the construction which he put forward is consistent with general planning principles. It is obvious, in his submission, that SEPP 5 would be appropriate in terms of both the physical environment and strategic land use control where that development is located on land zoned for special uses for churches, convents, educational establishments, schools and seminaries. Such a construction avoids the ambiguous position that SEPP 5 development might be permissible simply because, for example, development for the purpose of a church might be a permissible use in a zone. [29] Mr Hemmings rejected that approach. He focussed on the language of the whole of cl 4(1), and pointed to the fact that, whilst subcl (a) is expressly concerned with zoning, subcl (b) is concerned with permissible development of specified kinds. The proper approach, in his submission, is to have regard to the permissibility of kinds of development in land zoned for special uses under the relevant instrument. If development of the kind specified (churches, convents etc) is identified as permissible in respect of land zoned special uses under the relevant instrument, and is also development of a kind which is permissible in the particular zone in question, then the land falls within the description of land to which SEPP 5 applies. Thus, under LEP 1993, development for the purpose of, for example, churches, is permissible under the special uses zone as being a purpose indicated by lettering on the zoning map. Development for the purpose of churches is therefore development of a kind identified in respect of land zoned for special uses and it is development which is permissible in the 4(a) General Industrial zone. Therefore, the site is amenable to SEPP 5 development, because it is land within New South Wales on which development for one of the specified purposes is permitted. [30] This whole matter is not free from doubt . The language of cl 4(1)(b) is tortuous and leaves a lot to be desired. After anxious consideration, I have concluded that the submission of Mr Hemmings is correct. The construction which he proffered is based on the language used, and in particular, the reference in subcl (b) to 'purpose' which is 'permitted' being 'development of a kind'. The reference point is land zoned special uses, but the determinative factor is the permissibility of development for specified purposes. According to cl 4(1)(b), the land to which SEPP 5 applies is land on which development for certain specified purposes is permitted. Those purposes are dwelling-houses, residential flat buildings, hospitals, and development for purposes of a kind identified in respect of land zoned for special uses, including churches, convents etc. If, on the land in question (here, the site) development for any of those purposes is permitted, it is land to which SEPP 5 applies. [31] The scope and purpose of SEPP 5 does not, in my opinion, require a different conclusion. Clause 4 is concerned with land to which SEPP 5 may apply, that is, land upon which SEPP 5 development may be carried out. Whether it is appropriate to be carried out on that land, however, depends upon the application of the other provisions of SEPP 5 which include development criteria and design standards. The policy of providing housing for older people and people with a disability is met if land is available in accordance with the requirements in cl 4 and the other criteria and standards are satisfied. That seems to me to meet the objective, stated in cl 3(1)(a) of SEPP 5, of encouraging the provision of housing that will 'increase the supply and diversity of housing that meets the needs of older people or people with a disability ...'. [32] The explanatory notes only serve to reinforce the doubts. On the face of it, they seem to indicate that subcl (b)(iv) is confined to land zoned for special uses, but that, in my opinion, ignores the language used. As Mr Hemmings submitted, the explanatory notes may merely be widening the ambit of land to which SEPP 5 applies by including land which is zoned special uses as well as land where specified special uses are permitted. In any event, I do not regard the explanatory notes as determinative; they are merely an aid to construction under s 34 of the Interpretation Act ." (emphasis added) 74 I consider that at the acquisition date the hypothetical parties, properly advised, would have placed considerable reliance on the decision in Q & R Developments, notwithstanding the statement therein that the whole matter is not free from doubt and the possibility that it might not be followed. 75 The Authority submits that even if Q & R Developments were properly decided, the hypothetical parties, properly advised, would regard it as distinguishable because in the present case development of the relevant kind, namely educational establishments, is not also identified as permissible in respect of land zoned for special uses as LEP 2000 did not have a Special Uses zone. The Authority submits that it is critical that the zone in question be called a "Special Uses" zone. 76 I disagree. It is true that, unusually (if not uniquely), LEP 2000 does not have a zone that is called "Special Uses". It is not essential, in my view, that there be a zone actually called "Special Uses". The phrase "special uses" is not a term of art. The question is whether the Public Purpose Zone in LEP 2000 zoned land "for special uses", within the meaning of cl 4(1)(b)(iv) of SEPP 5. Upon consideration of LEP 2000 in its historical context and consideration of the text of cl 4(1)(b)(iv), in my view the question should be answered in the affirmative. 77 LEP 2000 repealed the Leichhardt Planning Scheme Ordinance 1979. The Ordinance had a Special Uses Zone, which was described by reference to a scheme map. There is a large congruence between the land in the Ordinance Special Uses Zone and in the LEP 2000 Public Purpose Zone. The mere change of name does not matter. 78 The Authority nevertheless submits that the uses referred to in the LEP 2000 Public Purpose Zone are not inherently "special" because many of them are also permissible in other zones. I think that this point is neither dispositive nor sufficiently weighty. A number of uses in the Special Uses zone in the Ordinance were similarly permissible in other zones yet the Authority does not suggest they were not special uses. For example, under the Ordinance, educational establishments, hospitals, places of public worship and generating works were permissible in certain Residential Zones but uses answering those general descriptions were also permissible in the Special Uses Zone. 79 The July 2001 opinion of senior counsel referred to in the parties' submissions ([69 (c)] and [70 (e)] above) was that SEPP 5 applied to the Land. The reasoning was consistent with the reasoning in Q & R Developments, decided a few months later. The opinion was expressed in the following terms: "McCross Developments Pty Limited ('the Company') has acquired the old Caltex site at Ballast Point ('the site'). The site is zoned Industrial under Leichhardt Local Environmental Plan 2000 ('the LEP'). Under that zoning various forms of development are permissible with consent including educational establishments. My advice is sought as to whether the site falls within the provisions of clause 4(1) of State Environmental Planning Policy No 5 – Housing for Older People (SEPP5). Relevantly that clause provides as follows: 'This Policy applies to land within New South Wales: (a) that is zoned primarily for urban purposes, or that adjoins land zoned primarily for urban purposes; and (b) on which development for the purpose of any of the following is permitted: (i) … (ii) … (iii) … (iv) development of a kind identified in respect of land zoned for special uses, including (but not limited to) churches, convents, educational establishments, schools and seminaries.' I am instructed that under the LEP there is land zoned for special uses in which development for the purpose of educational establishments is permissible with consent. So far as the provisions of clause 4(1)(a) are concerned, it seems to me that the site fulfils the requirements of that provision. In the first place, I am of the opinion that although zoned Industrial that zoning is one primarily for ' urban purposes '. There is no definition of that expression in the dictionary to SEPP5 and a reference to the word 'urban' in the Macquarie Dictionary 3 rd ed, reveals that it is defined, inter alia, as of, or relating to, or comprising a city or town; living in a city or cities. It is pertinent to note that the requirement of clause 4(1)(a) is not that the relevant land be zoned primarily for residential purposes: on the contrary, it need only be zoned for 'urban' purposes. Given the ordinary meaning of that word, it is clear, in my opinion, that the site is so zoned. In the second place, I am instructed that the land adjoining the site is zoned for residential purposes so that the site would in any event qualify under the second limb of clause 4(1)(a). As to the provisions of clause 4(1)(b)(iv), in my opinion its requirements are also satisfied. The development control table to the special uses zonings under the LEP identify development for the purpose of educational establishments to be permissible use. That use is also permissible within the Industrial zone. Accordingly, it is clear, in my opinion, that this requirement is also satisfied. In summary, therefore, I am of the opinion that (a) the site is zoned primarily for urban purposes; (b) alternatively or in addition, it adjoins land so zoned; (c) development is permitted upon the site of a kind that is identified in respect of land zoned for special uses under the LEP, namely, for educational establishments; (d) accordingly, SEPP5 applies to the site." (emphasis added) 80 The passages I have emphasised in the above quotation suggest that senior counsel may have relied on instructions that "under the LEP there is land zoned for special uses in which development for the purpose of educational establishments is permissible with consent". The Authority submits that the instructions (or senior counsel's assessment if he was not relying on instructions) were incorrect because LEP 2000 contained no Special Uses Zone. In my view, senior counsel's instructions (or his own assessment if he was not relying on instructions) were correct if (as I think is the case) the Public Purpose Zone is regarded as including land zoned for special uses in which development for the purpose of educational establishments is permitted. 81 In my opinion, the prudent hypothetical buyer and seller at the acquisition date, properly advised as to Q & R Developments, would have thought it likely that SEPP 5 applied to the Land, while allowing for some risk that it did not apply having regard to contrary arguments (as raised by the Authority). SEPP 5 development consent 82 Given the history of opposition by the Council, in assessing the chance of obtaining any development consent and the extent of development for which consent could be obtained, the hypothetical buyer and seller at the acquisition date would be likely to regard this Court, on a merits appeal under the EPA Act, as ultimately deciding the fate of a development application. 83 Assuming that SEPP 5 applied to the Land at the acquisition date, the Authority submits that (a) the hypothetical buyer and seller at the acquisition date would have considered that constraints in cll 12 and 25(f) of SEPP 5 presented risks as to whether development consent could be obtained; and (b), at the very least, this consideration means that the value of a SEPP 5 development must be considered to be significantly less than for a residential development. 84 At the acquisition date, cll 12 and 25(f) of SEPP 5 relevantly provided: " 12 Matters for consideration (1) Location, facilities and support services The consent authority must not consent to a development application made pursuant to this Part unless the consent authority is satisfied, by written evidence, that residents of the proposed development will have access that complies with subclause (2) to: (a) shops, banks and other retail and commercial services that residents may reasonably require, and (b) community services and recreation facilities, and (c) the practice of a general medical practitioner. (2) Access complies with this subclause if: (a) the facilities and services referred to in subclause (1) are located at a distance of not more than 400 metres from the site of the proposed development, or (b) there is a transport service available to the residents who will occupy the proposed development: (i) that is located at a distance of not more than 400 metres from the site of the proposed development, and (ii) that will take those residents to a place that is located at a distance of not more than 400 metres from the relevant facilities or services, and (iii) that is available both to and from the proposed development during daylight hours at least once per day from Monday to Friday (both days inclusive). 25 Design of residential development Consent must not be granted for development to which this Part applies unless the consent authority is satisfied that the proposed development demonstrates that adequate regard has been given to the following principles: … (f) Accessibility The proposed development should, where appropriate: (i) have convenient, obvious and safe pedestrian and bicycle links from the site that provide access to public transport services and local facilities, and (ii) provide attractive, yet safe, environments for pedestrians, cyclists and motorists with convenient access and parking for residents and visitors, and (iii) where feasible, involve site layout and design that enables people with a disability to access, on one continuous accessible path of travel, the street frontage, car parking, and all buildings, facilities and open spaces within the site." 85 Clause 12 as it stood at the acquisition date was in different terms from cl 12 when first gazetted, which required a consent authority to consider in relation to access to facilities and services: "whether any relevant facility or service is or will be convenient to residents of the proposed housing in view of the walking distance and availability of public transport to and from the facility". 86 It is significant that by the acquisition date the reference to "public" transport had been deleted from cl 12. 87 The SEPP 5 Guide provided in relation to transport: " Transport Public transport is the preferable means of transport. In country areas that can include a community bus or even taxi service. The service should run at least once a week-day and should be a return service. For larger developments on the urban edge which are: not within walking distance of general facilities and not on a regular bus route a courtesy bus or change in bus routes would meet the access needs of new residents." 88 Clause 12 restricts development consent being granted to a proposed SEPP 5 development unless the consent authority is satisfied that the residents of the proposed development have access to the facilities and support services in clause 12(1)(a), (b) and (c). Clause 12 establishes a development standard. If the standard is not met, consent cannot be granted to the development (unless a State Environmental Planning Policy No 1 objection is made and upheld, where the proponent would have to establish that compliance is unreasonable or unnecessary). 