Land and Environment Court New South Wales Medium Neutral Citation: SNS Pty Ltd v Roads and Maritime Services [2018] NSWLEC 7 Hearing dates: 6, 7, 8, 9, 10, 13, 14, 15, 17 November 2017 Decision date: 15 February 2018 Jurisdiction: Class 3 Before: Pain J Decision: See pars 355-357 Catchwords: COMPULSORY ACQUISITION – partial acquisition of land – application of before and after method of valuation where mixed use development highest and best use – gateway site in Mascot Station Town Centre Precinct – assumption by hypothetical parties of developable gross floor area in before and after scenario – s 59(1)(f) disturbance claim – costs of development application for parent parcel not claimable – costs of development application for residue land not claimable – professional fees of experts advising on valuation for compulsory acquisition additional to legal and valuation fees claimable – stamp duty for replacement land claimable Legislation Cited: Botany Bay Development Control Plan 2013 Pt 4C, Pt 9A Botany Bay Local Environmental Plan 2013 cll 4.6, 6.16 Botany Local Environmental Plan 1995 cl 23A City of Botany Bay Section 94 Contributions Plan 2016 County of Cumberland Planning Scheme Ordinance 1951 Environmental Planning and Assessment Act 1979 ss 74C, 79C, 123 Environmental Planning and Assessment Regulation 2000 cll 49, 55 Interim Development Order No 19 Land Acquisition (Just Terms Compensation) Act 1991 ss 5, 47, 55, 56, 59, 61, 66 Land and Environment Court Act 1979 s 34 Mascot Station Precinct Development Control Plan 2004 Mascot Station Precinct Section 94 Contributions Plan 2004 Mascot Station Town Centre Precinct Masterplan 2012 Roads Act 1993 State Environmental Planning Policy (Infrastructure) 2007 cll 85, 86, 100 State Environmental Planning Policy No 65 – Design Quality of Residential Apartment Development Cases Cited: Al Amanah College Inc v Minister for Education and Training (No 2) [2011] NSWLEC 254 Allandale Blue Metal Pty Ltd v Roads and Maritime Services (No 6) [2015] NSWLEC 18 Blacktown Council v Fitzpatrick Investments Pty Ltd [2001] NSWCA 259 Bligh Consulting Pty Ltd v Ausgrid (2016) 217 LGERA 258; [2016] NSWLEC 75 Botany Development Pty Ltd v Council of the City of Botany Bay (No. 3) [2015] NSWLEC 1282 Cannavo v Roads and Traffic Authority of New South Wales [2004] NSWLEC 570 Commissioner of Succession Duties (South Australia) v Executor Trustee and Agency Company of South Australia Ltd (1947) 74 CLR 358; [1947] HCA 10 Constantine v Blacktown City Council (No 2) [2016] NSWLEC 81 Everest Project Developments Pty Ltd v Minister Administering the Environmental Planning and Assessment Act 1979 (2010) 177 LGERA 43; [2010] NSWLEC 88 Health Administration Corporation v George D Angus Pty Ltd (2014) 88 NSWLR 752; [2014] NSWCA 352 Housing Commission (NSW) v Falconer [1981] 1 NSWLR 547; (1981) 50 LGRA 334 Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413; [1999] HCA 25 Kirela Pty Ltd v The Minister Administering the Environmental Planning and Assessment Act 1979 (No. 2) (2004) 132 LGERA 90; [2004] NSWLEC 68 Macarbell Pty Ltd v Roads and Traffic Authority of New South Wales (2006) 149 LGERA 217; [2006] NSWLEC 651 Mir Bros Unit Constructions Pty Ltd v Roads & Traffic Authority of New South Wales [2006] NSWCA 314 Raja Vyricherla Narayana Gajapatiraju v Revenue Divisional Officer, Vizagapatam [1939] AC 302 Roads & Traffic Authority of New South Wales v Peak [2007] NSWCA 66 Roads and Maritime Services v Allandale Blue Metal Pty Ltd (2016) 212 LGERA 307; [2016] NSWCA 7 Roads and Traffic Authority of New South Wales v McDonald (2010) 79 NSWLR 155; [2010] NSWCA 236 Spencer v The Commonwealth of Australia (1907) 5 CLR 418; [1907] HCA 82 Speter v Roads and Maritime Services [2016] NSWLEC 128 Spicer v Valuer-General (1963) 10 LGRA 319 Sydney Water Corporation v Caruso (2009) 170 LGERA 298; [2009] NSWCA 391 Tenstat Pty Ltd v Valuer General [2012] NSWLEC 1361 Turner v Minister of Public Instruction (1956) 95 CLR 245; [1956] HCA 7 Vilro Pty Ltd (In Voluntary Liquidation) v Roads and Traffic Authority NSW (No 3) (2010) 179 LGERA 47; [2010] NSWLEC 234 Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority (2008) 233 CLR 259; [2008] HCA 5 Yates Property Corporation Pty Ltd (in liq) v Darling Harbour Authority (1991) 24 NSWLR 156; 73 LGERA 47 Category: Principal judgment Parties: SNS Pty Ltd (Applicant) Roads and Maritime Services (Respondent) Representation: COUNSEL: A Galasso SC and L Waterson (Applicant) R Beasley SC and M Astill (Respondent) SOLICITORS: King & Wood Mallesons (Applicant) Minter Ellison (Respondent) File Number(s): 17/10904 TABLE OF CONTENTS Compensation following compulsory acquisition of land 1-4 Land Acquisition (Just Terms Compensation) Act 1991 5-7 Planning controls 8-30 Chronology 31 Assessment of Original DA and JRPP DA 34-39 Market value and injurious affection 40-44 Issues 45-55 Lay evidence 56-71 Evidence on market value 72 Town planning 73-104 Architectural evidence 105-117 Geotechnical engineering evidence 118-120 Valuation evidence 121-165 Assumed GFA in before scenario 166-183 Consideration of before scenario Is evidence which came into existence after date of acquisition admissible in before and after scenarios? 184-191 Finding on assumed GFA in before scenario 192-208 Finding on GFA rate in before scenario 209-226 Consideration of after scenario Assumed GFA in after scenario 227-235 Finding on GFA in after scenario 236-238 Whether delay in construction assumed to affect value/if deferment what is appropriate period? 239-288 Finding on assumed GFA in after scenario/access to Acquired Land/deferred construction in after scenario 289-312 Finding on GFA rate/impact of construction costs in after scenario 313-317 Conclusion on market value 318 Disturbance 319 Evidence on disturbance 320-340 Finding on disturbance claim under s 59(1)(f) 341-354 Conclusion 355-357 Judgment Compensation following compulsory acquisition of land 1. The Applicant SNS Pty Ltd (SNS) owns land at 653 Gardeners Road Mascot. It objects to the amount of compensation offered by the Respondent Roads and Maritime Services (RMS) for the partial acquisition of that land for the purposes of the Roads Act 1993 in particular the WestConnex New M5 project (WestConnex Project) on 5 August 2016. These proceedings are an appeal in relation to the amount of compensation payable brought pursuant to s 66 of the Land Acquisition (Just Terms Compensation) Act 1991 (Just Terms Act). I thank Acting Commissioner Parker for his valuable assistance in this matter. 2. Prior to the acquisition, SNS owned land identified as Lot 100 DP 1191017 comprising an area of 4,962 m2 bounded by Bourke Street on the eastern boundary and Gardeners Road on the northern boundary (Parent Parcel). It had approximate dimensions of 46.45 m x 108.82 m. The WestConnex Project involves inter alia the widening of Bourke Street at the intersection with Gardeners Road. The RMS acquired part of the Parent Parcel identified as Lot 11 DP 1219678 and comprising an area of 1,678 m2 (Acquired Land). The Acquired Land is generally 15.24 m wide (widening to 24.385 m at the Gardeners Road frontage) and runs along Bourke Street. The residue portion owned by SNS is Lot 10 DP 1219678 and is 3,284 m2 (Residue Land). The site was vacant meaning unoccupied at the acquisition date with various warehouse structures on it. It was leased to a business renting out campervans until shortly before the acquisition. 3. SNS' land is part of the Mascot Station Town Centre Precinct (MSTCP), an area of urban renewal characterised by multi-storey residential flat buildings and mixed-use buildings centred around Mascot train station. The land is approximately 150 m to the north of the station. 4. The Court went on a view of the subject site and surrounds and viewed the comparable sales relied on by the valuers. Land Acquisition (Just Terms Compensation) Act 1991 1. Relevant sections of the Just Terms Act provide: Division 4 Determination of amount of compensation … 55 Relevant matters to be considered in determining amount of compensation In determining the amount of compensation to which a person is entitled, regard must be had to the following matters only (as assessed in accordance with this Division): (a) the market value of the land on the date of its acquisition, (b) any special value of the land to the person on the date of its acquisition, (c) any loss attributable to severance, (d) any loss attributable to disturbance, (e) the disadvantage resulting from relocation, (f) any increase or decrease in the value of any other land of the person at the date of acquisition which adjoins or is severed from the acquired land by reason of the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired. 56 Market value (1) In this Act: market value of land at any time means the amount that would have been paid for the land if it had been sold at that time by a willing but not anxious seller to a willing but not anxious buyer, disregarding (for the purpose of determining the amount that would have been paid): (a) any increase or decrease in the value of the land caused by the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired, and (b) any increase in the value of the land caused by the carrying out by the authority of the State, before the land is acquired, of improvements for the public purpose for which the land is to be acquired, and (c) any increase in the value of the land caused by its use in a manner or for a purpose contrary to law. (2) When assessing the market value of land for the purpose of paying compensation to a number of former owners of the land, the sum of the market values of each interest in the land must not (except with the approval of the Minister responsible for the authority of the State) exceed the market value of the land at the date of acquisition. (3) If: (a) the land is used for a particular purpose and there is no general market for land used for that purpose, and (b) the owner genuinely proposes to continue after the acquisition to use other land for that purpose, the market value of the land is taken, for the purpose of paying compensation, to be the reasonable cost to the owner of equivalent reinstatement in some other location. That cost is to be reduced by any costs for which compensation is payable for loss attributable to disturbance and by any likely improvement in the owner's financial position because of the relocation. … 59 Loss attributable to disturbance (1) In this Act: loss attributable to disturbance of land means any of the following: (a) legal costs reasonably incurred by the persons entitled to compensation in connection with the compulsory acquisition of the land, (b) valuation fees of a qualified valuer reasonably incurred by those persons in connection with the compulsory acquisition of the land (but not fees calculated by reference to the value, as assessed by the valuer, of the land), … (f) any other financial costs reasonably incurred (or that might reasonably be incurred), relating to the actual use of the land, as a direct and natural consequence of the acquisition. (2) Subject to the regulations, a reference in this section to a qualified valuer is a reference to a person who: (a) has membership of the Australian Valuers Institute (other than associate or student membership), or (b) has membership of the Australian Property Institute (other than student or provisional membership), acquired in connection with his or her occupation as a valuer, or (c) has membership of the Royal Institution of Chartered Surveyors as a chartered valuer, or (d) is of a class prescribed by the regulations. … 61 Special provision relating to market value assessed on potential of land If the market value of land is assessed on the basis that the land had potential to be used for a purpose other than that for which it is currently used, compensation is not payable in respect of: (a) any financial advantage that would necessarily have been forgone in realising that potential, and (b) any financial loss that would necessarily have been incurred in realising that potential. SNS' claim 1. As set out in the Points of Claim dated 1 November 2017, SNS claims compensation in the amount of $40,681,906 plus stamp duty as set out in the following table: Sections 55(a), 56 and 55(f)- Market value and injurious affection $38,768,993 Disturbance Losses Sections 55(d) and 59(1)(a) and (b)- Legal and valuation costs $325,900 (GST exclusive) Sections 55(d) and 59(1)(f)- Other financial costs being: • stamp duty to be incurred in respect of the acquisition to replace the Acquired Land; stamp duty • costs incurred in relation to the preparation of the Original DA and Amended DA ($774,134); $1,587,013 • costs incurred in relation to the Residue Land Consent ($478,877); and • fees of consultants whose expertise informed he valuation of the Acquired Land ($314,000). Total $40,681,906 plus stamp duty RMS' position 1. The RMS' contention as to compensation is set out in the following table: Sections 55(a), 56 and 55(f) – Market value and injurious affection $13,472,000 Disturbance Losses Sections 55(d) and 59(1)(a) and (b) – Legal and valuation costs $325,900 (GST exclusive) -AGREED Sections 55(d) and 59(1)(f) – Other claimed financial costs NIL Total 13,797,900 Planning controls 1. At the date of acquisition the Parent Parcel was zoned "B4 Mixed Use" under the Botany Bay Local Environmental Plan 2013 (BBLEP). The floor space ratio (FSR) development standard for the Parent Parcel under the BBLEP was 3.2:1. The "site area" of the Parent Parcel as defined in the BBLEP for the purposes of determining FSR was its total area (which included the land which became the Acquired Land). 2. At the date of acquisition the Parent Parcel had registered on its certificate of title easements for electricity, water and railway transit. All easements were on the portion of the Parent Parcel that became the Acquired Land and remain entirely contained within the Acquired Land post acquisition. The easements run generally in a north-south direction parallel to Bourke Street. The easement for railway transit is approximately 15 m wide, the majority of which (13 m) is within the Acquired Land. The top of the railway easement is at RL 2.475 m AHD, a depth of approximately 8.5 m. A rail tunnel for the airport line passes under the Acquired Land. 3. The Parent Parcel has been historically affected by a number of road reservations under various planning instruments which are relevantly summarised below. County of Cumberland Planning Scheme Ordinance 1951 1. The County of Cumberland Planning Scheme Ordinance 1951 contained a map dated 27 June 1951 which identified a proposed road widening reservation along the land known as Bourke Street. Interim Development Order No 19 1. Part of the Parent Parcel was identified for road widening in the Council's Interim Development Order No 19 gazetted on 16 September 1977. Botany Local Environmental Plan 1995 1. An area of 1,690 m2 of the Parent Parcel was affected by a reservation for local road widening purposes (Zone 5(a) Special Uses – Road Widening) in the Botany Local Environmental Plan 1995 (BLEP 1995) which largely corresponds with the land acquired by RMS (1,678 m2). The BLEP 1995 was superseded by the BBLEP in 2013 some three years prior to the acquisition date. Under cl 23A of the BLEP 1995 the Council was designated the responsible acquiring authority for land reserved for road widening in the "Mascot Station Precinct". Botany Bay Local Environmental Plan 2013 1. Under the BBLEP the Parent Parcel was zoned B4 Mixed Use, had a maximum permissible building height of 44 m and maximum FSR limit of 3.2:1. The Land Reservation Acquisition (LRA) Map included in the BBLEP identified 1,678 m2 of the eastern portion of the Parent Parcel as Classified Road (SP2). The area identified was generally consistent with that which was shown in earlier instruments save for a small additional splay corner in the top left hand corner. The RMS was the relevant acquisition authority pursuant to cl 5.1(2) of the BBLEP. 2. The maximum FSR for the Parent Parcel was 3.2:1 according to the Floor Space Ratio map in the BBLEP. As the Parent Parcel was located within the MSTCP, cl 6.16 design excellence applied to any development application (DA) for a new building on that land, requiring the consent authority to have regard to various design-related matters. Mascot Station Precinct Development Control Plan 2004 1. The Mascot Station Precinct Development Control Plan 2004 (Mascot DCP) specified design guidelines for new streets earmarked for improvement including Bourke Street. Additional road widening works were contemplated on Bourke Street between Gardeners Road and Church Avenue to the effect that the eastern boundary of the Parent Parcel would align with properties to the south. The relevant sketch map was not dimensioned. It indicated that the land to be acquired would be in line with the road reserve alignment to the south. Botany Bay Development Control Plan 2013 1. The Botany Bay Development Control Plan 2013 (BBDCP) applied to the Parent Parcel at the acquisition date. Part 9A of the BBDCP related to the MSTCP in which the Parent Parcel was located. The MSTCP "vision statement" articulated in Pt 9A.2 of the BBDCP envisages "a vibrant and diverse town centre, where a spacious, high quality public domain is the setting for thriving activities and cohesive built form". Bourke Street "is to be a vibrant retail main street, with excellent pedestrian amenity, wide footpaths, a dedicated bicycle lane and excellent public transport access". 2. The Parent Parcel was located in "Urban Block 1" identified in the BBDCP. The desired future character of "Urban Block 1" was for a mixed use area with retail ground floor premises. Bourke Street was envisaged as "the major, thriving main street" and "active spine" of the MSTCP. The Parent Parcel was described as a "gateway site" being at the intersection of the northern entry point to the MSTCP. Redevelopment of the Parent Parcel "will respond to the sites [sic] prominence and visual importance in order to define the entry to the [MSTCP]". 3. Diagrams in the BBDCP illustrate the layout and built form controls for development within the MSTCP. The desired built form for development on the Parent Parcel is a four storey podium beneath two towers reaching a height of 13 storeys. The podium was envisaged to have zero setback and retail frontage along the new (widened) Bourke Street alignment. The towers were to be set back 3 m from Bourke Street. 4. The BBDCP also stated in relation to alternative development schemes proposed by developers: Council will consider alternative development schemes subject to the Vision in Part 9A.2 – Vision Statement and the Desired Future Character principles in Part 9A.3 – Urban Block Character Statements being met. [Pt 9A.1.2 – Preliminary; Land to Which this Part Applies] Council will consider alternative development proposals relating to the future layout and built form controls (Part 9A.4.3) if the alternative development proposal meets the future vision in Part 9A.2 for the Mascot Station Town Centre Precinct and the Desired Future Character principles in Part 9A.3. Alternative development proposals are to meet the provisions of the Botany Bay LEP 2013 and SEPP No. 65 and the Apartment Design Guide. [Pt 9A.4.1 – General Controls; Introduction] Development must comply with the future layout and built form controls for Urban Blocks 1 and 4 in Figures 11, 12, 14 and 15. This requirement may result in the FSR not being achieved. [Pt 9A.4.3.2 – Floor Space Ratio (FSR)] 1. The abovementioned diagrams identified that part of the southern portion of the Parent Parcel was required for a proposed "new street" to be created to the south of the Parent Parcel perpendicular to Bourke Street. The Court was informed that this street is to be named Galloway Street and I will refer to it as such throughout this judgment. 2. Part 4C of the BBDCP contained controls for residential flat buildings including site and building design, building configuration and social requirements. Notably, for development with 10 or more apartments, a maximum of 25% of apartments were to be studio and one-bedroom. Mascot Station Precinct Section 94 Contributions Plan 2004 1. The eastern portion of the Parent Parcel was identified as "[l]and to be purchased by Council" in Figure 8 of the Mascot Station Precinct Section 94 Contributions Plan 2004 (s 94 Plan 2004). Figure 8 was a sketch map similar to that which appeared in the Mascot DCP. The purpose of the acquisition was described in cl 3.3.3 as "to improve the functioning of Bourke Street to cater for the needs of new development in the locality". City of Botany Bay s 94 Development Contributions Plan 2016 1. The City of Botany Bay s 94 Development Contributions Plan 2016 (s 94 Plan 2016) proposed that a portion of the Parent Parcel, as identified in the BBDCP, be dedicated for the widening of Bourke Street and used to accommodate forecast growth in local traffic. The s 94 Plan 2016 was the relevant s 94 plan as at the date of acquisition. Mascot Station Town Centre Precinct Masterplan 2012 1. The MSTCP Masterplan prepared in April 2012 provided the urban design framework for future development of the MSTCP. The illustrations used in the Masterplan appear similar if not identical to those which are included in the BBDCP. They show the proposed widening of Bourke Street incorporating the eastern portion of the Parent Parcel at a width of 16.4 m, the same two towers on top of a four-level podium concept design, zero setback for the podium levels with retail frontage along the new Bourke Street alignment, and 3 m setback for the towers. The widened Bourke Street is shown in all illustrations as being linear to the existing road reserve to the south. 2. The Masterplan explained that separating towers above a podium is intended "to provide daylight and views through the Town Centre and a sense of openness". State Environmental Planning Policy (Infrastructure) 2007 1. Clauses 85 and 86 of the State Environmental Planning Policy (Infrastructure) 2007 (ISEPP) apply which respectively relate to development immediately adjacent to rail corridors and to excavation in, above, or adjacent to rail corridors. They required concurrence from Sydney Trains because of the location of the Airport Tunnel beneath the Parent Parcel. 2. The tunnel imposed constraints on the redevelopment of the Parent Parcel as described in the "Airport Line Tunnel Projection Guidelines: Guidelines for Development within the Vicinity of the Airport Line" (Airport Line Guidelines). 3. Clause 100 relates to development on a proposed classified road and relevantly required concurrence from RMS for such development. Concurrence from RMS was required for proposed development on the Parent Parcel as the eastern portion of the site was identified on the LRA Map in BBLEP as Classified Road (SP2). State Environmental Planning Policy No 65 – Design Quality of Residential Apartment Development 1. State Environmental Planning Policy No 65 – Design Quality of Residential Apartment Development (SEPP 65) contains design guidelines which need to be addressed and considered in the submission and determination of a DA for a residential flat building. The relevant design quality guidelines as at the acquisition date (5 August 2016) were those in the Apartment Design Guide (ADG) which applies to DAs lodged from 19 June 2015. When the DA for development on the Parent Parcel (DA 15/22) was first lodged on 17 February 2015 the relevant design quality guidelines were those in the Residential Flat Design Code (RFDC). Chronology 1. The following chronology was agreed by the parties: Event Date DA No 15/22 lodged by Icek Holdings Pty Ltd (a related entity to SNS) for the construction of a 14 storey mixed-used development including 190 residential apartments (Original DA). 17 February 2015 Amendment to Original DA under cl 55 of the Environmental Planning and Assessment Regulation 2000 (EPA Regulation) reducing the number of residential units from 190 to 184 and increasing retail floor space (JRPP DA). The proposed building height, FSR (3.67:1), gross floor area (GFA) (18,184 m2) and provision of car parking (268 spaces) remained the same. July 2015 Botany Bay Council Assessment Report of JRPP DA issued under s 79C of the EPA Act to the Sydney East Joint Regional Planning Panel (JRPP) for consideration. 2 December 2015 Further amended plans lodged with the Council (Further Amended DA). These plans reduced the number of residential units from 184 to 144, changed the unit mix to reduce the proportion of studio and one-bedroom apartments, removed the above ground development proposed on the Acquired Land and retained basement car parking under the Acquired Land. The FSR remained 3.67:1. 4 December 2015 The Further Amended DA was not sent to the JRPP. JRPP DA refused by the JRPP. 17 December 2015 Class 1 proceedings commenced in the Court appealing JRPP's refusal of the JRPP DA. 19 April 2016 Proposed acquisition notice issued to SNS. 29 April 2016 Land acquired by RMS. 5 August 2016 Leave granted in the Class 1 proceedings by the Registrar of the Court to rely on amended plans (Residue Land DA) that proposed development wholly within the Residue Land. The Residue Land DA reduced the number of residential units to 117, underground car spaces to 158 and FSR to 3.39:1. 23 August 2016 Statutory offer of compensation to SNS in accordance with the Valuer-General's determination. 24 October 2016 Development consent for the Residue Land DA granted by the Court pursuant to an agreement under s 34(3) of the Court Act. 21 December 2016 Proceedings commenced appealing the Valuer-General's determination of compensation. 12 January 2017 1. The development proposed on the Parent Parcel in the Original DA and the JRPP DA comprised a slab building construction with nil setback. Development proposed on the Acquired Land included about two metres of slab building on the western boundary and a basement carpark which was close to the rail tunnel for the airport line. The surface area potentially required by the Council's road widening requirements in Bourke Street was provided for on the eastern boundary with the basement carpark proposed to be built underneath. WestConnex publicly available project documents 1. Several publicly available documents identify the likely completion dates of the work on Bourke Street including the Acquired Land. A WestConnex "Project Overview" dated November 2014 indicated that the Project would be open to traffic in late 2019. A "Community update" dated August 2015 maintained the same intended date for completion. A "Project Overview" dated November 2015 identified that Bourke Street would be widened and upgraded to cater for future traffic growth. The "New M5 – St Peters" fact sheet dated November 2015 included basic construction timetables which indicated that the Bourke Street road works were forecast for completion in late 2019. Assessment of Original DA and JRPP DA Design Review Panel report 1. As part of the Council's assessment process the Original DA was referred to the Design Review Panel (DRP) which prepared a report dated 4 April 2015. Relevant extracts of the report are as follows: 1. PREAMBLE The subject DA is for a mixed-use development on the south-western corner of the intersection of Gardeners Road and Bourke Street, within the Mascot Station Precinct. ... The site is dimensionally constrained by future road widening to Bourke Street, the rail tunnel and a planned new street to the south. The DA submission is of a new scheme but it continues to demonstrate a well­considered design approach to which the Panel responds positively. The Panel continues to be concerned about the excess in FSR and would recommend a possible way that this issue may be addressed. This and other issues are discussed in this report. 2. DESIGN REVIEW 2.1 Context The design overview submitted by the applicant documents effectively the reasoning behind the current scheme of a single slab tower over a four storeyed podium. ... Despite the changes, the current proposal would be an acceptable response in terms of its relationship to the adjoining redevelopment, within the courtyard and when viewed from Gardeners Road and the new street. 2.2 Scale The bulk and height of the 4 storey podium and the 10 storey slab building are generally appropriate for the scale of the streets and the adjoining and surrounding redevelopments. ... 