Land and Environment Court New South Wales Medium Neutral Citation: Canal Aviv Pty Ltd v Roads and Maritime Services [2018] NSWLEC 52 Hearing dates: 27 and 28 February and 1, 2 and 5 March 2018 Date of orders: 24 May 2018 Decision date: 24 May 2018 Jurisdiction: Class 3 Before: Moore J Decision: See directions at [284] Catchwords: COMPULSORY ACQUISITION - portion of landholding acquired for WestConnex project - agreement on value of acquired land - no agreement on impact on value of residue land - consideration of impacts on residue land - overall negative impact on residue land - extent of impact on value determined - compensation to be ordered MODEL LITIGANT POLICY - applicant complains respondent has not acted in accordance with its obligations imposed by the State's Model Litigant Policy - not a matter for the Court - alternative avenues for complaint lie in the hands of the applicant COMPULSORY ACQUISITION - claim for stamp duty for replacement property - Fitzpatrick basis for considered and rejected - consideration of decision in SNS - SNS provides no alternative basis for claim - stamp duty claim rejected COMPULSORY ACQUISITION - claim for reimbursement for land tax - claim made as either part of market value or as a disturbance claim pursuant to s 59(1)(f) of the Land Acquisition (Just Terms Compensation) Act 1991 - neither statutory provision provides support for the claim - claim rejected Legislation Cited: Land Acquisition (Just Terms Compensation) Act 1991 Land Tax Act 1956 Land Tax Management Act 1956, s 10AA Cases Cited: Blacktown Council v Fitzpatrick Investments [2001] NSWCA 259 Carlewie Pty Ltd v Roads and Maritime Services [2017] NSWLEC 78 Dial A Dump Industries Pty Ltd v Roads and Maritime Services [2017] NSWCA 73 Dial A Dump Industries Pty Ltd v Roads and Maritime Services [2016] NSWLEC 39 George D Angus Pty Limited v Health Administration Corporation (2013) 205 LGERA 357; [2013] NSWLEC 212 Hatzivasiliou v Roads and Maritime Services [2017] NSWLEC 9 Housing Commissioner of New South Wales v Falconer and Others [1981] 1 NSWLR 547 Konduru t/as Warringah Road Family Medical Centre v Roads and Maritime Services [2017] NSWLEC 36 Leichhardt Council v Roads & Traffic Authority of NSW (2006) 149 LGERA 439; [2006] NSWCA 353 SNS Pty Ltd v Roads and Maritime Services [2018] NSWLEC 7 Speter v Roads and Maritime Services [2016] NSWLEC 128 Sydney Water Corporation v Caruso [2009] NSWCA 391 The Melbourne Steamship Company v Moorehead 15 CLR 333 Toveno Pty Limited v Roads and Maritime Services [2014] NSWLEC 1266 Category: Principal judgment Parties: Canal Aviv Pty Ltd (Applicant) Roads and Maritime Services (Respondent) Representation: Counsel: Mr J Lazarus and Mr L Waterson, barristers (Applicant) Mr P Tomasetti SC/Ms F Berglund, barrister (Respondent) Solicitors: King and Wood Mallesons (Applicant) Herbert Smith Freehills (Respondent) File Number(s): 130795 of 2017 Publication restriction: No TABLE OF CONTENTS Introduction The effect of the acquisition The public purpose The issues in dispute The evidence 1-3 Ricketty Street, Mascot The site inspection The relevant statutory framework Valuation methodology The position of the valuers The Model Litigant Policy Introduction The Company's written submissions Mr Lazarus' oral closing submissions My exchange with Mr Lazarus on this point Conclusion on the Policy The acquisition impact on the value of the residue land The comparable sales relied upon The starting rate for the residue land Introduction Mr Lunney's post-acquisition position Mr Davis' post-acquisition position Conclusion on the starting value for the residue land Potential adjustment factors for the residue land Introduction Access to the residue land Introduction Construction access to the residue land Access from the north Egress from any redevelopment on the residue land Introduction Additional exposure to passing traffic Ricketty Street into Venice Street Timing of development activities Introduction Construction of Venice Street Development of the residue land Valuation adjustments for the residue land Introduction Mr Davis' adjustments to the starting value of the residue land Introduction Mr Davis' starting value Mr Davis' general adjustments Mr Davis' further adjustment of 10% Conclusion on Mr Davis' approach to the residue land General conclusion on the valuers' evidence concerning the residue land Consideration of the various factors potentially impacting the residue land Introduction The impact of the broader WestConnex project Reduction in size The impact of redevelopment commencement timing Reduction in rental income potential Reduced building footprint on the residue land The new access from the north Egress from the residue land post-redevelopment Overall conclusion of impacts on the residue land The stamp duty claim Introduction The relevant passage in SNS Mr Ronen's evidence Consideration of this claim Introduction The Fitzpatrick principles The decision in SNS Conclusion on the stamp duty compensation claim The land tax claim Introduction Quantum of the land tax claim The valuers' land tax evidence The Carlewie decision. The RMS' submissions The Company's position Consistent practice Conclusion on the market value land tax claim Land tax and s 59(1)(f) of the Land Acquisition Act Conclusion on the land tax compensation claim Conclusion Introduction Impact on the value of the residue land The stamp duty claim The land tax reimbursement claim Costs Directions JUDGMENT Introduction 1. HIS HONOUR: In early September 2015, Canal Aviv Pty Ltd (the Company) entered into a "put and call" option to purchase 1-3 Ricketty Street, Mascot (the parent parcel). Shortly thereafter, Mr Ronen, the director and sole shareholder (and therefore guiding mind) of the Company, was made aware that portion of the parent parcel would be required to be acquired for an element of the major public road project known as WestConnex. Nonetheless, Mr Ronen caused the Company to complete the acquisition of the parent parcel, an acquisition which took place in late 2015. 2. On 24 February 2017, the required portion of the parent parcel was compulsorily acquired by Roads and Maritime Services (the RMS) for the purposes of the new M5 element of the WestConnex project (the New M5). The consequence was that the compensation provisions set out in the Land Acquisition (Just Terms Compensation) Act 1991 (the Land Acquisition Act) were triggered. The Company did not accept the compensation determined by the Valuer General to be appropriate and exercised its right to commence an appeal to this Court pursuant to the relevant provisions of the Land Acquisition Act. The effect of the acquisition 1. The parent parcel comprised Lot 24 in Deposited Plan 515070, Lot 25 in the same Deposited Plan and Lot 1 in Deposited Plan 551509. The portion of the parent parcel which comprised Lot 1 was compulsorily acquired for the purposes of the New M5. 2. Although discussed more fully later, it is sufficient for present purposes to observe that Lot 1, pre-acquisition, was used for the purposes of providing access to Lots 24 and 25 from Ricketty Street. After the acquisition of Lot 1, it is currently being reconstructed as a public road to be known as Venice Street (Lot 1 will be referred to, subsequently in this judgment, as either the "acquired land" or "Venice Street" as the context demands). Lots 24 and 25 remain owned by the Company and are to be referred to, for the remainder of this judgment, as the "residue land". The public purpose 1. The land for Venice Street was acquired to form part of works described as the New M5 (the public purpose), an element of the larger WestConnex road project. The issues in dispute 1. At the commencement of the proceedings, the matters that were in dispute between the Company and the RMS were: 1. The value of the acquired land as at the date of acquisition; 2. The impact (if any) of the acquisition of the acquired land on the value of the residue land as at the date of acquisition; 3. The claim that the Company was entitled to be reimbursed for a portion of the land tax which it was required to pay in instalments during 2017, with the land tax liability arising as a consequence of the Company's ownership of the parent parcel as at 31 December 2016; 4. A claim for the RMS to meet the future stamp duty costs to be incurred by the Company on the acquisition of replacement land to take the place of the acquired land; and 5. The amounts for which the Company was entitled to reimbursement of various expenses arising from the acquisition and compensation determination process. Agreement on these amounts was reached during the hearing and did not require my determination. The evidence 1. A large volume of documentary material in three volumes of the Court Book was tendered and, during the course of the trial, a number of further documents were also tendered. Individual expert reports and, as necessary, joint expert reports, were tendered in the following disciplines: * Town planning; * Traffic management; * Valuation; and * Architecture. 1. Limited oral evidence was required during the hearing from expert witnesses, with this being required from: 1. Mr Hollyoak for the RMS and Mr McLaren for the Company (traffic management); and 2. Mr Lunney for the RMS and Mr Davis for the Company (valuation). 1. Mr Ronen also provided an affidavit in the proceedings and was required for cross-examination. 1-3 Ricketty Street, Mascot 1. The parent parcel had an area of 11,470 square metres. Of this area, 2,529 square metres comprised the acquired land and 8,941 square metres comprised the residue land. Pre-acquisition, the parent parcel had a frontage of approximately 84 metres to Ricketty Street and a frontage, post-acquisition, of approximately 63.7 metres to that street. Pre-acquisition, access to the parent parcel was via that element which became the acquired land with the acquired land having been used to provide some 58 parking spaces serving the parent parcel, as well as providing access to those elements of the parent parcel that became the residue land. 2. Post-construction of Venice Street, access to the residue land will be from it rather than directly from Ricketty Street. There will be around 130 metres of parking spaces along Venice Street, providing parking for around 21 cars. 3. The parent parcel had a western boundary of approximately 151.1 metres comprising a gently curving frontage to the Alexandria Canal. This boundary remains unchanged for the residue land but plays a role, as a consequence of development constraints arising from applicable planning controls, in consideration of future potential uses of the residue land. 4. The northern boundary of the parent parcel had a length of 83.9 metres abutting industrial land located to the north. Pre-acquisition, there was no vehicular access across the northern boundary of the parent parcel. Post‑acquisition, the northern boundary of the residue land will be approximately 63.8 metres and access (in a fashion requiring some detailed description later) will also be available from the north, as a consequence of the construction of Venice Street as a slip road linking to Gardeners Road (one-way traffic from Gardeners Road to it joining Venice Street proper at its turning bulb and hence two-way to Ricketty Street). 