89 Residents will have access if the collection of facilities and support services are within 400 metres of the site or there is a transport service available within 400 metres of the site which will permit access to the collection of facilities and services: cl 12(2). The purpose of the clause is to ensure that aged and disabled people are not isolated by residing at an excessive distance from necessary facilities or transport to those facilities: Georgakis v North Sydney Council [2004] NSWLEC 123, 140 LGERA 379 at [17]. The maximum distance which the standard sets for a resident to be able to achieve independent access is 400 metres. The Land is located well in excess of that maximum distance. It is 1.2 kilometres to the nearest collection of facilities and services referred to in cl 12(1) and over 600 metres to the nearest transport service (a bus stop) by a generally poor quality pedestrian route for aged or disabled persons to negotiate. 90 Therefore the criterion in cl 12(2)(a) was not satisfied. 91 The issue between the parties is whether the alternative criterion in cl 12(2)(b) was satisfied. As the nearest public transport was at a bus stop more than 600 metres from the Land, reliance on public transport would not satisfy cl 12(2)(b). 92 Walker submits, however, that the provision of an on-site bus service operating at least once a day would satisfy cl 12(2)(b). The Authority submits that (a) the provision of an on-site bus service operating at least once a day does not satisfy the objective of cl 12, given that the Land is not in the country or urban fringe (places where the SEPP 5 Guide makes an exception), because it is restrictive on the residents' access to facilities and services; and (b) even though the SEPP 5 Guide is only a guide, it would remain as a hurdle to development consent, which serves to reduce the chance of any consent. 93 Ms Karen O'Donnell, Walker's accessibility expert, prepared a report in support of Walker's 2001 development application for 83 residential units, in which she expressed the opinion that cl 12(2)(b) would be satisfied by the provision of an on-site bus service available at least once per day, to link residents to public transport routes and the local shopping district. At the LEC 1 hearing, Ms O'Donnell expanded on the kind of on-site bus service she would expect for SEPP 5 residential development on the Land. She said it could go all the way to the local shopping centre, take people to their medical appointments and connect them to public transport. She envisaged a return service, possibly providing many more services than once a day. 94 Mr Mark Relf, the Authority's accessibility expert, considered that the prospects of obtaining development consent under SEPP 5 for the Ballast Point Land were poor. Initially, his pessimism, as expressed, seems to have been based mainly on two matters: (a) the proposition that the provision of an on-site bus service for this location would be inconsistent with the SEPP 5 Guide as the Land is not on the urban edge and therefore would not satisfy the objective of cl 12(2)(b); and (b) a concern that although Walker's November 2001 development application provides a partially accessible outcome in terms of eleven lifts and ramped pathways, the associated plans "do not show, conclusively, that continuous access was possible or would be provided along the northern foreshore line", and hence there is possible non-compliance with clause 25(f) of SEPP 5. 95 Walker submits that no hypothetical prudent purchaser, willing to acquire the Land, would take Mr Relf's concerns seriously. 96 I agree that Mr Relf's cl 25(f) non-compliance point is insubstantial. As he said in cross-examination, it could be met by appropriate design. 97 As regards Mr Relf's other point concerning an on-site bus service, Walker submits, and I accept, that the deletion, before the acquisition date, of any reference to "public" transport in cl 12 promoted greater flexibility when considering the mode of transport, and the SEPP 5 Guide's expressed "preference" for public transport did not preclude other options. 98 As the evidence unfolded in relation to cl 12 in the joint experts report of Ms O'Donnell and Mr Relf and in oral evidence, the focus of Mr Relf's concerns seems to have been that an on-site bus needed to provide a high frequency service the cost of which he thought would be prohibitive, and whether its satisfactory operation could be guaranteed in the long term. 99 There is evidence, which I accept, of on-site bus services working satisfactorily at a number of retirement villages in Sydney suburbs, some of which have been operating for more than 15 years. Mr Relf was concerned that longevity of use was more likely in a retirement village than in a self-care development such as that proposed on the Land, where units were on-sold and that was the end of the developer's involvement. I think that longevity of use would be of concern to a consent authority. 100 In cross-examination, Mr Relf conceded that he had provided support for applications for SEPP 5 developments that had relied upon bus transport to provide access to services. He added that some years ago he had concluded that he should only support on-site bus services for larger developments. It seems to me that the proposed development on the Land, whether the 83 units proposed in Walker's 2001 development application or the 138 units now proposed, is a larger development. 101 An on-site bus service would be unlikely to have the attractions of regularity and cheapness of public transport. It also does not sit comfortably with one of the express aims of SEPP 5, to make efficient use of existing infrastructure and services, in this case public transport. Nevertheless, given the deletion of reference to "public" transport in the amendment to cl 12, the inferior status of the SEPP 5 Guide and the fact that that Guide merely refers to a "preference" for public transport, I conclude that the properly advised hypothetical buyer and seller, at the acquisition date, would regard it as likely that cl 12 could be satisfied by the provision of a suitable on-site bus service, while allowing for some risk that that it could not be and for the risk that the consent authority may take a view of what was suitable that could present difficulties. 102 The Authority submits that other matters affecting the hypothetical parties' perception of the risk of obtaining SEPP 5 development consent are the Land's general site constraints discussed earlier including: (a) the poor quality of pedestrian access on roads in the surrounding area; (b) the steepness of the Land which affects the provision of access to residents; and (c) the significant change in levels between the plateau and the foreshore area which make the foreshore area unsuitable for access by frail, aged residents and disabled residents except via lifts. I accept that these would be relevant considerations in the minds of the hypothetical parties at the acquisition date, as presenting risk in obtaining SEPP 5 consent, particularly in relation to development of the foreshore area. SEPP 5 yield 103 On the erroneous assumption of a residential zoning, in LEC 1 Talbot J concluded that the hypothetical, properly advised buyer would have perceived obstacles which posed a considerable risk that a 138 residential units development may not be achieved. 138 units at the agreed rate of $600,000 per unit produced a value of $82.8 million. After considering the evidence, his Honour quantified the yield risk as a 27.5 per cent discount on that value, resulting in a market value of $60 million, which his Honour described as "the point of equipoise": LEC 1 [123] – [134]. 104 Walker submits that when considering yield, the Court now need only apply that "point of equipoise". I do not accept the submission. Because of the assumed residential zoning basis on which LEC 1 was decided (which was rejected on appeal), it was unnecessary, as Talbot J said, to address SEPP 5 and, accordingly, his Honour did not do so: LEC 1 at [117]. Although his Honour remarked at LEC 1 [117] that the arguments in respect of yield for SEPP 5 and existing use rights are inherently the same as for an assumed residential zoning development, he also commented in his disturbance judgment at [19] that with a SEPP 5 development "there would have been the additional risk of achieving a yield equivalent to the potential recognised, on the basis assumed by me, namely that the Land would have been zoned residential at the date of resumption". His Honour added that: "Reliance upon an existing use to support residential development would have involved a significant risk that would have reduced the risk of compensation": disturbance judgment at [19]. I agree with those comments in the disturbance judgment. In fact, there was clear expert evidence before his Honour supporting the Authority's argument that the yield for a SEPP 5 development would have been lower than for other residential development. 105 It is now necessary for me to decide the SEPP 5 yield issue, as perceived by the hypothetical buyer and seller at the acquisition date. 106 Factors bearing on yield identified in LEC 1 included planning controls, the likely attitude of objectors and council officers, studies and reports in the public arena and the likely approach of relevant government departments, which would have been collated by professional advisers such as planners: LEC 1 [124]. As was said at LEC 1 [125] – [142], the factors included the following: (a) as SEPP 56 applied, the Minister would have taken a pivotal role in the determination of any development application raising significant issues in relation to State government policy of co-ordinating the planning of development on the foreshores of Sydney Harbour; (b) the consent authority would be anxious to constrain the density of the development, having regard to its strategic location, although mindful of State government urban consolidation policy; (c) the purchaser may have received conflicting advice from town planners as to the extent of floor space ratio that would be achieved; (d) there was an issue as to whether the appropriate foreshore building line should demand a setback of up to 30 metres or only 10 metres with a three metre building setback. To accommodate an appropriate setback, extensive landscaping and substantial open space, approximately half the site could be excluded from a developable area for the purpose of structures, although that would allow a more generous floor space ratio on the elevated sections; (e) any consent authority, under pressure from residents, would have given close consideration to density, height and setback of buildings and to limiting the perception of bulk and scale. Access to the Land along a congested and narrow network of streets would have raised issues about the desirable population of the development; (f) a range of matters of concern, identified in evidence by the Sydney Harbour Design Review Panel, would be addressed including maximising public access along the foreshores, greening of the foreshores, ecology of the Harbour, preservation and enhancement of views to and from the Harbour, and high quality, low building design near the foreshore. 107 In contrast to the expert evidence as to the achievable yield for an assumed residential zoning development which ranged between 69 and 138 units, the expert evidence as to the achievable yield for a SEPP 5 development ranged between 40 units (Mr Shiels, the Authority's planner) and 138 units (Walker's planners). 108 The Authority submits that if the chance of a SEPP 5 development consent exists, the SEPP 5 yield parameters relevant to the quantum of the chance are significantly less than for other residential development. The Authority submits that: (a) a yield of 40 units with an average floor area of 150 m 2 should be adopted, as propounded in the statement of Mr Shiels, the Authority's planning expert. Mr Shiels considered that a SEPP 5 development, if permissible, would be restricted to the plateau area. If it were to be assumed that the whole of the Land would be utilised, Mr Shiels considered that the yield would be 69 units averaging 142 m 2 ; (b) alternatively, the 83 units yield in Walker's November 2001 development application should be adopted less a 40 per cent risk discount. 109 Clause 14(b)(i) of SEPP 5 provided that the consent authority must not refuse consent to a development application on the grounds of density and scale if the density and scale of buildings, when expressed as a floor space ratio (FSR), is 0.5:1 or less. LEP 2000 provides for an FSR of 0.7:1. Walker's 2001 development application for a SEPP 5 development was in respect of 83 units of 150 m2 with a FSR of 0.55:1: LEC 1 [127]. The development proposed by Walker in these proceedings is for 138 units of 150 m2 each with a FSR of 0.8:1. This places reliance on the Commissioners of Inquiry 1991 report recommending a floor space ratio of 0.8:1 and 138 units of 150 m2 (albeit calculated on an area of 26,000 m2, which is a little larger than the surveyed area of 25,880 m2 in evidence, on which the parties' valuers agreed). 110 Developments after 1991 when the Commissioners of Inquiry report was delivered, evidence an entrenchment or change of attitudes by 2002 whereby, in my view, reliance by the hypothetical parties on the report's yield recommendation would be unsafe even if the Land were zoned residential. For example, local opposition to redevelopment of the Land for anything other than open space land remained resolute; the other four sites the subject of the Commissioners of Inquiry report were residentially developed after 1991 with an FSR of about 0.8:1, and common to the evidence of the planning witnesses on both sides was an aversion to their densities, built form and the location of the built form; and as the Land was listed in Schedule 2 to SEPP 56, which was gazetted in 1998, any development application would be considered by the Sydney Harbour Design Review Panel. (There is a slip in LEC 1 at [105] that in 2002 it was decided to transfer the site from Schedule 1 to Schedule 2 of SEPP 56; it was actually from Schedule 2 to Schedule 1). The Panel was established to advise the Minister for Planning and the Department on SEPP 56 projects that were of State significance. Its role was to advise on behalf of the larger character of the Harbour. The evidence of its chair, Mr Chris Johnson, was summarised in LEC 1 at [137] – [139] (see also the reference to SEPP 56 at [95]), which I will not repeat. 111 Walker's proposed development, whether for 83 units in its 2001 development application or 138 units in these proceedings, enlivened the consent authority's discretion to refuse consent on the ground of density and scale. Having regard to the history of the extent of local opposition to residential development on the Land since 1991, the Authority submits that the hypothetical parties would have regarded an FSR of 0.8:1 for a SEPP 5 development as presenting a significant risk as to whether it was achievable. I agree, even on the reasonable assumption that there would be a merits appeal to this Court. 112 In the opinion of Walker's planning experts, the SEPP 5 yield was 138 units of 150 m2 each, and there was no difference between a SEPP 5 yield and other residential yield. 