2.3 Built Form The proposed slab building is approximately 90m long but is well modulated by deep recesses in the main eastern façade, in particular the central recess above level 3 which provides a significant visual break in the length of the building. The proposal as outlined on the drawings and presented at the meeting would be generally acceptable in terms of its relationship to the existing and approved redevelopment, definition of the public domain and activation of the streets at ground level. … 2.4 Density ... The DA has reduced the FSR to 3.67:1 which is an excess of 15%. The established preference of the Panel regarding FSR is for numerical compliance with the maximum allowed especially considering that the LEP is a recent instrument having been made in 2013. The Panel does not support excesses in FSR unless it is a minor excess and then with adequate justification otherwise it may tend to undermine the objectives of the control. It is understood that the applicant is willing to transfer a substantial part of the site area without charge to the public for the purpose of road widening and part of a new street adjoining the southern boundary of the site. In these circumstances there is potential justification for acceptance of an excess in density on the basis of "public benefit". The applicant advised however that if a further part of the site is also required in the future for widening of Bourke Street, this would need to be on an agreed commercial basis. In the subject case, the proposed excess density would be partly mitigated by the reduction of a part storey as suggested above and the skilful design as demonstrated by the design architect. … 3. CONCLUSION/ RECOMMENDATION The subject proposal has the potential for an excellent design outcome, and some excess density could be justified if the land required for the new street is dedicated without charge to the Council. The Panel generally supports the DA subject to the suggested modifications in this report being incorporated in an amended design to the satisfaction of the Council. 1. Following the DRP report the Council accepted an amendment to the Original DA (the JRPP DA) which addressed some of the issues raised by the Council's initial assessment of the proposal. Council Assessment Report 1. The Council prepared an undated assessment report which recommended that the JRPP DA be refused by the JRPP. The Council Assessment Report was sent to the JRPP on 2 December 2015. Its recommendation in full and reasons for refusal are extracted as follows: RECOMMENDATION That the Sydney East Joint Regional Planning Panel (JRPP), as the Determining Authority resolve to refuse consent for the construction of a thirteen storey mixed use development including 272msq of retail floor space at ground level; including 184 residential apartments DA-15/22, for the following reasons: Reasons for Refusal 1. The Roads and Maritime Services have refused to provide the concurrence required by Clause 100 of State Environmental Planning Policy (Infrastructure) 2007, relating to development on a proposed classified road Concurrence is unable to be granted as the development is proposed within the proposed classified road, and would interfere with future road widening (Environmental Planning and Assessment Act 1979 s79C(1)(a)(i)). 2. Sydney Trains have been unable to provide the concurrence required by Clause 86 of State Environmental Planning Policy (Infrastructure) 2007, relating to excavation in, above or adjacent to rail corridors. Concurrence is unable to be granted as the package of information required to assess the impacts of the proposal on the Airport Railway Tunnel is not adequate, and Sydney Trains are not able to properly consider the matters outlined within Clause 86(4) of State Environmental Planning Policy (Infrastructure) 2007 (Environmental Planning and Assessment Act 1979 s79C(1)(a)(i)). 3. The proposal is not consistent with the Design Principles outlined within State Environmental Planning Policy No.65 Quality of Residential Flat Development, Specifically, the proposal does not comply with the following principles: a) The proposal is unable to be contained within the developable area of the site, and the density is therefore inappropriate for the site and context as required by Principle 3: Density. b) Inadequate acoustic amenity is provided to the ground floor dwellings, as required by Principle 7: Amenity. c) The design does not provide a dwelling mix that responds to the desired future community as required by Principle 9: Social dimensions and housing affordability. (Environmental Planning and Assessment Act 1979 s79C(1)(a)(i)). 4. The proposed development is not consistent with the objectives of the B4 Mixed Use zone under Botany Bay Local Environmental Plan 2013 as the proposal does not integrate suitable business, office, residential, retail and other development, as the ground floor residential units are not suitable in the location. 5. The proposed does not comply with the maximum floor space ratio required by the Botany Bay Local Environmental Plan 2013, and the submitted 4.6 variation request is not supported, as the proposed floor space is unable to be contained within the developable area of the site (Environmental Planning and Assessment Act 1979 s79C(1)(a)(i)). 6. The proposed development does not comply with Part 9A Mascot Station Town Centre Precinct of the Botany Bay Development Control Plan 2013 (Environmental Planning and Assessment Act 1979 s79C(1)(a)(iii)). Specifically, the proposal does not comply with the following: a) The proposal does not comply with the unit mix requirements outlined within Part 9A.4.4.7, and the proportion of studio and one bedroom apartments is excessive. b) Further to reason 1. above, the proposal does not comply with the setback requirements to Bourke Street outlined within Part 9A.4.3.4, as inadequate provision has been made for the portion of the proposed classified road to be acquired. c) The ground floor units are provided with poor amenity, and the private open space areas are not designed away from noise sources as required by Part 9A.4.5.1, and the primary outdoor private open space areas are located on the street frontages, contrary to Part 9A.4.4.3. d) The proposal does not provide a complete commercial frontage to Bourke Street, as required by Part 9A.4.4.4. e) Insufficient information has been provided to demonstrate that vehicles are able to manoeuvre into the service parking bays as required by Part 3A.3.4. 7. The proposal will result in adverse social impacts on the locality given the provision of an unsatisfactory dwelling mix, will result in adverse impacts on the built environment in relation to the impacts to the proposed road widening, and has not demonstrated that the proposal will not generate adverse impacts on the Airport Rail Tunnel (Environmental Planning and Assessment Act 1979 s79C(1)(b)). 8. The proposed development is not suitable in the context of the site and locality given the issues in relation to road widening, road noise, and acoustic amenity impacts to ground floor apartments (Environmental Planning and Assessment Act 1979 s79C(1)(c)). 9. Granting approval to the development is contrary to the public interest (Environmental Planning and Assessment Act 1979 s79C(1)(e)). Correspondence from Sydney Trains 1. The concurrence of Sydney Trains was necessary before development could proceed on SNS' land due to the location of the Airport Line tunnel and railway easement described in par 29 above. At the time the JRPP determined the JRPP DA, Sydney Trains had not provided concurrence having sought information that was either not provided or was inadequate for the purposes of cl 86 of the ISEPP, as set out in the correspondence summarised in the next paragraph. 2. A letter from Sydney Trains to the Council dated 30 June 2015 requested further information to allow Sydney Trains to make a decision on the granting of concurrence. SNS was encouraged to consult with Sydney Trains before submitting new or revised documentation to the Council. An email from Sydney Trains to the Council dated 19 November 2015 advised that Sydney Trains was still not in a position to issue its concurrence. Despite consultation between Sydney Trains and a consultant for SNS, Sydney Trains was of the opinion that the information provided remained inadequate. Several technical issues were identified as outstanding and requiring further documentation to resolve before an assessment on concurrence could be made. JRPP determination 1. The JRPP notified its refusal of the JRPP DA in a letter dated 17 December 2015. Its reasons for refusal were: 1. The Roads and Maritime Services have refused to give concurrence to the development, which is located on a classified road . 2. Sydney Trains has not provided its concurrence required under Clause 86 of SEPP (Infrastructure) 2007. Market value and injurious affection 1. The RMS correctly identified the applicable valuation principles that are relevant to the hypothetical transaction in the before and after method applied by the valuers. The market value of land under s 5(a) of the Just Terms Act must be assessed according to its "highest and best use", Turner v Minister of Public Instruction (1956) 95 CLR 245; [1956] HCA 7 and Spicer v Valuer-General (1963) 10 LGRA 319. The Court will therefore approach the task of determining compensation by determining what was the "most profitable potential use" of the subject land, Vilro Pty Ltd (In Voluntary Liquidation) v Roads and Traffic Authority NSW (No 3) (2010) 179 LGERA 47; [2010] NSWLEC 234 at [17]. 2. The parties to the hypothetical sale are assumed to be "fully informed" and to make "all proper inquiries", Everest Project Developments Pty Ltd v Minister Administering the Environmental Planning and Assessment Act 1979 (2010) 177 LGERA 43; [2010] NSWLEC 88 at [58]. The extent to which this includes expert evidence will be discussed below. 3. The land must be valued at the relevant date in its existing condition with all its potentialities, Yates Property Corporation Pty Ltd (in liq) v Darling Harbour Authority (1991) 24 NSWLR 156; 73 LGERA 47 at 175-176; citing Raja Vyricherla Narayana Gajapatiraju v Revenue Divisional Officer, Vizagapatam [1939] AC 302 at 313 and Turner v Minister for Public Instruction at 268-289. 4. The valuation exercise must assume that both parties to the hypothetical transaction are "perfectly acquainted with the land, and cognizant of all circumstances which might affect… [its] value", Spencer v The Commonwealth of Australia (1907) 5 CLR 418; [1907] HCA 82 at 441 per Isaacs J and Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413; [1999] HCA 25 at [49]-[50], specifically adopted by the High Court in Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority (2008) 233 CLR 259; [2008] HCA 5 at [51]. Following Spencer v Commonwealth the hypothetical purchaser in both the before and after scenario is assumed to be willing, knowledgeable and prudent. 5. As a general principle in determining compensation doubts should be resolved in favour of a more liberal estimate, see Commissioner of Succession Duties (South Australia) v Executor Trustee and Agency Company of South Australia Ltd (1947) 74 CLR 358; [1947] HCA 10 at 374 and Sydney Water Corporation v Caruso (2009) 170 LGERA 298; [2009] NSWCA 391 at [3]. Issues 1. The parties have a common general approach to market value but have used different values for the inputs to that approach. The common approach as set out by RMS with some amendment by the Court has the following elements: 1. the highest and best use of both the Parent Parcel and the Residue Land is redevelopment for a mixed use development incorporating a podium containing commercial uses and high rise residential buildings (towers being the preferred built form according to the BBDCP); 2. the values of the Parent Parcel and Residue Land are determined (largely) by the amount of GFA in a redevelopment to which a purchaser (developer) would reasonably expect to obtain development consent; 3. the value of expected GFA for the land per square metre may be derived from comparable sales; 4. the expected GFA for the Parent Parcel less the expected GFA for the Residue Land, multiplied by a rate per square metre derives an amount (subject to possible further adjustment under (e) below) that reflects the value of the Acquired Land and the diminution in the value of the Residue Land; and 5. further adjustments if the carrying out of the public purpose affects the value of the Residue Land in the following respects: 1. potential delay in commencement of redevelopment (if any); and/or 2. potential extra cost of redevelopment (if any). 1. SNS contends that the market value of the Residue Land is substantially less than the market value of the Parent Parcel principally because of the following factors: 1. a substantial reduction in the development potential of the Residue Land compared to the Parent Parcel to the extent of approximately 7,000 m2 of GFA; 2. a substantial increase in risk and cost attending the physical development of the Residue Land in the after scenario as a consequence of RMS' denial of access over the Acquired Land for construction purposes until completion of the road widening works on Bourke Street. 1. SNS in closing submissions submitted the following key issues for determination. In the before scenario, disregarding the public purpose, would the Further Amended DA (144 units, FSR 3.67:1) have been approved in relation to the Parent Parcel at the acquisition date? If yes, the developable area of the Parent Parcel is 18,184 m2 GFA according to one town planner. If no, what would the hypothetical parties have regarded as the developable GFA for the Parent Parcel? Mr Chambers town planner for SNS applied 18,184 m2 while Mr Mitchell town planner for RMS deduced 16,085 m2. Alternatively, if both planners' views are reasonably open, the valuers adopted different rates for certain and less certain GFA. The rate per square metre GFA determined by the valuers for certain GFA is Mr Davis for SNS at $3,400/m2 and Mr Lunney for RMS at $3,200/m2. 2. In the after scenario, what would the hypothetical parties regard as the developable GFA for the Residue Land? Mr Chambers applied 10,508 m2 GFA (FSR 3.2:1) and Mr Mitchell applied 16,085 m2 GFA (FSR 4.9:1). SNS' primary case is that the Residue Land DA approved with a GFA of 11,164 m2 (3.39:1 FSR) showed that this developable area was reasonably available to a hypothetical purchaser in the after scenario. Determining the appropriate rate per square metre of GFA as between the valuers produces an after value. According to SNS this must be adjusted to reflect the lack of access to the Acquired Land on the Bourke Street boundary until early 2020, the appropriate period of deferment being 30 months. If construction commences before 2020 greater construction costs result from the inability to rely on the Acquired Land for access. SNS not synonymous with hypothetical parties 1. I observe that one of the features of this case was the well advanced planning by SNS for the site including the preparation of a DA rejected by the JRPP not long before acquisition. Since acquisition development consent has been granted over the Residue Land by the Court. There are consequently potentially two well advanced DAs in the before and after scenarios. As observed by the Acting Commissioner during the hearing had SNS wished to claim loss of development potential the hypothetical development model may well have been a more appropriate valuation approach. As the valuers considered there was insufficient evidence from the other disciplines to enable them to undertake that approach it was not pursued. 2. In accordance with the principles of valuation identified above in pars 40-43, the extent to which the prudent hypothetical parties would be informed in the before and after scenarios must not be assumed to be identical to the actual circumstances of SNS. Separating reality from the required hypothetical considerations which I must undertake was not straightforward in this case. This leads to the next topic as I consider part of the driver for the extensive expert evidence was the tendency to support the detailed actual development proposals which existed in the before and after scenarios. Extent of expert evidence likely to be obtained by hypothetical parties 1. Whether and what expert evidence would be obtained by the hypothetical parties is a necessary finding the Court must make. The principle encunciated in Everest Projects that the hypothetical parties must make all proper inquiries does not mean that every piece of information or expert opinion sought by a party should be considered by the Court. The volume of expert evidence from seven disciplines before the Court is substantial. The RMS submitted it was far more substantial than the prudent hypothetical parties would be assumed to obtain and that is a question of fact per Everest Project Developments at [58]. 2. As has been observed in other cases, parties before the Court in some compensation appeals are often better informed as is the Court than the prudent hypothetical parties would be assumed to be, Allandale Blue Metal Pty Ltd v Roads and Maritime Services (No 6) [2015] NSWLEC 18 at [257]. One example in this case is that Mr Menzies quantity surveyor for SNS undertook an assessment of building costs for six comparable properties which Mr Davis valuer for SNS included in his analysis of these sales. I consider that is more information than the prudent hypothetical parties should be assumed to obtain. 3. As RMS identified, it having lost the argument at the interlocutory stage as to whether detailed expert evidence should be prepared and filed, it has addressed the expert evidence which SNS wished to rely on. It nevertheless argued that the hypothetical parties would have obtained advice from an architect, town planner and valuer at most. In this case there was a volume of material prepared to support various versions of SNS' DA for development on the Parent Parcel available at the date of acquisition negating the need for structural engineering, geotechnical engineering, construction scheduling or quantity surveying advice. 4. SNS submitted the assumed sale is of a high value, complex development. The degree of investigation is not disproportionate. 5. I flag this issue at this stage and will not rule finally at this point on the admissibility of all the expert evidence but will return to this matter as I discuss the expert evidence in more detail. Lay evidence Affidavits of Mr Royal 1. Mr Royal director of SNS affirmed an affidavit on 15 September 2017. SNS is part of a group of companies (Sans Group) directed and managed by Mr Royal each of which carries on the business of acquiring and developing property. Mr Royal listed six additional companies within the Sans Group which had purchased and been involved in the development of seven properties since 1986. Mr Royal also stated that some of the Sans Group companies have acquired partial interests in various development properties. 2. SNS acquired the subject property in 1992 and leased it to various tenants until 30 June 2016. The most recent tenant used the premises for its campervan and car rental business. On 21 July 2016 a complying development certificate was obtained authorising demolition of the existing structures on the property. Mr Royal attested to inspecting the property on 24 July 2016 where he observed that the demolition works had been partially completed. 3. Mr Royal attested that on 23 February 2015, after preparation of the Original DA had commenced, he met with representatives of WestConnex and RMS who explained that RMS intended to acquire part of the subject property which would be added to the Bourke Street road reserve. 4. Mr Royal attested to receiving a proposed acquisition notice on 29 April 2016. On 11 May 2016 he attended a meeting with representatives from the Sydney Motorway Corporation (SMC), the entity responsible for the construction of WestConnex, and the contractors (CPB) engaged to perform the Bourke Street road works. Mr Royal recorded in his affidavit his recollection of the meeting having refreshed his memory using notes made at the time. He was told by CPB that the Bourke Street road widening would likely be completed in 2018 and that access across the Acquired Land would not be possible before this time as it would interfere with those road works. CPB also said that the Acquired Land would not be available for scaffolding, even if it were cantilevered over the road reserve, as it would interfere with WestConnex's construction program and pose safety issues. CPB said that crane swings above the Acquired Land would be a safety risk and would not be permitted unless required by law. It would not allow anchors to be placed on the Acquired Land to support the basement during construction. 5. On 25 May 2016 Mr Royal attended a meeting with the same representatives of SMC and CPB. He recalled that CPB reiterated that there could be no access to the Residue Land from Bourke Street until the road widening was complete. Anchoring would only be permitted by CPB if legally obliged to and subject to the final design of the road. Scaffolding on and crane swings over the Acquired Land would only be permitted if forced to by law. CPB expected that the widening of Bourke Street would be completed by mid-2019 and declared a public road in 2020. 6. The acquisition occurred on 5 August 2016. Mr Royal attested that SNS paid fees for consultants and advisers engaged in connection with the preparation of development plans prior to the acquisition. Mr Royal attested that he intends to purchase land to replace the Acquired Land and has made offers on nine other properties without success. 7. Mr Royal affirmed a second affidavit on 1 November 2017 related to disturbance costs. Mr Royal stated that some expenses incurred for services provided by consultants in the preparation of the DAs for development on the Parent Parcel were wasted as a consequence of the acquisition as they were unable to be used in relation to the DA. Nine consultants were engaged relating to the following disciplines: acoustic, architectural three-dimensional modelling, photomontage, fire engineering, population analysis, accessibility, legal, landscape design and wind. For each consultant Mr Royal described the nature of the services and identified the quantum of and extent to which the services initially provided for the DAs prepared before the date of acquisition were able to be re-used for the Residue Land DA. Invoices in respect of these amounts were attached to Mr Royal's second affidavit. Oral evidence of Mr Royal 1. In examination-in-chief Mr Royal stated he spoke with a council officer in November 2015 who maintained the view that RMS was the concurrence authority and that it would continue to recommend that the JRPP refuse the JRPP DA on the basis that RMS had not given its concurrence. Following this Mr Royal instructed his geotechnical engineers to stay their investigations until the JRPP made its determination. 2. Mr Royal was asked questions about his discussions with the Council. He was shown a letter from the Council dated 27 May 2015 which stated that a preliminary assessment of the Original DA had been carried out and that several issues had been identified including the absence of RMS concurrence. Mr Royal was also shown a file note of a council officer dated 16 June 2015 produced after a meeting with SNS staff including Mr Royal which stated that "Applicant needs this [the Original DA] to be determined such that they can pursue litigation with RMS. Thus, SNS understands that Council/JRPP will have to refuse the application, but nonetheless wishes to proceed". It was put to Mr Royal that the letter and file note recorded an understanding between the Council and SNS that the Original DA would be refused. Mr Royal refuted this and stated that SNS acted on legal advice that suggested RMS' concurrence was not required. Mr Royal was asked why he only asked the geotechnical work to be put on hold in November 2015 if he understood from June 2015 that the Original DA would be refused. Mr Royal said that the Council continued to work with SNS to resolve the issues raised in their preliminary assessment of the Original DA suggesting that neither parties' actions were consistent with an assumption that the DA would inevitably be refused. 3. It was pointed out in re-examination that the file note of 16 June 2015 recorded requests from the Council to SNS to provide additional information concerning a number of issues with the Original DA. Mr Royal stated that these issues were examples of the parties continuing to work together before the JRPP determination in December 2015. Many of the issues were resolved in the Residue Land DA. 4. Mr Royal was cross-examined about his records of meetings with SMC and CPB, which were included in his first affidavit and summarised in pars 59-60 above. In his affidavit Mr Royal recalled that he had been told that access to the Residue Land from Bourke Street would not be possible. Mr Royal agreed in oral evidence that he was in fact told that "unrestricted" access would not be possible as this more accurately reflected the notes he made after the meetings with SMC and CPB. Mr Royal confirmed that he was told a crane would not be permitted to swing over the Acquired Land unless required to by law. He was also confident that he had been told that no anchors or scaffolding would be permitted on the Acquired Land unless required by law. Mr Royal had the impression at the first meeting on 11 May 2016 that SMC and CPB were very unhappy about the prospect of SNS using the Acquired Land in any manner. At the second meeting on 25 May 2016 they qualified their responses slightly but continued to convey reluctance towards permitting SNS using the Acquired Land unless required to by law or under the terms of the WestConnex Project approval. 5. Mr Royal was asked about access for construction vehicles to the Residue Land via the new Galloway Street. He stated that at the date of acquisition the portion of Galloway Street to the south of the Residue Land was privately owned. Mr Royal did not think that he would be able to obtain permission from the landowner to traverse that land. Correspondence between SNS and RMS 1. Nine letters between SNS and RMS after the date of acquisition were tendered as evidence of discussions concerning access over the Acquired Land. In the first letter dated 23 December 2016, Mr Royal wrote to RMS informing it of the Court's approval of the Residue Land DA and requesting confirmation of RMS' position concerning access. The RMS responded on 18 January 2017 seeking additional information. On 30 January 2017 Mr Royal provided extra information about the matters of construction for which access to the Acquired Land is required. Mr Royal stated that SNS anticipated commencing construction on the Residue Land in September 2017. The RMS response on 5 April 2017 stated that it was committed to maintaining access to adjoining properties where "feasible and reasonable" in accordance with the WestConnex Project approval. However, it considered Mr Royal's requests for access went "beyond merely 'maintaining access' to your property" and that insufficient detail had been provided. It continued: There is a potential for conflict between the two construction activities giving rise to a need for the SNS Development to take account of the Project at an operational level. However your letters seek to obtain quite broad and general undertakings that do not recognise this need. Specifically Roads and Maritime cannot and will not allow SNS use of the RMS Land in any manner that may affect the construction of the Project. 1. Mr Royal provided further details as requested on 8 May 2017. On 5 July 2017 RMS responded to the information provided. It was of the view that erecting scaffolding on the Acquired Land would constitute "development" under the EPA Act for which no development consent had been granted. The RMS expressed a similar view concerning anchors and any crane jib swing over the Acquired Land. On 20 July 2017 Mr Royal stated that the Court approval of the Residue Land DA was broadly framed so as to permit activities on adjacent land to facilitate the construction of the proposed development without the need for an additional development consent. Mr Royal directed attention to Condition 10(a) of the Court approval which prohibits development on the Acquired Land "except with consent of RMS or Court Orders that allow access". 2. The RMS responded on 9 August 2017 that it did not agree that the Court approval permitted development on the Acquired Land. The RMS stated that it would not give owners' consent under cl 49 of the EPA Regulation to lodge any DA for construction activities on the Acquired Land as such works may interfere with the road widening project. It would reconsider this position once the road widening works were completed. 