5. As to the eastern boundary of the parent parcel and, subsequently, of the residue land, there is no functional difference apart from the fact that the consequence of the resumption of the acquired land has moved this boundary some 20.12 metres the west. The site inspection 1. During the afternoon of the first day of the hearing, a site inspection was undertaken. The inspection comprised an inspection of the parent parcel and a drive-by viewing of 202-212 Euston Road, Alexandria (202‑212 Euston Road). What follows is a description of that which was observed during the course of the site inspection and the various locations from which those observations were made. 2. The topography of the parent parcel was near level. The acquired land comprises an almost north-south-running, rectangular-shaped lot. The parent parcel is located on the northern side of Ricketty Street, approximately eight kilometres south from the City of Sydney, with truck and vehicle access now available from Gardeners Road as a consequence of the acquisition of land for creation of Venice Street to the north of the acquired land. 3. First, we travelled along Gardeners Road, a public road, before continuing to travel, by way of a truck and vehicle access route off Gardener Road, in a generally south-westerly direction into the residue land. The parent parcel had been developed some time ago with two separate buildings - one with a Ricketty Street frontage and the other toward the northern boundary of the site. 4. We were taken to the site frontage to Ricketty Street. This portion of Ricketty Street comprises two eastbound lanes with a speed limit of 60 kilometres per hour. A third eastbound lane commences to the east of the site. There is a median strip preventing a right turn in from or out to Ricketty Street from the acquired land. 5. A large tar-sealed parking area separated the two buildings. This parking area had been subject to a lease to Secure Logistics Pty Ltd (Secure Logistics) to be used for truck parking. This use gives rise to matters requiring consideration as to what value the loss of availability of this space for truck parking purposes might play, post-acquisition, on the value of the residue land pending redevelopment. 6. The acquired land is situated on the northern side of Ricketty Street and had a southern frontage to Ricketty Street of 20.12 metres. Stage 1 of construction of Venice Street was underway on the acquired land. Part of the acquired land was constrained by a temporary construction fence, with pedestrian access on it left open to enable access to Ricketty Street from the residue land. 7. Venice Street is to be a two-way, two-lane road with a left-in-left-out intersection with Ricketty Street. A bulb will be located on Venice Street to the north of the acquired land to be used as a turning circle. We were taken to the location of the future head of Venice Street and viewed the area where the slip road from Gardeners Road would join the bulb. The relevant statutory framework 1. The process pursuant to the Land Acquisition Act earlier described has been invoked by the Company with respect to the compensation determined by the Valuer General for the compulsory acquisition of land on 24 February 2017 for the creation of Venice Street. There are four provisions of the Land Acquisition Act which are relevant to these proceedings. The first is s 66 of the Land Acquisition Act, the provision which sets out the basis upon which the Company can object to the Valuer General's determination. The provision is in the following terms: 66 Objection against amount of compensation offered (1) A person who has claimed compensation under this Part may, within 90 days after receiving a compensation notice, lodge with the Land and Environment Court an objection to the amount of compensation offered by the authority of the State. (2) If any such objection is duly lodged, the Land and Environment Court is to hear and dispose of the person's claim for compensation. (3) … (4) … 1. The second relevant provision is that which specifies an exhaustive list of the matters that are to be considered in determining the amount of compensation to which the Applicant is entitled. The relevant elements of this provision, s 55 of the Land Acquisition Act, are in the following terms: 55 Relevant matters to be considered in determining amount of compensation In determining the amount of compensation to which a person is entitled, regard must be had to the following matters only (as assessed in accordance with this Division): (a) the market value of the land on the date of its acquisition, (b) … (c) … (d) any loss attributable to disturbance, (e) … (f) ... 1. The two further relevant provisions are set out below: 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) ... (3) … 59 Loss attributable to disturbance (1) In this Act: loss attributable to disturbance of land means any of the following: (a) … (b) … (c) … (d) … (e) … (f) any other financial costs reasonably incurred (or that might reasonably be incurred), relating to the actual use of the land, as a direct and natural consequence of the acquisition. (2) … Valuation methodology 1. Mr Lunney and Mr Davis agreed that the appropriate valuation methodology to be applied was the before-and-after method. This methodology requires an assessment of the value of the parent parcel, on a rate per square metre basis, as at the date of acquisition. That rate per square metre, they agreed, was appropriate to be determined by a process of analysis of relevant comparable sales. The derived, analysed rate from the relevant sale(s) was then to be applied to the area of the acquired land for the purposes of calculating the compensation to be paid to the Company for the acquisition of that land. 2. For the purposes of assessing what compensation (if any) should be paid to the Company for impacts on the residue land as a consequence of the resumption of the acquired land, a derived starting rate per square metre is to be taken with adjustments (if required) to be made to that rate before deriving an analysed rate per square metre, post-acquisition, for the residue land. The difference between the pre-acquisition rate per square metre for the parent parcel and the post-acquisition rate for the residue land is then applied to the area of the residue land to calculate the amount of compensation (if any) to which the Company is entitled as a consequence of the impact of the acquisition of the acquired land for Venice Street, as part of the New M5 project on the value of the residue land. The position of the valuers 1. Mr Lunney and Mr Davis each prepared individual expert reports on the valuation matters arising for consideration in the proceedings. Having done so, they then undertook a joint expert conferencing process which resulted in the preparation of two joint expert reports. 2. At the commencement of the conferencing process, the issues which were in dispute between them were: 1. The value of the parent parcel as at the date of acquisition (from which the value of the acquired land could be determined); 2. The extent (if any) to which the acquisition of the acquired land impacted on the value of the residue land; and 3. The extent to which the proportionate outstanding land tax liability relating to the acquired land would be taken into account in any hypothetical transaction involving the parent parcel as at the date of acquisition. 1. For the purposes of their comparable sales analysis to establish the value of the parent parcel as at the date of acquisition, Mr Lunney and Mr Davis agreed that the most relevant comparable sale was the sale of the parent parcel itself, as that sale was an arm's length transaction with the purchase price having been struck without the purchaser (the Company) being aware of future impact of the requirement to resume the acquired land for the purposes of constructing Venice Street as part of the New M5. 2. Although Mr Lunney relied on other sales at 12-18 Burrows Road, St Peters and 202-212 Euston Road to assist with his analysis, they played no major role in his derivation of an analysed rate for the parent parcel, at the date of acquisition, of $1,650 per square metre. 3. Mr Davis also agreed that the sale of the parent parcel was the most relevant comparable sale but, in addition, he relied upon the sale of the Slazenger site and the site at 202-212 Euston Road for the purposes of his analysis. Mr Davis derived an analysed rate of $1,500 per square metre of the parent parcel, as at the date of acquisition, for the purposes of preparation of his individual expert report. 4. During the course of the joint conferencing process, Mr Lunney and Mr Davis reached agreement that, having regard to their individually derived rates, it was appropriate to compromise and agree that the rate per square metre for the parent parcel (and thus appropriate to be applied to the area of the acquired land) to compensate the Company for its acquisition was $1,575 per square metre. As a consequence of Mr Lunney and Mr Davis reaching agreement on this rate, the amount of compensation due to the Company for the resumption of the acquired land was no longer in dispute. 5. However, the second and third of the items in dispute between Mr Lunney and Mr Davis remain for my determination. The written and oral evidence concerning these two matters requires further consideration (particularly with respect to what is said by Mr Davis to be the adverse impact of the acquisition for, and the creation of, Venice Street on the residue land). The Model Litigant Policy Introduction 1. During the course of his closing submissions, Mr Lazarus, counsel for the Company, handed up a copy of the State Government's Model Litigant Policy (the Policy). He did so for the purpose of addressing what he said were contradictory positions which the RMS had taken in relevant court proceedings, including these proceedings before me. In this regard, he was contrasting an element of that which had been submitted to Pain J in SNS Pty Ltd v Roads and Maritime Services [2018] NSWLEC 7 (SNS) and what had been submitted to me on the same point in these proceedings. The Company's written submissions 1. The relevant portion of the Company's written closing submissions on this point were in the following terms (Applicant's written submissions at (54)): The RMS' contention in these proceedings is the exact opposite of the contention it made in SNS. This is blatantly inconsistent with the NSW Government's Model Litigant Policy, which obliges the RMS to act "consistently" in litigation. That a higher standard of fairness and consistency is required of the State and its agencies in respect of the conduct of litigation has been recognised in numerous authorities. In those circumstances, the RMS should not be permitted to put the submission at all. It should be bound by its conduct in SNS. [footnotes excluded] Mr Lazarus' oral closing submissions 1. Having handed to me a copy of the Policy, Mr Lazarus made submissions concerning how I should have regard to the Policy in these proceeding in light of what he said were submissions made on behalf of the RMS in the SNS proceedings (Transcript, 5 March 2018, page 306 line 10 to page 307 line 35): LAZARUS: Thank you, your Honour. Before I take your Honour to the policy, the submission that I'm going to put to your Honour is that the RMS should not be permitted, because of the Model Litigant Policy, to put the submission that Mr Tomasetti foreshadowed in opening - should not be permitted. The reason for that, your Honour, is that if one considers the Model Litigant Policy one sees para 2.1, so it's a policy clearly applying to the RMS in this case. 3.1, "The obligation to…and court rules," and it requires the State and its agents "to act with complete propriety, fairly and in accordance with the highest professional standards." TOMASETTI: This is a Bar Association complaint, is it? Really. LAZARUS: My friend can put what submissions he wants but he really shouldn't interrupt because this is important. 