113 In the opinion of Mr Shiels, the Authority's planning expert, if an FSR of 0.5:1 were achievable, the SEPP 5 yield was 40 units of 150 m2 each. Mr Shiels considered that only the plateau was suitable for SEPP 5 development and, given the nature of the site and the history of other approvals in the area, a developer would be likely to offer, and a consent authority require, an open space dedication in the vicinity of one third of the Land, which exceeded the council's local infrastructure contributions plan under s 94 of the EPA Act. He considered that the lower part of the Land, beneath the cliffs, was totally unsuitable for SEPP 5 development. He said that gaining access to the lower part would be difficult if not impossible from adjacent streets due to their configuration, the inadequate provision of footpaths and gradients; and that the inclusion of 11 lifts in Walker's 2001 development application highlighted accessibility difficulties. He also thought that a consent authority would require a 20 - 30 metre building line setback. He concluded that only 40 units with average of 150 m2 would be achievable for a SEPP 5 development. 114 Walker makes a number of criticisms of Mr Shiels' evidence: (a) the first criticism is that there was no reason to assume a one third open space dedication. I think there was a reason, namely, that it was about the average of open space dedication on three other sites in the area referred to in the 1991 Commission of Inquiry report and developed for residential purpose (not SEPP 5); (b) the second criticism is that there was no reason to take an FSR of 0.5:1. I think that it may be explained by the fact that cl 14(b)(i) of SEPP 5 adopts 0.5:1 as a standard that a consent authority cannot use as a ground of refusal; (c) the third criticism is that Mr Shiels in oral evidence accepted that development need not be limited to the plateau when he said that on the northern side there is a step plateau and it may be that there is some option for some development in that location. The area he referred to was limited; (d) the fourth criticism is that Mr Shiels used the wrong site area of 24,946 m 2 . During the course of the proceedings the surveyors agreed on a site area of 25,880 m 2 . The difference is not a reason for rejecting all of Mr Shiels' evidence. 115 Clause 25(c) of SEPP 5 provides that the proposed development should, where possible, "ensure adequate daylight to the main living areas of … residents and adequate sunlight to substantial areas of private open space". 116 The Authority's architect, Mr Cooney, who thought that a maximum of 67 units could be achieved, would have advised a prospective purchaser that the Walker 2001 development application for 83 units was unrealistic because a significant number of units are located (a) on the southern foreshore beneath the cliff, which was not usable due to there being difficult access and extremely poor solar access, and (b) on the northern foreshore, given comments received from the Sydney Harbour Review Panel. Because of the steep gradient of much of the Land, cl 13(a)(i) of SEPP 5 applied and directed the consent authority not to consent to a development application unless a specified percentage of dwellings had wheelchair access by a continuous path of travel to an adjoining road or a driveway accessible to all residents. 117 Having regard to such considerations, in my view the properly advised hypothetical buyer and seller at the acquisition date would have considered that there was a significant SEPP 5 yield risk over and above the yield risk for residential development if the Land had been zoned residential, particularly as to the suitability of housing frail, elderly people and disabled people beneath steep cliffs where access to the plateau and residential streets adjoining the plateau was likely to depend upon lifts and where, beneath the southern cliffs, solar access was poor. 118 Mr Shiels considered that Walker's 2001 development application established an upper limit for understanding what Walker may have believed was the reasonable extent of SEPP 5 development on the site. He thought that any SEPP 5 development potential beyond that was entirely speculative. 119 In oral evidence, Mr Dundas, Walker's valuer at the LEC 2 hearing, agreed that the most recent and best evidence by someone in the market with good knowledge of the Land and the prevailing governmental and commercial circumstances was that it produced 83 units for a SEPP 5 development as per Walker's 2001 development application. 120 In my opinion, Walker's 2001 SEPP 5 development application casts light on what was achievable for a SEPP 5 development given its proximity to the Minister's announcement of the proposed acquisition in February 2002 and the fact that it was made by Walker itself on advice. It contrasts markedly with the development proposed by Walker in these proceedings for 138 units in a two, three and four storey development with an FSR of 0.8:1. Walker's 2001 development application was for 83 units of 150 m2 each in two storey buildings and an FSR of 0.55:1. The application said that it was lodged pursuant to the existing rights provisions of the EPA Act and EPA Regulation Part 5, but had been designed to SEPP 5 standards in order to suit the requirement of both residents generally and those over 55. 121 I do not accept Walker's submission that no assistance can be drawn from its November 2001 development application. Walker refers to the evidence of Professor Lyneham, who was involved in the application, that Walker decided to reduce the FSR to 0.5:1 and offer a high level of open space so as to obtain an expeditious determination. If that was the object, the application certainly failed to achieve it. The Council did not consent to the application and Walker thereafter initiated a Class 1 merits appeal to this Court as well as a Class 4 application for a declaration as to existing use rights, both of which became academic upon the Minister's news release in February 2002 and were later discontinued. 122 The difference between 83 and 138 units in Walker's 2001 development application is so large as to cast very considerable doubt over the proposition that 138 units for a SEPP 5 development would have been a realistic maximum in the minds of the hypothetical parties at the acquisition date. The difference is 55 units which (at the valuers' agreed rate of $600,000 per unit site) represents $33 million of value less than Walker's position in these proceedings that 138 units was achievable for a SEPP 5 development. 123 While accepting that 83 units partly reflects the SEPP 5 yield risks that a hypothetical buyer and seller would perceive at the acquisition date, I do not consider that it does so sufficiently. It is realistic to use 83 units as a point from which to sufficiently discount for yield risk as well as for other SEPP 5 risks. I will do this after considering the valuation evidence. SEPP 5 value 124 In my opinion, the hypothetical buyer and seller at the acquisition date would have considered that the Land had potential for SEPP 5 development but, as analysed above, there were significant risks relating to the applicability of SEPP 5, obtaining development consent for a SEPP 5 development, and yield if development consent were obtained. 125 Valuation evidence on both sides approached the assessment of value of the Land with potential for SEPP 5 development on a top down basis and both parties make submissions in support of a top down valuation. 126 The valuers were Mr Egan (at the LEC 1 hearing) and Mr Dundas (at the LEC 2 hearing) for Walker and Mr Wood for the Authority. 127 Mr Egan and Mr Dundas favoured a top down valuation approach on SEPP 5 and all other valuation bases for the Land. For SEPP 5, Mr Wood eventually favoured a top down valuation approach. 128 Mr Wood thought that matters that would cause the hypothetical purchaser concern for SEPP 5 or other residential development included traffic constraints, height restrictions, geotechnical and topographical factors, opposition from local residents, council's attitude and the State government's policy of a working waterfront (he also erroneously referred to remediation). The best evidence of pessimism, he thought, was the 1997 option price, which did not ascribe a value above its industrial value. He did not think the hypothetical parties at the acquisition date in 2002 would place reliance on the 1991 Commissioners of Inquiry report. In his initial report, Mr Wood, after reviewing the evidence of Mr Shiels and Mr Relf, concluded that the prospect of obtaining SEPP development consent was poor and that the hypothetical parties would not have paid a premium beyond the Land's industrial value. In case he was in error and assuming a SEPP 5 development consent could be obtained, he assessed SEPP 5 market value on a top down basis at $16.8 million (after I add back remediation costs he erroneously deducted), calculated on the basis of Mr Shiels' 40 units of 150 m2 each at the valuers' agreed rate of $700,000 each (for that number of units), less a 40 per cent risk discount. 129 However, in a later report prepared in response to Mr Egan's valuation report, Mr Wood said that the Land should be valued on a bottom up basis at its industrial value plus a premium. If the Land were to be valued on the assumed basis that it had a residential zoning (the s 56(1)(a) basis later rejected by the Court of Appeal), he proposed a premium of 100 per cent. 130 Thereafter, in the joint valuation report of Mr Wood and Mr Egan, Mr Wood reverted to a top down valuation for residential development on all alternative yield scenarios. Their respective SEPP 5 valuations for three alternative yield scenarios were calculated as follows (after I add back remediation costs erroneously deducted by Mr Wood): Yield Agreed Rate per unit Risk Discount Value ($ million) 40 units $700,000 Wood 40% Wood 16,800,000 (Shiels) Egan nil Egan 28,000,000 138 units $600,000 Wood 50% Wood 41,400,000 (Lyneham) Egan nil Egan 82,800,000 83 units $600,000 Wood 50% Wood 24,900,000 (Walker 2001 DA) Egan nil Egan 49,800,000 131 The Authority submits that it is open to me to adopt the top down approach and to accept that the proper yield basis is 83 units (the number the subject of Walker's 2001 development application) and that the proper risk discount for the 83 units is 40 per cent. This would result in a market value of $29,880,000, say $30,000,000 (83 x $600,000 = $49,800,000 – 40%). 132 As rezoning is not required for a SEPP 5 development, Walker submits that Mr Wood's top down discount of 40 per cent should be reduced to 15 per cent and his 50 per cent discount to 20 per cent, because in cross-examination at the LEC 1 hearing Mr Wood apportioned his 40 per cent risk discount to 25 percent for rezoning and 15 per cent for development consent, and apportioned his 50 per cent risk discount to 30 per cent for rezoning and 20 per cent for development consent. In cross-examination at the LEC 2 hearing, Mr Wood explained that what he meant by "rezoning" in his earlier evidence was the applicability of SEPP 5 development to the site. Walker submits that the explanation should not be accepted. As rezoning is not required for a SEPP 5 development, Mr Wood got himself into trouble in cross-examination at the LEC 1 hearing and may fairly be criticised for attributing any SEPP 5 risk to rezoning and for not clarifying the situation in his further reports for the LEC 2 hearing. However, it is almost inconceivable that an experienced valuer like Mr Wood would think that rezoning is required for a SEPP 5 development. I am prepared to accept his exculpatory explanation at the LEC 2 hearing. 133 There is some weight in the Authority's criticisms of certain aspects of Mr Egan's evidence at the LEC 1 hearing. First, his nil risk of a SEPP 5 approval seems to have been on the assumption that it had a residential zoning. This appears to confuse SEPP 5 with the s 56(1)(a) disregard leading to a residential development assumption, which was the basis of the erroneous LEC 1 decision. Secondly, he ignored the local animosity to residential development. Mr Wood took it into account. Thirdly, he allowed no risk for obtaining development consent. Fourthly, he did not take into consideration Walker's 2001 development application but conceded that the hypothetical purchaser would have considered it. 134 For the LEC 2 hearing, Mr Wood prepared a further report in which he valued the Land on various bases. His highest valuation was for SEPP 5 development. Because of more stringent development controls, he considered Walker's 2001 development application for 83 units to be a measure of the development potential of the Land under SEPP 5. He assessed the value on the basis of 83 units at $600,000 per unit, which he discounted by 40 per cent for risk (noting Mr Shiels' view that the potential SEPP 5 unit yield was only 40 units) to give a resultant value of $30 million. 135 For the LEC 1 hearing, Mr Wood's general top down approach for the SEPP 5 valuation contrasted with his identical bottom up valuations for, first, industrial use with s 56(1)(a) residential potential and, secondly, industrial use with existing use rights grounding a change to residential use ($15,528,000 + 10% [$1,552,800] = $17,080,000). 136 Mr Wood's SEPP 5 value of $30 million at the LEC 2 hearing (after discounting 40 per cent for risk) included no discount for the time to obtain development consent. The Authority submits that self-evidently there is a need to factor in a discount for that time. That normally would be so but, on the evidence, not in this case. At the LEC 1 hearing Mr Egan had given unchallenged evidence that at the acquisition date the market was so heated that larger developers were not factoring in a discount for time to obtain development consent. Mr Wood did not dispute this and, as I have said, for the LEC 2 hearing then assessed SEPP 5 value at $30 million without discounting for time. In this state of the evidence, I am not satisfied that there should be any discount for time. 137 At the LEC 2 hearing, Walker called Mr Dundas in lieu of Mr Egan to give valuation evidence. On the basis of the evidence of Walker's planners, Professor Lyneham and Mr Ingham, Mr Dundas concluded that there was very little risk in relation to SEPP 5 development. Mr Dundas valued the Land for SEPP 5 on the top down basis of 110 units at $600,000 per unit site, representing a value of $66 million less a discount of 10 per cent for the risk of not achieving that yield, resulting in a valuation of $59,400,000. In adopting a minor risk discount of 10 per cent, Mr Dundas departed from Mr Egan's position of no discount for SEPP 5 risk. 138 There is weight in the Authority's criticism that Mr Dundas' yield of 110 units was too high because it ignored the LEC 1 adoption of a yield risk discount of 27.5 per cent for residential development. His Honour's discount reduced the value to $60 million, representing 100 units (at the agreed value of $600,000 per unit). Mr Dundas reduced yield for risk by only 20 per cent (from 138 units) to 110 units. Mr Dundas explained in oral evidence that his 110 units was arrived at arbitrarily, simply by taking the midway point between the 83 units in Walker's 2001 development application and the 138 units proposed by Walker in the proceedings. 139 The Authority submits that I should attach weight to the 1997 option price for the Land of $16.5 million, which was exercised by Walker in 2002 shortly after the announcement of the acquisition process. There should be taken into account that the price was struck as a future price five years before the acquisition date and that at the acquisition date the residential development market was heated. Nevertheless, the difference between the option price of $16.5 million and the value of $60 million for which Walker contends is so massive as to cast a shadow of doubt over the reality of the latter. 