3. On 20 October 2017 RMS wrote an unsolicited letter to Mr Royal stating that it would grant consent to a crane jib swing over the Acquired Land on certain terms. Evidence on market value 1. Extensive expert evidence was obtained from town planners, architects, a geotechnical engineer, structural engineers, quantity surveyors, and construction schedulers some of which informed the valuation exercise undertaken by the valuers. Town planning 1. Mr Chambers town planner for RMS prepared a report dated May 2017. The RMS' town planner Mr Mitchell prepared a report dated 4 May 2017. The planning experts prepared a joint report dated 8 June 2017. 2. The planners agreed that some design flexibility was provided for in the BBDCP. They also noted that according to the EPA Act the controls in a DCP are to be applied flexibly (s 79C(3A)) and have no effect to the extent that they are inconsistent with the provisions of an environmental planning instrument (s 74C(5)). Likely approval prospects of Further Amended DA before acquisition date (before scenario) 1. Mr Chambers thought that absent the public purpose there was a strong likelihood that the JRPP would have approved the JRPP DA with an FSR of 3.67:1 (18,184 m2 GFA) subject to the resolution of engineering matters raised by Sydney Trains. This approval would likely have been granted before the date of acquisition. 2. Disregarding the public purpose some form of widening of Bourke Street would have been required to enable it to function as a local road in the manner anticipated by the Council. The JRPP DA accommodated the Council's road widening requirements. Although the Council Assessment Report did not expressly acknowledge that the JRPP DA met these requirements it was accompanied by a traffic concept plan which was stated to have been prepared in consultation with the Council and to have accommodated the Council's plans for Bourke Street. The traffic concept plan had also been provided to the WestConnex Delivery Authority who indicated by email dated 7 August 2014 that it did not conflict with the requirements of the WestConnex Project. In Mr Chambers' opinion the Council would not have desired a more extensive road widening scheme than WestConnex. 3. The JRPP identified only two reasons for refusal of the JRPP DA, neither of which were related to the merit of the proposed development. Mr Chambers' opinion was that it is reasonable to infer that the JRPP did not have any merit issues with the JRPP DA as it would have otherwise acted reasonably and informed the proponent. Even if the JRPP had been concerned about design issues, it is unlikely that these would have been determinative of the JRPP DA. The DRP considered the Original DA to be "generally appropriate" and had the potential "for an excellent design outcome". The Council Assessment Report to the JRPP stated that the proposed development complied with the design excellence provisions in cl 6.16 of the BBLEP. Any outstanding design issues were or at least could have been resolved in subsequent amendments to the DA. The Council's recommended rejection of the cl 4.6 variation request for an FSR above the 3.2:1 control (reason 5) was predominantly influenced by the public purpose and should be ignored. Development was proposed on the portion of the Parent Parcel marked on the LRA Map in BBLEP for the purposes of road widening which was therefore impermissible under RMS' plans for the site. The Council made no mention of its own road widening proposal for Bourke Street when discussing this reason for recommending refusal in its report to the JRPP. Mr Chambers considered the Further Amended DA satisfied both the Council and WestConnex road widening requirements in the before scenario. Absent the public purpose, the cl 4.6 variation request for greater FSR was well-founded and likely to have been supported by the JRPP. 4. Mr Mitchell disagreed that absent the public purpose the Further Amended DA would have been approved by the JRPP. The engineering issues raised by Sydney Trains were not easily resolvable. Further, that the JRPP relied only on the absence of concurrence from RMS and Sydney Trains in its reasons for refusal does not mean that merit issues would not have acted as an impediment to its approval. Most of the merit based reasons for refusal recommended by the Council were not resolved by subsequent amendments to the DA. There is no evidence supporting a successful cl 4.6 variation request to permit the FSR proposed in the DA. The nomination of the site as a gateway to the MSTCP does not justify greater building bulk but requires higher design standards. 5. Absent the WestConnex public purpose the Council's plans for widening Bourke Street and consequential increases in local traffic would have been relevant considerations. Mr Mitchell considered the hypothetical parties would not assume that the Council was satisfied its local road widening requirements had been met by the Further Amended DA as it had not turned its mind to that at the time of assessing the Original DA and JRPP DA. The adverse traffic related impacts identified in the Council's refusal reasons would therefore still largely apply. 6. The DRP report had no regard to the provisions of the BBDCP and its conclusion that the Original DA had the potential "for an excellent design outcome" was largely based on an irrelevant consideration that "the land required for the new street is dedicated without charge to the Council". In Mr Mitchell's opinion a "slab building type" of the kind proposed would not be appropriate and unlikely to be approved in either the before or after scenarios. A slab building is inconsistent with the Council's desired future character of buildings expressed in Pt 9A of the BBDCP and maximum building length of 24 m in Pt 4C.2.2. Mr Mitchell disagreed with the DRP's conclusion that "[t]he bulk and height of the 4 storey podium and the 10 storey slab building are generally appropriate for the scale of the streets and the adjoining and surrounding redevelopments". A slab building scheme would lack distinctive elements such as a slender tower and be generally inconsistent with the emerging future character of the locality which would be particularly inappropriate for a gateway site. Mr Chambers disagreed with Mr Mitchell's criticism of the slab building design, noting that developments elsewhere within the MSTCP have been approved with a similar building form notwithstanding the desired built form expressed in the BBDCP. 7. Mr Mitchell requested that Mr Bonus architect for RMS provide possible building designs consistent with the planning controls in the BBLEP, the maximum building height of 51 m, the airport tunnel easement, SEPP 65 and the ADG, the desired future character map in the BBDCP and designation of the subject site as a gateway site. Mr Bonus' concept plans were adopted by Mr Mitchell as evidence of the GFA and FSR that could be achieved by a hypothetical purchaser of the Parent Parcel in the before scenario and are summarised at pars 109-110 below. Likely floor space ratio approved in before scenario 1. Mr Chambers' opinion was that the JRPP would have likely approved a development of a similar type, density and presentation to that which was proposed in the DAs prepared before the date of acquisition. Absent the public purpose some widening of Bourke Street would have been required by the Council to enable it to function in the manner anticipated as an integral part of the MSTCP. There was a strong likelihood that absent the proposed acquisition and subject to the resolution of issues associated with Sydney Trains' concurrence the Further Amended DA would have been approved by the JRPP with an FSR of 3.67:1 and GFA of 18,184 m2. 2. The Further Amended DA was for a design which addressed what council officers understood to be the relevant requirements for the widening of Bourke Street. It did not preclude the street being developed in accordance with the Council's vision for the MSTCP as set out in the BBDCP. Mr Chambers found support for this view in the Statement of Environmental Effects (SEE) prepared in support of the Original DA. 3. In Mr Chambers' opinion there was "some possible basis" for additional FSR approved in a DA for the Parent Parcel above that of the adjacent Avantra site (3.34:1) due to the Parent Parcel's location at the northern gateway of the MSTCP. Absent the public purpose there was a strong likelihood that the JRPP would have approved the Further Amended DA which proposed an FSR of 3.67:1, although possibly with some design modifications that may have had a minor impact on FSR. 4. Mr Mitchell stated that development on the Parent Parcel absent the acquisition would have been confined to the area of the site not affected by the proposed Council road widening. Given the constrained developable area a breach of the FSR control would not be appropriate nor practical as it would result in a building with excessive bulk and substantial basement excavation on the Residue Land. A development with an FSR of 3.16:1 (15,660 m2 GFA) or 3.24:1 (16,085 m2 GFA) would likely have been approved based on designs prepared by Mr Bonus architect for RMS. Mr Mitchell considered the designs of Mr Bonus that were compliant with the built form controls on the BBDCP were more likely to be approved than those that were not compliant. The differences in FSR depended on whether the ADG or RFDC applied to the DA, see par 116 below. 5. Mr Chambers thought that Mr Mitchell failed to adequately consider the approved FSR of 3.34:1 at the adjacent Avantra site and that SNS' DAs had considerable design merit which was recognised by the Council. Mr Mitchell's opinion was that the Avantra site was not a useful comparison due to the restricted developable area on the Parent Parcel. Likely floor space ratio approved in after scenario 1. In Mr Chambers' opinion the Council would have been unlikely to support a cl 4.6 variation request other than for a very minor increase in the permissible maximum FSR (no more than 5%) given the changes to the development potential of the Residue Land in the after scenario. His advice to a hypothetical purchaser was that it was highly likely that the maximum achievable FSR would be the 3.2:1 control pursuant to the BBLEP. This would result in 10,508.8 m2 of GFA. 2. Mr Mitchell was of the opinion that an FSR of 4.9:1 would likely be approved in the after scenario in accordance with designs provided by Mr Bonus. The site has essentially the same constraints in the before and after scenarios. If a 3.24:1 FSR (16,085 m2 GFA) development was appropriate in the before scenario that same development would be equally appropriate in the after scenario (yielding a higher FSR due to the reduced developable area). There were "virtually unique circumstances" which applied to the site that would have justified a substantial variation to the FSR control. A development that is compliant with the control would be of a bulk and scale which is not appropriate for the prominence and visual importance of the site as a gateway to the MSTCP. The site area would be underutilised and conflict with the Council's vision for the site in the BBDCP. 3. An alternative approach for a hypothetical purchaser would be to lodge a planning proposal seeking a zoning amendment to achieve a large variation to the FSR control. 4. Mr Chambers disagreed with Mr Mitchell's approach to FSR in the after scenario. It is highly unlikely that a consent authority would refuse a DA on the basis that its FSR is too low. Similarly, an FSR of 4.9:1, a 53% increase above the BBLEP control, is unrealistic and would not be approved. The prospect of a planning proposal successfully changing the FSR limit on the Residue Land to 4.9:1 would be very remote. Development potential in after scenario 1. Mr Chambers assumed that a new DA would be required for development on the Residue Land in the after scenario. The site area 3,284 m2 is substantially reduced by 1,675 m2 from the Parent Parcel. The development potential of the subject site was different following the acquisition. Firstly, an assessment of a new DA must take into account the changes to SEPP 65 and the fact that the ADG, not the superseded RFDC, applies to DAs lodged from 19 June 2015. This will likely result in smaller units being approved by the Council provided they satisfy ADG requirements notwithstanding the Council's relatively large minimum apartment sizes in the BBDCP. The Court's decision in Botany Development Pty Ltd v Council of the City of Botany Bay (No. 3) [2015] NSWLEC 1282 supports the likelihood of this outcome. Mr Chambers stated that given the smaller apartment sizes council planning officers were less likely to accept exceedances of the FSR control. Previously there was "a trade-off between units that complied with Council's unit size requirements and the achievement of more FSR than was permitted by the [BB]LEP". Mr Chambers did not provide any evidence of such a "trade-off" between council officers and developers. 2. Secondly, development in the before scenario was not confined to the Residue Land as identified in the LRA map in BBLEP. The Acquired Land had "real development potential" absent the public purpose, which would have been able to coexist with the Council's road widening intentions. Geotechnical work carried out in preparing the Original DA supported the building extending onto the Acquired Land. The DRP report and Council Assessment Report did not identify any conflict between the proposed development and any local road widening intentions for Bourke Street. Documentation in support of the Original DA suggested that the Council's road widening requirements were more flexible and negotiable than the requirements of RMS. Further, the reduced site area in the after scenario is a constraint on development as it generates less achievable GFA based on the FSR control. 3. In Mr Mitchell's opinion the development potential of the Residue Land is essentially the same as that which was available on the Parent Parcel. In the before scenario, absent the public purpose the Council's road widening plans would have applied. Both road widening plans are virtually identical and have the same effect on the site's development potential. Both plans would also result in substantial increases in traffic on Bourke Street creating important merit considerations affecting the use of the lower levels and overall form, siting and design of a development on the subject land. Development in both the before and after scenarios must also satisfy the provisions of the Airport Line Guidelines. Cross-examination of town planners Before scenario 1. Mr Chambers' opinion was that the DRP report which referred to the proposal as achieving "design excellence" suggested the Council did not have any issue with a slab-style building on the subject site, despite this being the desired built form for development on the land in the BBDCP. He did not consider that the plans were inconsistent with the BBDCP which allows for flexibility in built form. 2. Mr Chambers agreed with Mr Mitchell that absent the public purpose there would have been a Council road widening requirement. However, the developer of the site would have been able to negotiate the land dedication with the Council which is common practice. Mr Mitchell said that he has only ever come across such negotiations when a new street is to be created. 3. Mr Chambers agreed that there was no need for council officers to engage with the Council's road widening purpose when it assessed the Original DA and JRPP DA because at the time RMS was the acquiring authority. Mr Chambers agreed that the Council Assessment Report expressed concerns about the merit of the proposed development in addition to the absence of RMS' or Sydney Trains' concurrence as reasons for recommending refusal to the JRPP. However, his opinion was that it is unlikely that these merit issues would have been determinative and were curable. He agreed that there was no direct engagement in the Council Assessment Report with cl 4.6 variation request seeking an uplift in FSR to 3.67:1 from 3.2:1. 4. Mr Mitchell agreed that advice to a hypothetical developer of the Parent Parcel would consider the approved FSR of nearby developments including Avantra and Meriton (see par 130 below) at 3.34:1 but that this would only be one factor to consider. Another important factor is the developable area of the Parent Parcel. He agreed that the ability of the subject site to accommodate the Council's vision for the widened Bourke Street was an advantage over the Avantra and Meriton sites. He disagreed however that this was a reason to support the FSR uplift sought despite the DRP's view. 5. Mr Mitchell did not agree that the designation of the subject land as a gateway site in the BBDCP suggests that a higher FSR would be approved for development in the before scenario. The gateway designation shows a need for a higher standard of design and finish but makes no reference to bulk and scale. 6. Mr Mitchell said that he would advise a hypothetical purchaser who wished to construct a basement carpark over the rail tunnel that to do so could be problematic due to the Airport Line Guidelines and geotechnical advice would need to be sought before proceeding. He did not agree that the absence of Sydney Trains' concurrence indicated that they were in principle content with the prospect of development over the rail tunnel. 7. It was put to Mr Mitchell that the Council Assessment Report had no indication that the plans submitted to it by the proponent were unacceptable insofar as it impeded plans for the widening of Bourke Street. Mr Mitchell stated that as the Council's road widening plans had been replaced by the public purpose it would have been illogical to discuss the Council's plans in this report. 8. Mr Mitchell agreed that of the nine reasons for refusal recommended by the Council Assessment Report reasons 1, 3(a), 6(b) and parts of 7 and 8 were to be disregarded to give effect to s 56(1)(a) of the Just Terms Act. He also agreed that apart from the absence of concurrence of Sydney Trains the remaining reasons were based on location of residential units on the ground floor or non-compliance with the unit mix control for one-bedroom and studio apartments. Mr Mitchell did not agree that there was a high likelihood at the date of acquisition, but for the public purpose, that the Further Amended DA was likely to have been approved. After scenario 1. Mr Chambers said that a "minor" FSR uplift would be possible in the after scenario. A point of difference with the adjacent Avantra and Meriton sites which received an approved FSR of 3.34:1 is that those DAs were approved under the former provisions relating to apartment sizes (relevantly, larger apartments required by the BBDCP). Mr Chambers said that the prospect of approval for an FSR of 4.9:1 as suggested by Mr Mitchell was "unrealistic" and would carry a 95% chance of refusal. 2. Mr Mitchell agreed that an FSR of 4.77:1 or 4.9:1 would require a significant cl 4.6 variation but emphasised that "these circumstances are virtually unique". He thought that a development which was satisfactory for the Parent Parcel should by default be satisfactory for the Residue Land. Mr Mitchell disagreed that his approach to the before scenario infected his analysis of the after scenario. He said that he looked at each case on its own circumstances and the constraints which applied to the site in both scenarios were essentially the same. 3. Mr Mitchell disagreed that submitting a planning proposal to permit a significant FSR uplift of 4.9:1 would be an "absolute nonsense". He said that there would be "strong planning merit" for such a proposal and "[saw] no reason why it wouldn't be granted". Mr Mitchell disagreed that the BBDCP controls for built form and character were the "driving factor" in his advice for a cl 4.6 variation to the FSR control but maintained that the BBDCP was an important document that should be "given significant weight". Architectural evidence Mr Ireland 1. Mr Ireland architect for SNS prepared an expert report dated 8 May 2017. He had regard to the planning evidence of Mr Chambers and the architectural plans which accompanied the various DAs for development on SNS' land in the preparation of his report. In Mr Ireland's opinion both the JRPP DA and Further Amended DA complied with relevant planning controls, site constraints and characteristics. Further, the Council Assessment Report raised no issues which would warrant refusal of the application in the before scenario save for the ground floor residential uses proposed in the JRPP DA which were amended to commercial in the Further Amended DA. 2. Mr Ireland prepared a concept plan for development on the Residue Land in the after scenario. He considered that the developable site in the after scenario was much narrower than in the before scenario based on the advice of Mr Chambers. The development he proposed complied with the FSR control of 3.2:1. Mr Bonus 1. Mr Bonus architect for RMS prepared an expert report dated 4 May 2017. Prior to the preparation of his report Mr Bonus had received advice from Mr Mitchell about the planning controls which apply to the subject site. Mr Mitchell advised him that absent the public purpose the Acquired Land would have been reserved for acquisition by the Council. 2. Mr Bonus prepared several concept plans and design reports for the development of the subject site in the before and after scenarios. The plans differed based on various assumptions about whether a hypothetical purchaser of the Parent Parcel would lodge a new DA, whether the ADG or RFDC would apply affecting the number and type of units that could be included in a potential development and whether strict compliance with the BBDCP is required. Mr Bonus' architectural schemes in before scenario 1. Mr Bonus explained that if a purchaser of the Parent Parcel decided to lodge a new DA then the ADG which came into effect on 19 June 2015 and the principles of SEPP 65 should be applied to the design of new apartments. He prepared a plan for development of the Parent Parcel which was consistent with the four-level podium and two-tower built form set out in the BBDCP within the area unaffected by the Council's road widening requirements. Assessed against the design criteria of the ADG the plan had a GFA of 16,085 m2 and FSR of 3.24:1. An alternative plan for a slab style building not compliant with the built form requirements of the BBDCP but otherwise based on the same assumptions produced a GFA of 16,106 m2 and an FSR of 3.25:1. 2. If a hypothetical purchaser decided to proceed with the Class 1 appeal afoot at the date of acquisition then the RFDC would apply and apartment size and car parking spaces would be mandated by the BBDCP. Apartments would need to be larger than required by the ADG, and larger than usually required in the current market, resulting in a reduced number of apartments and an increased number of car parking spaces. Mr Bonus prepared two concept plans. In both scenarios amendments to the Further Amended DA would be required to confine the development to the area of the Parent Parcel unaffected by the Council road widening requirements. Both plans were assessed in accordance with the design criteria of the RFDC. The plan which proposed development in accordance with the built form prescribed in the BBDCP had a GFA of 15,660 m2 and an FSR of 3.16:1. The second plan which is not compliant with the built form controls in the BBDCP had a GFA of 16,202 m2 and an FSR of 3.27:1. Mr Bonus' architectural schemes in after scenario 1. Mr Bonus was of the opinion that a hypothetical purchaser in the after scenario would need to lodge a new DA. He made the same assumptions as in the first two concept plans summarised above to produce plans for the after scenario. Thus applying the same GFA to the reduced site area of the Residue Land, a development with a built form compliant with the BBDCP and GFA of 16,085 m2 would yield an FSR of 4.9:1. Similarly, a development with a slab style built form and GFA of 16,106 m2 would yield an FSR of 4.9:1. Mr Bonus' opinion was that a cl 4.6 variation request for an uplift in FSR would succeed as a development of the scale proposed would comply with the BBDCP and MSTCP Masterplan. 2. Mr Bonus prepared two further concept plans for development compliant with the FSR control of 3.2:1. The first plan removed one of the two towers above the four-storey podium while the second maintained the two-tower design and reduced their height to five storeys. In Mr Bonus' opinion both these plans represented major departures from the BBDCP and MSTCP Masterplan including by failing to provide a "gateway" building to the MSTCP. Joint architectural reports 1. Mr Ireland and Mr Bonus prepared a joint report dated 4 July 2017. The experts essentially maintained the opinions expressed in their original reports. It is not necessary to summarise this joint report. 2. The architects prepared a further joint expert report dated 13 November 2017 concerning basement car parking in response to the evidence of the structural engineers and construction schedulers that a third level may be necessary. Mr Ireland's opinion was that a third level of basement would be required in the after scenario if either a diaphragm wall or secant pile method was used. He adopted Mr Ienco structural engineer's evidence that a diaphragm wall would be 1,000 mm in thickness and secant piles would be 1,200 mm in diameter. Mr Ireland sketched diagrams which showed the potential configuration of a three-level basement carpark. He assumed 172 car spaces would be required as per the BBDCP. 3. Mr Bonus did not agree that a third level of basement car parking would be required. A secant pile wall of 900 mm diameter is feasible and would allow the two level basement design to be preserved. He agreed that a 1,000 mm diaphragm wall would necessitate a third level. Cross-examination of architects 1. Mr Ireland was cross-examined on why he did not have regard to the ADG and guide to traffic generation development which have lesser car parking requirements (0.6 car spaces per bedroom) compared to the BBDCP (one car space per bedroom). He said that the market generally requires one parking space per apartment. Mr Ireland agreed that fewer car spaces would be required under the guide to traffic generation development (135 to 140 spaces) whereas his plans for a three-level basement were based on 172 spaces being needed. Mr Ireland maintained that a third level would be required due to the insetting of the basement walls even if only 135 to 140 car spaces were needed. 2. Mr Bonus' opinion was that most of the 135 to 140 car spaces could be accommodated on two levels of basement according to Mr Ireland's plans with the remainder located on the ground floor. He agreed that some clients prefer to construct more car parking than the minimum expressed in the relevant controls or design standards. Geotechnical engineering evidence 1. Mr Burbidge geotechnical engineer for SNS prepared a report dated 15 June 2017. Mr Burbidge reported on the results of geotechnical investigations which were carried out at the subject site before the date of acquisition. He identified issues with the groundwater table which will need to be controlled during any subterranean development on the site, particularly in relation to the proposed basement carpark within 3 m of the rail tunnel. Additional considerations for excavation and foundations were outlined. Mr Burbidge stated that the investigations carried out prior to the date of acquisition were preliminary and further investigation would be needed before detailed designs could be drawn. 2. Concerning the effect of development on the Airport Line Tunnel Mr Burbidge said that numerical modelling was carried out prior to the refusal of the JRPP DA in December 2015 which calculated unacceptable impacts on the Tunnel. Mr Burbidge noted that after the JRPP's refusal the development design was changed to include stiffer basement walls. It would have been expected that revised numerical modelling would have been undertaken at that time but it was not because the project was put on hold. Revised modelling would have been required if the new design was to be approved. Such modelling was undertaken after the date of acquisition and relied on by Mr Burbidge in his conclusion that the Further Amended DA would have satisfied Sydney Trains' requirements. 