3.2, "The obligation requires…claims and litigation", and your Honour will see (c) which is the one to which we draw particular attention, "acting consistently in the handling of claims and litigation." What we say, your Honour, is that the RMS put a diametrically opposed position to the position they wish to put in this case in SNS. They submitted to Pain J that she should not have regard to any post acquisition material because of - well, that was the submission that was put. I'll take your Honour to it. I think your Honour should have a copy of the SNS because I think my friend handed it up in opening. Does your Honour still have that? HIS HONOUR: It doesn't matter. I can get it. LAZARUS: I do wish to take your Honour to certain sections of the judgment. HIS HONOUR: I understand that. Yes, I'm there. LAZARUS: Your Honour sees, turning first to para 185, "The RMS objected…at that date." That was their position in a case to do with land a few hundred metres away, the same project in a case decided less than a month ago. Her Honour dealt with that submission at para 184. I'll take your Honour to that. HIS HONOUR: I'm there. LAZARUS: Her Honour says, "A threshold issue…establish a hindsight." Then her Honour refers to Allandale at 60 to 61, which were the principle paragraphs to which my learned friend drew attention in opening. Consideration of events after the date of acquisition, where a claim was made based on in duress affection, in relation to the level of risk of access to land was allowed. Then her Honour refers to her decision in Bligh to which I might add there was no adverse reference on this topic made in the Court of Appeal. 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 methods if events are the date of acquisition are justified by a falconer. And your Honour, we say, that is entirely consistent with the principle, is not inconsistent with Allandale and your Honour should follow it unless your Honour is convinced that it's clearly wrong, as a matter of comity if nothing else. Now, we deal with the question of the authority of Allandale at para 52 as we point out that Allandale itself was solely concerned with the assessment, separate assessment, I should say under 55F and not the market value of the acquired land under 55A. Thus, to the extent that, some parts of the judgment are consistent with the proposition that regard may be had to post acquisition evidence this cannot be transposed to the present case where a before and after method is used to assess both the market value of the acquired land and in duress affection under 55F. It just doesn't work if one is undertaking a before and after case and methodology, I should say, that is, what Pain J has found. And until the Court of Appeal says that she was wrong to distinguish Allandale in that fashion your Honour should follow it, follow her decision. And we explain that at paras 55 and 45. Paragraph 57, there's simply, we say that once you disregard the post-acquisition matters there's simply no evidence for the RMS's assumptions. And indeed, we would submit your Honour there's no evidence in support of those assumptions, in particular the last two assumptions made by Mr Tomasetti at all, at all. And that would have been a simple matter for the RMS to address had that been the correct position but they haven't. HIS HONOUR: And it follows from what you say that, I, on your submission, therefore exclude what I saw concerning the staging in Venice Street during the site inspection. LAZARUS: Correct. Correct, but the alternative submission is, even if you have regard to it, you place very little weight on it for the reasons that I gave a little while ago. My exchange with Mr Lazarus on this point 1. During the course of Mr Lazarus' closing submissions, I had the following exchange with him concerning the propositions he was advancing concerning the Policy. This exchange was in the following terms (Transcript, 5 March 2018, page 308, lines 1 to 18 and page 308, line 34 to page 309, line 1): HIS HONOUR: Right, let me just take you back to the Model Litigant Policy in the extent to which you complain about it. In this context I am not to be taken to be commenting on what her Honour said at 184 merely the proposition that you advances with respect to the Civil Litigant Policy. Isn't it the fact that, it would not be appropriate for me to enter into what might or might not be a proper debate about the conduct of Mr Tomasetti's client as a litigation strategy to the extent that there might be any legitimacy in that. And I'm not to be taken to be saying that there is. The Model Litigant Policy is a political document in a small "p" fashion to the extent that there might be anything that could be regarded as binding the RMS in it. Is that not a matter properly dealt with in the political arena either directly with the RMS's political mistress or through, for example, the ombudsman? LAZARUS: No, no, your Honour, well, yes, but we would be submit that it has wider implications. And that is because the Model Litigant Policy and its predecessors have been considered to affect or should affect litigation in a substantive sense. ... HIS HONOUR: Well, to the extent that, perhaps, the appropriate descriptor might be in your proposition ought not be permitted as opposed to should not. And to the extent that that gives rise to something that should be dealt with I'm testing you on the proposition as to whether this is the appropriate forum in which to deal with it to any extent beyond, if I were minded to do so. And by saying so, I'm not indicating that I am or am not by saying, yes, the RMS has been naughty in that respect or - and has apparently adopted mutually contradictory positions. But not that I should then, in effect, give rise to some sort of estoppel about them proceeding to rely on the contradictory position. LAZARUS: Well, I think that, with respect the estoppel analogy is an apposite one, that's the way, we submit that, this should operate. This operates as a promise on behalf of the government and it's a promise that should be enforced by the Courts. The RMS should not, on our submission, be permitted to blow hot and cold on the same legal issue and say one thing one week and the complete opposite thing the next... Conclusion on the Policy 1. In his written submissions on this point, Mr Lazarus had referred to the reasons of Basten JA in Mahenthirarasa v State Rail Authority of New South Wales (2008) 72 NSWLR 273; [2008] NSWCA 101 (Mahenthirarasa), at [16] to [20]. 2. In his oral submissions, Mr Lazarus spoke further on this point (Transcript, 5 March 2018, page 308, lines 18 to 33): LAZARUS: …we give your Honour the reference, at footnote 59, to a decision of Basten J, I won't attempt to pronounce or attempt to pronounce the name of the case but it's the SRA case in 2008. HIS HONOUR: Yes. LAZARUS: I think his Honour held in that case - the policy was not merely to be regarded as an aspirational document as it were but actually affected matters in the litigation in a substantive sense. It wasn't the same proposition, that is, the consistency obligation. But we would submit that, it's but a short extension to say that the Model Litigant Policy requires the RMS to act in a particular way. It binds the RMS and the RMS should not be permitted to advance a diametrically opposed legal proposition in one case from the proposition that was put in a case that was decided a month, they just shouldn't be permitted to do that. So that's what we say on that that topic. 1. In Mahenthirarasa, the State Rail Authority opposed the application made to the Workers Compensation Commission. On judicial review proceedings, in the Supreme Court and the Court of Appeal, the State Rail Authority filed a submitting appearance and attended proceedings by its legal representative, making no submissions throughout. The paragraphs of the judgment referred to by Mr Lazarus ((16) to (20)) contain Basten JA's review of the authorities regarding the standards expected by the courts of the executive branch in its conduct of litigation. 2. A consideration of the cases set out in [16] to [22] of Mahenthirarasa indicates that the assistance expected of the executive branch of government (and to which it is required to adhere) are standards of fair dealing at a level of broad generalisation, "best appreciated in its particular exemplifications in individual cases" (The Melbourne Steamship Company v Moorehead 15 CLR 333 at [45]). These observations were made by Basten JA, at [22]: On the appeal, this Court expressly invited the State Rail Authority to reconsider its position and provide assistance to the Court. It declined to do so. Again, it should be assumed that, upon the institution of the appeal, the State Rail Authority gave consideration to whether it should actively defend the benefit it had obtained in the lower Court or concede that the judgment should fairly be set aside. Whatever view was formed, on appropriate advice, this Court did not have the assistance which might have been offered consistently with the view adopted by the State Rail Authority. The principles applicable to a model litigant required it to deal with claims promptly, not to cause unnecessary delay, to endeavour to avoid litigation wherever possible, not to resist relief which it believes to be appropriate and not to decline to provide appropriate assistance to the court or tribunal whether expressly sought or not. It is probable that those principles were not applied. 1. Mr Tomasetti SC, counsel for the RMS, addressed me during the course of the closing submissions in reply on behalf of the RMS, expressing concerns not only at the appropriateness of the submission but also the language used in the written element earlier reproduced. It is not necessary for me to address his submissions for the purposes of dealing with this issue. 2. I have concluded that what I foreshadowed as a position potentially able to be taken, was in fact the correct one. To the extent that the Company (and/or its legal advisers) have some concern of the nature articulated before me, those concerns, even if well-founded (a position about which I am not to be taken to making any evaluative comment whatsoever), find no proper forum in these proceedings. If such a complaint was desired to be pursued by the Company, the proper forum, in my view, is with the makers of the Policy, the New South Wales Government, concerning either the terms of the Policy or its implementation as a matter of general principle. 3. To the extent that the Company might wish to complain, specifically, concerning the position of the RMS in these proceedings, the appropriate first port of call would appear to be its responsible Minister, the Minister for Roads. Even if there was some alternative pathway for complaint (such as to the Ombudsman, as I posited to Mr Lazarus), one matter, in my perception, is completely clear - that is that this Court is not the appropriate forum for ventilating such complaints and, certainly, it should not, through its judgments, provide commentary (let alone any determinative conclusion) based on such a complaint. The acquisition impact on the value of the residue land The comparable sales relied upon 1. I have earlier noted that Mr Lunney and Mr Davis agreed that the before‑and‑after valuation methodology was the appropriate approach to take. In addition, although alternative valuation methodologies may also have been explored, in the final analysis they agreed that consideration of comparable sales was the appropriate methodology to be used. 2. For the purposes of their comparable sales analysis, Mr Lunney and Mr Davis agreed that the sale of the site in 2015 to the Company was the best comparable sale. Given their agreement as to the appropriate rate per square metre for the parent parcel as at the date of acquisition, it is unnecessary to unpick how they may have derived that agreement. However, the same is not the position with respect to analysis of the position when seeking to ascertain what adjustments might need to be made to reflect the changed position that might arise with the residue land after the acquisition of the land for the creation of Venice Street. 