140 In my opinion, the hypothetical buyer and seller at the acquisition date would have seen SEPP 5 based residential development as a far less certain potentiality than the potentiality of residential development based on a residential zoning, which was the erroneous assumption in LEC 1 that founded a market value assessment of $60 million. Talbot J was of the view that a proposal for development pursuant to SEPP 5 would have carried additional risk: disturbance judgment at [19]. I agree. In my view, Walker's proposal that the SEPP 5 market value should also be assessed at $60 million is unrealistic. 141 I have earlier explained that the 83 units in Walker's 2001 SEPP 5 development application is a realistic point from which to discount sufficiently for SEPP 5 risks: at [122] – [123] above. In my judgment, that discount should be one third. The value of the Land at the acquisition date with SEPP 5 potential should then be assessed, in my opinion, on 83 units at the agreed rate of $600,000 per unit which equals $49,800,000, discounted by one third which equals $33,200,000. As the hypothetical buyer and seller would have done at the acquisition date, I round this figure to a market value of $33,500,000. EXISTING USE RIGHTS VALUE 142 I turn to Walker's alternative existing use rights case, which Walker and its valuer value at ten per cent less than its SEPP 5 case. 143 The Land was zoned "Industrial" under LEP 2000. In that zone the use of land for the purpose of a liquid fuel depot is prohibited, as is use for a residential purpose. If, when LEP 2000 was made on 22 December 2000, the Land or part of it was then used for the purpose of a liquid fuel depot, that use was an "existing use" within the meaning of s 106(a) of the EPA Act and could be continued under s 107(1). The rationale is that it is unjust to deprive an owner of the right to use his land for an existing purpose where that purpose has become prohibited: Royal Agricultural Society of New South Wales v Sydney City Council (1987) 61 LGRA 305 at 309. The existing use could be changed, with development consent, to another use including a use that would otherwise be prohibited, such as a residential use: s 108 and cll 41(1)(d) (now radically amended) and 45 of the Environmental Planning and Assessment Regulation 2000. However, nothing under s 107(1) authorises the continuance of a use where that use is abandoned; and a use is presumed to be abandoned, unless the contrary is established, if it ceases to be actually so used for a continuous period of 12 months: s 107(1)(e) and (2). 144 Walker submits that at the acquisition date: (a) Talbot J found that the hypothetical purchaser would have placed considerable reliance on the prospect that existing use rights existed over the whole Land: LEC 1 [75]. On that basis, the task of the Court now is to determine the market value of the Land with potential for residential development based on existing use rights; (b) that market value should be assessed at $54 million, being the value of the Land if it had a residential zoning less a discount of 10 per cent reflecting the risk that residential use would not be achieved. In oral submissions, Walker suggested that the Court could adopt a discount of 15 per cent, which would reduce the market value to $51 million. 145 The Authority submits that: (a) the whole issue of the existence and extent of existing use rights is concluded by findings of Talbot J not disturbed on appeal, including a finding that the existing use for a liquid fuel depot was limited to Tank 7921, distribution pipes to the wharf and the wharf itself: LEC 1 [69] and [76]; (b) consequently, market value should be assessed on the basis of industrial value with a small premium for the chance of residential development based on existing use rights; (c) alternatively, if the existence and extent of existing use rights now has to be determined afresh, the Court should find that at the date of making LEP 2000 (i) there were no existing use rights because the existing use was not a liquid fuel depot but ports use or other permissible use under the LEP; or (ii) existing use rights as a liquid fuel depot extended only over the site of Tank 7921 and the distribution pipes to the wharf, and that at the acquisition date the use of Tank 7921 had been abandoned and replaced by a much smaller tank; and that is how the hypothetical parties would have seen it at the acquisition date. 146 In LEC 1 there were extensive findings as to Walker's existing use rights claim that were not disturbed on appeal. Therefore they stand: CA 3 at [86], [87[, [118]. In LEC 1 Talbot J began by examining the nature of existing use rights including how it differed from a right under a development consent, and the controversy that may be involved in defining an existing use: "[54] The respondent likens an existing use to a privilege similar to the 'right' under development consent and, therefore, the Court, as judicial valuer, must determine whether an existing use exists at the date of acquisition as part of the process of determining the attributes of the land. [55] The applicant, on the other hand, says that whether there are existing use rights arises only as part of the consideration of potentiality of the land and that risk is assessed accordingly in the market value approach. [56] I do not accept that an existing use can be regarded as being altogether in the same category as a right under a development consent. Although, in a limited sense, it carries the same benefits as a consent, namely that, pursuant to s 107, nothing in the Environmental Planning and Assessment Act 1979 ('the EP&A Act') or an environmental planning instrument prevents the continuance of the existing use. There are nevertheless constraints imposed by s 107(2) and an existing use can be abandoned. The existing use right that runs with the land is more properly described as an entitlement to relaxation of constraints otherwise applied by the current planning scheme. That entitlement does not attach to any particular individual. It is subject to formal proof of its lawfulness. [57] As Kirby P explained in North Sydney Municipal Council v Boyts Radio and Electrical Pty Ltd (1989) 16 NSWLR 50 at 56, according to one view the ultimate objective of recognising existing use rights 'after a transitional protection of the established beneficiaries of such rights, is their termination (by abandonment) or their confinement (by the prohibition of alteration, extension or intensification)' so that 'the overall objectives of a universally applicable planning law will be achieved in a coherent and consistent fashion'. He recognised at 57 an alternative view that the:-- ...principle was to exclude existing use rights from the general requirement of new planning law and of respect for the accrued rights of private property, out of recognition of the inequity of imposing upon those rights the retrospective operation of newly introduced planning law and out of regard for the fact that in our form of society, with private ownership of land, the character of a neighbourhood cannot suddenly be changed by the stroke of the planner's zoning pencil. [58] He described the position as a conflict between private and social rights. The former, he said, tends towards protection of private interests in land by adopting a wide definition of, and generous approach to, existing use rights. On the other hand, identifying and defining existing use rights with specificity and precision tends to uphold the social interest represented by the planning law and to confine derogation from that interest to a narrow class of case. [59] The difficulty of concisely specifying an existing use is demonstrated by the continuing discussion arising in cases such as Shire of Perth v O'Keefe (1964) 110 CLR 529, 10 LGRA 147, Parramatta City Council v Brickworks Ltd (1972) 128 CLR 1, 26 LGRA 437, Woollahra Municipal Council v Banool Developments Pty Ltd (1973) 129 CLR 138, 28 LGRA 410 and Royal Agricultural Society (NSW) v Sydney City Council (1987) 61 LGRA 305. [60] Kirby P summarised the position as he saw it in Boyts Radio as follows:-- 1. Defining `existing use' depends upon a detailed examination of the facts of each case. Inevitably there will be borderline cases where the characterisation of the use which is protected will be controversial and upon which minds may differ. 2. Nevertheless, the general approach to be taken is one construing the `use' broadly. It is to be construed liberally such that confining the user to precise activity is not required. What is required is the determination of the appropriate genus which best describes the activities in question. 3. In determining that genus, attention should be focused on the purpose for which the determination is being made. This is a town planning purpose. It therefore considers the use from the perspective of the impact of the use on the neighbourhood. This is because the regulation of the use within the neighbourhood is the general purpose for which planning law is provided." 147 His Honour then considered how a hypothetical prospective buyer approaches the question of the existence and characterisation of existing use rights: "[61] Thus it can be seen that an existing use right is not something that can always be readily drawn from a concise set of circumstances or by reference to a single document or instrument. In the absence of an express determination of existing use rights in relation to the land either by a court or by an unequivocal acknowledgement of a relevant consent authority at the relevant date, a purchaser could not always be certain that the perceived rights could be relied upon to support a development application to change the use to another use, including a use that would otherwise be prohibited. [62] The equation of an existing use right to a development consent only arises in the context of continuing the existing use. To that limited extent, the analogy drawn by [counsel for the Authority] may be apposite. [63] In my view, an hypothetical prospective purchaser would not proceed to acquire the land on the basis of existing use rights attached to it, except, and only, where the existing use rights have been established and acknowledged beyond doubt. It is unrealistic to expect that, in practical terms, final proof would be required or available in some cases as it would not be feasible to obtain conclusive proof in the context of negotiations for outright purchase. Certainly a purchaser would make enquiries about the possibility of existing use rights and, depending upon the extent of available evidence at that time, would take the prospect into account as a relevant factor but prudently allowing for commensurate risk according to the particular circumstances. [64] I, therefore, hold that it is correct to take into account the facts that would have been available to a prospective purchaser at the relevant date to determine the appropriate risk factor for relying on an existing use right in order to carry out future non-conforming development of the land. Taking such a course is not inconsistent with the principle relied upon by [counsel for the Authority], namely that determining what constitutes the land involves ascertaining the actual status and condition of the land both legal and factual at the date of acquisition. Whether existing use rights prevailed is a mixed question of fact and law, the answer to which may not be precisely known by the purchaser at the time. Accordingly, where the legal and factual position remains equivocal, that would be a condition which carried through to the doubtful legal status of the land at the date of acquisition. [65] When Leichhardt Local Environmental Plan 2000 ('LEP 2000') came into force on 22 December 2000 the land was zoned industrial and the purpose of a liquid fuel depot was prohibited. The applicant claims that the existing use of the land is for a liquid fuel depot. Alternatively, it was an innominate use such as petroleum products and distribution or oil terminal. The respondent characterises the use as industry port uses and warehouse. The latter uses continued to be permissible in the zone after LEP 2000 came into effect. [66] Characterisation of the use is a question of fact. It is not appropriate to characterise the use by reference to a definition in a planning instrument. The proper approach is to describe the use broadly at a level of generality that covers the collection of alike activities carried out on the land. There can be more than one purpose. If one purpose operates independently and is not merely incidental to another purpose it is not necessarily deprived of its character merely because it is ancillary to or connected to another use ( Foodbarn Pty Ltd v Solicitor-General (1975) 32 LGRA 157 at 161 and Baulkham Hills Shire Council v O'Donnell (1990) 69 LGRA 404 at 410)." 148 Finally, his Honour turned to the facts concerning the history of the use of the Land, the characterisation and extent of the use, and how matters would have been perceived by the hypothetical sale parties: "[67] Over the years since 1955 there has been a plethora of applications recorded on the registers of the council. There are various references to 'warehousing', 'production of lubricants', 'petroleum production distribution', 'bulk terminal", 'oil storage terminal', 'manufacturing packaging and distribution facility', 'bulk oil loading facility', 'grease manufacturing', 'lubricating oil terminal and grease manufacturing plant', 'marine diesel fuel bunkering' and 'production of lubricants and greases'. In November 1998 Caltex (Ampol) wrote to Walker Corp Ltd in the following terms:-- 'This site was the original gasoline terminal for distribution of petrols and other petroleum hydrocarbon products to the Sydney market. It was operated by Texaco which later formed Caltex. In its mid term the use changed to a grease and lubricants manufacturing facility and remained Caltex prime source of these products until early in the 1990's. In later years it has been the main point of supply of diesel to the harbour marine traffic. It shares this role with a similar Shell facility at Gore Bay. It has also been used for bulk storage of lubricant base oils. Currently it supplies fuel to ferries, fishing boats and water taxis operating Sydney Harbour.' [68] At 22 December 2000, according to the evidence of its former employee, Neville Robert Beyer, part of the Caltex site was used for the storage of lubricants, greases, cartridges, lubricating oil and diesel that was predominantly distributed to commercial vessels. Other ancillary uses included an administration building, a tank for the storage of groundwater and pipes associated with refuelling. [69] The respondent argues that the proper characterisation of the land was for the purposes of port uses or warehouses, not a liquid fuel depot. In the alternative, the respondent contends that only the site of Tank 7921, the distribution pipes to the wharf and the wharf itself could be said to be land actually and physically used for the purpose of a liquid fuel depot. [70] It is apparent from the above that there was a range of individual fuel related activities carried on over the site over the years. The question is whether an hypothetical purchaser would have reasonably regarded the contemporary use on 22 December 2000 and at the date of acquisition as justifying the application of the description of liquid fuel depot to the collective uses of the site and, if so, to what degree of confidence it could be regarded as within the statutory definition of 'a