3. Mr Burbidge prepared a supplementary report dated 4 August 2017 which advised on differences in the subsurface conditions in Zetland, Waterloo and Mascot. The material contained in this report is ultimately not relevant to my determination in these proceedings and does not need to be summarised. Valuation evidence 1. Mr Davis valuer for SNS prepared a report dated 18 October 2017. Mr Lunney valuer for RMS prepared a report dated 20 October 2017. Following joint conferencing the valuation experts prepared a joint expert report dated 31 October 2017. The valuers applied the before and after method of comparison of the subject site in light of the partial acquisition. Any decrease or increase in the market value of the Parent Parcel arising out of the public purpose must be ignored in the before scenario. The impact of the public purpose on the Residue Land must be considered for the purposes of s 55(f) in the after scenario. In summary the valuers analysed comparable sales to derive a GFA/m2 rate in the before and after scenarios. In the after scenario they also made differing additional adjustments reflecting the assumed costs of building on the Residue Land on the assumption that access to the Acquired Land would not be available. 2. Both valuers agreed that the comparison method of valuation on a before and after basis using a GFA/m2 rate was more appropriate than the hypothetical development method of valuation due to the market pricing by GFA and the absence of quantity surveying advice on different development scenarios. 3. I note that the comparison method of valuation has been considered at length in this Court and in higher courts. In Tenstat Pty Ltd v Valuer General [2012] NSWLEC 1361 following a review of relevant authorities, it was accepted that there were four steps to be undertaken in the comparison method of valuation: 1. accumulation step – the accumulation of potentially genuinely comparable sales seeking to identify and establish a pool of relevant comparable sales from which information may be deduced concerning the value of the subject property, at [39]; 2. analysis step – the analysis of potentially genuinely comparable sales providing a common basis of measurement by seeking to convert all potentially comparable sales to a common basis of expression such as a unitary rate (rate per square metre, rate per hectare, etc), improved or unimproved (through allowance for the absence or existence of improvements, etc) and so forth, at [45]; 3. adjustment step – the adjustment of potentially genuinely comparable sales acknowledging the fact that no two properties are ever identical and seeking to convert those potentially comparable sales to a hypothetical expression of value as a unitary rate in the context of the subject property through the reflection of differences (such as size, location, use, date, etc) between the respective potentially comparable sales and the subject property, at [47]; and 4. application step – the application of those potentially genuinely comparable sales to the subject property seeking to determine the value of the subject property through a consideration of the relevance (such as being limited, indirect or direct) of the unitary rate derived from those adjusted comparable sales relative to the subject, at [62]. 1. Both valuers agreed that the highest and best use of the subject property was for high-rise residential apartment development with ground floor retail/commercial space. The land is zoned B4 Mixed Use under the BBLEP. 2. Mr Davis assessed compensation payable for market value under ss 55(f) and 56 of the Just Terms Act to be $38,768,993. Mr Lunney assessed compensation payable to be $13,472,000. These positions are set out in the following table: Expert Before value After value Market value Mr Davis $61,825,600 $23,056,607 $38,768,993 Mr Lunney $51,472,000 $38,000,000 $13,472,000 Mr Davis' evidence Comparison analysis – before scenario 1. Mr Davis relied on the evidence of Mr Chambers town planner that in the before scenario 4,962 m2 could be developed at an FSR of 3.67:1 giving a GFA of 18,184 m2. The development would comprise two basement car parking levels for 268 car spaces, 14 upper levels with 184 apartments (including 78 studio units and 46 one bedroom units) and two ground level retail tenancies, I note this refers to the JRPP DA. Mr Davis considered the Parent Parcel to be located in a prominent position with corner exposure to a major intersection, being prestigious and having impact. 2. Mr Davis accumulated eight sales of high density residential apartment sites, sold between June 2015 and April 2016. Mr Davis analysed each sale but did not thereafter appear to refer to the sales at 1-9 Lachlan Street Waterloo and 110-112 Addison Road Marrickville. Mr Davis later included sales at 577-579 Gardeners Road Mascot, 27-29 Robey Street Mascot and 563 Gardeners Road Mascot, giving a total of nine sales. He analysed these to derive a range of $2,676-$4,232/m2 GFA. 3. Mr Davis adjusted each of the nine analysed sales in a four-step process for the before scenario. First, he provided a qualitative description of the differences in location, size, existence of DA, frontage and costs of construction relative to the subject property for the before and after scenario. Secondly, Mr Davis made quantitative adjustments for contamination and market changes since the date of sale. Thirdly, as shown in the table below he attributed a percentage weighting to each of location, size, existence of DA, frontage and costs of construction relative to the Parent Parcel. RELATIVITY OF PROPERTY TO COMPARISONS Location Size (Land GFA/FSR) DA Frontage Building Costs psm GFA Weighting 60.0% 10.0% 5.0% 5.0% 20.0% 19-25 Robey Street Elizabeth Ave, 24-25 High Street, Mascot 20% -5% 10% 10% 20% 671-683 Gardeners Rd, Mascot 5% 5% 0% -5% 0% 890-898 Bourke St, Zetland -5% -5% 5% 20% 0% 1049-1053 Bourke St, Waterloo -5% -15% 10% 20% 0% 1037-1047 Bourke Rd, Waterloo -5% -10% 10% 5% 0% 713-717 Elizabeth St, Waterloo -5% -15% 0% 20% 5% 577-579 Gardeners Rd, Mascot 5% -15% 0% 20% 20% 27-29 Robey St, Mascot 25% -20% 0% 20% 20% 563 Gardeners Rd, Mascot 5% -15% 0% 20% 5% 1. Fourthly, Mr Davis made percentage changes on a weighted basis for the differences in location, size, existence of DA, frontage and costs of construction relative to the subject property, giving a range of $3,019-$4,321/m2 GFA. The table below extracted from Mr Davis' original report shows his analysed and adjusted comparable sales as follows: 176. The table below sets out a) The time adjusted values of the Comparisons, in respect of $ psm GFA; b) The adjustments of key determinants of value, multiplied by the weighting of each determinant; [application of table in par 131] c) The equivalent value of the Before Site to each Comparison, after adjustment of relativity. … Yr /Frac Time Adj $psm ADDRESS Location Size (Land, GFA/FSR) DA Frontage Building Costs psm GFA Total Equivalent $psm GFA GFA 0.64 $2,926 19-25 Robey Street Elizabeth Ave, 24-25 High Street, Mascot 12.00% -0.50% 0.50% 0.50% 4.00% 17% $3,409 0.52 $3,360 671-683 Gardeners Rd, Mascot 3.00% 0.50% 0.00% 0.25% 0.00% 3% $3,489 0.39 $3,836 890-898 Bourke St, Zetland -3.00% -0.50% 0.25% 1.00% 0.00% -2% $3,750 0.37 $4,455 1049-1053 Bourke St, Waterloo -3.00% -1.50% 0.50% 1.00% 0.00% -3% $4,321 0.30 $3,960 1037-1047 Bourke Rd, Waterloo -3.00% -1.00% 0.50% 0.25% 0.00% -3% $3,831 0.29 $4,120 713-717 Elizabeth St, Waterloo -3.00% -1.50% 0.00% 1.00% 1.00% -3% $4,017 0.09 $3,203 577-579 Gardeners Rd, Mascot 3.00% -1.50% 0.00% 1.00% 1.00% 4% $3,315 0.24 $3,022 27-29 Robey St, Mascot 15.00% -2.00% 0.00% 1.00% 4.00% 18% $3,565 0.32 $2,917 563 Gardeners Rd, Mascot 3.00% -1.50% 0.00% 1.00% 1.00% 4% $3,019 1. Mr Davis then applied the nine sales by way of qualitative description, opining that 671-683 Gardeners Road Mascot (the Meriton site), 890-898 Bourke Street Zetland and 1037-1047 Bourke Road Waterloo were most relevant giving a range of $3,489-$3,831/m2 GFA. He derived a rate of $3,400/m2 GFA for the subject site of 18,184 m² and determined its market value in the before scenario to be $61,825,600. 2. In the alternative, where no DA is in place at the date of acquisition, Mr Davis applied an FSR of 3.4:1 and GFA of 16,867 m2 (this appeared to be derived from the Residue Land DA) for certain GFA with the potential for an FSR of 3.67:1 and GFA of 18,184 m2, giving an additional 1,317 m2 GFA (less certain GFA). Mr Davis applied a market value of $3,400/m2 GFA to the certain GFA. For the less certain GFA he applied a premium of 33% of "estimated profit on land component" to reflect "hope value", which was derived from the expected profit of $12,903,561 equating to $4,300,000 in "hope value". On this basis the value of the Parent Parcel in the before scenario was $61,649,160. Comparison analysis – after scenario 1. Mr Davis relied on the evidence of Mr Chambers that in the after scenario the 3,284 m2 Residue Land could be developed at an FSR of 3.39:1 giving a GFA of 11,164 m2 with a development comprising two basement car parking levels, 14 upper storeys and ground level commercial space. Construction would commence in January 2020, being a delay of 30 months compared to the before scenario, as the hypothetical purchaser would not accept the risk of interruption of works due to the lack of access to the Acquired Land. 2. Mr Davis considered the Residue Land to be inferior, having a lesser position with corner exposure but smaller scale and lacking frontage to Gardeners Road. This reduced its prestige and impact relative to the Parent Parcel. 3. In the after scenario, Mr Davis adopted the same accumulation and analysis process as in the before scenario, with the adjustment process detailed in the following table. RELATIVITY OF PROPERTY TO COMPARISONS Location Size (Land GFA/FSR) DA Frontage Building Costs psm GFA Weighting 60.0% 10.0% 5.0% 5.0% 20.0% 19-25 Robey Street Elizabeth Ave, 24-25 High Street, Mascot 20% 0% 0% 10% 5% 671-683 Gardeners Rd, Mascot 5% 7% -10% -5% -20% 890-898 Bourke St, Zetland -5% 0% -5% 10% -15% 1049-1053 Bourke St, Waterloo -5% -10% 0% 10% -15% 1037-1047 Bourke Rd, Waterloo -5% 0% 0% 0% -15% 713-717 Elizabeth St, Waterloo -5% -10% -10% 20% -15% 577-579 Gardeners Rd, Mascot 5% -10% -10% 20% -15% 27-29 Robey St, Mascot 25% -15% -10% 20% 20% 563 Gardeners Rd, Mascot 5% -10% -10% 20% -15% 1. Mr Davis then applied the nine sales by way of qualitative description and analysed these as follows giving a range of $2,902-$4,165/m2 GFA for application to the Residue Land: 184. The table below sets out: a) The time adjusted values of the Comparisons, in respect of $psm GFA and $ per Unit Site; b) The adjustments of key determinants of value, multiplied by the weighting of each determinant; c) The equivalent value of the After Site to each Comparison, after adjustment of relativity. Yr /Frac Time Adj $psm ADDRESS Location Size (Land, GFA/FSR) DA Frontage Building Costs psm GFA Total Equivalent $psm GFA GFA 0.64 $2,926 19-25 Robey Street Elizabeth Ave, 24-25 High Street, Mascot 12.00% 0.00% 0.00% 0.50% 1.00% 14% $3,322 0.52 $3,360 671-683 Gardeners Rd, Mascot 3.00% 0.70% -0.50% -0.50% -4.00% 1% $3,316 0.39 $3,836 890-898 Bourke St, Zetland -3.00% 0.00% -0.25% 0.50% -3.00% -6% $3,616 0.37 $4,455 1049-1053 Bourke St, Waterloo -3.00% -1.00% 0.00% 0.50% -3.00% -7% $4,165 0.30 $3,960 1037-1047 Bourke Rd, Waterloo -3.00% 0.00% 0.00% 0/00% -3.00% -6% $3,722 0.29 $4,120 713-717 Elizabeth St, Waterloo -3.00% -1.00% -0.50% 1.00% -3.00% -7% $3,852 0.09 $3,203 577-579 Gardeners Rd, Mascot 3.00% -1.00% -0.50% 1.00% -3.00% -1% $3,187 0.24 $3,022 27-29 Robey St, Mascot 15.00% -1.50% -0.50% 1.00% 4.00% 18% $3,585 0.32 $2,917 563 Gardeners Rd, Mascot -3.00% -1.00% -0.50% 1.00% -3.00% -1% $2,902 1. Mr Davis opined that 19-25 Robey Street Mascot, 1037-1047 Bourke Road Waterloo, 577-579 Gardeners Road Mascot and 563 Gardeners Road Mascot were most relevant as these were smaller sites, giving a range of $2,902-$3,722/m2 GFA. He determined $3,225/m2 GFA for application to the Residue Land in the after scenario, a value of $36,003,900. 2. In the alternative, Mr Davis applied a similar methodology as at par 131 above in relation to less certain GFA to address the scenario of a hypothetical purchaser considering the competing planning evidence of Mr Chambers and Mr Mitchell. He applied a premium of 10% of "estimated profit on land component" ($8,100,878) equating to a "hope value" of $810,088. Adding the hope value to the value of the certain GFA for the Residue Land ($36,003,900) produced an alternative value of $36,813,988 taking into account the less certain GFA. The 10% figure was far lower than the 33% figure Mr Davis applied in the before scenario reflecting his opinion that a prudent purchaser would place very little weight on Mr Mitchell's advice. Delay in construction/construction timing in after scenario 1. In Mr Davis' opinion a further adjustment to the value of the Residue Land due to lack of access over the Acquired Land occasioning a delay in construction in the after scenario was required. He gave evidence that 12 months should be allowed for the application for a DA to be approved and also the commencement of construction. The hypothetical parties would therefore assume they would be ready to commence building 12 months from the date of acquisition. This opinion was informed by considering three of the comparable sites in Mascot as follows: 1. Meriton site – based on Mr Davis' search of the Council's website and review of Nearmap images of the site, he estimated that it took approximately 10 months from lodgement of the DA until the commencement of construction. The DA was submitted in July 2016 and approved in January 2017. Construction commenced in approximately April 2017. 2. 577 Gardeners Rd Mascot – Mr Davis estimated that it took approximately 10 months for the DA to be approved and five months between purchase of the site (with a DA approval in place) until the commencement of construction. A DA was submitted in June 2015. The DA was approved in April 2016. Construction commenced in approximately December 2016. 3. 42 Church Ave Mascot – based on Mr Davis' search of the Council's website and review of Nearmap images of the site, he estimated that it took approximately 12 months between lodgement of the DA until the commencement of construction. A DA was submitted in August 2016, approved in July 2017. Construction commenced in approximately August 2017. 1. Mr Davis asserted that, as the hypothetical purchaser would not accept the risk of interruption of works due to lack of access to the Acquired Land construction would commence in January 2020, a delay of 30 months. A prudent hypothetical purchaser would discount the value of the site by an amount reflecting the risk anticipated which Mr Davis asserted to be equivalent to an annual rate of return of 20% pa. Discounting $36,003,900 for 2.44 years (30 months) at 20% pa, Mr Davis asserted that based on a market value of $3,225/m2 GFA a hypothetical purchaser would pay $23,056,607 for the Residue Land in the after scenario. 2. In the alternative, Mr Davis considered delays of 10 months and 17 months at 20% pa, asserting that the hypothetical purchaser would pay $29,703,153 or $27,667,928, respectively, for the Residue Land in the after scenario. This topic is discussed in more detail at par 159 below and following below. Cross-examination of Mr Davis 1. Mr Davis was asked about his two-step approach to his adjustment of comparable sales. In his opinion the market attaches greater significance to certain factors, such as location (to which he attributed 60% of the adjustment decision), rather than to frontage. Mr Davis did not accept that his adjustments were inconsistent nor that the weighting resulted in adjustments being insignificant. His weighted adjustment for whether a DA existed at the time of sale of 0.25-0.5% reflected the position in the marketplace. His analysis of comparable sales indicated that the presence of a DA made little difference to developers buying sites around the time of the acquisition. 2. Mr Davis explained that he had revised his analysis of the Meriton sale since joint conferencing with Mr Lunney. He agreed that the approved GFA for the Meriton sale was 23,991 m2 not 22,928 m2 as stated in his original report. His adjustment for contamination was revised down from $4.6 million to $3.269 million reflecting the difference in decontamination costs between the Meriton site and the subject property. Additional inquiries made with the selling agent revealed that a deal for the sale at $67 million was struck in October 2015. The put and call option was not entered into until January 2016 to give the vendor time to find alternative premises. He therefore made an adjustment for time of 15% pa from October 2015 which he recognised was not a conventional approach. The appropriate GFA rate for the Meriton sale is $3,388/m2, revised down from $3,404/m2 in the joint report. Mr Davis did not agree that any adjustment as made by Mr Lunney to reflect the 15 month delayed settlement under the put and call option was necessary. Although in general it would be considered advantageous to the purchaser to delay payment, in this case the period was driven by the vendor and was not sought by the purchaser. 3. Mr Davis did not resile from his opinion that uncertainty concerning access to the Residue Land in the after scenario, whether the Bourke Street road works would be completed on time and issues associated with the availability of construction finance would mean that a prudent hypothetical purchaser of the Residue Land would not commence construction before January 2020. A hypothetical vendor would likely accept a sum that reflected a discount rate for delayed construction as both parties to the sale would recognise that an adjustment needed to be made due to the risk of late completion of the public purpose. 4. Mr Davis was asked about his "hope value" premium of 33% in the before scenario and 10% in the after scenario which a hypothetical purchaser of the Parent Parcel would pay reflecting the less certain GFA that might be achieved taking into account the conflicting planning advice of Mr Chambers and Mr Mitchell. He said that he arrived at the 33% figure "with difficulty" and faced similar challenges with the 10% figure. He conceded that this approach is not conventional nor flawless. Mr Davis agreed that a small change to the 33% would have a major impact on his calculations. If 35% is adopted the hope value is $4,516,246 meaning the value of the Parent Parcel is almost identical where certain and less certain GFA is considered. Mr Lunney's evidence Comparison analysis – before scenario 1. Mr Lunney relied on the evidence of Mr Mitchell town planner that in the before scenario the 4,962 m2 site could be developed at an FSR of 3.24:1 giving a GFA of 16,085 m2 with a development comprising two basement car parking levels, 14 storeys with 128 apartments (including no studio units and 30 one-bedroom units). 2. Mr Lunney accumulated three sales of residential apartment sites sold between June 2015 and February 2017 along Gardeners Road very close to the subject site being the Meriton site, 577-579 Gardeners Road Mascot and 563 Gardeners Road Mascot. Mr Lunney analysed each of the three sales to derive a range of $2,718-$3,051/m2 GFA. 3. Mr Lunney adjusted each of the three analysed sales for the differences in time/market movement, existence of a DA at the date of sale and size relative to the Parent Parcel, giving a range of $2,258-$3,068/m2 GFA. 4. Mr Lunney then asserted that the Meriton sale and 577-579 Gardeners Road Mascot were most relevant giving a range of $3,003-$3,068/m2 GFA. He determined $3,200/m2 GFA for application to the Parent Parcel meaning its market value in the before scenario was $51,472,000. 5. In the alternative, where no DA is in place at the date of acquisition and dealing with the competing evidence of Mr Chambers and Mr Mitchell, Mr Lunney contemplated the potential of an FSR of 3.67:1 and GFA of 18,184 m2 (Mr Chambers' advice), giving an additional 2,099 m2 GFA of less certain GFA. Mr Lunney applied a rate of $3,200/m2 GFA to the certain GFA of 16,085 m2 (Mr Mitchell's advice) and a rate of $1,065/m2 GFA (being 33.33% of $3,200/m2 GFA) to the less certain GFA. This resulted in a market value of the Parent Parcel in the before scenario of $53,707,435. 6. In the joint report Mr Lunney identified that Mr Davis' approach to "hope value" produced a rate for the less certain GFA that was 96% of the certain GFA. Comparison analysis – after scenario 1. Mr Lunney relied on the evidence of Mr Mitchell that the development would be either the same or substantially similar in both the before and after scenarios. Therefore, in the after scenario the 3,284 m2 site could be developed at an FSR of 3.2:1 giving a GFA of 10,508 m2 with the high likelihood (15% risk) of an FSR of 4.9:1 giving a GFA of 16,085 m2, being an additional 5,576 m2. 2. In the after scenario, Mr Lunney adopted the same accumulation, analysis and adjustment process for his comparable sales as in the before scenario giving a range of $2,258-$3,068/m2 GFA. 3. While Mr Lunney adopted the same approach to the application step in the after scenario as in the before scenario, he applied his derived market value of $3,000/m2 to certain GFA and $1,161/m2 for less certain GFA, being 38.7% of the full rate. He determined the value of the Residue Land in the after scenario to be $38,000,000, resolving the benefit of the doubt in favour of SNS. Delay in construction 1. Mr Lunney considered delays of 10 months, 17 months and 30 months at 20% pa, asserting that the hypothetical purchaser would pay $32,643,688, $29,201,872 or $24,334,893, respectively, for the Residue Land in the after scenario (see pars 159 and following below). Cross-examination of Mr Lunney 1. Mr Lunney was asked about potential inconsistencies in adjustments for size among the comparable sales. He advised these were due to differences in estimated GFA on the Parent Parcel. Mr Lunney did not think that Mr Davis' weighted adjustment for a DA in place of 0.25-0.5% properly reflected the value benefit to purchasers. An existing development consent would at the very least provide a 12 month head start on construction compared to sales without a DA. 2. Concerning the details of the Meriton sale, Mr Lunney advised he had also spoken with the selling agent and understood that the price was struck on the basis of a deferred settlement, which was an advantage to the purchaser. The sale should be adjusted at 6% from the date of exchange of the put and call option in January 2016 not from the date at which the price may have been agreed. Mr Lunney thought that it was immaterial whether the 15 month delay in payment was driven by the vendor or purchaser, an adjustment was appropriate. 3. Mr Lunney was asked about his starting value for the Residue Land of $38 million. He agreed that this figure gave significant weight to the evidence of Mr Mitchell and it may need to be revisited if the Court was to prefer the evidence of Mr Chambers in the after scenario. 4. Concerning his advice to prudent hypothetical parties in relation to internal buttresses and the third level basement, Mr Lunney accepted that an inability to access the Acquired Land during construction would negatively impact the value of the Residue Land. He also agreed that additional costs may arise through the need for internal buttress walls rather than rock anchors and that he would advise a hypothetical purchaser to be wary that three basement levels may be needed. Although he would need more information on the quantum of such costs he would be likely to make a capital deduction for such costs from his assessment of value of the Residue Land in the after scenario. Summary of valuers' evidence of deferment of construction in after scenario 1. The following table is a summary of the valuers' evidence in the joint report concerning whether market value should be reduced in light of the deferment of construction due to lack of access to the Acquired Land before early 2020 in the after scenario. Valuer Davis Lunney Basis of deferment Value % Reduction Value Valuation of After Site $34,608,400 14.1% $38,000,000 Defer 10 Months $29,703,153 $32,643,688 Valuation of After Site $36,003,900* 23.2% $38,000,000 Defer 17 Months $27,667,928 $29,201,872 Valuation of After Site $36,003,900 36.0% $38,000,000 Defer 30 Months $23,056,607 $24,334,893 * Should be $34,608,400, clarified by Mr Davis in cross-examination. 1. The valuers noted in their joint report having had regard to the evidence of the construction schedulers Mr Abbott for SNS and Mr King for RMS inter alia that a time penalty was potentially relevant to the Residue Land. That evidence is set out below from pars 253-266 when I consider the after scenario. "Deferment" refers to the period between when construction could have commenced in the before scenario and when it would be likely to commence in the after scenario. The valuers have agreed that the impact of any deferment of the commencement of construction on the market value of the Residue Land should be at a rate of 20% pa apportioned across the period of the delay. This is reflected in the "% Reduction" column in the table. Based on the construction schedulers' and quantity surveyors' evidence the valuers understand that any construction commencing before January 2020 would require alternative construction methodologies. 2. The valuers' approaches in the table above are difficult to compare. Mr Davis has factored into his figures additional construction costs due to the inability to access the Acquired Land until January 2020 (assuming internal buttressing and a third level of basement car parking are required). Guided by the evidence of the quantity surveyors as to the cost of these works Mr Davis adjusted his GFA rate down from $3,225/m2 to $3,100 m2 and arrived at an after value for the Residue Land of $34,608,400. Mr Lunney has not adjusted his figures in the table to make any allowance for construction costs. He accepted the need to adjust for internal buttressing at a cost of $1.9 million and that a risk of a third level of basement car parking being required at a cost of $1.1 million may also require adjustment. These costs are not reflected in the table and would be taken off Mr Lunney's after valuation for the Residue Land following any deferment adjustment in the 10 month and 17 month scenarios. 3. For completeness I note that no construction costs are deducted by Mr Davis for the 30 month deferment period as that assumes access to the Acquired Land. 4. The deferment periods require further explanation. According to Mr Lunney 10 months was the difference between the commencement date proposed in Mr Abbott's construction program in the before scenario (September 2017) and Mr King's best-case construction program in the after scenario (mid-July 2018). SNS' counsel correctly observed during the hearing that the period between these two dates is actually 11.5 months. SNS disagreed that a 10 month deferment is available as it relies on Mr King's construction program which did not take into account the extra time required to construct internal buttressing. 5. The 17 month deferment proposed by Mr Davis was the period between August 2017 (assuming a DA for development on the Residue Land could be obtained 12 months from the date of acquisition) and January 2019 which Mr Abbott considered was the starting date for a development incorporating internal buttressing and a three-level basement. 6. The 30 month deferment reflects Mr Davis' primary case. That is, a prudent hypothetical purchaser would not commence construction on the Residue Land until the widened Bourke Street was declared a public road. WestConnex anticipates that the road works will be completed in January 2020, approximately 30 months from August 2017 (assuming a DA for development on the Residue Land could be obtained 12 months from the date of acquisition). Assumed GFA in before scenario SNS' submissions Further Amended DA likely to be approved by date of acquisition 1. SNS submitted that absent the public purpose the Court should accept the evidence of Mr Chambers and find that at the acquisition date development consent would have been granted for the Parent Parcel at an FSR of 3.67:1 (18,184 m2 GFA), that is the Further Amended DA. The JRPP DA was rejected due to lack of concurrence of RMS and Sydney Trains. It was otherwise likely to be acceptable as it accommodated the Council's road widening proposal for Bourke Street. Of the JRPP's two reasons for refusal one concerns RMS' lack of concurrence and must be disregarded in compliance with s 56(1)(a) of the Just Terms Act. The lack of concurrence of Sydney Trains would not be considered an impediment to obtaining development consent given the evidence of Mr Burbidge. 