3. Mr Lunney's position remained that it was unnecessary to go beyond consideration of the residue land when compared to the parent parcel and he undertook his consideration of whether or not there should be adjustments made to the starting value derived from the parent parcel to make adjustments to derive the appropriate rate for the residue land. As later discussed, it was his view that, although there were a number of impacts of the acquisition, some were positive and some were negative, with the resultant position being, in his opinion, there was no net impact on the value of the residue land. 4. Mr Davis, on the other hand, took a different approach. He concluded that a number of factors impacted adversely on the value of the residue land. These factors, and his evidence, written and oral, concerning them are dealt with in a later section. However, for the purposes of identifying sales said to be comparable for the purposes of analysis, Mr Davis relied, for his consideration of valuing the residue land, on two sales in addition to the sale of the parent parcel in 2015. Those sales were 202-212 Euston Road and a site described as the Slazenger site in Burrows Road. 5. The site at 202-212 Euston Road comprises a land area of 16,800 square metres, with three major road frontages - Euston Road to the north-west, Burrows Road to the south-east and Campbell Road to the south-west. The Slazenger site was made up of 132-138 McEvoy Street, Alexandria and 9‑15 Bowden Street, Alexandria. The Slazenger site had extensive frontages to Bowden Street on the north-east and McEvoy Street on the north-west. At the time the Slazenger site was sold in March 2015, it was zoned B7 ‑ Business Park with a total area of 16,487 square metres. 6. As earlier noted, during the course of the site inspection a drive-by was undertaken of 202-212 Euston Road. The parties did not consider it necessary to drive past the Slazenger site. As a consequence of the fact that, although Mr Davis traversed the Euston Road and Slazenger sites in his written evidence, only limited attention was paid to these sites during the course of the valuers' oral evidence and submissions by counsel for both sides did not focus extensively on these sites, I do not consider it necessary to address these sales in any detail. I am fortified in this view by the agreement between the valuers that the particularly relevant sale, to inform their (and my) consideration of valuation issues in this appeal, was the arm's-length sale of the parent parcel to the Company in 2015. 7. I do not find the limited material concerning the Euston Road and Slazenger sites to be of assistance. This is because of the agreement of the valuers about the significant (indeed dominant) relevance of the sale of the parent parcel itself in 2015. The starting rate for the residue land Introduction 1. As earlier noted, Mr Lunney and Mr Davis agreed that the appropriate valuation methodology to be applied, was the before-and-after approach. Although there was agreement between them as to the "before" rate per square metre to be applied to the acquired land, there was no such agreement between them as to the rate to be applied to the residue land. The calculation of the "after" rate to be applied to the residue land arises because the RMS is liable to pay compensation to the Company for any reduction in the value of the residue land from its "before" rate per square metre, if that rate per square metre is reduced as a consequence of the resumption by the RMS of the acquired land for the creation of Venice Street. 2. Mr Lunney and Mr Davis agreed that the appropriate basis for considering whether such a reduction in value had occurred was also to undertake a comparative sales analysis in the "after" circumstances, having regard to relevant comparable sales evidence and undertaking an appropriate analysis and adjustment process to derive the relevant post-acquisition rate per square metre to be applied to the residue land. 3. Mr Lunney and Mr Davis each undertook that process. 4. However, unlike the derived rate per square metre applicable in the "before" situation for valuing the acquired land, Mr Lunney and Mr Davis were unable to resolve the question of whether or not there had been any reduction in the derived rate per square metre in the "before" acquisition position appropriate to be applied to the residue land post-acquisition. 5. Indeed, Mr Lunney and Mr Davis were unable to agree about whether the derived pre-acquisition rate per square metre should be applied to the residue land as the starting point to be used for deriving an analysed post-acquisition rate per square metre to be applied to the residue land. 6. During the course of the hearing, Mr Lunney and Mr Davis undertook a further joint conference addressing this issue. It is therefore necessary to consider the relevant elements of their individual expert reports; their first Joint Report and this Supplementary Joint Report for the purposes of my determination of what is the correct derived rate per square metre to be applied to the residue land post-acquisition. Mr Lunney's post-acquisition position 1. Mr Lunney's post-acquisition position concerning the value of the residue land is to be understood as coming from two basic propositions. First, he considered that the starting rate per square metre for the acquired land post‑acquisition should be the derived rate per square metre upon which he and Mr Davis had agreed as being the rate per square metre to be applied to the parent parcel as at the date of acquisition, $1,575 per square metre - this being the rate which had been applied to calculate the compensation payable to the Company to represent the value of the acquired land (Transcript, 2 March 2018, page 286, lines 2 and 3). 2. Second, he considered that there were a number of factors which potentially impacted the residue land as a consequence of the acquisition but that, as he considered some of those factors were positives whilst others were negatives, they were all small and, in a cumulative fashion, cancelled each other out. He set out his commentary on these factors in a table forming part of Exhibit J (a supplementary joint report with Mr Davis). Mr Davis' post-acquisition position 1. While Mr Lunney adopted the simple proposition that the starting value for considering whether or not any post-acquisition adjustment is warranted to the value of the residue land was that the agreed parent parcel value of $1,575 per square metre, as at the date of acquisition, was appropriate, Mr Davis, on the other hand, adopted an entirely different approach. I have earlier described the process by which Mr Lunney and Mr Davis reached agreement on the $1,575 per square metre value for the parent parcel as a compromise on the values that they had originally proposed in their individual expert reports. 2. In his individual expert report, Mr Davis adopted his analysed value for the parent parcel based primarily on a time adjustment applied to the sale value when the Company purchased the parent parcel. This time-adjusted rate was $1,459 per square metre. Although accepting that $1,575 was the value per square metre of each and every square metre of the parent parcel as at the date of acquisition of the land for the construction of Venice Street, Mr Davis then opined that his rate of $1,459 per square metre remained the valid starting point for consideration of the impact of the acquisition when calculating what might be the impacted value of the residue land for this element of the Company's claim. 3. Mr Davis was cross-examined by Mr Tomasetti at some length on the question of what was the appropriate starting point for valuing the residue land post-acquisition (Transcript, 2 March 2018, page 278 line 38 to page 285 line 20). It is unnecessary to reproduce the entirety of that exchange. However, I do reproduced below, the concluding element of it (Transcript, 2 March 2018, page 284 line 24 to page 285 line 20). This element is in the following terms: TOMASETTI: Let's go back to paragraph 17 of exhibit J. You say, "Whilst my calculated rate for the residue land was not assessed by applying a discount to the agreed before rate, I note the rate is equivalent to 85.7% or a discount of 14.3% to rate agreed by the valuers in the before scenario. WITNESS DAVIS: Yes. TOMASETTI: So what you've done, I suggest, is to take the after agreed - the before rate as agreed by the value - as agreed between you and Mr Lunney, 1,575, and now you're replying different deductions to give rise to a different alternative, a different residue figure. WITNESS DAVIS: Well, with respect, I think what you're doing is taking the percentage and fixating on that. It happens to be a different percentage, it happens to be a greater amount. But that's because the value of the before land was agreed at a higher rate than my original 1500. TOMASETTI: Do you say that the sale of the subject land to Canal Aviv in September or November 2015, it's getting late, 2015 is only the best comparable insofar as the sale of the before parcel is concerned? WITNESS DAVIS: No, I'm saying that it has relevance to both of them but because I'm comparing it to different sites, the levels of adjustment are different. TOMASETTI: But you're comparing it to the same sites, I suggest. The table on page 33 of your original report is Slazenger, Euston Road, Ricketty Street. WITNESS DAVIS: I'm not denying‑‑ TOMASETTI: In the second comparison in the after it's the same sites. WITNESS DAVIS: Yeah, and in one exercise I'm comparing them to the before property and in the separate discreet exercise I'm comparing them to the after property. That's what happens in a before and after valuation. TOMASETTI: Well, I suggest to you as a matter of logic, Mr Davis, I take it you don't agree, but you needed to reapply the discounted rate that that you found to the reagreed rate of the parent parcel, $1575. WITNESS DAVIS: I have done. Yeah, I've done it in relation to the before site but not the after site. TOMASETTI: And I suggest to you as a matter of consistent methodology you have to do it to both? WITNESS DAVIS: No, I disagree. 1. I have carefully read and reread (several times) this passage of cross‑examination by Mr Tomasetti of Mr Davis concerning how he concluded that, at the instant of acquisition of the land for Venice Street, this acquisition (without having regard to any of the matters I am later required to consider as potentially impacting on the residue land), caused an immediate, significant reduction in the value of the residue land. 2. Mr Davis was unable to provide any satisfactory explanation to justify why there was some miraculous alchemaic transmutation of the value of the residue land at the instant of the transformation of its status from being part of the parent parcel to being the standalone residue land. Conclusion on the starting value for the residue land 1. It is clear that the position adopted by Mr Lunney is the logically correct one and, hence, the starting value for considering whether or not there has been any impact on the value of the residue land, as a consequence of the acquisition of the land for the construction of Venice Street, is $1,575 per square metre. Potential adjustment factors for the residue land Introduction 1. Before turning to consider whether (and if so, to what extent) issues raised should impact on the analysed value to be applied to the residue land, it is first necessary to make an assessment of what impacts and/or risks of impacts might be considered by the hypothetical purchaser. 