depot or place used for the bulk storage for wholesale distribution of petrol, oil, petroleum or other unflammable liquid'. The council did not concede in correspondence with the applicant that existing use rights were available. [71] However, on 15 November 2001 McRoss obtained advice from senior counsel in the following terms:-- 'The land is currently zoned Industrial under Leichhardt Local Environment Plan 2000 (the LEP). In that zone the use of land for the purpose of a liquid fuel depot is prohibited. However, the land has at all material times, and still is, used for that purpose. It follows that the use of the land by Caltex for the purpose of a liquid fuel depot is an existing use within the meaning of s 106(a) of the Environmental Planning and Assessment Act 1979 (the Act).' [72] The opinion did not canvass the specific issue of whether existing use rights applied to the land but went on to advise whether constraints imposed by cl 14(1)(a) and cl 14(1)(c) of State Environmental Planning Policy No. 56 - Sydney Harbour Foreshores and Tributaries ('SEPP 56'), s 92A(2)(d) of the Environmental Planning and Assessment Regulation 2000 and State Environmental Planning Policy No. 55 ('SEPP 55') were of any force or effect by virtue of the provisions of s 108(3) of the EP&A Act. Senior counsel advised they were not. [73] There is also an issue whether there was a risk the existing use, if it existed at all, had been abandoned at the relevant date. The purchaser would have been aware that existing use rights can be lost by abandonment and, therefore, it can be expected some enquiries would have been made and some advice sought in that respect. From 2001 onwards the evidence shows that the use of the remaining parts of the site was progressively reduced until 27 May 2002 when Metropolitan Fuel Distributors, the operator of the site, advised the Premier the refuelling terminal will cease to operate due to McRoss exercising an option to develop. [74] In a consultant's report commissioned by McRoss in October 2002, CH2M Hill stated that at 7 May 2002 the main functions of the site were fuel unloading, fuel dispensing, packaged lubricant store and that fuel distillate was unloaded from road tankers at the tanker discharge bay which was delivered to Tank 330 via fixed piping. However, Mr Beyer said that the tank was decommissioned in May 2002. [75] By September 2002 Caltex had cleared all tanks, equipment had been removed and no fuel was stored on the site. Accordingly, an hypothetical purchaser would have recognised a prospect of eventually establishing an existing use but at the same time appreciating the significant risk of being able to ultimately establish that the existing use could be relied upon to provide the platform for the approval of an alternative non-complying use. In my opinion, it would not have been free from doubt to an extent that would have justified unqualified confidence that an existing use right in fact existed over the whole of the site. Nevertheless, the purchaser would have placed considerable reliance on the prospect that it did. [76] If I had to decide it now (which, in light of my earlier ruling, is not required), in my opinion, based on the evidence in respect of the position, at December 2000 Caltex was using part of the land as liquid fuel depot. The balance of the land was either being used as a warehouse or was not being currently used for any purpose, following progressive decommissioning of the plant. This general state of affairs continued during the period within 12 months before resumption on 26 September 2002. As the use of the land as a liquid fuel depot was limited to part of the land only, the applicant may not have benefited from existing use rights in respect of a liquid fuel depot over the whole site. This is how the prospective purchaser would have seen the position." 149 In the disturbance judgment at [19], Talbot J said: "Reliance upon an existing use to support residential development would have involved a significant risk that would have reduced the amount of compensation." 150 In CA 1 at [19] the Court of Appeal, after referring to the letter quoted at LEC 1 [67], said: "It appears from the materials before the Court that consideration of the future of the site followed upon the realisation that Caltex no longer wished to continue its existing usage, as demonstrated by an application submitted on its behalf in November 1989 for the site to be rezoned to permit residential development, by the construction of 163 units." 151 The "part" of the Land which Talbot J found was being "used" - meaning, I take it, physically used - as a liquid fuel depot at December 2000 (LEC 1 [76]), the Authority submits, was the part referred to in the Authority's contention recorded at LEC 1 [69]. That is in issue but it is difficult to know what else his Honour could have been referring to since that was the only part described in the judgment as being used at December 2000. That was Tank 7921 and the distribution pipes to the wharf (the wharf itself was not part of the Land). If his Honour did not determine what the part was and if I had to do so, I am inclined to conclude that this was the part physically used as a liquid fuel depot having regard to the evidence of Mr Beyer referred to at LEC 1 [68], with the relatively minor addition of vehicular access to the part used. However, physical use is not the end of the enquiry: see [154] below. 152 The evidence of Mr Beyer supported his Honour's undisturbed finding that the balance of the Land was either being used as a warehouse or was not being used for any purpose: LEC 1 [76]. Mr Beyer also said that a small Tank 101 was used for storage of ground water but that does not add much to his Honour's finding. 153 The evidence of Mr Beyer raised a significant question as to abandonment. His evidence was that there had been a progressive cessation of use of buildings, works and land such that at 22 December 2000, when LEP 2000 was made, the only part of the Land being physically used for the storage of fuel for distribution at the wharf to vessels was Tank 7921. About six months later that tank was taken out of service and the much smaller Tank 330 was put into service (it previously not having been used since 1996). His evidence supported Talbot J's undisturbed findings that use of the remaining parts of the Land was progressively reduced until in May 2002 the operator advised that the refuelling terminal would cease to operate and by September 2002 tanks and equipment had been removed and no fuel was stored on the Land: LEC 1 [73] – [75]. 154 Determination of the part physically used is not the end of the enquiry for the whole of an area of land may be held to have been used for a particular purpose although only part of it was physically used for the purpose, if the land is rightly regarded as a unit: Parramatta City Council v Brickworks Ltd (1971 - 1972) 128 CLR 1 at 5; Eaton and Sons Pty Ltd v Council of the Shire of Warringah (1972) 129 CLR 270 at 274, 278 and 281. This principle was considered in Lemworth Pty Ltd v Liverpool City Council [2001] NSWCA 389, 53 NSWLR 371 at [73] – [74]; applied Starray Pty Ltd v Sydney City Council [2002] NSWLEC 48 at [23] and Mona Vale Pty Ltd v Pittwater Council [2003] NSWLEC 74, 124 LGERA 449; distinguished Moore Development Group Pty Ltd v Pittwater City Council [2003] NSWLEC 130, 127 LGERA 27 at [24]. In Lemworth at [71] and [74] Hodgson JA, referring to Parramatta City Council v Brickworks and Eaton, said: "[Those cases] concerned town planning Ordinances which in effect permitted the enlargement or extension of existing uses within the land on which the relevant existing use was carried out at the relevant time. They decided in effect that this land was not restricted to the area of land actually physically and lawfully used at the relevant time, but extended to so much land as could be regarded as being used for the relevant purpose: questions of fact and degree could arise in particular cases as to whether areas not physically used for the purpose at the relevant time should reasonably be regarded as included in the whole area of land used for that purpose, or rather regarded as distinct areas not used for that purpose. ... [In answering that question it] would be relevant to consider whether some other part of the property was held in reserve for that use, what use or uses were being made of other parts of the property, and also the physical set up of the property and title boundaries." 155 Walker submits that the Land was a unit for the purpose of ascertaining the area of the Land used for the purpose of a liquid fuel depot. The submission finds some support in the report of CH2M Hill referred to at LEC 1 [74], which argued that most of the Land was used for the purpose of a liquid fuel depot if ancillary services were included (including site access areas and the entire bunded area on the northern side within a concrete wall built in the 1920's to retain oil spills). 156 Walker submits that existing use rights over part of the Land were, in any event, capable of expansion over the whole of the Land, if there were doubts in relation to the matter, pursuant to cl 41 of the EPA Regulation. I do not think that the submission should be accepted in that unqualified form. Clause 41 provides that an existing use may be expanded. Clause 42 provides that development consent is required for any expansion and that the expansion "must be carried out only on the land on which the existing use was carried out immediately before the relevant date". The effect of this provision is that the approach in Parramatta City Council v Brickworks and Eaton is to be applied to determine the extent of the area into which an existing use could be permitted to expand pursuant to development consent: Lemworth at [73]. 157 Walker suggests that the hypothetical parties would have obtained planning advice and may have obtained legal advice, such as that in evidence from Walker's planners and the 2001 counsel's opinion referred to at LEC 1 [71] – [73], in which appear statements that existing use rights applied to the Land. The statement in counsel's opinion was in the nature of a conclusion and appears to have been based on instructions; it was not expressed to be based on analysis of the facts which is essential to the accuracy of such a conclusion. Walker's planners' view appears to have been based on the CH2M report. The Authority's planner Mr Shiels said he would advise prospective parties to obtain legal advice but pointed to considerations that raised doubt as to whether there were existing use rights. 158 To my mind, all this is subsumed in Talbot J's undisturbed findings, which in effect addressed three risks of residential development based on existing use rights that the hypothetical buyer and seller would have perceived at the acquisition date. 159 The first risk was whether existing use rights existed over any or all of the Land. That is relevant because Walker's proposed development is over virtually the whole Land (allowing for open space on the east). Assessment of this risk involved at least two questions: the part of the Land over which existing use rights existed when LEP 2000 was made; and whether any such rights had been abandoned by the acquisition date. Having addressed these questions, Talbot J concluded that the hypothetical buyer (and, of course, the hypothetical seller) would have perceived that (a) there was a significant risk of being able to ultimately establish that an existing use right in fact existed over the whole Land but nevertheless would have placed considerable reliance on the prospect that it did; and (b) as only part of the Land was being used as a liquid fuel depot at December 2000 and to within 12 months before the acquisition date Walker may not have benefited from existing use rights over the whole Land: LEC 1 at [75] – [76]. There is tension between those two propositions but they may be reconcilable by the principle of the use of land as a unit and the CH2M report, discussed above. 160 The second risk was whether development consent could be obtained for a change of use to residential development. His Honour held that (a) as a general proposition, in the absence of an express determination of existing use rights either by a court or by unequivocal acknowledgement of a consent authority at the acquisition date, a buyer could not always be certain that the perceived rights could be relied upon to support a development application to change the use to another use, including a use that was prohibited: LEC 1 at [61]; and (b) in the present case "reliance upon an existing use to support residential development would have involved a significant risk that may have reduced the amount of compensation": disturbance judgment at [19]. I agree. 161 The third risk concerned the yield if development consent was obtained. The yield risk could not be less than the yield risk for development if the land had been zoned residential, which Talbot J found to be 27.5 per cent (on the erroneous assumption of residential zoning): LEC 1 at [147]. 162 At the LEC 1 hearing, Mr Shiels, the Authority's planner, thought that existing use rights did not apply to the Land. On that basis, Mr Wood, the Authority's valuer, considered that the hypothetical buyer would not pay a premium over industrial value for the possibility of obtaining residential approval through an existing use rights claim. In case he was in error, he supplied a top down value, which he repeated in his later joint valuation report with Mr Egan, Walker's valuer. 163 In their joint valuation report for the LEC 1 hearing, Mr Egan and Mr Wood assessed the market value of the Land for residential development based on existing use rights using (inter alia) the yields of Mr Shiels for the Authority (69 units) and Professor Lyneham for Walker (138 units) as follows (I have added back remediation costs that Mr Wood erroneously deducted): Yield Rates per unit Risk Discount Value $ 69 units $600,000 Wood 50% Wood 20,700,000 (Shiels) (agreed) Egan 10% Egan 37,260,000 Wood 50% Wood 41,400,000 138 units (Lyneham) $600,000 Egan 10% Egan 74,520,000 (agreed 164 At the LEC 1 hearing, Mr Wood was cross-examined into saying that his 50 per cent discount was apportioned 30 per cent to rezoning and 20 per cent to obtaining development consent. As rezoning is not required for residential development based on existing use rights, Walker says that his 50 per cent discount is really only 20 per cent. However, at the LEC 2 hearing Mr Wood explained that by rezoning he had meant establishing existing use rights. This is essentially the same difficulty that he got himself into over SEPP 5 risk at the LEC 1 hearing, as discussed at [132] above. Again, it is almost inconceivable that an experienced valuer such as Mr Wood would think that rezoning is required for residential development based on existing use rights, and I am prepared to accept his explanation at the LEC 2 hearing. 165 It appears that Mr Egan did not take local opposition to residential development into account, and made no discount for obtaining development consent . 