2. Any part of the Council's recommendations for refusal which are connected to the public purpose must be disregarded. Of the nine reasons for recommending refusal several rely on the public purpose and must be disregarded. Reasons 1, 3(a), 3(b), 3(c), 5, 6(b) and parts of 7 and 8 are to be disregarded, as Mr Mitchell agreed in cross-examination. Apart from one condition concerning the absence of concurrence of Sydney Trains the remaining reasons were based on the location of residential units on the ground floor or non-compliance with the unit mix control for one-bedroom and studio apartments. The unit mix and ground floor design (reasons 4, 6(a), (c), (d), (e)) were addressed in the Further Amended DA by removing the ground floor apartments and amending the unit mix. Council road widening requirements 1. Mr Chambers accepted that absent the public purpose some of the Acquired Land would have been required for the Council road widening. The Council's requirements were accommodated by the plans proposed by SNS. He extracted parts of the traffic concept plan which accompanied the Original DA which was stated to have been prepared in consultation with the Council and to have accommodated the Council's requirements. The proposal was also acceptable to WestConnex as identified in an email dated 7 August 2014 see par 76 above. The prudent parties would consider that the road widening requirements of the Council could be accommodated on the surface as shown in the JRPP DA plans. This would enable a basement to be constructed close to the train tunnel under the now Acquired Land and the utilisation of two metres of that land at the ground level for building. An appropriate easement to accommodate the railway tunnel could be created. 2. The DRP generally supported the Original DA and stated that a justification for the exceedance of the FSR control was the willingness of SNS to transfer a substantial part of the site without charge for road widening and part of a new street adjoining the southern boundary of the site. These statements suggest the proposal was considered to be consistent with the Council road widening requirements. 3. The council staff continued to actively engage with the DA assessment process despite an officer observing at a meeting in July 2015 that it was likely to be refused because of RMS not providing concurrence. Many meetings and telephone calls with council staff took place according to Mr Royal. The council staff were not just going through the motions of assessment, contrary to Mr Mitchell's evidence that the Council did not address its own road widening concerns. The recommended reasons for refusal in the Council Assessment Report to the JRPP did not refer to the Council road widening requirements as an issue. Sydney trains 1. Sydney Trains did not issue an outright refusal. The lack of concurrence was due to the absence of the required information being provided to permit a full assessment about the impact of the proposal on the tunnel. Mr Burbidge's advice is that the proposed developments for the Parent Parcel and the Residue Land would have met Sydney Trains' requirements. Mr Royal was advised that there were only minor matters to be resolved with Sydney Trains. 2. The hypothetical parties would have obtained advice from a geotechnical engineer about the likelihood of concurrence being granted by Sydney Trains. The planners agreed that this kind of advice would be sought. While they agreed on the geotechnical documents that would be available to the hypothetical parties that simply reflects what actually existed at the date of acquisition. As the planners agreed that they would recommend to a hypothetical purchaser that the advice of a geotechnical engineer should be obtained this list of documents was not intended to be exclusive. The hypothetical parties would receive advice of the kind and to the effect set out in Mr Burbidge's report, namely, that the requirements of Sydney Trains would have been satisfied with respect to the development the subject of the Further Amended DA. Further Amended DA prospects of approval 1. There is nothing in the JRPP reasons for refusal that disturbs the conclusion that, ignoring the WestConnex project, development consent for the Further Amended DA (144 units, 3.67:1 FSR) would have been approved by the date of acquisition. This FSR exceeds the maximum permitted FSR of 3.2:1 by 15% so that an application under cl 4.6 of the BBLEP would be required. The variation would be highly likely to be approved as the land is a gateway site under the BBDCP and the Council road widening proposal could be accommodated, the DRP report having recognised its dedication was a substantial public benefit. Next door sites, Avantra at 659 Gardeners Road Mascot and Meriton at 671-689 Gardeners Road Mascot, both achieved an FSR of 3.34:1. RMS' submissions 1. The RMS' position is that: 1. development would have been limited to the Residue Land in the before scenario in light of the Council road widening requirements; 2. due to the Council road widening requirements and the BBDCP which does not permit development under new public road widenings, a hypothetical purchaser would consider that there is a significant risk of not obtaining development consent with basement car parking under the Acquired Land; 3. a hypothetical purchaser would have considered that there would be significant risks associated with obtaining development consent and the construction of development over the Airport Line easement and infrastructure; 4. the hypothetical parties would consider that the built form for any development would be required to comply with the vision outlined in the BBDCP; 5. having regard to the above, the hypothetical parties would only have assumed that it would achieve an FSR between 3.16:1 to 3.24:1; and 6. unlike the neighbouring sites which have achieved an FSR of 3.34:1, such sites have been able to distribute that FSR across the entirety of the sites, whereas the Parent Parcel has a smaller area over which it can spread the FSR, namely the Residue Land portion of the Parent Parcel, on account of the Council road widening requirements that would have existed absent RMS' public purpose. Council road widening requirements 1. The RMS submitted that the Council road widening requirements affected the same extent of land as RMS' public purpose. The Parent Parcel has historically been affected by a number of road reservations under various planning instruments including the County of Cumberland Planning Scheme Ordinance gazetted in 1951, Interim Development Order No 19 gazetted in 1977, BLEP 1995 and BBLEP as gazetted in 2013. The area of the Parent Parcel affected by road reservations since 1951 has generally been the same area as the Acquired Land; that is, a strip along the length of the eastern boundary adjoining Bourke Street comprising a width of about 15.24 m. In relation to the BLEP 1995 and BBLEP, the Acquired Land comprised an area of 1,678 m² whereas the Council road widening comprised an area of 1,690 m². Only the BBLEP related to RMS' public purpose. Absent the public purpose the eastern portion of the Parent Parcel would have been affected by the Council's road widening requirements. The plans for widening Bourke Street are evidenced in the BLEP 1995, Mascot DCP, s 94 Plan 2004 and MSTCP Masterplan. 2. Further evidence of the Council's road widening requirements is that in 2002 it acquired (by dedication as public road) a strip of land immediately to the south of the Acquired Land with a width of 15.24 m, precisely the same width as the Acquired Land. The Council's s 94 Plan 2004 identified the "land to be purchased by Council" from the Parent Parcel by diagonal blue hatching on the plan titled "Bourke Street Improvements Figure 8". The intention is made clear by cl 3.3.3, see par 23 above. The hatching is not dimensioned but it is clear that the land to be acquired will be a linear prolongation of the alignment to the south. That is, the acquisition will be the same width as the 2002 dedication. This is how the hypothetical parties would have viewed and understood the s 94 Plan 2004. This width appears to be consistent with the BLEP 1995. The BBLEP and BBDCP also identify the same width but RMS is identified as the acquiring authority and, therefore, those instruments contemplate the public purpose. 3. The only evidence that the Council might be satisfied with less area for widening Bourke Street is the SEE supporting the Original DA. SNS was informed at an early stage that the DA would not succeed. It needed a determination to pursue litigation with RMS, see par 64 above. The Council did not have to address its own road widening needs when assessing SNS' proposals for development. Statements in the SEE were not based on what SNS thought would have been the Council's requirements for road widening but a perception of the WestConnex Delivery Authority's (then constituted as a subsidiary of RMS) requirements for the width of the road, see par 76 above. As such representations made by the Council must also be infected by the public purpose which the council officers must have had in mind when liaising with SNS' consultants with respect to its DAs. Given that the Council's requirements no longer existed in the environmental planning instruments during the DA assessment process, any suggestion that the Council would have desired a narrower area of the Acquired Land absent the public purpose cannot be maintained. Further, the lesser width references in the SEE were clearly a reference to the constructed width (not the dedicated width) and simply do not address the Council's vision for a widened Bourke Street aligned with the land to the south. 4. Mr Mitchell's advice to the hypothetical parties (absent the public purpose) is that the JRPP would not have granted development consent in respect of the Further Amended DA. Mr Mitchell maintained his view that the DA would be refused because he considered it was incompatible with the Council's road widening intentions. This, together with the lack of concurrence of Sydney Trains, were his reasons for considering refusal of the DA was highly likely. 5. Mr Chambers' approach to the statutory disregard of the public purpose was erroneous. He effectively redacted reference to the public purpose in the Council Assessment Report to conclude that absent the public purpose the Further Amended DA would have been approved as the Council had not expressed any perceived conflict with its road widening requirements. This does not engage with the planning instruments that would have applied absent the public purpose. Sydney Trains 1. SNS did not obtain the concurrence of Sydney Trains due to the absence of information requested. A prudent purchaser would have had concerns about the potential impact of any construction on the Airport Line tunnel. Further Amended DA no prospects of approval 1. There are several merit reasons which suggest the JRPP would have been likely to refuse the Further Amended DA. The slab form proposed is contrary to the desired built form for the site set out in Pt 9A of the BBDCP and exceedance of the FSR control render the Further Amended DA unlikely to have been approved by the date of acquisition. 2. Mr Mitchell would have advised the hypothetical purchaser at the date of acquisition that the Further Amended DA had an 85% chance of being refused. Mr Mitchell's opinion is based on the following primary factors determining the development potential of the Parent Parcel (and the Residue Land): 1. the maximum building height (51 m AHD) and FSR standards as set out in the BBLEP; 2. the zoning of the land for B4 Mixed Use; 3. the Council road widening requirements which would have constrained development to what became the Residue Land; 4. the constraints of the land including easements; 5. the provisions of SEPP 65 and the RFDC or ADG (as applicable at relevant times); 6. the built form envisaged on the "Desired Future Character" map in Pt 9A of the BBDCP, the designation of the Parent Parcel as a "gateway site" and other relevant controls such as boundary setbacks and maximum building length; 7. the emerging character of the immediate locality, particularly the neighbouring uses; and 8. the fact that the development is regulated by relatively new and well-conceived planning controls, namely the BBLEP and BBDCP. GFA rate in before scenario 1. The parties generally adopted the opinions of their respective valuers on the rate of GFA which were Mr Davis' $3,400/m2 and Mr Lunney's $3,200/m2. Their evidence is set out above. Consideration of before scenario Is evidence which came into existence after date of acquisition admissible in before and after scenarios? 1. A threshold issue to determine is what evidence is admissible in the before and after scenarios in the context of this case. Because compensation is to be determined as at the date of acquisition events after the date of acquisition are not generally relevant subject to the principle in Housing Commission (NSW) v Falconer [1981] 1 NSWLR 547; (1981) 50 LGRA 334 that such events can only be considered to prove a foresight and cannot be used to establish a hindsight. In Roads and Maritime Services v Allandale Blue Metal Pty Ltd (2016) 212 LGERA 307; [2016] NSWCA 7 (Allandale CA) at [60]-[61] per Basten JA (Ward JA agreeing) consideration of events after the date of acquisition where a claim was made based on injurious affection in relation to the level of risk of access to land was allowed. In Bligh Consulting Pty Ltd v Ausgrid (2016) 217 LGERA 258; [2016] NSWLEC 75 at [47]-[48] I found that Allandale did not expressly support an approach that events up to the date of hearing can be considered. Greater consistency of approach to valuation is achieved in the before and after method if events after the date of acquisition are justified by Falconer. 2. The RMS objected to evidence which came into existence after the date of acquisition as such evidence could not possibly be in the mind of the hypothetical parties as at that date. Sydney Trains in before scenario 1. In the before scenario there is one area of evidence requiring consideration. SNS sought to rely on testing undertaken by Mr Burbidge after the date of acquisition in the course of preparing his report in relation to Sydney Trains' requirements. 2. SNS submitted that Mr Burbidge's evidence that Sydney Trains' requirements would be satisfied and concurrence very likely granted represented the advice that he would have given to potential purchasers of the Parent Parcel in relation to geotechnical issues affecting the site. The hypothetical parties would have obtained advice from a geotechnical engineer about the likelihood of concurrence being granted. The planners agreed this kind of advice would be sought. The documents objected to by RMS were documents prepared after the acquisition date about compliance with the requirements of Sydney Trains. They are not independent, post-acquisition fact or analysis but an integral part of his report containing the essential conclusions of the advice he would have given the hypothetical parties at the date of acquisition. 3. The RMS submitted that the Burbidge evidence of the results of testing undertaken after the date of acquisition is not permissible as it was prepared after the date of acquisition and could not have been known to a prudent hypothetical purchaser. 4. Mr Royal attested orally that in November 2015 he instructed the geotechnical engineers not to do further work because he was told RMS would not provide concurrence to the JRPP DA. But for that it is likely the geotechnical evidence of Mr Burbidge summarised briefly in par 119 above would have been obtained before the date of acquisition in August 2016. The results confirming that Sydney Trains' requirements could be met would theoretically have been available to the hypothetical parties as information they could consider at the date of acquisition. This material satisfies the Falconer approach and can be considered as being in the hands of the hypothetical parties. Correspondence between Mr Royal and RMS in after scenario 1. In the after scenario, the correspondence between Mr Royal and RMS set out above in pars 68-71 concerning whether access to the Acquired Land to enable construction works on the Residue Land would be permitted was opposed by RMS as not confirming a foresight as required by Falconer. Given the nature of the inquiries undertaken by Mr Royal concerning access to the Acquired Land before the date of acquisition the correspondence is admissible as confirming a foresight which would be in the minds of the hypothetical parties. As summarised above in pars 59-60 Mr Royal made inquiries of WestConnex contractors in May 2016 before the date of acquisition in August 2016. The effect of what he was told was that access across the Acquired Land before early 2020 would be difficult to obtain for any purpose. This included for the erection of scaffolding. Residue Land DA in after scenario 1. The Residue Land DA was obtained after the date of acquisition in December 2016 from the Court. SNS seeks to rely on it as indicative of what FSR is likely to be considered achievable on the site by hypothetical parties. The concern I raised earlier about the risk of eliding SNS with the hypothetical parties arises from reliance on this kind of evidence. As that DA process occurred entirely after the date of acquisition it cannot provide any evidence of foresight for the hypothetical parties and cannot be relied upon for that purpose. Finding on assumed GFA in before scenario 1. The Court is determining the amount of GFA that the hypothetical parties would have anticipated could be achieved on the Parent Parcel at the acquisition date, consistent with the principles outlined in pars 40-44 above. There is no dispute that the prudent parties would have obtained the advice of a town planner. The two town planners briefed by the parties have provided markedly different advice. The first issue to resolve is whether the Further Amended DA would have been considered by the hypothetical parties to be approved by the date of acquisition. If so, a GFA of 18,184 m2 representing an FSR of 3.67:1 would apply in the before scenario. 2. There is inherent uncertainty preventing a conclusion that the prudent hypothetical parties would assume the JRPP would approve a particular DA. The JRPP DA was refused. The JRPP's view on any merit issue is unknown. Its reasons for refusal were based on two essential concurrences not being obtained. I do not agree with Mr Chambers that it would have been reasonable for the JRPP to identify concerns it had with any merit issues at the time it refused the JRPP DA as it had two clear bases for refusal. Nothing more about its attitude to that DA or any similar DA can be inferred. 3. That the DRP whose report is extracted above at par 34, supported the Original DA in part because the design outcomes while exceeding the FSR control were acceptable and the area required for a road would be dedicated free of charge is a neutral matter. The DRP has an advisory role. Despite its views and as it was entitled to do the Council recommended refusal to the JRPP including on a number of merit grounds. 4. The Council Assessment Report provided to the JRPP contained nine reasons for refusal. As SNS submitted a number of these reasons 1, 3(a) 3(b), 3(c), 5, 6(b), parts 7 and 8 must be disregarded as they concern the public purpose of the acquisition. I accept that the Further Amended DA plans changed the unit mix and included commercial activity on the ground floor in conformity with the mixed use envisaged for the site in the BBDCP and were likely to satisfy the reasons for refusal identified by the Council in that regard being reasons 4, 6(a), 6(c), 6(d), and 6(e). Council road widening requirements 1. The key issue to determining the likelihood of the Further Amended DA being approved by the date of acquisition is the impact of the Council road widening requirements in Bourke Street. If the Council required the same area of land as RMS' acquisition, any DA that utilised the Acquired Land would be refused. The Further Amended DA would not be approved as the basement car parking and some of the built form would encroach on the land required by the Council. The numerous planning instruments outlined in pars 11-25 above identify, as emphasised by RMS' submissions set out in pars 175-176 above which I accept, the historic extent of the road reservation of approximately 15.24 m since the County of Cumberland Planning Scheme Ordinance gazetted in 1951 continuing up to the BLEP 1995 and various DCPs. This is the same area as RMS' acquisition. Such reservations for public roads generally incorporate the whole of the stratum beneath the surface area reserved. 2. The assumption must be made that RMS does not acquire the land. But for the public purpose it is highly likely that the planning instruments would have provided for the Council road widening requirements as they existed up to the BBLEP, when RMS became the acquiring authority, to the same extent. Significantly, in 2002 the Council resumed the area to the south of the Acquired Land for incorporation into Bourke Street providing further support for that conclusion. Mr Mitchell drew his conclusions in a similar fashion and I am inclined to agree with him. 3. SNS relies on the history of the Council's assessment of the Original and JRPP DAs which provided for the transfer of land for a public road on the surface and basement car parking below the road where this was not ruled out as a possibility by council officers during the assessment process. Nor was it explicitly accepted by the council staff as far as I can see in the evidence. As RMS submitted, the only evidence is the statement in the SEE prepared for SNS that this was acceptable to the Council. The SEE is but part of an overall process of assessment of a DA that was highly likely to be refused by the JRPP given the role of RMS as a concurring authority. 4. SNS is also recorded in a council file note dated 16 June 2015 as wanting its DA to be sent to the JRPP, as identified in par 64 above, as Mr Royal was cross-examined about. This was to occur despite its inevitable refusal because RMS would not have provided concurrence as also identified to SNS at the time and recorded in the council officer's minute dated 16 June 2015. As Mr Royal identified in his cross-examination summarised in par 64 there were many meetings and discussions with staff. These actions are inconclusive given the refusal by the JRPP on limited bases and do not enable any firm conclusion to be drawn in the absence of a DA requiring express consideration of the Council's road widening requirements. 5. Discussions with WestConnex about the proposed development to the effect that the Original DA was satisfactory to them according to the SEE and an email from WestConnex is irrelevant to determining what the ultimate conclusion of the Council and the JRPP might be. 6. Mr Chambers' contention that a dedication of land to the Council to satisfy its plans for Bourke Street would be negotiated with the developer and may lead to some development being permitted within the road reserve is speculative and would not be assumed by a hypothetical purchaser of the Parent Parcel. 7. In the absence of any explicit consideration by the Council of whether it would countenance transfer of the surface area of land for the widened section of Bourke Street only, I consider the hypothetical parties would be unlikely to assume that consent in the form of the Further Amended DA would be forthcoming as a certainty. Sydney Trains 1. The prudent parties would be aware at the date of acquisition that a DA had been refused in part because of lack of concurrence of Sydney Trains (reason 2 in the Council Assessment Report). I have found above that Mr Burbidge's evidence of testing which demonstrated an ability to satisfy the Sydney Trains' requirement for building near train tunnels should be assumed to be available to such parties. As I have already determined that the hypothetical parties would not assume that the Further Amended DA would be approved because of its impact on Council's road widening requirements the issue of whether concurrence from Sydney Trains would be forthcoming can simply be noted. Merits (FSR/built form) 1. The town planners' opinions on what FSR and built form the hypothetical parties would consider likely to be approved varied substantially in the context of the Further Amended DA with FSR of 3.67:1. The FSR control is 3.2:1 in the BBLEP. Control C3 in Pt 9A.4.3.2 in the BBDCP states that the FSR control is subordinate to achieving the layout and built form for the desired future character of the MSTCP. The plan in the BBDCP shows a four-level podium and two residential towers of 13 storeys. The Further Amended DA proposed a slab design, which Mr Mitchell considered was unlikely to be approved as clearly in conflict with the desired built form in the BBDCP. Mr Chambers did not agree. The BBDCP is summarised above in pars 17- 22. The gateway nature of the area is identified and diagrams indicate the desired built form of a four-storey podium and two towers for this site. The importance of this form is identified in the statements concerning alternative development schemes identified in par 20 above. To my mind, a willing, knowledgeable and prudent hypothetical purchaser would consider the built form in the BBDCP would be likely to be applied provided that the FSR control in the BBLEP was generally met, subject to the following consideration of FSR. 2. Considering the likely assumption about permissible FSR, the planners also gave conflicting evidence in this regard. Mr Chambers' opinion was based on the assumption that the Further Amended DA would be approved by the date of acquisition with an FSR of 3.67:1. That assumption is not available given my finding in the previous section in par 202 above. Mr Mitchell considered two plans prepared by Mr Bonus which yielded an FSR of 3.16:1 and 3.24:1 respectively, both close to the FSR control of 3.2:1. 3. In the before scenario in the face of this potentially conflicting planning opinion, a willing, knowledgeable and prudent hypothetical purchaser would reasonably anticipate approval for a GFA of 15,878 m2 on the Parent Parcel of 4,962 m2 reflecting the FSR control of 3:2.1. 4. The prudent hypothetical purchaser would be aware of the FSR achieved for the Meriton site of 3.34:1, given its proximity to and similarity to the subject land. I note the evidence of the planners that Meriton was able to obtain a higher FSR by transferring site area from other land it owned in the vicinity. The Avantra site immediately next door also achieved an FSR of 3.34:1, a matter that would also be known to hypothetical parties. 5. While a willing, knowledgeable and prudent hypothetical purchaser may be aware of the planning history of the subject property and of previous DAs seeking approval for a built envelope of greater GFA including the JRPP DA, it would not be prudent for the hypothetical purchaser to place greater reliance on such uncertain outcomes given the existence of more certain outcomes. A hypothetical purchaser would reasonably anticipate the potential approval for an FSR of 3.34:1 and GFA of 16,573 m2, an additional 695 m2 of potential GFA. This additional area would be considered less certain as it reflects an FSR above the control. Finding on GFA rate in before scenario 1. The valuers' evidence on GFA rates in the before scenario is set out above. The principal matter to consider is their respective approaches to comparability of sales in order to determine the GFA rate to be applied in light of my finding in pars 206 and 208 above of the areas of certain and less certain GFA. 2. Mr Davis gave evidence in cross-examination that he selected sales with a focus on the date of sale and site area as well as upon location, later conceding that he gave greater weight to location as reflected in his approach to the adjustment of sales. Mr Lunney said that sites in Waterloo and Zetland are regarded in the market as substantially superior in site value and consequently in apartment value, with Mr Davis referring to "higher locational value" and larger unit sizes in the joint report. I understand this to mean that the Waterloo and Zetland markets differ in character from the Mascot market. 3. The Court had the benefit of an inspection of each of the nine comparable sales, rendering it starkly evident that the three sales on Gardeners Road Mascot were highly proximate to the subject property and the other six sales were not. 4. As became clear in cross-examination Mr Davis prioritised finding sales in the general but not immediate Mascot area based largely on time of sale. I accept Mr Lunney's evidence that the Mascot area is different to the Waterloo area with the latter deriving GFA rates of $500/m2 to $1,000/m2 more. This was clear from the sales selected by Mr Davis. This suggests sales in the Waterloo market are not as comparable to the subject property as those in Mascot. Where Mascot area sales are available, as they were with three sales very close to the subject site along Gardeners Road, they are preferable for comparative purposes given their location in the same market with the same zoning although not necessarily the same FSR. Mr Lunney's reliance on nearby sales particularly the Meriton site is well placed. Accordingly, I am of the view that greater weight should be given to the Gardeners Road Mascot sales than to the other six sales relied on by Mr Davis. 