2. It is only having made those factual assessments as to outcomes (positive, negative or neutral) do the steps of whether each of the factual conclusions give rise to a valuation impact and what adjustments (if any) might be appropriate to be made reach an overall cumulative position on what the valuation adjustment post-acquisition (if any) is required to the residue land. Access to the residue land Introduction 1. Four elements of access to the residue land arise for consideration. They are: 1. First, what impact the construction of Venice Street would have on any redevelopment of the residue land during the construction phase for creation of that street; 2. Second, what is the extent of the benefit to the residue land of the slip road/Venice Street access to the residue land for vehicles westbound along Gardeners Road; 3. Third, what would be the impact of the operation of Venice Street on egress from any redevelopment of the residue land; and 4. Fourth what impact would the design of the Ricketty Street/Venice Street intersection have on access to any redevelopment on the residue land? Construction access to the residue land 1. Mr McLaren expressed the opinion that he would expect that there would be constraints on access to the residue land during the course of construction activities for the RMS in the creation of Venice Street. These constraints, he opined, would potentially impact on the ability of a hypothetical purchaser undertaking a redevelopment of the residue land. This would be because the nature and timing of Venice Street construction activities might limit access of large vehicles to the residue land. Large (or overlarge) vehicles might have their access to the residue land impeded when deliveries of construction materials or construction equipment (such as cranes or excavators) might be needed to be made to the residue land. 2. Mr McLaren also expressed the opinion that, at the very least, close and frequent coordination and cooperation would be necessary between those supervising construction of Venice Street and any redevelopment of the site. 3. However, Mr McLaren acknowledged that construction scheduling and critical path analysis for construction projects were outside his area of expertise. As a consequence, as I understood his evidence, he would advise a hypothetical purchaser that, from a traffic management perspective, he considered that there were risks potentially arising for redevelopment construction access for the residue land and that further expert advice appropriate to enable a proper assessment of those risks should be sought. 4. The position put on behalf of the RMS was that condition D49 of the project approval, when considered in conjunction with the two-step staging plan adopted (and being implemented, as could be observed during the course of the site inspection), were sufficient to demonstrate that any such risk, if it existed, was so small as to not warrant any valuation adjustment as a consequence. For this factual assessment, it is, therefore, appropriate to set out the terms of condition D49 and to describe the staging plans and actual construction activities being undertaken for creating Venice Street. 5. Condition D49 of the project approval is in the following terms: 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. The argument was put forward by the Company that condition D49 failed to give any degree of certainty concerning access to the residue parcel during the construction period of Venice Street. In his submissions, Mr Lazarus relied on the decision in SNS, saying (Transcript, 5 March 2018, page 358, lines 1 to 25): If I can turn then to my learned friend's submissions about SNS and in particular his attempt - valiant though it was - to distinguish her Honour's finding in relation to D49 - para 290. He endeavoured to do that in two ways, firstly he said to your Honour that SNS was distinguishable on the facts because it was access to the acquired land rather than - as in this case - access to the residue land. But the problem, your Honour, is that her Honour's analysis in SNS was entirely - or perhaps if I can put it this way - was not concerned with the facts of that case as distinct from how a potential purchaser would read and understand those conditions. And as I've submitted to your Honour, they would be understood as not conveying any level of certainty whatsoever. That position of complete uncertainty is not assisted one iota by my learned friend's reference to the defined terms of feasible and reasonable which her Honour also considered in her Honour's judgment. They just do not bear upon the question of assisting a hypothetical purchaser with the issue of certainty because - to be perfectly honest, your Honour - they add uncertainty rather than remove it in the highly imprecise manner in which those terms are expressed. In any event, I've submitted to your Honour why we say condition D49 is imprecise and uncertain and we maintain those submissions and Pain J's decision in that regard should stand. 1. In response, Mr Tomasetti noted that, as the decision had not been made available at the time of the acquisition of the acquired land it could not be relied upon (Transcript, 2 March 2018, page 260, lines 33 to 46), and, in the alternative, the decision was wrong and ought not be followed (Respondent's closing submissions, page 11). In closing submissions, Mr Tomasetti submitted further on the certainty of the condition (Respondent's closing submissions, page 7): A condition of approval is a legally enforceable right and it is the expectation that a person, and in particular a responsible NSW Government authority, will comply its legal obligations. 1. The wording of this condition would have been able to be ascertained by the hypothetical purchaser of the residue land as a consequence of the fact that the determination to give approval of the project was made on 21 April 2016 and the terms of the project approval became available on the relevant departmental website as a consequence. 2. In SNS, Pain J considered the extent to which, in the circumstances with which she was dealing, condition D49 could be regarded as providing sufficient certainty for future redevelopment access. She said: 290 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. 291 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. 1. Although Mr Lazarus places reliance on these comments as supporting the proposition that I should adopt a similar position concerning condition D49 as applicable to the residue land, I am unable to agree. I have reached this conclusion for three reasons: 1. First, although Mr McLaren expressed non-expert views on how the interrelationship between construction of Venice Street and redevelopment traffic to the residue land might need to be managed, he did not suggest (even accepting as valid his non-expert opinion) that these issues were overly complex. He certainly did not suggest they were insurmountable; 2. Unlike that which can be seen was the position in Bourke Street confronting her Honour, here the construction of Venice Street is not inherently in conflict with a redevelopment of the residue land; and 3. Third, unlike the position in SNS, there is here no evidence of any contact on behalf of the Company with the RMS to explore options for access. Mr Royal's position - explained in [291] of her Honour's decision quoted above - is not replicated in evidence now before me. 1. As a consequence, I consider the prudent hypothetical purchaser would be satisfied that, in these circumstances, condition D49 provided an appropriate assurance of access to the residue land for redevelopment purposes. 2. In August 2017, some six months after the date of acquisition, two plans were produced showing the intention of the RMS to construct Venice Street in two stages. Although Mr Lazarus challenged the utility of the plans in the present proceedings because of concerns he raised as to the provenance of the plans, I understood this objection to be pressed but faintly (as opposed to his more substantial objection later considered concerning the date of the plans and, as a consequence of that time gap after the date of acquisition, it was appropriate to have regard to the plans). It is to be noted that, as discussed in the earlier description of the site inspection, that the construction of Stage 1 of Venice Street is currently being undertaken and that that construction is, in general terms, being carried out in a fashion consistent with the staging plans. 3. My factual conclusion concerning these access issues is that, if both condition D49 and the staging of construction of Venice Street were factors to which positive regard should be had by the hypothetical purchaser, the risk of disruption of redevelopment construction on the residue land would be sufficiently low as not to impact on the value of that land. On the other hand, if both of these elements are to be disregarded, there would be some risk requiring weighing as part of the valuation of the residue land. Access from the north 1. Prior to the acquisition of the land for the construction of Venice Street, the acquired land provided the sole access to the parent parcel. There was no access to the parent parcel from the north. The access to the parent parcel was only available by a left-turn-in by vehicles travelling in an easterly direction along Ricketty Street. There was no right-turn-in access for vehicles travelling west along Ricketty Street. 2. After the completion of construction of Venice Street, and the associated elements at its north-eastern end where it will create a slip lane for vehicles debouching from Gardeners Road when travelling in a westerly direction through the elements of Gardeners Road being constructed as part of the New M5, access will become available for vehicles travelling in a westerly direction along Gardeners Road. This access will be by utilising the slip-road element of Venice Street, traversing the bulb at the northern end of the two-way portion of Venice Street and travelling south along Venice Street to such entrance(s) as would be established for any redevelopment of the residue land. 3. In his individual statement of evidence, Mr Hollyoak noted the positive benefit of this additional access, saying (Exhibit A, folio 292): The property will enjoy an improvement to its access, this being that westbound vehicles along Gardeners Road can access the site via the newly constructed Venice Street. This will improve access to the site, travel times to the site from the road network and will provide a perception that the site is easier to access than in the before scenario. 1. Mr McLaren concurred in the assessment of this benefit to the site, as can be seen from the Supplementary Joint Traffic Report which said (Exhibit H, page 6): 31. It is agreed by CM and KH that for traffic travelling to the site from the East (i.e. westbound) that vehicles will turn left off Gardeners Road via the proposed slip road and into the northern cul-de-sac end of Venice Street. Both CM and KH also agreed that the future access from Gardeners Road constitutes an improvement on the existing access arrangements. 1. Mr Tomasetti also submitted that this northern access should also be seen as a benefit in providing an alternative path for long vehicles travelling in an easterly direction and seeking to enter the residue land from Ricketty Street if that manoeuvre was unable to be undertaken for some reason arising from the configuration of the intersection of Ricketty Street and Venice Street. He submitted that any such access difficulty, post-construction of Venice Street and redevelopment of the residue land, would be able to be resolved by such a vehicle continuing along Ricketty Street; turning left into Kent Road; turning left again into Gardeners Road; and entering the slip-lane element of Venice Street before traversing the bulb at the northern end of Venice Street proper; and using Venice Street southbound to access the residue land. This, he submitted, would provide an appropriate alternative path involving an additional travel distance of only some 700 metres or so. I accept this submission (as an element of the positive benefits of the northern access [although this does not entirely address concerns about the design of the intersection of Venice Street with Ricketty Street, as later discussed]). 2. It is clear that this northern access should be regarded as a benefit to the residue land in any consideration of value impacts on the residue land as a consequence of the acquisition of Lot 1 for the purpose of constructing Venice Street. Egress from any redevelopment on the residue land Introduction 1. The extent to which there might be increases in the eastbound traffic volumes in Ricketty Street which potentially impacts on the ability of trucks, particularly, to exit from a future development on the residue land by turning right into Venice Street and then left into Ricketty Street, Mr Hollyoak and Mr McLaren agreed that this impact only had the potential to arise as a consequence of queuing of southbound traffic in Venice Street during the afternoon peak. They agreed that, at other times of the day, such queuing would not give rise to any potential blockages of egress from the residue land by the queuing preventing a long vehicle from being able to turn right and stack in Venice Street waiting to turn left into Ricketty Street. However, there was significant disagreement between them as to the likely impact of future increased traffic volumes, in the longer term, when the New M5 was completed and, additionally, the overall WestConnex project was completed. 