166 Having replaced Mr Egan for the LEC 2 hearing, Mr Dundas for Walker adopted a yield of 110 units of 150 m2 each, equating to a value of $66 million. As discussed in the context of SEPP 5 at [138] above, his adoption of a yield of 110 units may be criticised as too high because in LEC 1 a yield discount risk of 27.5 per cent was found, which resulted in a value of $60 million representing a yield of 100 units at the agreed value of $600,000 per unit site. 167 Having regard to (among other things) the reports of the Authority's planners, Mr Dundas considered that existing use rights would be readily established in the eyes of the purchaser and therefore allowed a risk discount of only 20 per cent, which reduced the value to $52.8 million. That was in the face of Talbot J's finding in LEC 1. In cross-examination, he accepted that the prospect of obtaining development consent declined as the number of units sought increased. Mr Dundas also indicated that he had assumed that existing use rights would apply to individual sections of the Land and then could be expanded elsewhere on the Land. 168 Mr Dundas' value of $52.8 million was calculated differently from, and is lower than, the $54 million that Walker submits I should adopt: see [144 (b)] above. In oral submissions, Walker suggested that I might adopt a discount of 15 per cent (from $60 million) being the mid-point between Mr Egan's 10 per cent and Mr Wood's 20 per cent, which would result in a value of $51 million. That does not take account of the fact that the amount from which each deducted his discount was different. 169 For the LEC 2 hearing, Mr Wood, having considered LEC 1, concluded that the Land should be valued on its existing use rights basis potential for residential development at its industrial value plus 10 per cent. His industrial value was $15,500,000. The addition of a premium of 10 per cent for residential potential resulted in a value of $17,050,000. That is the bottom up approach that the Authority presses before me. 170 In my opinion, the hypothetical buyer and seller at the acquisition date would not have seen the potential for residential development based on existing use rights as having anything like the certainty of residential development based on a residential zoning, which was the erroneous assumption in LEC 1 that founded a market value assessment of $60 million. Walker's proposed assessment of an existing use rights based market value at a mere 10 per cent or 15 per cent less than that $60 million assessment is unrealistic. 171 In my opinion, the risks that the hypothetical buyer and seller at the acquisition date would have perceived for residential development based on existing use rights were greater than for residential development based on SEPP 5 and would have been reflected in a significantly lower market value. Indeed, that is Walker's own case and the views of its valuers: they value the SEPP 5 residential potential higher than existing use residential potential. They allow no or little risk discount for SEPP 5 residential potential but propose a risk discount or a larger risk discount for existing use potential. As market value based on existing use rights is less than market value based on SEPP 5, it is unnecessary to go further and precisely value the former. SECTION 56(1)(a) VALUE 172 I turn to Walker's alternative case under s 56(1)(a) of the Just Terms Act, which provides: " 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…" 173 For relevant purposes there is no distinction between the Authority and the State government: HCA [10], CA 2 at [34]. 174 The critical characteristic of the Land which constrains its possible development and hence its market value is its industrial zoning. Walker's s 56(1)(a) case is aimed at overcoming that constraint. 175 Following rejection by the appellate courts of Walker's old s 56(1)(a) case based on the Council's conduct, Walker's new s 56(1)(a) case focuses on the State government's conduct and is to the following effect: (a) the maintenance of the zoning of the Land as industrial by the State government in LEP 2000 was part of the Authority's proposal to carry out the public purpose for which the Land was acquired; (b) except for that proposal the Land would have been zoned residential; (c) the market value of the Land with an industrial zoning was less than its market value with a residential zoning. Therefore the industrial zoning must be disregarded and the residential zoning notionally substituted; (d) consequently, the Land's market value on the acquisition date was its residential value based on the yield findings made in LEC 1, namely $60 million: LEC 1 at [147]. 176 The Authority's position is that one cannot date its proposal to carry out the public purpose for which the Land was acquired any earlier than shortly before the Premier's 19 February 2002 announcement, and that there are other flaws in Walker's LEP 2000 argument. 177 The chapeau to s 56(1) is concerned with the hypothetical buyer and seller. But the s 56(1)(a) disregard is concerned with the actual. It requires identification of the actual proposal to carry out, or the actual carrying out of, the public purpose for which the land was acquired, as well as identification of any increase or decrease in market value thereby caused. 178 The logic of s 56(1)(a) as applied to the present case requires two steps. There first has to be a finding that immediately before the proposal that disappointed residential development aspirations, there was a residential development premium for this industrial zoned land over and above what people minded to exploit it purely as industrial land would be prepared to pay. Then it has to be found that the proposal decreased the premium realisable from that residential potential. Unless the proposal actually "caused" the decrease there is nothing to disregard. 179 Walker's s 56(1)(a) case draws succour from the "traditional" approach referred to in Smith v Roads and Traffic Authority of New South Wales [2005] NSWLEC 438 at [63] per McClellan J (decided between CA 1 and CA 2), as restated in the following terms in CA 2 at [57] – [61]: 1. Identify the zoning of the land at the date of acquisition. 2. Determine whether the imposition or retention of that zoning was part of the carrying out of the public purpose or part of the proposal [by the resuming authority] to carry out the public purpose for which the land was acquired. 3. If the answer to question 2 is yes, that zoning is notionally set aside, and the potential of the land and ultimately its market value is assessed by determining how the land would have been zoned, at the date of acquisition, but for the proposal to carry out the public purpose. 180 The "traditional" approach owes much to cases decided under different resumption compensation legislation, which were analysed in Smith. However, that approach does not employ the language of s 56(1)(a), as was noted in CA 2 at [59] – [60]. It does not refer to a decrease or increase in the value of the land, which is the subject of the s 56(1)(a) disregard. Its shortcuts are the unstated assumptions that the imposition or retention of zoning decreased or increased the value of the Land compared with its value if the Land otherwise would have been zoned differently, and that such a change in value is within the contemplation of s 56(1)(a). 181 It must be accepted that the Land, when acquired, was zoned industrial and not something else; on that basis there is the inquiry about market value; followed by the inquiry about the s 56(1)(a) disregard. This is apparent from HCA [53] – [54]: "53. The Foreshore Authority submitted that (i) the statutory definition required what might be called a Spencer's Case valuation in the sense explained above; but (ii) this was to be followed by any disregard which para (a) required; and (iii) the reference in para (a) of the objects set out in s 3(1) to eventual acquisition indicated that the proposal might predate by a significant period the acquisition of the land in question; (iv) but (iii) did not render applicable to s 56(1) the proposition drawn from San Sebastian as to the sufficiency of an 'indirect relationship' where the maintenance of the planning restriction by the Council is seen as 'a step in the process of resumption'; (v) this is because the market value disregard in para (a) looks to the public purpose for which the Land might by law be acquired by the Foreshore Authority by compulsory process under the Compensation Act and to ' the proposal' to carry it out; (vi) ' the proposal' here was not that of the Council as the proposed resuming authority, or some aggregation over time of the policies of the Council and later of the Carr Government; (vii) to give the statutory expression that operation, as had the primary judge in fixing upon 'unity of purpose displayed by the two arms of government', was an error of law. 54. This reasoning should be accepted. The construction of the market value disregard in para (a) for which the Foreshore Authority correctly contends, links 'the proposal' to that of the resuming authority. It puts aside anterior discussions or agitations by the Council and others in favour of classifying the Land as public space. In this way there is reflected in the terms of para (a) of s 56(1) a policy to require a disregard only of that increase or decrease (as in this case) in value for which the resuming authority is responsible." 182 Walker advances its proposition that maintenance of the industrial zoning in LEP 2000 was part of the s 56(1)(a) proposal in three stages, of which the second and third are controversial: (a) the Land was acquired by the Authority for the public purpose of a public park; (b) it can be inferred from the history of the zoning of the Land, from internal State government documents, and from all of the circumstances, that the State government's "proposal" to carry out the public purpose for which the Land was acquired crystallised by August 2000, prior to the making of LEP 2000 in December 2000. The proposal involved the maintenance of the zoning of the Land as industrial throughout the period leading up to the acquisition of the Land at a time when several local environmental plans had been made to rezone similar foreshore land as residential; (c) the gazettal of LEP 2000 was a manifestation of the proposal. It caused a decrease in the value of the land, which should be disregarded under s 56(1)(a). 183 The timing question, which it is open to me to explore, is the one referred to at HCA [56] as "the time-scale of 'the proposal' of the resuming authority". There is then the following comment, without any discernable preference, at HCA [56] – [57]: "56. It said that before the announcement of 19 February 2002, the Planning Minister had had 'a certain preference, but declined to take a decision which might commit the State Government to significant expenditure'. The primary judge had seemed to recognise that it was not until shortly before February 2002 that the State Government itself had adopted the proposal to carry out the public purpose. In its written submissions, Walker sought to place the date of the proposal by the State at some significantly earlier time. 57. Resolution of any controversy of this nature must be for the further proceedings in the Land and Environment Court on the remitter ordered by the Court of Appeal on 21 December 2006." 184 Walker submits that a difficulty in pointing to a precisely formulated proposal or the particular time at which it arose should not, of itself, lead the Court to hold that no such proposal existed, though the more certain and better known the proposal becomes the more significant its likely effect will be for the value of the Land. In aid of this proposition, Walker says that a statement of Lord Denning in the English resumption compensation context relating to a "scheme" is equally applicable to the "proposal" under s 56(1)(a). This statement appears in Roads and Traffic Authority of New South Wales v Perry [2001] NSWCA 251, 52 NSWLR 222 at [42] quoting Lord Denning in Wilson v Liverpool Corporation [1971] 1 WLR 302 at 309D: "A scheme is a progressive thing. It starts vague and known to few. It becomes more precise and better known as time goes on. Eventually it becomes precise and definite, and known to all. Correspondingly, its impact has a progressive effect on values. At first it has little effect because it is so vague and uncertain. As it becomes more precise and better known, so its impact increases until it has an important effect. It is this increase, whether big or small, which is to be disregarded at the time when the value is to be assessed." 185 Walker concedes that the State government made no commitment to the public purpose until shortly before the Premier's news release in February 2002. In my view, the resuming authority made no commitment to the proposal until sometime after 22 January and before 5 February 2002, as evidenced by the following documents: (a) on 19 December 2001, a briefing note of the Department of Planning to the Director General canvassed five options and recommended that "the above five options be noted and, if necessary or appropriate, that instructions be given as to a preferred option or options to be followed by SHFA and the Department of Planning". Clearly no decision had been made by the resuming authority to adopt the proposal at that time; (b) on 22 January 2002 the Mayor of the Council wrote to the Premier requesting the State government to act on Ballast Point. The Mayor said that there had been a "constant battle to hold back development" and that the battle would continue "until such time as the State government intervenes". The Mayor requested "the opportunity to meet with you and the Minister for Planning along with the Ballast Point Committee to discuss an approach to future planning for Ballast Point". Thus, the State government had not at that time adopted the proposal to carry out the purpose for which the Land was acquired; (c) in a memorandum of 5 February 2002 the Chairman of the Authority wrote to the Chief Executive Officer that, "the government has decided to acquire the site for a Park". The Chairman suggested that the Authority "[d]ecide to acquire the site" and "[a]mend SEPP 56 to make the site a State Significant Site (Schedule 1)". Thus, by 5 February 2002 the State government had adopted the proposal; (d) on 11 February 2002 the Minister for Planning requested the Director General to prepare a draft amendment to SEPP 56 to reschedule the Land from Schedule 2 to Schedule 1, thereby making the Minister for Planning the consent authority for development on the Land; (e) on 14 February 2002, the Minister for Planning approved a ministerial briefing note that stated: "The Sydney Harbour Foreshore Authority Amendment (Foreshore Area) Regulation 2002 is to be gazetted with SEPP 56 Amendment No 6. This regulation prescribes the 'foreshore area' under the Sydney Harbour Foreshore Authority Act to include Ballast Point. It is intended that Sydney Harbour Foreshore Authority will acquire the Ballast Point site by way of negotiation or compulsory acquisition and subsequently manage the site as 'core land' thereby making the site available for public use". The Minister approved the recommendation that the Minister: "notes that SEPP 56 Amendment 6 is being made concurrently with the Sydney Harbour Foreshore Authority Amending (Foreshore Area) Regulation 2002 and that the SEPP forms part of a package of measures related to future planning and development of the site"; (f) on 19 February 2002, the Premier made the first public announcement of the proposal: see [2] above. That was the first time the market knew of the public purpose and the consequent resumption; (g) on the same day, 19 February 2002, Amendment No 6 to SEPP 56 was gazetted. The amendment moved the Land from Schedule 2 (sites of strategic significance) to Schedule 1 (State significant development) and the Minister replaced the council as the consent authority. 