5. The Meriton sale is particularly important given the reliance placed on it. The sale price was agreed in October 2015 and a put and call option was entered into in January 2016 with exchange on 24 February 2017 and settlement on 11 April 2017. There are three principal areas of difference in analysis between the valuers. 6. Mr Lunney contended that the 15 month delayed settlement was a benefit for the purchaser that should be reflected in the analysis at 6%, being equivalent to the cost of debt funding. He increased the analysed sale price from $2,793/m2 GFA to $3,176/m2 GFA which he considered to be the relevant rate at the date of exchange of contract in January 2016. Mr Davis did not adjust for the delayed settlement because he understood the purchaser did not regard this as a benefit. 7. The valuers differed in their analysis of contamination of the Meriton sale. Mr Davis added the entire cost of decontamination, estimated at $4.6 million by the quantity surveyors, to the purchase price before deriving his GFA rate for the sale. Mr Lunney adjusted his GFA rate by $118/m2 to make allowance for contamination. These different approaches did not appear to result in relevantly different GFA rates. 8. The valuers made different time adjustments based on a different view of when the price for the Meriton sale was struck. Mr Davis considered October 2015 was the relevant date as that is when the agreement was made according to his inquiries. Mr Davis made a larger time adjustment as a result by 1.5% a month for three months. Mr Lunney adopted the contract date of January 2016, a more orthodox approach. 9. I consider Mr Lunney's adjustments for delayed settlement and time the contract price was struck are preferable as they accord with usual valuation practice. I note that there is a slight difference in total GFA applied by the valuers (23,991 m2 or 23,967 m2) for this sale but nothing arises from that. 10. The value adjustment of the analysed three Gardeners Road sales by Mr Davis and Mr Lunney may be summarised as follows: Mr Davis Comparable Sale Analysed Rate GFA/m2 GFA (m2) Date of Sale Time Delayed Settlement Adjustment Weighting / % Adjustment Total Adjustment Contamination Adjusted Rate GFA/m2 Location 60%/3% +7.57% Size 10%/0.5% "Meriton" 671-683 Gardeners Road Mascot $3,050 23,967 27.1.16 = $3,281/m2 GFA -0% DA 5%/0% +3.25% $0 $3,388 Frontage 5%/-0.25% Building costs 20%/0% Location 60%/3% Size 10%/-1.5% 577-579 Gardeners Road Mascot $3,203 (time adjusted) Not stated Not stated 0% 0% DA 5%/0% +3.5% $0 $3,315 Frontage 5%/1% Building costs 20%/1% Location 60%/3% Size 10%/-1.5% 563-567 Gardeners Road Mascot $2,917 (time adjusted) Not stated Not stated 0% 0% DA 5%/0% +3.5% $0 $3,019 Frontage 5%/1% Building costs 20%/1% Mr Lunney Comparable Sale Analysed Rate GFA/m2 GFA (m2) Date of Sale Time (1.5% per mth) Delayed Settlement DA Size Total Adjustment Contamination (rate per m2) Adjusted Rate GFA/m2 "Meriton" 671-683 Gardeners Road Mascot $2,793 23,991 24.2.17 +10.5% -6% 0% +5% +9.5% $118 $3,176 = 3,058/m2 GFA 577-579 Gardeners Road Mascot $3,038 4,065 29.6.15 +21% 0% -10% -10% +1% $0 $3,068 563-567 Gardeners Road Mascot $3,051 2,294 23.12.16 -6% 0% -10% -10% -26% $0 $2,258 1. There are a number of concerns with Mr Davis' approach. Firstly, Mr Davis' comparison in the before and after scenarios as generally set out in the tables at pars 128 and 135 above identify his comparative weightings for location (60%), land size (10%), DA (5%), frontage (15%) and building costs (20%). This method is unusual not having been seen before in evidence in court and is not supported by authorities so far as I am aware. That this is the first time such a method has been presented does not alone preclude its application. The Court however found Mr Davis' allocation of weighting of various factors not helpful in comparing sales. When explained orally the approach was understandable but its application mathematically as shown in the tables in pars 129 and 130 above resulted in unhelpfully small percentage comparisons of as little as 0.25%. Location which is supposed to achieve a significant weighting given its 60% attribution was only 3% for most comparable sales. Mr Davis' weighting approach requires two levels of adjustment, resulting in very small percentage adjustments rendering the outcomes potentially unsafe. 2. Secondly, to be consistent with the usual evidence before the Court and with the authorities, Mr Davis should have adjusted for market changes (time) along with other adjustment factors, rather than as an upfront adjustment of the GFA rate to which other adjustments are then applied. His approach elevates the amount to which further adjustments are made resulting in an overall increase in the rate. A disproportionately high weighting for time results from this approach. 3. Thirdly, factoring building costs into the comparison of sales is also problematic. I do not consider prudent hypothetical parties would engage a quantity surveyor to estimate building costs for other comparable sites as held above in par 52. Different building costs for different sites may be considered differently by developers in light of, for example, different profit margins for different sites. Developers would consider all such factors in their feasibility studies rather than focussing solely on building costs as a component of land value. Adjustment on this basis is therefore not helpful. 4. I do not accept key aspects of Mr Davis' approach to the adjustment of comparable sales resulting in an erosion of confidence in that process. 5. Mr Lunney's adjustments of market changes (time), existence of DA and size relative to the subject property were transparent and explicit and are accepted. Mr Lunney had greatest regard to the Meriton sale ($3,176/m2 GFA) and 577-579 Gardeners Road Mascot ($3,068/m2 GFA), determining the rate applicable to the Parent Parcel in the before scenario to be $3,200/m2 GFA, which I accept. No DA at date of acquisition 1. Reflecting the differing planning opinions of Mr Chambers and Mr Mitchell, the valuers performed alternative valuations of the Parent Parcel on the basis that no development consent was approved at the date of acquisition, attributing different rates to the less certain GFA above 3.2:1 up to 3.67:1. The valuers took a different approach to valuing the less certain GFA. Mr Davis adopted a "hope value" based on his assessment of loss of profit as set out in par 131 above. Mr Davis' approach appeared unnecessarily complicated, was unusually subjective and a small change in the assumptions made had a big impact on the final figure as ably explored in cross-examination. Further, there was not a great deal of difference between his rates for certain and less certain GFA in the end. The criticism of this approach by RMS that it was too sensitive and therefore unsafe is accepted. Mr Lunney reduced the certain value by 33%, a simpler approach. 2. I prefer Mr Lunney's approach as more orthodox and more readily understood. The less certain GFA rate which should be applied is $1,065/m2. Conclusion on market value in before scenario 1. The market value of the Parent Parcel in the before scenario is $51,549,775, consisting of 15,878 m2 GFA at $3,200/m2 ($50,809,600) and 695 m2 GFA at $1,065/m2 ($740,175). Consideration of after scenario Assumed GFA in after scenario 1. The Court must determine in the after scenario what GFA the hypothetical parties would have anticipated could be achieved on the Residue Land at the acquisition date. At issue is the development potential for the Residue Land. 2. I have found above that the Further Amended DA should not be assumed to have been approved at the date of acquisition. In the after scenario there is no DA in existence and the hypothetical parties will assume they will have to obtain a development consent. 3. The advice of the town planning experts which the parties agree would be likely to be sought by the hypothetical parties in the after scenario on this topic is set out in pars 91-93 above. SNS' submissions 1. Mr Chambers considered that in the after scenario an FSR of 3.2:1 with a possibly minor increase of 5% was achievable. That is consistent with neighbouring properties. 2. Mr Mitchell's opinion that he would have advised parties that development with an FSR of 4.9:1 would be highly achievable should be rejected on numerous grounds including common sense. Such a large exceedance of the FSR control would require an unusual or unique circumstance, which Mr Mitchell referred to. The application of the unique circumstances by Mr Mitchell results in the misapplication of the before and after method. In applying the before and after method the market value of the Parent Parcel is assessed by disregarding the effect of carrying out the relevant public purpose. Mr Mitchell's views of the hypothetical sale of the Residue Land are informed by his assessment of the developable GFA of the Parent Parcel in the before scenario, as he confirmed in cross-examination when he said if the building was "good enough" in the before scenario it should be "good enough" in the after scenario. In making the assessment for the Residue Land the public purpose must be taken into account and Mr Mitchell has not done that, contrary to valuation principle. 3. There are strong planning reasons why Mr Mitchell's evidence should not be accepted. His approach inverts the statutory hierarchy under s 74C of the EPA Act under which the provisions of a DCP are of no effect if they are inconsistent or incompatible with an LEP. That a variation under cl 4.6 is available is not an answer. The BBDCP permits flexibility in the built form in any event. An FSR of 4.9:1 is substantially out of line with neighbouring properties Meriton and Avantra which achieved 3.34:1. Relying on the possibility of a planning proposal to change the FSR control for the Residue Land to 4.9:1 as an alternative to a cl 4.6 variation application suggests the latter's prospects are remote. 4. As Mr Lunney takes into account Mr Mitchell in arriving at $38 million this figure must be reduced further as it is too high. RMS' submissions 1. The development potential for the Residue Land is similar to the Parent Parcel. Mathematically dividing the GFA by the different site areas in the before and after scenarios will of course yield different FSRs. The permitted FSR is 3.2:1. The entirety of the Parent Parcel could not be built on in the before scenario due to the reservation in BBLEP. 2. Based on Mr Mitchell's advice that in order to achieve the desired built form on the gateway site to the MSTCP in accordance with the BBDCP an FSR of up to 4.9:1 (16,085 m2 GFA) would be permitted, the prudent hypothetical parties would assume that a variation of the FSR control under cl 4.6 would have an approval risk of only 15% or an 85% chance of success. A development complying with an FSR of 3.2:1 would not comply with the Council's vision for the site in Pt 9A of the BBDCP of a four-level podium and two 13-storey towers. Control C3 in Pt 9A.4.3.2 makes it clear that the FSR control is subordinate to achieving the layout and built form imperatives for the desired future character in BBDCP. Finding on GFA in after scenario 1. I am determining what the prudent hypothetical parties would consider at the date of acquisition. Despite Mr Mitchell's confidence that a substantial cl 4.6 variation of the FSR or a planning proposal would be very likely to succeed I do not consider the hypothetical parties would be prepared to adopt that as their only advice. They would be guided by what the planning instruments specify and what was achieved on neighbouring sites. For the reasons given by SNS outlined above in pars 231-232 Mr Mitchell's advice is unlikely to be adopted by them. I consider Mr Chambers' advice should be assumed to be in the minds of the hypothetical parties. 2. In the after scenario, a willing, knowledgeable and prudent hypothetical purchaser would reasonably anticipate as certain approval for a built envelope of 10,508 m2 GFA (FSR 3.2:1) on the Residue Land. 3. A willing, knowledgeable and prudent hypothetical purchaser would also anticipate the potential approval for a built envelope of 10,968 m2 GFA (FSR 3.34:1) on the Residue Land, providing an additional 460 m2 of potential built envelope which is less certain. Whether delay in construction assumed to affect value/if deferment what is appropriate period? 1. Consideration of whether lack of access to the Acquired Land would cause a delay in construction on the Residue Land with a consequent impact on value also arises. A related issue is when development would commence once development consent had been obtained or whether additional time is required to prepare for construction. 2. Publicly available documents concerning the WestConnex Project indicate that the public purpose is likely to be completed by late 2019, see par 33 above. The valuers proceeded on the basis that completion was likely to be early 2020. Representations made to Mr Royal prior to the date of acquisition suggested that entities responsible for the construction of the public purpose were unwilling to allow the Acquired Land to be used to assist development of the Residue Land until Bourke Street was dedicated as a public road, see pars 59-60 and 66 above. No access to the Acquired Land means that construction vehicles cannot access the Residue Land across Bourke Street, rock anchors cannot be used underneath the Acquired Land to support the basement during construction, scaffolding and hoarding cannot be placed on and above the Acquired Land and a crane may not be able to swing its jib over the Acquired Land. 3. SNS' primary case is that a prudent hypothetical purchaser would delay construction on the Residue Land until January 2020 after the Bourke Street road works are complete due to the difficulties and attendant cost associated with not being able to access the Acquired Land. In the event that the Court finds a hypothetical purchaser would commence construction prior to January 2020 the value of the Residue Land would be impacted due to the increase in building costs, identified by the quantity surveyors. 4. The RMS' primary case is that some access to the eastern boundary of the Residue Land would be available during the period of construction of the public purpose. In the event the Court finds that there will be no access to the Acquired Land before January 2020, RMS disputed whether there would be delay in commencing construction. The WestConnex Project approval dated 20 April 2016 is publicly accessible and can be assumed to be available to the prudent hypothetical parties. Condition D49 of the approval states: Access to all properties must be maintained during construction, where feasible and reasonable, unless otherwise agreed by the relevant property owner or occupier. Any access physically affected by the SSI must be reinstated to at least an equivalent standard, unless agreed with by the property owner 1. "Feasible and reasonable" is defined in the WestConnex Project approval as follows: Consideration of best practice taking into account the benefit of proposed measures and their technological and associated operational application in the NSW and Australian context. Feasible relates to engineering considerations and what is practical to build. Reasonable relates to the application of judgement in arriving at a decision, taking into account mitigation benefits and cost of mitigation versus benefits provided, community expectations and nature and extent of potential improvements 1. Also relevant to whether access would be considered likely to be available before early 2020 is the information that a prudent hypothetical purchaser would be likely to be told by RMS if inquiries were made. In this case Mr Royal made actual inquiries as identified in his affidavit summarised in par 59 above. The correspondence between SNS and RMS summarised in pars 68- 71 above after the date of acquisition confirms the nature of the advice that a prudent hypothetical purchaser would receive. 2. A large and detailed volume of non-valuation expert evidence (summarised below) informed the valuers' opinions as to the effect that deferring the commencement of construction would have on the value of the Residue Land. The valuers' positions with respect to this issue is summarised at pars 159-165 above. Structural engineers 1. The structural engineers Mr Ienco for SNS and Mr Lewis for RMS prepared individual reports dated 22 June and 3 September 2017 respectively and a joint report dated 15 September 2017. They agreed that the basement could be sealed by either a diaphragm wall or secant pile wall although expressed different opinions about the relative size and benefits of each option. Mr Ienco and Mr Lewis agreed that a "top-down" construction method, internal propping or temporary internal buttresses could be used to support a shoring wall. Mr Ienco did not consider that the "top-down" or internal propping solutions were appropriate in this case principally due to the large size of the development site. Both experts agreed that there are no structural engineering reasons that would delay construction until access to the Acquired Land was available. 2. The level of detail in the structural engineers' reports was substantial and went well beyond what prudent parties would be assumed to obtain. The difficulty in discarding all of it on this basis is that the structural engineering issues inform the quantity surveyors' calculations and the construction schedulers' evidence of a possible building program if development commenced before 2020. The architects Mr Ireland and Mr Bonus were also asked to provide detailed evidence about whether a third level basement was likely to be required if a diaphragm wall or secant piles were inset from the boundary due to inability to access the Acquired Land. Their response is summarised at pars 114-115 above. Some of that evidence is adopted by the valuers. Quantity surveyors 1. Quantity surveying experts Mr Menzies for SNS and Mr Makin for RMS prepared individual reports dated 10 August and 28 August 2017 respectively. They prepared a joint report dated 5 October 2017 in which they agreed estimated construction costs for development on the subject land in the before and after scenarios. 2. In the after scenario the quantity surveyors took into account possible access difficulties to the Residue Land and costed the effect that this would have on the cost of constructing a basement carpark. They estimated that using internal buttresses along the eastern edge of the Residue Land in lieu of ground anchors would add $1,949,978 to the construction costs of a two-level basement. If a third level of basement was required this would cost an additional $1,175,185. The total cost of internal buttresses and a three-level basement is $3,125,163. 3. The quantity surveyors agreed that the cost of remediation works to overcome contamination issues on the Parent Parcel would be $1,338,013. By comparison the Meriton sale would have required an estimated $4,606,894 to resolve contamination issues on that site. Construction schedulers 1. Mr Abbott construction scheduler for SNS prepared a report dated 4 August 2017. Mr King construction scheduler for RMS prepared a report dated 5 September 2017. The experts prepared a joint report dated 27 September 2017. Construction program in before scenario 1. Mr Abbott prepared a construction program for the before scenario which was attached to his report. He was instructed to rely on the plans prepared for the Further Amended DA for the purposes of preparing his evidence on the before scenario. Mr Abbott assumed that there would be no restrictions for access or egress into the site for deliveries and material which will be done mainly off Bourke Street. He also concluded that two tower cranes would be required to facilitate the shortest construction program. He estimated that construction under this program could commence on 1 September 2017 and would take approximately 24 months. Mr King agreed that Mr Abbott's program for the before scenario was reasonable. Construction program in after scenario Mr Abbott – construction cannot commence until January 2020 1. In his original report Mr Abbott prepared a construction program for the after scenario. The program was based on Mr Ireland's concept plan for development on the Residue Land, see par 106 above. Mr Abbott was instructed to assume that there would be no access to or over the Acquired Land to facilitate the development of the Residue Land until the completion of the public purpose in January 2020. Based on this assumption, Mr Abbott's opinion was that construction could not commence until January 2020 for four reasons. Firstly, the diaphragm wall necessary for construction of the basement could not be erected without working space on the Acquired Land. Secondly, using temporary solutions to secure the eastern basement wall in the absence of permission to install temporary ground anchors on the Acquired Land would be costly. Thirdly, a central tower crane could not be erected without access to the Acquired Land. Finally, the Bourke Street facade could not be constructed without the ability to place scaffolding on the Acquired Land. 2. In addition to construction issues preventing the commencement of development until January 2020, Mr Abbott explained in his original report that there would be additional issues concerning access to the site affecting the after scenario construction program. Even after January 2020 access into and out of the site would only be possible via the proposed Galloway Street to the south of the Residue Land. Access via Gardeners Road would not be feasible due to insufficient space at that entry to the Residue Land to deliver and offload materials. Access via Bourke Street could not be relied on as it would require closures of the new cycleway and footpath on the western side of the road reserve which may not be permissible. Assuming materials could only be delivered via Galloway Street, only one tower crane was proposed in Mr Abbott's after construction program. Mr Abbott estimated that construction under this program would take approximately 22.5 months after commencing in January 2020. This is a longer duration proportional to site area compared to the before scenario. Mr King – construction can commence before January 2020 1. Mr King did not agree with Mr Abbott's conclusion that having no access to the Acquired Land would prohibit construction works commencing until January 2020. Although access constraints would have some impact on the constructability of the development, a reasonable hypothetical purchaser would consider alternative construction methods, designs and staging to allow a significant amount of the project to be constructed prior to January 2020 and avoid the costs associated with delaying the development until the completion of RMS road works on Bourke Street. 2. In response to the four reasons for delaying construction offered by Mr Abbott summarised in par 253 above, Mr King consulted with RMS' structural engineer Mr Lewis for advice on alternative construction methods that would allow construction on the Residue Land to commence prior to January 2020. He modified Mr Abbott's construction program to illustrate the changes in construction duration and timing that would occur if alternative methods were used. 3. Concerning the first reason, an option proposed by Mr King was to replace the diaphragm wall on the eastern boundary of the Residue Land with a secant pile wall which can be installed without access to the Acquired Land. 4. Secondly, assuming RMS would not grant permission to use temporary anchors on the Acquired Land then Mr King suggested alternatives could be used to provide internal support for the shoring wall. These include a "top-down" construction method, internal propping or temporary buttress walls. Mr King agreed with Mr Abbott that internal retaining solutions would be more costly than anchors, however this is fairly common on building sites in Sydney and would be much less expensive compared to the impact of delaying the entire project until January 2020. 5. Thirdly, Mr King agreed that it would be difficult to erect a central tower crane without access to the Acquired Land. He considered that alternate handling methodologies would be available to facilitate the movement of materials around the site that would avoid delaying the entire project. One option would be to erect climbing tower cranes in each of the lift cores of the development and use mobile cranes on Galloway Street and Gardeners Road to dismantle them. Mr King agreed in the joint report that this would add additional costs to the development. Even if tower cranes could not be erected Mr King suggested that it would be possible to complete most in-ground works (site establishment, demolition, bulk excavation and structural works) up to the ground floor prior to January 2020. Under this program construction could commence in February 2019 and be completed in December 2020. 6. Finally, Mr King agreed that it would be extremely difficult to complete works on the Bourke Street facade of the development without access from the Acquired Land. If tower cranes could be erected on the site it would be possible to commence the construction of structures and facades above the ground floor before January 2020. However, completion of the podium facade facing Bourke Street requires access to the Acquired Land and thus would need to be completed out of sequence with the rest of the development. Mr King suggested this option was feasible although it would increase construction duration and cost. Under this scenario construction could commence in July 2018 and conclude in August 2020. Effect of third level of basement car parking 1. The experts agreed in the joint report that temporary guide walls would be required to install either a diaphragm or secant pile wall. If the outside guide wall could not be placed on the Acquired Land so that the permanent walls are flush with the boundary of the Residue Land then the entire basement design would need to be inset from the eastern boundary of the Residue Land. 2. Mr Abbott was instructed that stepping in a diaphragm or secant pile wall would necessitate a third level of basement car parking. His original after scenario construction program assumed a 1,000 mm diaphragm wall constructed immediately against the boundary of the Residue Land. The architectural amendments resulting from insetting the eastern basement wall necessarily affect this construction program. He therefore prepared new construction programs based on plans for a three-level basement drawn by SNS' architect Mr Ireland. The experts agreed that adding a third basement level would extend the construction duration of the project in accordance with the new programs prepared by Mr Abbott. Mr Abbott's construction program assuming a three-level basement and internal buttressing are required showed construction commencing in January 2019. 3. Mr King stated in the joint report that various widths of a diaphragm wall or secant pile wall were available and that a third level of basement would not necessarily be required. He noted that Mr Ireland's plans for a three-level basement allow for a 1,800 mm "structural tolerance zone" the basis for which was not explained. Access to the site assuming construction can commence before January 2020 1. Mr King's opinion was that the Residue Land would be accessible for the purposes of construction via Galloway Street and Gardeners Road. He did not agree with Mr Abbott's view that Gardeners Road was not a practical option for construction access either before or after January 2020. Mr King referred to the Construction and Pedestrian Traffic Management Plan (CPTMP) dated 4 May 2017 prepared for SNS to assess the traffic implications of construction on the Residue Land which showed that primary construction access was intended to be via Gardeners Road. I have held above that the Residue Land DA would not be in the minds of the hypothetical parties as an event after the date of acquisition. The extent to which I can take this into account in this context is therefore limited. 