2. Each of them used modelling software to produce SIDRA analyses of what might be the length of an afternoon peak queue of traffic seeking to turn from Venice Street into Ricketty Street. The outcomes produced by these SIDRA analyses are, necessarily, dependent on what assumptions are made concerning the various input factors for the modelling. 3. Initially, the position adopted by Mr Hollyoak and Mr McLaren was that there existed no published future traffic volume predictions for future traffic movements along Ricketty Street past the intersection with Venice Street. During the course of the hearing, this position changed, as discussed immediately below. Mr Hollyoak's data discovery 1. During the course the hearing, Mr Hollyoak undertook a further reading of the RMS's WestConnex New M5 Environmental Impact Statement and discovered predictions of future traffic volumes for eastbound movements in Ricketty Street. He discovered these projections in a section of the document dealing with anticipated future vehicle crashes. The data was contained in this section of the document as such crash incidents, it is to be inferred, are dependent on traffic movement volumes. Mr Hollyoak candidly admitted that traffic volume data of the nature he had found was located in a part of the WestConnex New M5 Environmental Impact Statement to which he would not normally have regard for the purposes of seeking traffic volume predictions. Mr McLaren did not do demur from this observation. 2. It seems to me, in these circumstances, it is reasonable to assume that any traffic consultant engaged by the hypothetical purchaser of the residue land would only go to those portions of the RMS' WestConnex New M5 Environmental Impact Statement where such expert would reasonably expect to find relevant data which would enable advice to be given on this issue. That an experienced expert, in the context of a court contest of the nature with which I am dealing, could not (in an ordinary reading of the document) find the information without undertaking an intense examination of areas which would not ordinarily be examined renders this information irrelevant to what advice might be given to the hypothetical prudent purchaser contemplating acquisition of the residue land. The contest about queuing in Venice Street 1. The question of queuing in Venice Street needs to be examined in the context of what are likely to be, as earlier noted, the future volumes of traffic eastbound in Ricketty Street. The differences between Mr McLaren and Mr Hollyoak were significant. Although Mr McLaren and Mr Hollyoak had each undertaken limited traffic counts (albeit at different locations) at the present time, given the conclusion I have set out above concerning the material discovered by Mr Hollyoak being of no practical assistance in a hypothetical purchaser scenario, the position is that there are two quite different expert propositions requiring consideration. 2. On the assumptions adopted by Mr McLaren for his modelling, there was the potential of a significant impact for queuing in Venice Street if future traffic volumes grew at the rate he hypothesised. 3. On the other hand, Mr Hollyoak's assumptions demonstrated that there would not be any impact of significance warranting, in the hypothetical redevelopment of the residue land, any risk to the ease of (particularly truck) egress from the land turning to the south into Venice Street. 4. I am satisfied that it is not necessary for me to reach any definitive conclusion about what would be the realistically expected numerical traffic volume outcome. It is sufficient to note that there is a realistic and informed difference of opinion between reputable experts on this point. This, it seems to me, is sufficient to conclude that there is some risk of such an impact and that the hypothetical purchaser of the residue land as a redevelopment site would be advised to, and would, take into account this risk as part of the negotiation process for the hypothetical purchase transaction. 5. As a consequence, it is the extent to which this risk might require to be priced in that requires consideration - not the making of some mathematically precise determination of what might be the traffic counts or any consequential more specific probability as to the frequency when a left turn out into Venice Street to use the bulb at the northern end for a truck to be able to queue to access turning into Ricketty Street would arise. 6. I should observe, for completeness, in this context that it does not matter in these circumstances, in my view, whether the hypothetical redevelopment would have two access points to and from Venice Street or merely a single, centrally located one. It is the fact that the risk arises that would be taken into account by a reasonably advised hypothetical purchaser. Additional exposure to passing traffic 1. One of the factors which Mr Lunney identified as being a positive for the residue land (which he bundled up with the northern access discussed immediately above) was the additional exposure which the residue land would have as a consequence of visibility to passing traffic using Venice Street. 2. Whilst it might be expected that virtually all northbound traffic in Venice Street would be seeking to access the residue land, that is not the position with southbound traffic using Venice Street. Such southbound traffic (although agreed by Mr Hollyoak and Mr McLaren to be likely to be purely local - comprising workers or clients exiting from premises with a Gardeners Road-oriented frontage to the Venice Street slip lane) will nonetheless be able to view any promotional material displayed along the eastern frontage of the residue land. 3. There would not be any increase to the available exposure of promotional material along the Ricketty Street frontage as the active frontage element in that direction will remain unchanged. 4. Mr Ronen expressed the view that, for the purposes of his proposed development, exposure to Venice Street was irrelevant and, as I understood him, there would not be either any promotional material, or none of any significance, directed to Venice Street. That is a position potentially generally applicable only to his proposed development. In a broader context, there is some potential for exposure along the Venice Street frontage for a development constructed on the residue land. 5. However, given the limited queuing times for vehicles travelling south in Venice Street (even adopting Mr McLaren's most pessimistic position on this point), I am unable to conclude that this exposure would warrant any positive adjustment for the residue land. This arises as a consequence of the fact that not only will the exposure times be short, but that the exposure, as a consequence of this passing traffic, is likely to be of local origin and (at least significantly) to workers in the vicinity who would have regular exposure to such promotional material, rather than being one-off exposure to persons passing southward along Venice Street on an irregular basis. Ricketty Street into Venice Street 1. Mr McLaren produced a swept-path analysis showing what would be the movement of large rigid or articulated vehicles when travelling east on Ricketty Street and seeking to access the residue land by turning left into Venice Street. This analysis was based on the intersection configuration shown on the relevant element of the project plans (Exhibit H, Annexure E). The swept paths disclosed that, on the basis of the depiction of the configuration of the western corner of the intersection, effecting the turning movement for these vehicles would require them to cross onto the traffic lane for vehicles travelling south in Venice Street to turn left in the Ricketty Street. 2. This was the subject of discussion by Mr Hollyoak and Mr McLaren during the course of their oral evidence. It is unnecessary to extract from the transcript the terms of this discussion. As I understood their evidence, the position, in summary, was: * the present configuration of the western corner aspect of the depicted design of the Ricketty Street/Venice Street intersection was undesirable; * it was capable of rectification by alteration to the design of the corner by chamfering the curb which would eliminate the necessity for such vehicles to cross into the oncoming traffic lane in Venice Street; * it was reasonable to expect that (subject to the discovery of any unexpected impacts on services) that there would be no difficulty in accommodating such a design change; * it was not unreasonable to propose such a design change to the RMS and have the RMS incorporate that design change into the final construction design for this intersection (although Mr McLaren expressed the view that there was some small risk that this would not occur); and * it was Mr McLaren's opinion that any additional cost of rectifying this aspect of the intersection would be met by the RMS. Mr Hollyoak did not disagree with this position concerning cost of rectification. 1. The consequence of this evidence, in my assessment, is that any prudent hypothetical purchaser contemplating acquiring the residue land, as at the date of acquisition of the land resumed for Venice Street, would not, if given traffic advice concerning this intersection (even if in the mildly more pessimistic terms postulated by Mr McLaren), regard the risk as be so significant as to warrant it effecting a reduction in the value of the residue land. 2. This is not only because of the significant (and almost, if not entirely, inevitable) probability that the RMS would rectify the design if this defect was pointed out, but also, as Mr Tomasetti submitted, although occasioning an additional travel path of less than 750 metres, such vehicles could avoid making this turn and still readily access the residue land by utilising the Venice Street slip road and travelling south down Venice Street proper, to turn right into the residue land. Timing of development activities Introduction 1. One aspect requiring consideration for the purposes of assessing whether or not there has been any impact on the value of the residue land as at the date of acquisition is the timing of development which might hypothetically or actually be expected to take place. There are two development activities here that require consideration in this context. The first is the timing expected to be required for the construction of Venice Street, whilst the second is the likely time period that would need to run, post-acquisition, for the necessary preliminary steps antecedent to commencing a redevelopment project on the residue land for an industrial complex of the type identified by the architects as representing the highest and best use (this being represented by the design prepared by Mr Farkash (who gave written expert design evidence for the Company) and reproduced at folio 524 of Exhibit A). Construction of Venice Street 1. The agreed position concerning the construction period for Venice Street (whether undertaken in the staged development process discussed elsewhere or not) involves a construction period of two years from the date of acquisition. As a consequence, to the extent that there might be any impact on the residue land as a result of the construction activities for the creation of Venice Street, this would be limited to a maximum of two years. Development of the residue land 1. Although it took Mr Ronen until late 2017 to lodge a development application for his proposed self-storage facility on the residue land, he accepted that the period between the date of acquisition and the lodgement of the development application was longer than he might have expected in a theoretical model because of consideration of multiple iterations of a potential design before he was satisfied with a design to be submitted. 