186 However, Walker submits that: (a) a s 56(1)(a) proposal may be merely one of a number of options; (b) the State government articulated the proposal as an option at least by August 2000 and all of its actions prior to that and until 22 December 2000 when LEP 2000 was made were consistent with a related proposal to at least keep open that option; (c) were it not for that proposal, the Land would have been zoned residential under LEP 2000 or at some other time, consistently with the Commissioners of Inquiry report; (d) accordingly, the making of LEP 2000 in which the industrial zoning of the Land was maintained in exercise of the Minister's power under s 70 of the EPA Act , was part of the State government's proposal to carry out the purpose for which it acquired the Land; (e) the maintenance of the zoning of the Land as industrial in LEP 2000 led to a decrease in value of the Land compared with its residential value zoning; (f) therefore, the industrial zoning should be disregarded and the market value of the Land is its residential value based on its yield in LEC 1, namely, $60 million. 187 I do not accept the submission. It is true that prior to the making of LEP 2000 persons within the State government were considering a range of possibilities or options for the use of the Land, as the following documents evidence: (a) on 18 January 2000 the Director of the Department of Urban Affairs and Planning stated that it was "premature for the Minister to commit to any particular solution for the site, or action by the State government"; (b) a briefing note to the Minister from the Director on 27 January 2000 noted Walker's historic preference for residential development, the Council's established position that it wished to see either open space or industry, and the Department's position to promote a "best planning solution" from a local and regional perspective. The note recommended that it was premature for the Minister to commit publicly to any particular solution without further assessment on the impacts of any proposed option; (c) a memo of 8 August 2000 from an officer of the Authority to an officer of the Department of Urban Affairs and Planning entitled "Cost Estimate – Sydney Harbour Structures" contained cost estimates on various items including the Land. It noted that Walker had an option to acquire the Land for $16 - $18 million conditional on allowing residential development to occur and that if this was opposed the industrial value of the Land would be $8 - 10 million but a compensation payment may be required to be paid to Walker. The memo said that: "Should the Minister or [the Department] wish to proceed to the next stage of the process, then [the Authority] would recommend that a detailed budget be undertaken with the use of various consultants"; (d) by September 2000 a draft framework plan had been developed by the Department which was non-committal in respect of future land use and development; (e) in a document dated 18 October 2000 entitled "SEPP 56 Sites: Submission to the Deputy Premier, Minister for Urban Affairs and Planning", the Authority said that it seeks to have four SEPP 56 sites including the Land incorporated within the Authority's area boundary to enable it to redevelop and add value to the sites, guided by the key principles of the SEPP, and that: "This would necessitate transferring the four Schedule 2 sites to Schedule 1, making them sites of State significance, and with consent authority passing from local government to the Minister for Urban Affairs and Planning…It would also enable compulsory acquisition by the government…The authority's ownership or place management of the [Land and two other Harbour sites]…would demonstrate the State government's commitment to realise its vision for Sydney Harbour"; (f) following a Harbour tour by the Authority on 7 December 2000, the Department prepared a briefing note for the Premier in anticipation of a meeting with Lang Walker concerning the Land. The briefing note provided a suggested response, which included that a framework plan was being prepared, the council and the Department were working together to prepare master plan options, local residents had a preference for open space and generally opposed large-scale residential development and "the sub-regional context of the site, together with preparatory work for the framework plan suggests that the site should be required to comprise an element of public open space at the headland, continuous public access along the foreshore and a maritime precinct (to include a refuelling facility). The proportion of the site given over to other land uses will be determined to some degree by the numerous site constraints…the capacity of the local transport network and visual impact". 188 Subsequent to the making of LEP 2000, the State government continued to consider possibilities or options for the Land, as the following documents evidence: (a) a briefing note of 16 March 2001 from an officer of the Authority to its chairman identified options for the Land including: a hybrid refuelling depot, significant open space and low impact residential development; a rezone as open space (save for a refuelling depot); and compulsory acquisition followed by immediate remarketing (no purpose for the acquisition was expressed); (b) a Ministerial submission of 1 November 2001 recommended the lifting of an embargo placed earlier in the year on a draft framework plan for the Land, and noted the Minister's own preference for open space; (c) an internal note of 8 November 2001 noted that the Minister wished to see the Land transformed to public open space with a small element of maritime uses; the Authority was investigating options to help achieve the Minister's objective, including compulsory purchase of the Land; and the Department was preparing a briefing note on the option for rezoning the Land to help achieve the Minister's objective. 189 In my view, there are several overlapping reasons why s 56(1)(a) is not enlivened in this case. 190 The first reason is that "[i]t is necessary to identify the content of any decision made by a statutory authority, which is relied upon as constituting 'the proposal' or part of 'the proposal'": CA 2 at [25]. This emphasis on the need for a decision is consistent with The Minister v Stocks and Parkes Investments Pty Ltd (1973) 129 CLR 385. There the Education Department made a pre-resumption decision that it required certain land as a school site. The High Court characterised the decision as the "proposed" establishment of the school on the land that had to be disregarded under the expression of the Pointe Gourde principle in different legislation. That was because the Department's decision could be ascertained by interested persons and would affect its market value (at 391 – 392). 191 In the present case, in my opinion, no such decision was made by the State until shortly before the Minister's announcement in February 2002. A decision by a resuming authority constituting the statutory proposal can only be made, in my view, when someone with authority to bind the resuming authority to the proposal decides to make the proposal or to adopt it. In the present case, that was Cabinet. However, as Cabinet adopted the proposal, the continuity between its adoption and the decision of the responsible Minister to put the proposal to Cabinet would, I think, justify a finding that that decision by the Minister constituted the proposal. An antecedent, identical "proposal" to the Minister or to an officer of the resuming authority, whether by an officer of the resuming authority or anyone else, and whether put singly or as one of a number of options, is irrelevant because it was not yet the resuming authority's proposal. 192 The State made no choice between the various options for the use of the Land until shortly before the Premier's announcement in February 2002. It is clear that what the Premier announced was "the" proposal answering the statutory description. 193 The public proposal for which the Land was acquired was to convert it into a public park. Whether the Land should be the site for a public park depended upon the State. The possibility that residential development would not be permitted cannot be equated with "the proposal" to carry out the public purpose for which the Land was acquired. So much appears in the comment of the High Court at HCA [55] that: "Matters of debate or doubt as to the outcome of controversy respecting use of particular land might affect the perception of the willing but not anxious market participants well before there is 'the proposal' which is the means selected by the resuming authority to end the controversy". 194 Secondly, in my view, there is insufficient causal connection between the industrial zoning in LEP 2000 and the subsequent resumption in 2002 to attract s 56(1)(a). One purpose of the principle in s 56(1)(a) is to ensure that a resuming authority does not employ planning restrictions, such as zoning, to destroy the development potential of land and then assess compensation for its resumption on the basis that the destroyed potential had never existed: The Crown v Murphy [1990] HCA 42, 64 ALJR 593 at 595, although that case was decided in the context of different resumption compensation legislation. The High Court also held at 595 that: "The principle applies in cases where there is a direct relationship between the planning restriction and the scheme of which resumption is a feature and extends to cases where there is merely an indirect relationship, provided that the planning restriction can properly be regarded as a step in the process of resumption: Housing Commission of NSW v San Sebastian Pty Ltd [1978] HCA 28, 140 CLR 196 at 206-207". In the s 56(1)(a) context, this relationship statement has to be read as if the reference to "the scheme" was a reference to "the proposal". San Sebastian was decided on the basis of a direct causal connection rather than an indirect one. In San Sebastian the statutory connection with the value disregard was identified by the words "arising from". In CA 2 the Court of Appeal suggested that the words "caused by" in s 56(1) may require a more direct causal connection: at [15]; and left open whether the dicta in San Sebastian remains persuasive since the enactment of s 56(1)(a): at [43]. In CA 1 it was said that it was far from clear that s 56(1) operates so as to require that a failure to act be disregarded: at [87]. In HCA, the High Court appears to have held that an indirect relationship is insufficient under s 56(1)(a): HCA [53] proposition (iv) (quoted at [181] above). 195 In my opinion, there is neither a direct nor (if it be relevant) a sufficient indirect relationship between the Minister's conduct in making LEP 2000 and the resumption of the Land by the Authority in 2002. If, for example, the State government had dictated the zoning of the Land as industrial in LEP 2000 with the intent that it should be resumed for the purpose of a public park and if it otherwise would have been zoned residential, s 56(1)(a) might well have work to do because that could be viewed as part of the carrying out of the public purpose for which the Land was acquired. That is not this case. 196 San Sebastian was concerned with land that was zoned commercial but which the resuming authority proposed to rezone residential for the public purpose of facilitating development of public housing. It was held that the residential zoning should be disregarded under s 124 of the Public Works Act 1912 (incorporating the Pointe Gourde principle but worded differently from s 56(1)(a)). In contrast, the present case is concerned with Land that was zoned industrial which, Walker contends, the State maintained in LEP 2000 for the public purpose of facilitating development of the Land as a public park. In my view, there is no evidence that that was the State's purpose when LEP 2000 was made. As stated earlier, the State did not decide on that public purpose until shortly before the Premier's February 2002 announcement. 197 Thirdly, the LEP 2000 argument elides the difference between a State government decision to make a proposal under s 56(1)(a) of the Just Terms Act and a Ministerial act under the EPA Act to make a local environmental plan. It was a local council that created a local environmental plan. The Minister's response in making it was a response by a statutorily designated person, not the State government. All that the Minister could do within certain parameters was to make some changes: EPA Act Part 3 Division 4 (since amended). It was not the Minister's policy document. That is why it was called a local environmental plan. I leave to one side that the Minister could direct a local council to make a local environmental plan (s 55 since repealed) because that did not happen in this case. 198 Fourthly, the question should be asked how maintenance of the zoning of the Land as industrial in LEP 2000 can be identified with the proposal to carry out the public purpose to use it as a park. The answer can only be because it was the Council's ploy, as the planning authority, to maintain the status quo of the Land's industrial zoning in order not to expose itself to liability to pay for a park if it were zoned open space while continuing to press for the State government to make a choice, not then made, to resume it as a park. There is no evidence of the State government making that choice at the time LEP 2000 was made, nor at any time until shortly before the Premier's February 2002 announcement of the proposal. The Court of Appeal commented that, "at least until shortly before resumption, there seems to have been little prospect that any relevant State authority would succumb to pressure to resume the land for open space thus reducing its value for residential development": CA 1 at [59]. 199 Fifthly, it is necessary for Walker to prove that the making of LEP 2000 actually caused a decrease in the market value of the Land. That is the subject of the s 56(1)(a) disregard. Walker argues that except for the maintenance of the industrial zoning in LEP 2000, the Land would have been zoned residential and that the decrease in value caused by the proposal is simply the difference between the residential value of the Land and its industrial value. The valuation evidence did not specifically quantify such a difference at the time of making LEP 2000. Leaving aside that point, in my view, the proposition that the Land otherwise would have been zoned residential is not established on the evidence. All that the industrial zoning of the Land in LEP 2000 effected was a retention of the existing situation. The industrial zoning of the Land in LEP 2000 may well have occurred in any event because historically the Land had always been zoned industrial, the Land had from the 1920's been used for industrial purposes, the attributes of the Land dictated a well considered approach to any rezoning and such an approach had not run its course. 