2. In the joint report Mr King did not agree that Galloway Street would be inaccessible until January 2020. The RMS would be required to provide access to the Residue Land via Galloway Street from Bourke Street across the Acquired Land due to Condition D49 of the WestConnex Project approval which states "access to all properties must be maintained during construction, where feasible and reasonable". Mr King also noted that other construction sites are currently using Galloway Street for access suggesting that it is likely that a hypothetical purchaser would be able to obtain approval from adjoining owners to do the same to access the Residue Land. Mr Abbott agreed that if access could be provided via Galloway Street prior to January 2020 this would be the primary access used to construct the basement levels of the development. Rock anchors 1. The experts agreed that the use of ground anchors would only be possible subject to Sydney Trains' approval given the proximity of the underground rail tunnel. Cross-examination of construction schedulers 1. Mr Abbott stated in cross-examination that his original construction program was prepared on the basis that the basement walls could be built to the eastern boundary of the Residue Land and would not need to be inset due to the inability to access Bourke Street. Mr King's variations to this program, which assume inset basement walls, are inaccurate because the building design would be different. Mr Abbott's program would be altered by a number of weeks if the basement walls were inset from the boundary. The experts agreed that a third basement level would add a significant cost to the development. 2. Mr Abbott was questioned about how long it would take to construct and remove a guide wall. He stated that it would take less than seven days to construct a guide wall on the eastern boundary of the Residue Land and 14 days to construct it around the entire perimeter. Once a diaphragm wall has cured the guide wall surrounding it can be removed in three to four days. 3. Mr King was asked about whether constructing the eastern podium facade out of sequence with the rest of the development was an unconventional approach to building. He stated that it is not uncommon and recently worked on a project in Sydney where this occurred. He agreed that this approach would be adopted in less than 10% of the time. Mr King agreed that some of the construction methods he proposed in his report were unconventional and potentially complicated. He would nevertheless advise a hypothetical developer to consider these methods as a means to avoid the significant cost of an extra basement level or waiting until January 2020 to commence construction. 4. Mr King was asked about tower cranes and whether two tower cranes were necessary to complete the development. He stated that the contractor would decide if one or two tower cranes would be a more economical approach. A second tower crane would result in additional costs. Mr King estimated that it would take two to three days to construct the cranes. SNS' submissions No access to Acquired Land until early 2020 1. The prudent hypothetical parties would not assume they could get access to the Acquired Land until January 2020, the scheduled completion date of the public purpose. This would have occasioned significant delays to the commencement of construction on the Residue Land and increases the cost of construction in the after scenario. 2. The upshot of the representations to Mr Royal of RMS' contractor was that they wanted no potential interference with their use of the site and that access for construction space or rock anchors would not be permitted on the Acquired Land other than as required by statutory obligation. The hypothetical parties would need to understand RMS' attitude towards access to the Acquired Land and would have received the same message as Mr Royal. Mr Royal's evidence supports a finding that no access would be granted by RMS until January 2020. 3. The prudent hypothetical parties would also not assume access available from the new Galloway Street given that would require consent from a private landowner. Mr Davis assumed that the prudent hypothetical purchaser would not commence building until January 2020 due to the lack of access to the Acquired Land to enable buttressing of rock anchors and construction of a diaphragm wall flush with the eastern boundary preventing the usual construction process proceeding. Earlier commencement will require different and more expensive construction methods. This includes being unable to construct the basement using a block edge design which any developer would prefer to maximise their GFA. Additional costs if construction commenced before January 2020 1. The effect of denial of access for construction space as agreed by the construction schedulers is that it would not be possible to construct the building on the Residue Land unless the basement walls were inset from the boundary. If the walls are inset construction of the underground elements of the building could commence prior to January 2020 but this would be delayed so as to synchronise its completion with the scheduled completion of the public purpose to minimise the risk of the building program coming to a complete halt while the Bourke Street road works were still ongoing. 2. Insetting the guide walls narrows the width available for development on the Residue Land and results in the requirement for three levels of basement for car parking not two. The construction schedulers agreed in the joint report that construction involving a three-level basement inset design would commence in January 2019. According to Mr King a two-level basement inset design could commence in July 2018 but this should not be accepted as this relied on being able to carry out the block edge design. As Mr Abbott stated Mr King's program could not simply be amended to start earlier than 2020. The design could not commence construction until after that date due to the inability to access the Acquired Land. Mr King conceded that his primary report did not explicitly state that they were inset designs. He agreed that the construction sequencing in his program was unusual occurring less than 10% of the time. There is no evidence before the Court of the cost of this irregular programming. 3. Another issue is whether a third level of basement car parking would be required because of the need to step in the basement walls from the boundary due to lack of space access. Mr King's estimate of distances between 900 and 1,400 mm for a diaphragm wall and 1,200 and 1,600 mm for a secant pile wall were shown to be too optimistic in cross-examination. His view was based on advice from Mr Lewis who has no experience of building diaphragm walls near a train tunnel in sand. His secant pile wall design was based on advice from a piling contractor the reliability of which depended on the kind of piling and the contractor did not have that information. He conceded his proposal for a chain link or star picket fence on the surface of the land was unconventional. 4. The architects' different opinions on the basement were based on the different engineering advice. Mr Bonus conceded there was a material risk that a third level basement would be required. The hypothetical parties would consider there was a material risk that an inset design would have required a third level of basement to be constructed. The quantity surveyors agree that this would cost $1,175,185. This supports Mr Davis' position that a prudent purchaser would not commence building until early 2020 when the public purpose was completed. 5. If the Court finds as Mr Lunney contends that a reduction in the value of the Residue Land should be made on the basis that construction would commence prior to January 2020 with an inset design the Court should reject Mr Lunney's 10 month period because it is based on Mr King's program in his primary report which is uncosted construction sequencing. A 17 month period adopted by Mr Davis based on the agreed position of the construction schedulers for a three-level basement and internal buttressing should be adopted, an agreed reduction of 23.2% from the market value. The Court should accept Mr Davis' evidence that it would take around 12 months to obtain a development consent and commence construction. A further period to commence construction contended for by RMS should not be accepted. RMS' submissions Access before early 2020 should be assumed 1. The construction schedulers provided great detail about the likely length of construction for an after development scheme and in relation to dealing with any lack of access to the Acquired Land (supplemented by advice from structural engineers). The hypothetical parties to a sale transaction of the Residue Land would be unlikely to have had access to anything like the detail contained in the evidence served in these proceedings. Rather, the hypothetical parties would assume that access would be available from Gardeners Road at all times and access via the new Galloway Street would be reasonably available with the neighbouring owner's permission. 2. Further, the hypothetical purchaser would have the benefit of condition D49 of the WestConnex Project approval. Condition D49 is enforceable by any person in reliance on s 123 of the EPA Act. That enforceability is a matter that can be taken into account where there is a claim based on the impact of an acquisition on access, see the Court of Appeal in Allandale at [70]. The hypothetical purchaser would have placed significant reliance on condition D49 in order to obtain reasonable access to enable the development of the Residue Land at the same time as the WestConnex Project. The prudent hypothetical parties would therefore assume that access for construction is likely to be available across the Acquired Land where feasible and reasonable, at least for certain purposes. 3. The evidence of Mr Abbott in cross-examination was that the guide wall for a diaphragm wall would take a week to install and three to four days to remove. SNS did not ask RMS for consent to use the Acquired Land for any guide wall to facilitate building the eastern diaphragm wall. Nor was consent sought for access to erect a tower crane which is estimated to take two to three days. 4. SNS has not established that rock anchors would not have been permitted absent the public purpose. Rock anchors would have required concurrence from Sydney Trains which could not have been assumed. As the rock anchors extend beyond the Acquired Land consent would also be required from the Council as the roads authority. Nevertheless, a hypothetical purchaser would assume that rock anchors would be permitted subject to satisfying certain technical matters. Potential delay in construction 1. In the alternative, if access to the Acquired Land is unavailable until January 2020, the question of whether a hypothetical purchaser would anticipate any delay and if so of what duration arises. 2. Development consent for the Residue Land could be obtained in August 2017, 12 months after the date of acquisition. A further period would be required before construction could commence after this date. The three properties considered by Mr Davis to support a 12 month period to obtain development consent and prepare for construction were not constrained in terms of proximity to a train tunnel unlike the subject site, no allowance is made for the preparation of documentation to support the development consent and the Meriton site already had a consent which may have expedited the further DA process. A large mixed use development likely to be contemplated for the Residue Land would require a number of things to be done between gaining development consent and commencing construction including: 1. preparation of, and obtaining approval to, the various construction plans required (such as traffic management plans and waste and environmental management plans); 2. satisfaction of any other conditions of development consent that required satisfaction prior to obtaining a construction certificate; 3. preparation of detailed architectural and structural design drawings and details; 4. preparation and approval of detailed plans required for the issue of a construction certificate; and 5. preparation of tender documents, calling for tenders and negotiating and entering into a construction contract (assuming the purchaser was not a builder). 1. Mr Abbott's construction schedule in the before scenario allowed 12 months between the date of obtaining a DA and the entry into a construction contract with commencement some three to four weeks later, assuming that a DA existed at the date of acquisition. Further, actual development consent for the Residue Land DA was obtained in December 2016. Mr Royal wrote to RMS in January 2017 advising that it was intended to commence in September 2017, see par 68 above. This suggests that nine months between obtaining development consent and commencement of construction is a reasonable estimate for development of the Residue Land. Although this relates to the timing of SNS as opposed to a hypothetical purchaser it is the best evidence on the likely time required for construction preparation given it relates to the Residue Land and is aware of its constraints. On this basis a hypothetical purchaser of the Residue Land would not be in a position to commence construction until May 2018 or August 2018, 9-12 months after development consent would be granted in August 2017. 2. Mr King's evidence is that design solutions are available to overcome the issues posed by Mr Abbott which would allow construction to commence on the Residue Land in July 2018 even without access to the Acquired Land before January 2020. Criticism was made of Mr King's adjustment to Mr Abbott's construction program on the basis that it was for a block edge design and would not work for an inset design. Mr Abbott agreed however there would only be a difference of weeks as a result of this change. Criticism was also made of Mr King's construction program which relied on constructing the Bourke Street facade out of sequence with the rest of the podium. Mr King's evidence was that this was not unconventional. Although this may incur additional costs there is no evidence that a hypothetical purchaser would have sought to reduce the purchase price. 3. The hypothetical parties would consider that design solutions would be achievable to allow construction to commence by at least July 2018. Allowing 12 months for obtaining development consent from the date of acquisition and a further 9-12 months to prepare for construction, there would be no delay and no time penalty imposed on the value of the Residue Land. 4. Alternatively, if the Court does not accept that there should be no time penalty, a five or eight month delay should be allowed if the evidence of the construction schedulers that a third level of basement is required and the podium facade would not be constructed out of sequence is accepted. The schedulers agreed that construction would commence in January 2019 under this scenario, which is five months after construction preparation concludes in August 2018 and eight months if it concludes in May 2018. Finding on assumed GFA in after scenario/access to Acquired Land/deferred construction in after scenario 1. The level of expert evidence adduced in relation to the issues identified in the after scenario was far more detailed than would be available to prudent hypothetical parties, for example, the extremely detailed evidence of the construction schedulers. The position of the valuers in their joint report is summarised above in the table and following in pars 159-165. While I have attempted to deal with the evidence in order to entertain the issues raised it is worth repeating that the only reason for considering this evidence is to determine whether in the after scenario the prudent parties would agree on a reduction of the market value by 20% pa (the agreed rate of the valuers) because there would be a delay in construction warranting such a reduction based on a 10 month, 17 month or 30 month period. In addition, as additional construction costs might be incurred if building commences before the Acquired Land can be accessed in early 2020, whether there should be a reduction of the market value to reflect these must be considered. The valuers both accepted that some reduction of market value in the after scenario for additional construction costs arising from commencement on the Residue Land before early 2020 was warranted. Assumption of no access to Acquired Land until early 2020 1. In relation to the assumptions the prudent hypothetical parties would make about access to the Acquired Land, they would not consider that condition D49 in the WestConnex Project approval provides much certainty in gaining access for construction purposes. The condition is imprecisely drafted and does not refer to construction access explicitly. The definition of "reasonable and feasible" in the approval conditions is very unclear and cannot provide any certainty to a prudent party about its application. Having to resort to court action to enforce vaguely worded obligations would be considered highly risky and would lead to potentially lengthy delay even assuming success. Construction access sought is potentially invasive in that a narrow strip of the Acquired Land is required on the whole of the Bourke Street boundary for varying periods and is likely to have greater impact than say the maintenance of existing pedestrian and/or vehicular ground level access. Reliance by RMS on Allandale (CA) does not assist as the Court of Appeal held the major project approval condition in that case was clearly drafted and certain with consequently no risk of non-fulfilment at the date of acquisition. This case is quite different. 2. Mr Royal attested in his first affidavit to conversations with RMS' contractors before the date of acquisition in which he was told that no access across Bourke Street would be provided unless required by law, as summarised in pars 59-60 above. The nature of these conversations was confirmed by him in cross-examination, summarised in par 66 above. The tenor of the correspondence between SNS and RMS after the date of acquisition concerning access is similarly unhelpful. This can be assumed to be the kind of information that the prudent hypothetical parties would receive. 3. The RMS' submission that SNS has not established that rock anchors would not be permitted on the Acquired Land regardless of who controlled the Acquired Land is difficult to reconcile with the interactions between Mr Royal and RMS' contractors to the effect that access for anything could not be assumed. I do not accept that submission. The RMS also submitted that the evidence of the construction schedulers was to the effect that access to the Acquired Land would only have been required for relatively short periods to enable the construction of a guidewall and a crane inter alia. This appeared to be a criticism of Mr Royal's general request for construction access suggesting that had he made a more limited request he may have had some success. This is essentially speculation in light of oral evidence given by expert witnesses in the course of the case and there is no evidentiary basis for considering it. 4. The hypothetical parties would assume at the date of acquisition that if building is to commence before early 2020 access to the Acquired Land cannot be relied on. The parties would also assume that the WestConnex Project would be completed in early 2020 with a slight risk of delay inherent in all such large public projects. I will not make any valuation allowance for that risk as it does not appear substantial given the publicly available documents about WestConnex summarised above in par 33 and the valuers did not make any adjustment in this regard. Construction would commence before early 2020 1. I agree with RMS that given the buoyant and competitive market at the date of acquisition a prudent vendor would not accept a $13 million reduction in sale price which was Mr Davis' reduction in value at a rate of 20% pa for 2.44 years (30 months). The hypothetical parties would investigate whether there would be design and construction solutions that would allow development to commence in the after scenario without access to the Acquired Land. Other possibilities for access would also be fully explored. 2. Considering what assumptions would be made about access to the Residue Land, access from Gardeners Road continues in the after scenario. The possibility of using it for access to erect a crane was identified by Mr King. Mr Abbott's view of the feasibility of using Gardeners Road was unduly restrictive. The future public road system identified in the Council's planning instruments such as the BBDCP includes the creation of Galloway Street at the rear of the Residue Land. At the date of acquisition it was private land which will presumably be dedicated to or bought by the Council at some future time. Based on Mr King's evidence of current use, access from Galloway Street would also be considered a possibility by prudent parties at the acquisition date. Mr Abbott considered Galloway Street to be unavailable. That is more limited access than I consider hypothetical parties would take into account. 3. The prudent parties would assume that a crane jib can swing over the Acquired Land as that is a legal requirement generally imposed on owners of land and is confirmed in a letter received by SNS from RMS' contractor in October 2017 which I have held would be considered by the hypothetical parties. 4. I note that the structural engineers agreed that there are no structural engineering reasons why construction on the Residue Land would be delayed by lack of access to the Acquired Land. 5. My finding that the hypothetical parties would consider that construction could commence before early 2020 means that Mr Davis' assumption of deferment of construction for a 30 month period should not be assumed in relation to the hypothetical parties. Construction schedule if works commence before 2020 1. The deferment of construction as addressed by the valuers and the parties refers to the period between when construction could have commenced in the before scenario and when it would be likely to commence in the after scenario if commenced before 2020. The periods considered by the valuers were 10 months and 17 months as summarised above in pars 163-164. Ten months was based on the assumption by Mr Lunney that construction could commence in the before scenario in September 2017, but that assumes that a DA was in place at the date of acquisition, and in July 2018 in the after scenario. Seventeen months is the period identified by Mr Davis between an August 2017 commencement in the before scenario, based on the assumption that a DA and preparation for construction takes 12 months, and a January 2019 commencement in the after scenario, based on a building program including internal buttressing, a third level of basement car parking and no out-of-sequence building. At issue is what the hypothetical parties would be likely to consider in this regard. 2. The first issue to consider is when construction would be assumed to commence once development consent has been obtained. The parties and their valuers agreed that getting development consent takes 12 months from the date of acquisition (August 2016) which is August 2017. The construction schedulers do not express a view on how long it would take to prepare for construction on this site in addition to obtaining development consent. Mr Abbott identified in the before scenario that construction would commence in September 2017. He does not explicitly state whether this includes a period of 12 months from the date of acquisition to obtain development consent. As RMS submitted, Mr Abbott was asked to rely on the Further Amended DA plans giving rise to the inference that he assumed that DA was in place at the date of acquisition so that an allowance of some 12 months to prepare for construction appears to have been made by him. 3. Mr Davis considered that 12 months was required to both obtain a development consent and prepare for construction. He considered three other sales as outlined above in par 138 in arriving at his conclusion. Each site must depend on its own circumstances and Mr Davis agreed that he did not have particular expertise in this area. 4. These two pieces of evidence are in conflict. Given the expertise of Mr Abbott I am inclined to prefer his inferred allowance of 12 months preparation for construction in the before scenario. This finding is supported by RMS' submissions in par 284 above identifying the extent of work required before physical construction could commence. The earliest commencement of construction would be assumed to be August 2018. 5. The next issue to consider is how lack of access to the Acquired Land would affect construction commencing before early 2020. Mr Abbott prepared a construction program on the basis that work could not commence before early 2020 due to the inability to access the Acquired Land. Mr King's evidence was that construction could commence from mid-July 2018 based on a variation of the program prepared by Mr Abbott which commenced in January 2020. He considered various possibilities such as commencing in-ground work and the Bourke Street podium facade being built out of sequence. Mr King's evidence was that such an approach was feasible but more costly. His approach was criticised because this varied program did not consider the need for internal buttressing which would be necessary for construction to commence earlier than in January 2020. In cross-examination Mr Abbott agreed that any change to the program to accommodate internal buttressing would be a matter of weeks not months. No consideration was given to a third level basement in this construction program. 6. The effect of denial of rock anchor access to the Acquired Land is agreed by the structural engineers to require an alternative support solution located wholly within the Residue Land. The quantity surveyors agreed that an internal buttress system would be the most cost-effective solution and this would increase construction costs on the Residue Land by $1,949,978. 7. In the joint report Mr Abbott prepared a further construction program incorporating internal buttressing, a third level of basement carpark and made no provision for out of sequence building on the Bourke Street podium facade as he considered that to be unacceptable. That program commenced in January 2019. 8. It is useful to consider assumptions that any hypothetical parties would make in relation to the third level basement carpark raised in the evidence. I find that the likelihood of needing a third level of basement car parking would not be considered a certainty by the prudent hypothetical parties, indeed the opposite. The need for the third level was identified by Mr Ienco structural engineer on the basis that diaphragm walls would be inset a certain distance, about which there was some dispute by Mr Lewis. If secant walls are used a third level may not be necessary based on Mr Lewis' advice. I do not agree with SNS' submissions that Mr Lewis' views were so undermined in cross-examination that they should be disregarded. 9. The architects who were asked to prepare a design for a third level of basement carpark also disagreed about whether a third level would be necessary as summarised above in pars 114-115. Mr Bonus considered that a secant pile wall may negate the need for an additional level adopting Mr Lewis' advice. Further, the plan prepared by Mr Ireland was based on providing 172 car parking spaces on the assumption that would be required by the planning instruments. He agreed in cross-examination that if the ADG and the guide to car parking traffic generation was applied the number of spaces could be 135-140, a substantial reduction. I consider a prudent developer would seek to avoid the building cost of some $1.2 million for a third level of carpark by accommodating cars on two levels of car parking and elsewhere on the site such as at ground level where the number of spaces was reduced substantially from 172, on the assumption that development consent for that can be obtained. 10. In addition I agree with RMS that such detailed evidence as I have summarised above concerning construction scheduling, insetting of walls to a specific degree resulting in the possible need for a third level of basement car parking would not be obtained by the prudent hypothetical parties in any event. I will not consider the third level of basement further for construction programming or valuation purposes and accordingly it need not be taken into account in considering construction on the Residue Land before early 2020. 