2. The timing appropriate for the theoretical redevelopment is one which would allow for: 1. Preparation of a development application and supporting documentation - Mr Davis, in cross-examination, said six to nine months (Transcript, 2 March 2018, page 272, lines 29 to 32); 2. Assessment and approval processes - Mr Davis said, 'it would be about nine months maximum to get a development consent' (this appears to include time for design and lodgement of DA) (Transcript, 2 March 2018, page 272, lines 40 to 44; also see (140) of individual report at folio 1046 of Exhibit B). Mr Lunney did not cavil with the nine‑month (for lodgement of application and consent) estimate (Transcript, 2 March 2018, page 208, lines 26 to 28); 3. Preparation of the necessary detailed construction certificate plans - Mr Ronen, in cross-examination, estimated three to six months (Transcript, 1 March 2018, page 166, lines 33 to 34); Mr Davis, in cross-examination, said two to three months (Transcript, 2 March 2018, page 273, lines 6 to 18); and 4. The time for tendering for construction based on those construction plans before redevelopment actually commenced - Mr Lunney estimated "a month or so" (Transcript, 2 March 2018, page 208, lines 29 to 31). 1. The advocates both addressed what would be the total time to be allowed, post-acquisition, prior to the commencement of a hypothetical redevelopment of the residue land. 2. Mr Lazarus' closing submissions proposed that "construction works on the residue parcel would likely commence within 6 to 12 months of the acquisition date" (Applicant's written submissions at (63)). 3. Mr Tomasetti, in closing oral submissions, proposed (Transcript, 5 March 2018, page 356, lines 39 to 45): He acquires the land at the date of compulsory acquisition - February 2017, he plans to do his development application six, I think, Mr Ronen said, three to six months. Your Honour's not bound by that figure but this is a specialist Court, let's say, six months. Then you've got to get your construction certificate drawings together, another three months, say. Allow a period for contingencies, you're easily looking at 12 months before you start to turn the soil. 1. Noting the general consistency of these positions, the total reasonable period prior to actual commencement of the hypothetical redevelopment construction would be expected to be 12 months - I therefore adopt the beginning of March 2018 as the relevant time for this to occur. I later deal with the termination of its lease by Secure Logistics and how the likelihood of loss of rental income would be taken into account by the hypothetical purchaser. 2. I have earlier noted that the expected construction period for Venice Street is two years. However, I also explained at [78] to [81] why the construction of Venice Street and redevelopment of the residue land could coexist. As a consequence, I do not consider that the acquisition of land for, and the actual construction of, Venice Street would have any impact on the timing of any future redevelopment of the residue land. Valuation adjustments for the residue land Introduction 1. I have earlier discussed the various factors potentially impacting on the value of the residue land and, as a consequence, it is now necessary to turn to the extent to which each of them might warrant an adjustment to the post‑acquisition value of that land. 2. As earlier noted, some of those factors might, potentially, warrant an upward adjustment, whilst others might warrant a downward one. Having determined what might be the individual adjustments (if any), positive or negative, the cumulative adjustment derived is then to be applied to the starting value for the residue land to calculate what might be any negative impact on that land warranting compensation being awarded to the Company. 3. In this context, it is to be noted that Mr Lunney did not propose that there was any total overall beneficial impact that would arise from the acquisition and the subsequent construction of Venice Street. As I have concluded that there is an overall, modest, adverse impact on the residue land, the question of accounting for "betterment" does not arise. 4. An initial observation warrants being made concerning aspects of the valuation evidence given by both Mr Lunney and Mr Davis. In the course of his closing submissions, Mr Tomasetti submitted that one of the reasons why I should prefer Mr Lunney's valuation analysis over that of Mr Davis was that elements of Mr Davis' evidence were self-evidently speculative. In this context, he pointed to a number of adjustment factors relied upon by Mr Davis, where Mr Davis was unable to dissect an aggregated adjustment factor to explain how he had taken each of the subsumed factors into account in deriving his amalgamated position (Transcript, 1 March 2018, page 188, line 11 to page 189, line 46; Transcript, 2 March 2018, page 216, lines 7 to 30; page 231, lines 1 to 10; page 236, line 43 to page 237, line 11; and page 268, lines 19 to 43). Mr Tomasetti's criticism of Mr Davis is discussed in detail later - here I am merely dealing with the question at a greater degree of generality. 5. In response, Mr Lazarus pointed to the fact that, in (26) of Exhibit J, Mr Lunney acknowledged that: I have considered whether or not elemental adjustments could be made for each of these factors to determine an overall or net adjustment however in my opinion such an exercise would not likely be undertaken by a vendor or purchaser of the Residue Land. The adjustments would be subjective and difficult or impossible to quantify by reference to objective market evidence. In my opinion a more realistic approach would be to compare these competing factors in a holistic manner. I maintain the opinion that, when considered in this manner, the overall (or net) adjustment (if any) which would be applied is positive not negative. I have made no adjustment at all. In my opinion this is conservative in the applicant's favour. 1. Indeed, in the table prepared by Mr Lunney, which appeared immediately before the above extract from Exhibit J, Mr Lunney had set out some seven factors (three positive and four negative) which he postulated applied to the residue land. In doing so, he expressly acknowledged, with respect to each of these factors, that he was unable to ascribe an adjustment percentage to any of them, merely adopting the overall position that, in his professional assessment based on his valuation expert, these factors cancelled each other out. 2. To the extent that the criticism of both of the valuers is well-founded that a potential adjustment factor was unable to have a percentage ascribed to it, or that the reason for the proposing of an adjustment factor was speculative, that approach (when adopted by either of the valuers - as they both did) does not provide me with assistance in discharging my statutory role as the judicial valuer for the purposes of the Land Acquisition Act. 3. The consequence is that, if I conclude that any of the potential adjustment factors upon which either Mr Lunney or Mr Davis commented and where I do not have quantification and a clear basis to support the proposed value, I am left to "do the best I can" to assess the value to be ascribed to the factor and the reasons for it. 4. This is clearly an unsatisfactory position. The Court is entitled to expect that any valuer giving expert evidence (whether in a resumption compensation case or a challenge to a statutory valuation) will give evidence based on the three pillars of expert evidence: 1. the facts; 2. the assumptions made and applied to the facts; and 3. the conclusions drawn from the facts and the assumptions. 1. I have, in the past, commented on the unsatisfactory nature of the "trust me, I am a valuer" approach and "black box valuation evidence" (Toveno Pty Limited v Roads and Maritime Services [2014] NSWLEC 1266). Such an approach, to the extent that it has occurred in these proceedings, has been unhelpful. Mr Davis' adjustments to the starting value of the residue land Introduction 1. Mr Davis' approach to valuing the residue land to determine how to quantify what he regarded as the impact on the value of the residue land of the acquisition of the land for the creation of Venice Street involved three factors. The first was his selection of what he regarded as a differential starting rate per square metre; second was his general analysis proposing a reduction in value, using a comparable sales approach involving analysis of the two unrelated sales upon which he relied and on the sale of the parent parcel itself. The final, separate adjustment analysis he undertook was to consider specific matters arising from Mr McLaren's consideration of potential vehicle movement/traffic impacts. Each of these three elements requires separate consideration. Mr Davis' starting value 1. For his consideration of the residue land, Mr Davis adopted a starting value of $1,459 per square metre. He had earlier agreed with Mr Lunney that the value of the parent parcel, as at the date of acquisition, was $1,575 per square metre. At [60] to [61], I commented on this. It is now appropriate to deal with this aspect of Mr Davis' evidence in greater detail. 2. Mr Davis was questioned by Mr Tomasetti about this. Mr Davis was unable to provide a coherent explanation for this instantaneous shift in valuation for the residue land as a starting point for deriving a post-acquisition value for that land. The transcript records the following (Transcript, 2 March 2018, page 281, line 42 to page 283, line 37 and page 284, line 41 to page 285, line 20): TOMASETTI: So having agreed with Mr Lunney on the new before rate of $1,575 you should be adjusting that number for time to give you a different, but higher, figure than $1,459, in the second column at paragraph 129. And to that figure you should be then making your next adjustment of -7.5%. WITNESS DAVIS: I actually don't think that's correct and if I may just go back a step. The 1,459 is the time adjusted figure relative to the purchase price of 1 3 Ricketty Street. Ricketty Street was purchased for about $1,300 odd square metre. Allowing for time between when it was purchased and the acquisition date that goes up to 1,459, I then make the adjustments. Insofar as there's a linkage between the before and the after, the before and after methodology is discreet. I don't think that there's a - I don't think that there's a - any sort of reason - it shouldn't be a reason to say because I alter the before figure that I therefore have to alter the after figure in sync. They're discreet exercises. TOMASETTI: Okay, well, that's the point that I'm seeking to courteously debate with you. In your paragraph 122, there's a table. WITNESS DAVIS: Yes. TOMASETTI: There you identify the property 1-3 Ricketty Street, Mascot. WITNESS DAVIS: Yes. TOMASETTI: You adjust the before value for time. WITNESS DAVIS: Yes. TOMASETTI: 1,459. Correct? WITNESS DAVIS: Yes, the 1,459 being the time adjusted alteration of $1,300 square metre when the 1-3 Ricketty Street was acquired, was purchased. TOMASETTI: You then, in paragraph 123, say that there's a range thrown up. WITNESS DAVIS: Yes. TOMASETTI: And that you adopt, in 125, having regard to the range in market value of the land on the acquisition date, the parent parcel, $1,500 square metre. WITNESS DAVIS: Yep. TOMASETTI: You then, in paragraph 125, set out your adjustments to that-- WITNESS DAVIS: Sorry, 125? TOMASETTI: Paragraph 129, I'm sorry. You set out your adjustments to the englobo figure - to arrive at a figure in 132, after adjustment of $1,350 square metre, don't you, for the residue parcel? WITNESS DAVIS: Yes. TOMASETTI: Now, as a result of your discussion with Mr Lunney through the joint conferencing process we should now understand - and paragraph 125, that you agree and he agreed that the dollar per square metre site area rate is $1,575? WITNESS DAVIS: Yes. TOMASETTI: That's the starting