200 In my view, as discussed at [176] above, to establish a decrease in market value, findings would have to be made that immediately before the making of LEP 2000 there was a premium for potential residential development for this industrial zoned land over and above its industrial value and that the making of LEP 2000 caused a decrease in the premium. I am not satisfied on the evidence that these findings should be made. 201 After the making of the controversial regional environmental plans by the State government and before they were invalidated in the 1990's, there would have been optimism for those in the market who wished to see residential development of the Land. But after the Court of Appeal decisions that invalidated the regional environmental plans and after the change of government in 1995, a range of possibilities, sole or in combination, entered the mix. After 1995 when the master planning process commenced, which required a focus on strategic waterfront sites from the viewpoint of a range of sole or mixed uses (not only residential development), there is no evidence that the hypothetical market participants could have regarded full residential development as certain. Any market premium for residential development potential would have reflected risks, and might represent no more than a punting premium, say of 10 per cent. The possibility that the Land would be resumed for the purpose of a public park was one of a range of options that was under consideration by the State government, and was known to the market, including Walker. The Premier's announcement in February 2002 administered the final quietus to any residential ambition for the Land. 202 For these reasons, I do not accept Walker's s 56(1)(a) case. INDUSTRIAL VALUE 203 Walker alternatively submits that the market value of the Land should be assessed at its industrial value. As I have held that the market value of the Land on the acquisition date included its SEPP 5 development potential, which I have assessed on a top down basis, it is unnecessary to address its necessarily lower industrial value. If it were necessary to address its industrial value, I would do so as follows. 204 Walker submits that the industrial market value at the acquisition date was $33 million. The Authority submits that it was $15.5 million. There were very large differences of opinion between the parties' planners concerning industrial yield and between their valuers concerning industrial value. Industrial Yield 205 The topography of the Land is unsuitable for many forms of industrial use where level footplates are required. Industrial uses traditionally require flat land of a scale that only exists on the plateau of the Land. Notwithstanding that Caltex had carried on heavy industrial activities on the Land for many years, the hypothetical buyer and seller would have considered it unlikely that development consent could be obtained for heavy industrial development given the importance of the location of the Land, the topography and the truck generation problems that such development would cause in narrow streets of the Balmain Peninsula. 206 However, Walker's planner, Professor Lyneham, envisaged that the Land's trophy location would be appealing to major hi-tech companies, and that hi-tech industrial development would be generally confined to similar heights as those that would be required in relation to residential (including SEPP 5) development. Such uses may operate over different levels. I accept that this is the kind of industrial development which would be achievable, in the estimate of the hypothetical buyer and seller at the acquisition date. The market would be small, but s 56(1) only requires one hypothetical buyer and one hypothetical seller. 207 LEP 2000 provides for a FSR of 1:1 for industrial development and a foreshore building line of 10 metres. Mr Shiels considered that given the importance of the Land in the context of Sydney Harbour there was a substantive argument for a 20 metre foreshore setback for any redevelopment. I agree with that way of putting it. 208 In her written report, Professor Lyneham considered that industrial development would be permissible over the whole site which, on an FSR of 1:1, yielded 25,880 m2. Professor Lyneham noted that in the case of industrial development there was no s 94 EPA Act or other planning requirement to provide either on the site or monetary contribution for open space. Accordingly, she thought that, unlike residential development, there would be no requirement to accommodate an equivalent area for open space. However, in oral evidence Professor Lyneham indicated that she would have advised a prudent purchaser that the traffic generation associated with such a large bulk of industrial development would be problematic given the narrow streets of the Balmain Peninsula and that the FSR should be subdued to 0.75:1. This would equate to an area of 19,410 m2. 209 Mr Shiels used a net FSR method to calculate industrial yield at 13,988 m2, almost half Professor Lyneham's original estimate. Mr Shiels assumed a 10 metre foreshore building line, an open space of 8,215 m2 given the importance of the site, and an access road of 2,743 m2. 210 Given the importance of the location of the Land and the long-standing local concern for open space on the Land, I consider that any industrial development consent would require not less than about 30 per cent public open space and a foreshore setback for public access of 10 to 20 metres. I think that is how the hypothetical buyer and seller would have seen it at the acquisition date. 211 Walker's 1999 draft industrial masterplan provided for 13,920 m2 of industrial use, 2098 m2 of residential use, 7780 m2 of public open space and 2100 m2 of public road (apparently calculated on an incorrect site area of 25,898 m2). I think that this was a reasonably realistic estimate of the areas of use. 212 In my opinion, the prudent hypothetical buyer and seller at the acquisition date probably would have proceeded on the basis that the developable industrial areas of use for which development consent could be obtained would be in the order of 16,000 m2. Industrial Value 213 Mr Wood, the Authority's valuer, assessed industrial value at $15.5 million (after I add back remediation costs erroneously deducted). In reply, Mr Egan, Walker's valuer, assessed industrial value at $33 million. 214 Their values were derived by applying rates per square metre derived from comparable sales to the achievable floor space scenarios propounded by Professor Lyneham and Mr Shiels discussed above. The rates per square metre differed greatly. Mr Wood considered that the smaller the site the higher the rate per square metre. He applied a rate of $600/m2 to Professor Lyneham's achievable floor space area of 25,880 m2 and applied a rate of $1100/m2 to Mr Shiel's achievable floor space area of 13,988 m2. In each case, his calculation showed a value of $15.5 million. 215 Mr Egan, on the other hand, considered that the rate should be the same in the case of both those areas as they were both substantial areas. He applied a rate of $1345/m2 to the area of 25,880 m2 to show a value of $34.8 million, which he discounted for six months at 5.75 per cent to allow development consent, resulting in a market value of $33 million. 216 If Professor Lyneham's view that the hypothetical purchaser would expect to get an FSR of 0.75:1 is correct (see [208] above), that would equate to an area of 19,410 m2 which works out at a rate of $772/m2 using Mr Wood's industrial value of $15.5 million. 217 The price at which Walker would have purchased the Land in 2002 pursuant to the 1997 option agreement was $16.5 million. After making allowance for the fact that it was a future price struck five years earlier, that price is still so far below Mr Egan's industrial value as to give rise to particular caution as to whether the latter is realistic. 218 The Authority invites an unflattering comparison between, on the one hand, Mr Egan's valuation and, on the other hand, the Valuer General's statutory assessment of market value and disturbance loss in the sum of $10.1 million (which formed the unaccepted statutory offer that led to these proceedings), and an industrial valuation (with a residential component) of $11.75 million obtained by Walker to assess future GST liability as at 1 July 2000. I take the view that no weight should be given to those two reports. Apart from the fact that the second appears to be for a limited purpose and was unsigned, the valuers were not called to give evidence. Consequently, they were not covered by the rigorous regime which applies to expert witnesses. They were not bound by the expert witness Code of Conduct prescribed in the Uniform Civil Procedure Rules 2005, they did not participate in the pre-trial joint experts conferencing and reports, they did not give evidence under oath and they were not liable to be tested by cross-examination. 219 Mr Wood determined his rate of $600/m2 having regard to five comparable sales. However, in oral evidence he corrected, by increasing, the rates per square metre for those sales to allow for the period between the dates of sale and the date the Land was acquired. He called this period "market creep". 220 Mr Wood's analysis of comparable sales was as follows: (a) 7 Cooper St, Balmain sold for $2 million on 27 June 2001. The area was 1,348 m 2 excluding a Waterways lease of 750 m 2 . On the basis of the area of 1,348 m 2 , the rate was $1483/m 2 . The corrected rate was $1691/m 2 . If the Waterways lease area were to be included, the rate was $953/m 2 . Mr Wood considered that the Waterways lease area should not be included. I agree. This site is located in reasonable proximity to the Land but was on a much smaller site. It had improvements. (b) 30 and 30A Maddox St, Alexandria sold for $2.3 million on 8 November 2001. The area was 2423 m 2 . The rate was $949/m 2 . The corrected rate was $1044/m 2 . It is in a superior industrial location on a smaller site than the Land. (c) 21 Unwins Bridge Rd, Sydenham sold for $5.15 million on 21 June 2001. The area was 9547 m 2 . The rate was $539/m 2 . The corrected rate was $620/m 2 . It is in close proximity to the Sydney CBD. A factory occupied 3000 m 2 . The balance was hardstand or vacant land. It was used for the storage of containers. (d) 102-108 Bourke Rd, Alexandria sold for $5.6 million on 12 March 2001. The area was 8093 m 2 . The rate was $696/m 2 . The corrected rate was $816/m 2 . It is close to the Sydney CBD and Mascot Airport. It had an old warehouse which added no value. (e) 53-57 Queens Rd, Five Dock sold for $14.6 million adjusted to $11.36 million on 2 July 2002. The area was 27,610 m 2 . The rate was $411/m 2 . The corrected rate was $468/m 2 . The improvements comprised a number of older buildings which added no value and a modern building of approximately 5400 m 2 . 221 The valuers agreed that sales of comparable waterfront land on an industrial basis are rare. Only 7 Cooper Street, Balmain is a waterfront site. All five comparable sites were subject to a 1:1 floor space ratio and were flat sites. I accept Mr Wood's evidence that they were all capable of being developed to that ratio, unlike the Land. 222 Although Mr Wood's report referred to five comparable sales, he indicated in oral evidence that the two that he regarded as being most relevant were 53-57 Queens Road, Five Dock and 7 Cooper Street, Balmain. He favoured the former because it was the only comparable whose size was relatively similar to the size of the Land. It did not have the same access difficulties as the Land. It was ideal for industrial purposes. Although it did not have harbour frontage, that was not particularly important for industrial uses. Mr Wood's main reservation about 7 Cooper Street, Balmain appears to have been that the Land was some 18 times larger. 223 Mr Egan considered that the only truly comparable sale was 7 Cooper Street, Balmain. It is an industrial waterfront site with long term use for storage and maintenance of tugs. It has a small water frontage and a limited aspect over Mort Bay. Cooper Street is a narrow thoroughfare. On an industrial basis it has similar access and egress problems to the Land. 224 In my opinion, the two most comparable sales are 53/57 Queens Rd, Five Dock and 7 Cooper Street, Balmain. I consider that the remaining three comparables are so different from the Land in so many respects as to be of little assistance. 225 In reaching a rate of $1345/m2 for the Land, Mr Egan discounted by about 10 per cent for size the uncorrected sale rate $1483/m2 for 7 Cooper Street, Balmain. The area of the latter is 1,348 m2 as compared with the Land's 25,880 m2. Mr Wood considered that the 10 per cent discount was totally inadequate. Mr Egan's discount for size was tempered by a number of factors which in his view made the Land a far more attractive site than 7 Cooper Street, including the Land's prize location surrounded by water on three sides. I agree that those factors should be taken into account, but after taking them into account, I agree with Mr Wood to the extent of concluding that 10 per cent is an inadequate discount from the 7 Cooper Street rate when adjusting it for the Land. 226 Equally, however, I consider that Mr Wood's rates are too low. Having increased the rates per square metre of the comparable sales in oral evidence (see [219] above), his derived rates for the Land should have been, but were not, corrected. Also, Mr Wood appears to have regarded the LEP 2000 FSR of 1:1 and the foreshore building line of 10 metres as limiting factors for the Land when making a comparison with 7 Cooper Street, Balmain. However, those considerations were equally applicable to 7 Cooper Street. Mr Wood's rate of $600/m2 represents a discount in the order of 65 per cent from the 7 Cooper Street, Balmain rate. That seems too large, even allowing for the difference in areas. It also represents, I think, an insufficient premium on the 53-57 Queens Road, Five Dock rate given the superior location and amenity of the Land. There appears to be a suggestion in Mr Wood's evidence that his rate was influenced by the perception that the demand for waterfront land for an industrial use is generally limited. While that may affect the intensity of competition for such sites, it overlooks that under the Just Terms Act it must be assumed that there is a willing but not anxious buyer and seller. 227 Accepting Mr Wood's principle that the rate may increase with the developable area, nevertheless I think that his $1100/m2 rate applied to the smaller area still represents too large a discount on 7 Cooper Street, Balmain and an insufficient premium on 53-57 Queens Road, Five Dock. 228 Mr Wood's upper value of $1100/m2 and Mr Egan's value of $1345/m2 lie at the ends of a narrower range. Both rates should have been increased when Mr Wood corrected the comparable rates in oral evidence. Within that increased range, in my view, lies the rate that should be adopted and applied to the developable floor space area of 16,000 m2 that I have earlier determined. In my opinion, the hypothetical buyer and seller at the acquisition date probably would have settled on a rate of $1250/m2. That yields an industrial market value, which I adopt, of $20 million. CONCLUSION 229 I have determined that the market value of the Land at the acquisition date was $33,500,000: see [141] above. Compensation referable to market value should be assessed at $17,000,000 by deducting from that market value the purchase price of $16,500,000 representing the cost of completing the contract of sale. There should then be added disturbance loss which has been previously determined in the sum of $55,138.50. The total compensation to which Walker is entitled is therefore $17,055,138.50. 230 The parties are to bring in agreed or competing draft final orders to give effect to my decision. The matter will be listed before me at 10 am on 24 December 2009 to make final orders. Walker should be entitled to its costs of the proceedings in the second remitter without disturbing any existing costs order in that remitter. I will hear the parties on costs if they are not agreed. 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