11. Commenting more generally on the nature of expert advice that the prudent parties would be likely to obtain, I consider Mr King's evidence based on the structural engineers' advice as summarised above in pars 264-265 is more likely to be the type of evidence received by prudent hypothetical parties, if sought at all. That is to the effect that there are construction methods, albeit more costly, which enable construction to commence and progress without relying on access to the Acquired Land which would permit construction to commence at any time. Mr Abbott prepared a detailed construction schedule based on various assumptions such as whether internal buttressing and/or a third level of car parking would be required. Evidence of this type reflects a particular construction program and is not what the hypothetical parties would be assumed to obtain. I intend no criticism of Mr Abbott in making these observations as he was addressing the brief provided to him. 12. As a result of my findings accepting a 12 month period for preparation for construction after the grant of a development application and Mr King's evidence of the potential for construction to commence from July 2018 in the after scenario the 10 month and 17 month deferral periods do not arise. 13. Starting building before access to the Acquired Land is available does require additional costs to be incurred by a hypothetical developer. The valuers agree that additional construction costs arising from no access to the Acquired Land in 2020 should be taken into account in my consideration of such a hypothetical party. There was no dispute by the structural engineers and construction schedulers that the provision of internal support would be necessary if access to the acquired land is not available. The structural engineers agreed that a "top-down" method of construction, internal propping or temporary buttress walls could be used. Internal buttressing is costed at $1.9 million by the quantity surveyors. The additional building costs for internal buttressing should be considered to be a matter the prudent parties would be mindful of and a deduction for these should be made from the purchase price in the after scenario as a cost the hypothetical parties would accept is reasonable to take into account, subject to a matter identified in par 317. 14. A further building cost arising from the lack of access to the Acquired Land before early 2020 is the necessity at the ground level to vary the building program for the podium along Bourke Street so that grids D-E must be built out of sequence to be completed once access to the Acquired Land is obtained, as identified by Mr King in par 269 above. Mr King accepted in cross-examination that this would require additional costs over and above usual construction costs, as RMS accepted. RMS submitted that these could be separately determined. I consider that the hypothetical parties would consider this to be a reasonable cost to factor into any purchase price. I have no evidence of the additional costs that may be occasioned but am prepared to consider deducting these from the market value in the after scenario if they appear generally reasonable. It is a matter for SNS as to whether it wishes to pursue a claim for these. If so, ideally there would be agreement between experts as to what the appropriate reduction should be. Finding on GFA rate/impact of construction costs in after scenario 1. The parties largely adopted their respective valuer's evidence in their submissions on the appropriate GFA rate the Court should apply in the after scenario. 2. My findings concerning accumulation, analysis, adjustment and application in the before scenario also apply in the after scenario. While the Residue Land in the after scenario is smaller in area than the Parent Parcel in the before scenario, in relation to the accumulation of sales by Mr Davis the same concerns apply to the application of sales from Waterloo that being a different market. Relevant sales are located very close to the subject. The size of the Residue Land was not so different that the same local sales in Gardeners Road relied on by Mr Lunney in the before scenario cannot apply in the after. Mr Lunney's accumulation, analysis and adjustment of comparable sales in the after scenario were explicit and transparent and are accepted. In the after scenario, Mr Lunney applied the same accumulation, analysis and adjustment steps as in the before scenario, which I have accepted, with the application step having regard to the smaller site area of the Residue Land determining the rate applicable to the subject property in the after scenario to be $3,000/m2 GFA, which I accept. 3. Another factor which affects value is the valuers' approach to the likelihood of GFA being approved above the control of 3.2:1. Both identify a certain and a less certain GFA rate. Mr Lunney adopts $1,500/m2 for 5,576 m2, a market rate of $39,000,000, reduced to $38,000,000 to take into account Mr Chamber's and Mr Mitchell's differing opinions. Mr Davis adopts a rate of $3,225. I prefer Mr Lunney's reasoning for the reasons identified in the before scenario and will apply $1,500/m2. 4. Without taking into account building costs, the value in the after scenario is $32,214,000 consisting of 10,508 m2 at $3,000/m2 ($31,524,000) and 460 m2 at $1,500/m2 ($690,000). 5. As concluded above in par 311 and 312, additional building costs occasioned by the assumption of the prudent parties that internal buttressing will be necessary will need to be deducted from the value of the Residue Land. According to RMS, if internal buttress walls are allowed the cost of $1.9 million must be reduced as this includes such walls along Gardeners Road. That is an issue that will be discussed with the parties. Additional costs arising from the need to build out of sequence at ground level is also a matter which SNS can return to the Court about as noted above. Conclusion on market value 1. I have found that the market value in the before scenario is $51,549,775. The value of land in the after scenario is $32,214,000 from which specified building costs must be deducted. The difference between these figures once finalised will be the market value owing to SNS. Disturbance 1. SNS' claim for loss attributable to disturbance (s 55(d)) seeks the following costs: 1. under s 59(1)(a) and (b), valuation and legal fees for services provided prior to the commencement of proceedings. These are agreed; and 2. under s 59(1)(f): 1. fees of consultants (other than legal advisers and valuers) for services provided prior to the commencement of these proceedings in relation to the assessment of SNS' claim to compensation (including in negotiations with RMS and submissions to the Valuer-General under s 47 of the Just Terms Act); 2. wasted costs of consultants engaged in preparing and prosecuting the Original DA/JRPP DA; 3. costs of consultants engaged in preparing and prosecuting the Residue Land DA; and 4. costs for stamp duty payable on the acquisition of land to replace the Acquired Land. Evidence on disturbance 1. The evidence of Mr Royal's first affidavit is summarised above in pars 56-61 including a description of the structure of the Sans Group of six companies, including SNS, each of which carries out property development, the leasing of the property from 1992 to 30 June 2016 and that he is intending to purchase land to replace the Acquired Land. In his second affidavit, summarised above in par 62, Mr Royal attested to incurring wasted consultants' fees for various services and attached invoices reflecting these costs. 2. The consultants' affidavits relied on in relation to disturbance are as follows: * affidavit of Mr Koopman architect affirmed 20 September 2017; * affidavit of Mr Adam hydraulic designer affirmed 18 September 2017; * affidavit of Mr Jones engineer specialising in flood risk assessment dated 7 September 2017; * affidavit of Mr Hollyoak engineer sworn 30 August 2017; * affidavit of Mr Ienco structural engineer affirmed 11 September 2017; * affidavit of Mr Ruck energy efficiency consultant sworn 6 September 2017; * affidavit of Mr Young geotechnical engineer sworn 11 October 2017; and * affidavit of Ms McCabe town planner sworn 23 October 2017. 1. There is no dispute about the actual amounts claimed for disturbance. At issue is whether these are claimable under the Just Terms Act as a matter of principle. SNS' submissions on disputed disturbance Costs of other consultants engaged in connection with the compensation claim 1. As can be seen from the evidence adduced in these proceedings, given the nature of the acquisition, it was reasonable and prudent for SNS to obtain advice from consultants in disciplines other than law and valuation in order to properly inform its claim for compensation. A similar claim was made successfully in Constantine v Blacktown City Council (No 2) [2016] NSWLEC 81 at [157]-[164]. 2. This expenditure plainly meets all the requirements of s 59(1)(f). In particular, it is a cost "relating to the actual use [of the Acquired Land]" because, immediately prior to the acquisition, the actual use of the Acquired Land (as part of the Parent Parcel together with what was to become the Residue Land) was as a development site for a mixed use residential and commercial building and the subject matter of the expenditure plainly concerns the use of the Acquired Land (as part of the Parent Parcel) in this manner. Wasted costs of the Parent Parcel DA 1. Expenditure for the purpose of a proposed development that is aborted or wasted because the development cannot proceed as a consequence of an acquisition is recoverable under s 59(1)(f), for example Al Amanah College Inc v Minister for Education and Training (No 2) [2011] NSWLEC 254. The expenditure incurred by SNS in preparing for and prosecuting the Original DA/JRPP DA was effectively aborted as a consequence of the acquisition except to the extent that the expenditure can be characterised as being for works or services that were able to be re-used in preparing and prosecuting the Residue Land DA. 2. SNS' claim is largely based on evidence adduced from the consultants involved in providing the relevant services that identifies and estimates the extent to which (if at all) services were able to be re-used in respect of the Residue Land DA. Costs of the Residue Land DA 1. Had the acquisition not occurred it would not have been necessary for SNS to incur costs in preparing and prosecuting the Residue Land DA. Although from one perspective the expenditure was incurred in relation to the Residue Land (and not the Acquired Land), for the reasons that follow, it also has a sufficient relationship with the actual use of the Acquired Land as required under s 59(1)(f). 2. Immediately prior to the acquisition, the actual use of the Acquired Land was (as part of the Parent Parcel and together with the Residue Land) a development site. The claimed expenditure relates to that same actual use albeit as a result of the acquisition. It is only the Residue Land that can be used by SNS in that manner. Putting the matter another way, the actual use of the Acquired Land and the Residue Land were so intimately connected that the use of each was dependent upon (or was indeed the same as) the other, for example Roads and Traffic Authority of New South Wales v Peak [2007] NSWCA 66 at [71] and Roads and Traffic Authority of New South Wales v McDonald (2010) 79 NSWLR 155; [2010] NSWCA 236 at [44]-[45]. Stamp duty on replacement land 1. Immediately prior to the acquisition, SNS was actually using the Acquired Land (as part of the Parent Parcel) as a development site for the purpose of its development business, see the affidavit of Mr Royal summarised above in pars 56-57. Persons carrying on such a business require development sites as their land bank or stock-in-trade and acquire them for that purpose. The acquisition has removed the Acquired Land from SNS' land bank and stock-in-trade and, to continue its business, it intends to acquire replacement land as recognised in Blacktown Council v Fitzpatrick Investments Pty Ltd [2001] NSWCA 259 and Macarbell Pty Ltd v Roads and Traffic Authority of New South Wales (2006) 149 LGERA 217; [2006] NSWLEC 651 at [12]-[16]. The execution of that transaction will involve SNS incurring various costs including for stamp duty. 2. In SNS' circumstances, as attested to by Mr Royal, the authorities clearly establish that incurring stamp duty calculated on the market value of the Acquired Land is compensable under s 59(1)(f), see Macarbell. Potential future use of the Acquired Land is not an "actual use" but SNS' use is not as a mere passive investor. The circumstances are unlike Cannavo v Roads and Traffic Authority of New South Wales [2004] NSWLEC 570. Speter v Roads and Maritime Services [2016] NSWLEC 128 is also distinguishable on its facts. RMS' submissions Stamp duty not claimable 1. SNS is not entitled to compensation for four reasons. Firstly, the claim is not related to the actual use of the Acquired Land but is a future or potential use at the date of acquisition. The intention to develop the land is a potential future use as no consent had been obtained to allow development on the Acquired Land, relying on Speter at [93]. The land is not stock-in-trade. SNS has owned it for 25 years as an investment and leased it out. The holding of land as an investment rather than as trading stock is not an actual use of land per Cannavo at [46]. This case is similar to Kirela Pty Ltd v The Minister Administering the Environmental Planning and Assessment Act 1979 (No. 2) (2004) 132 LGERA 90; [2004] NSWLEC 68 where a similar claim was rejected. 2. Secondly, the stamp duty costs are not a direct and natural consequence of the acquisition. The use of the Parent Parcel was for a mixed use development, the same use as on the Residue Land, albeit at reduced size. There is no evidence of SNS carrying out multiple developments at once or at all. 3. Thirdly, the claim is unreasonable given the constraints to development on the Acquired Land, resulting in minimal development. A true replacement with all its constraints would be problematic. 4. Fourthly, the claim is precluded by s 61 of the Just Terms Act if the Court finds the Acquired Land was ripe for redevelopment. Original DA/JRPP DA costs not claimable 1. For the same four reasons identified above the Original DA/JRPP DA costs are not claimable, particularly as these costs were not caused by the acquisition (second reason). The costs were incurred for the redevelopment of the site. The formulation of the redevelopment was inconsistent with the acquisition as it proposed development on the Acquired Land. It did not therefore acknowledge it and the loss was not caused by it. 2. SNS is not entitled to compensation for any cost that would necessarily have been incurred in realising the potential for mixed use development as that was not its use at the date of acquisition. Obtaining development consent is necessary in order to realise that potential and SNS is not entitled to any costs incurred in realising that potential. Residue Land DA costs not claimable 1. The Residue Land DA costs are not claimable as they do not relate to the actual use of the land and are precluded by s 61. Assuming that market value will be assessed on the basis that the land was ripe for mixed use development this is a use other than that for which it was being used as at the date of the acquisition. Obtaining development consent is necessary in order to realise that potential and is therefore not claimable. Costs of other consultants engaged for compensation claim not claimable 1. SNS is not entitled to claim compensation for costs incurred in relation to consultants' fees to inform a valuation under s 59(1)(f) for the same four reasons as set out in pars 331-334 above. In addition, there is a clear statutory intent in s 59(1)(a) and (b) to limit fees payable to lawyers and registered valuers to advise a dispossessed owner in relation to an acquisition. This intent was made even clearer by the insertion of s 59(2) in 2016 to limit claimable valuation fees to those payable only to valuers with certain qualifications. 2. Finally, and independently of the above, for the Court to allow these fees it would need to be satisfied that both the engagement of the consultants was required to inform the valuation of the Acquired Land and that, in fact, SNS' valuer relied on the reports or advice of such consultants in preparing the valuation. 3. SNS relied on Constantine. The case is clear authority that such consultant fees are not compensable under s 59(1)(b). In that case the trial judge did not allow the claim under s 59(1)(f) because the fees claimed did not relate to an actual use of land. Similarly here, the costs claimed could not rationally be said to be related to the actual use of land that were incurred as a direct and natural consequence of the acquisition. First, the fees relate not to the actual use of the land but rather to the prospective highest and best use of the land. Second, they have not been incurred as a consequence of the acquisition affecting any use, but for the purpose of pursuing the claim for compensation with the Valuer-General. The statutory intent is to permit only a limited range of fees in that regard. Finding on disturbance claim under s 59(1)(f) 1. The precise terms of s 59(1)(f) must be applied in the circumstances of this case. "Any other financial costs" is a wide term and includes loss per Health Administration Corporation v George D Angus Pty Ltd (2014) 88 NSWLR 752; [2014] NSWCA 352 at [61]. Any such costs or losses must be or might be reasonably incurred as a direct and natural consequence of the acquisition. 2. Key to the determination of the claims made under s 59(1)(f) in this case is whether the claims relate to the actual use of the Acquired Land at the date of acquisition. As noted in Constantine in [156] citing Mir Bros Unit Constructions Pty Ltd v Roads & Traffic Authority of New South Wales 149 LGERA 217; [2006] NSWCA 314 at [88] disturbance costs can only be awarded if they relate to the actual use of the Acquired Land at the date of acquisition so that costs relating to a potential future use would fall short of actual use and would not be claimable. In the present case, at the date of acquisition the Acquired Land was vacant, the lease to the business formerly occupying the site having expired some two months prior. SNS had lodged a DA for a mixed use development which had been refused by the JRPP and was the subject of a Class 1 appeal in the Court. No building work related to the development of the site for mixed use development had commenced. However, a complying development certificate for demolition work had been issued and demolition had commenced on the Acquired Land. SNS described the use at the date of acquisition as a development site for a large mixed use development. I agree with that description of the actual use. 3. This case is similar to Macarbell where Jagot J held vacant land ripe for industrial development was being used in the applicant's business of land development at the relevant date. The potential use of the land for that purpose was consistent with the use of the land at the date of acquisition. That the applicants had open to them various means of pursuing their business including through a leasehold did not preclude a finding of actual use, at [35]. Applying similar reasoning here SNS is entitled to disturbance which relates to that actual use of the Acquired Land. That is the same basis on which market value is assessed. Section 61 has no application in these circumstances. 4. A further matter identified by RMS is my finding that the Further Amended DA would not have been considered likely to be approved by the prudent hypothetical parties. The Council's road widening requirements would be presumed to apply in the absence of RMS' public purpose in the before scenario. This was used to support a submission that the development potential of the Acquired Land was more limited than the Residue Land as a result and its replacement as if on the same development basis was not justified. The Acquired Land nevertheless had development potential for which it is reasonable to find replacement land. That finding does not negate this aspect of the disturbance claim. Stamp duty (points of claim at [26]-[30]) 1. Whether SNS should be regarded as in the business of land development with parcels of land as stock-in-trade arises in relation to the stamp duty claim. Actual use of land can include "land banking" for future development, Fitzpatrick at [4], [27]. 2. Mr Royal as the sole director of SNS attested to having a number of development companies through which he has pursued developments of various kinds over many years. His business model is to create a company for each development site under an umbrella group of companies. I accept that he is in the business of land development and that SNS is part of his portfolio of companies created to achieve that end. The stamp duty claim for replacement land is reasonable as the area acquired was substantial in the context of the MSTCP. 3. In Speter the Court found the applicants were not in the business of investing, holding only a single investment of land citing Cannavo. Kirela, Speter and Cannavo are distinguishable given their different facts to this matter. Wasted costs of Original DA/JRPP DA (points of claim at [23]-[25]) 1. This claim is maintained by SNS on the basis that costs of the Original DA/JRPP DA concerning the Parent Parcel were wasted. Why this DA in its various forms was pursued by SNS given the imminent acquisition is unclear on the evidence. Mr Royal was cross-examined about his discussions with council staff as summarised in par 64 above. Despite being told that RMS' concurrence was unlikely to be forthcoming both he and council staff continued to work on the DA on the assumption on his part that refusal of development consent was not a given. As already observed this approach appears curious given the terms of the BBLEP. 2. Knowledge of when the possibility of acquisition was known about by SNS and of the reservation of land for road widening is relevant to assessing this claim. The RMS' reservation over the Acquired Land was identified in the BBLEP in 2013. The evidence before the Court included a legal advice dated January 2015 provided to SNS to the effect that RMS' concurrence was not required under cl 100 of the ISEPP. In a letter to SNS' consultants dated 13 October 2014 SNS was informed by RMS that it did not agree to reduce the area proposed widening Bourke Street to facilitate development of the Parent Parcel and made it clear that all new building or structures were to be erected clear of the land reserved for road widening unlimited in height or depth. 3. According to Mr Royal's first affidavit, par 57, in a meeting on 23 February 2015 he was told by RMS' representatives that part of this land would be acquired. It therefore appears that SNS was aware that RMS would be likely to consider that it was a concurring authority before it submitted its Original DA in February 2015 and also that RMS may acquire the land at some stage. That SNS had legal advice to the contrary which explains in part pursuing the DA does not strengthen this disturbance claim. Its DA was unlikely to succeed yet it proceeded. These are not wasted costs in the sense referred to in Al Amanah College where the abandoned DA costs for a private school were awarded as the applicant had no knowledge of the impending acquisition. This claim is not claimable under s 59(1)(f). Wasted costs of Residue Land DA (points of claim at [21]-[22]) 1. Section 59(1)(f) relates to the actual use of the Acquired Land. The wasted DA costs relate to the Residue Land. In a very small number of cases such as Peak and McDonald expenditure on land other than the Acquired Land has been allowed where these are intimately connected with the actual use of the Acquired Land. The Parent Parcel was a development site. The Residue Land is a development site which does not rely on the Acquired Land in any way. They are not interdependent. That they had the same overall use does not give rise to any practical connection between the two. This claim is not claimable under s 59(1)(f). Costs of other consultants engaged in compensation claim (points of claim at [11]-[12]) 1. SNS is claiming the costs of the architect, quantity surveyor, town planner, geotechnical engineer, structural engineer, construction programming consultant and accountant who assisted in the assessment of compensation in addition to legal and valuation costs under s 59(1)(f). They are not claimable under s 59(1)(b), which RMS submitted provides a statutory indication that such costs are not claimable. The terms of s 59(1)(f) are wide and there is no statutory construction basis for construing them narrowly by reference to s 59(1)(b) and s 59(2). The only case referred to by the parties to have considered such a claim is Constantine. 2. The passages in Constantine relied on at [157]-[164] consider the application of s 59(1)(f) from the point of view of whether the claim for an ecologist's report obtained as part of the negotiation of valuation process arose from the actual use of the acquired land at the date of acquisition. There is no express consideration of the issue which arises here of whether the pursuit of a compensation claim through instructing expert consultants not otherwise referred to in s 59(1)(a) and(b) relates to the actual use of the acquired land. Unlike in Constantine I have held that the actual use of the land is as a development site so that if I award these costs they do arise from the actual use of the land. Given the broad wording of s 59(1)(f) I consider these costs can be claimed under s 59(1)(f) as they relate to the actual use of the land and arise as a direct and natural consequence of the acquisition, subject to one further matter. 3. The further caveat identified in s 59(1)(f) is that the cost incurred must be reasonable. As identified in SNS' closing submissions in the table in par 182 the use made of the consultants' reports by the valuer Mr Davis is identified and clear and I am satisfied that these can be claimed under s 59(1)(f) as being reasonably incurred. It is fair to describe the approach of SNS as somewhat "Rolls Royce" and I have expressed reservations earlier in the judgment as to the relevance of all of the expert evidence obtained in the context of the hypothetical parties I had to consider in the before and after approach to land valuation. In the context of a disturbance claim where the expenditure has been incurred and the evidence establishes that the expertise has been applied I will allow all of this claim for $314,000. Conclusion 1. I have determined market value subject to two matters as identified in par 318 above. As flagged above in par 317 the market value in the after scenario should be reduced by an appropriate amount for internal buttressing costs the precise amount of which needs to be clarified by the parties. Further, if SNS wishes to pursue an amount for additional construction costs occasioned by changes in sequencing of building the podium level along Bourke Street in the after scenario this can also be deducted once agreed. 2. Disturbance in the amount of $314,000 for additional consultants' fees is payable under s 59(1)(f). I have also held that stamp duty is payable on any replacement land pursuant to s 59(1)(f). 3. The parties need to agree orders to give effect to the judgment including the resolution of outstanding matters. A timetable for doing so will be discussed with the parties. Addendum made on 9 April 2018 1. In accordance with the terms of paragraph 357 above and the directions in my judgment of 15 February 2018 the parties provided me with their agreed proposed orders. Accordingly I make orders as follows. Orders 1. Compensation under the Land Acquisition (Just Terms Compensation) Act 1991 (Act) is determined in the sum of $25,734,425 comprising: 1. market value under section 55(a) of the Act and compensation under section 55(f) of the Act: $23,933,753; and 2. disturbance under section 55(d) of the Act: $1,800,672. 1. Within 28 days of the date the respondent receives from the applicant the original duly executed direction as to payment form, the respondent must pay to the applicant the amount of compensation referred to in paragraph 1 and any interest payable under section 49 of the Act, less any advance payment made to the applicant pursuant to section 48 of the Act. (3) The respondent is to pay the applicant's costs, as agreed or assessed on the ordinary basis. (4) The exhibits may be returned. (5) The mention at 4.15 pm on 9 April 2018 is vacated. ********** Amendments 09 April 2018 - Addendum for final orders added DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 09 April 2018