point I suggest. You should then be applying the deductions to that starting point in your table in 129. WITNESS DAVIS: No, no, I don't - I disagree with that. They - $1,575 is the before figure assuming that there has been some increase in value from where it was purchased, that's the market value of the before property as at the acquisition date. TOMASETTI: Yes, whereas before you said it was $1,500. WITNESS DAVIS: Certainly not, yep, so-- TOMASETTI: So you've had discussions and you've come up with an agreement. WITNESS DAVIS: Rather counterintuitively just to prove the - that experts can actually be objective, I'm not entirely adversarial - Mr Lunney happened to be higher than me - we agreed the figure of 1,575. Mr Lunney was then of the view that, there should be some quick pro quo with the after. And my argument is that a before and after is a separate and discreet exercise. And that you shouldn't necessarily say that because we've altered one you should alter the other in sync. TOMASETTI: But the separate and discreet exercise involves, essentially, discounting the rate that you've derived for the parent parcel doesn't it? WITNESS DAVIS: Yes. TOMASETTI: So if you have to discount the rate that you've arrived for the parent parcel you have to now discount the rate of $1,575 square metre and not $1,500 square metre. WITNESS DAVIS: I'm comparing to a different site, I'm comparing it to the residue site and not the - not the parent land. … TOMASETTI: Do you say that the sale of the subject land to Canal Aviv in September or November 2015, it's getting late, 2015 is only the best comparable insofar as the sale of the before parcel is concerned? WITNESS DAVIS: No, I'm saying that it has relevance to both of them but because I'm comparing it to different sites, the levels of adjustment are different. TOMASETTI: But you're comparing it to the same sites, I suggest. The table on page 33 of your original report is Slazenger, Euston Road, Ricketty Street. WITNESS DAVIS: I'm not denying-- TOMASETTI: In the second comparison in the after it's the same sites. WITNESS DAVIS: Yeah, and in one exercise I'm comparing them to the before property and in the separate discreet exercise I'm comparing them to the after property. That's what happens in a before and after valuation. TOMASETTI: Well, I suggest to you as a matter of logic, Mr Davis, I take it you don't agree, but you needed to reapply the discounted rate that that you found to the re-agreed rate of the parent parcel, $1,575. WITNESS DAVIS: I have done. Yeah, I've done it in relation to the before site but not the after site. TOMASETTI: And I suggest to you as a matter of consistent methodology you have to do it to both? WITNESS DAVIS: No, I disagree. 1. I am satisfied that there is no rational basis why the post-acquisition starting point for considering the value of the residue land should be anything other than $1,575 per square metre. Mr Davis' general adjustments 1. Mr Davis' primary Statement of Evidence dealt with his analysis of the value of the residue land in the following terms (Exhibit B, Tab 15, folios 1043 and 1044): 127 I have adjusted the Larger Comparisons sale prices per square metre of site area at a rate of 10% pa appreciation and capital values, as between their sale dates and the Valuation Date of the Property. The time adjusted rates have then been adjusted for relativity to the Property. 128 I have derived the percentage adjustment of Comparisons and the Property having regard to the following factors: (a) Timing of the Larger Comparisons relative to the Valuation Date; (b) Location - the Property location is relatively isolated and lacks exposure; (c) Size - in my experience, other things being equal, larger industrial development sites command lower values per square metre than smaller sites; (d) General Nature - this adjustment captures the broad characteristics of the Property relativity, including, inter alia, ease of access, title considerations, planning constraints, footprint configuration. 129 My adjustment of the Comparisons is set out below. 130 Calculation of time adjusted values, adopting an appreciation rate of 10% per annum, indicates a range of some $1,459 to $1,608 psm, the average and median values being the order of $1,513 and $1,472 respectively. 131 After adjustments for relativity, the equivalent Property values are in a range of some $1,288 to $1,407, the average and median values being the order of $1,348 and $1,349 respectively. 132 I have considered the characteristics of the Property at the date of acquisition and its relativity to the Larger Comparisons, and I have adopted a market value in the amount of $1,350 psm site area, as summarised below. ADDRESS DATE OF VALN MKT VALUE ZONING SITE AREA ( square metres) FSR SPSM SITE AREA The Residue Land 24-Feb-17 $12,070,350 B7 8,941 4.0 $1,350 133 Application of my adopted market value in the amount of $1,350 psm site area results in a quantum market value for the Acquired Land at the Property of some $12,070,350, which I have rounded to $12,070,000. 1. I have, above, set out the adjustments made by Mr Davis in (128) of his Statement of Evidence to explain the four factors he had taken into account. The fourth one was given the descriptor of "General Nature". It was described as being: General Nature - this adjustment captures the broad characteristics of the Property relativity, including, inter alia, ease of access, title considerations, planning constraints, footprint configuration. 1. The table reproduced earlier, in the extract from Mr Davis' Statement of Evidence, discloses that he had deducted 10% for these "General Nature" factors under the heading "Other Adjustments". 2. On 1 March, Mr Tomasetti questioned Mr Davis about "title considerations" from the above list. This culminated in the following question and answer (Transcript, 1 March 2018, page 189, lines 42 to 46): TOMASETTI: No, I know that, but you have no idea now how that title consideration informed any component of the 10% adjustment. WITNESS DAVIS: I can't say that 1% of the 10% was because of title, no, in the same manner as we were discussing the other matter earlier. 1. The next day, Mr Tomasetti returned to questioning Mr Davis about what was the basis for this 10% adjustment. He commenced the questioning with the following introductory exchange (Transcript, 2 March, page 212, lines 29 to 41): TOMASETTI: Open at page 33 so as to give you context. Your valuation of the residue land took into account two steps - did it not - in making adjustments? WITNESS DAVIS: Yes. TOMASETTI: The first step was to account for the matters referred to in paragraph 128 A to D. And the second step was to take into account a matter which wasn't apparent when you wrote your first report, but emerged to you - at least - upon reading Mr McLaren's later evidence where he indicated that there could be impacts on the construction of the redevelopment. WITNESS DAVIS: Yes, that's correct. 1. Mr Tomasetti then turned to questioning Mr Davis concerning his other three adjustments (excluding "title considerations") in (128)(d) of his Statement of Evidence. It is not necessary to reproduce the entire transcript of this questioning to get a broad flavour and to understand my reaction to it. However, I reproduce below a relevant transcript extract (Transcript, 2 March 2018, page 217, lines 1 to 30) concerning "planning constraints": TOMASETTI: So I go back to paragraph 128(d), what was the planning constraint that you were referring to? WITNESS DAVIS: I'm referring to planning constraints in a generic sense. TOMASETTI: But what in particular that led you to make a deduction which was incorporated into this 10% adjustment? WITNESS DAVIS: The 10% would not reflect any material amount of deduction of planning constraints. In making that comment I am saying that it's one of the matches that I refer to generically. If there's no difference, I don't make an adjustment. TOMASETTI: I don't understand your answer. You've made an adjustment for other according to the table in 129 of 10%. WITNESS DAVIS: Those are the things I've considered. TOMASETTI: You say that adjustment is warranted by a consideration inter alia, as you point out, of four matters: ease of access, title considerations, planning constraints, footprint configuration. I'm asking you, very purposefully I might say, what was it, if anything, about planning constraints that contributed to the downward adjustment of 10%? WITNESS DAVIS: No, I wouldn't have made any adjustment. It's one of the things that I considered and when you - when one considers different characteristics and factors in relativity sometimes you look at the comparison sale and the subject property which is being valued, and say, "There's no alteration to be made." That's exactly what I've done here. 1. Mr Tomasetti also questioned Mr Davis about other aspects concerning his deductions in (128)(d) - reproduced above - for example, the following exchanges took place (Transcript, 2 March 2018, page 217, lines 46 to 51 and page 219, line 36 to page 221, line 15) concerning "zoning" and "footprint configuration": WITNESS DAVIS: I've considered a number of things that are all set out there. Some of them are of no consequence. I haven't made deductions. Some are. The 10% would be mainly attributable to the fact that I believe that a hypothetical purchaser would regard Venice Street as being a much more difficult ingress and egress to the site than would be the case in the before. TOMASETTI: Where do you say that in your report? WITNESS DAVIS: I've referred in the report to the difficulty of Venice Street. I can't-- TOMASETTI: Where do you say that the main factor informing the 10% adjustment is the difficulty with access onto Venice Street? WITNESS DAVIS: I don't say the main factor. I've made an adjustment. I haven't broken it down into-- TOMASETTI: Let me finish my question so I can hear your answer. Where do you say, if anywhere in your report, that the main factor which informs your 10% downward adjustment is the access difficulties in Venice Street? WITNESS DAVIS: I don't believe it's said in that respect. No. TOMASETTI: Do you agree with me that the reader, looking at 128D, would assume that you had in your mind, amongst other things, four principal considerations which inform the 10% downward adjustment, they being ease of access, title considerations, planning constraints and footprint configuration? WITNESS DAVIS: Broadly, yes. TOMASETTI: You've told us yesterday you can't remember what title considerations you had in mind. You've told us this morning that the planning constraints on the subject land and its residue layout and with respect to the comparables they were no different? IN1 zone, B7 zone, no difference? WITNESS DAVIS: There's no adjustment made for zoning, no. … TOMASETTI: Now, in order to get to that point, we have to consider the other three and now I'm considering footprint configuration on its own. This is a reference, as I understand the words footprint configuration, to the footprint of any development which might occur on the subject site as opposed to the footprint that might occur of any development on the two comparable sites. WITNESS DAVIS: No, it's the footprint of the site. Euston Road is a relatively regular shaped site. It has three street frontages and therefore I consider it to be superior to the residue land because-- TOMASETTI: What, because it has three frontages? WITNESS DAVIS: And its regular shape. It would not necessarily have the same setback as is required from the Alexandria canal. It's a better site. TOMASETTI: So do you say the subject site is an irregular shape, lot 24 and 25? WITNESS DAVIS: No. Well, it is slightly irregular but that's not a major point that I'm making. TOMASETTI: It's rectangular, isn't it? WITNESS DAVIS: It's more or less rectangular, yes. TOMASETTI: And in the sense of it being rectangular, it's not a long and narrow block. It's a block which is so dimensioned where its width or the width of the blocks is not significantly different to the depth of the blocks? WITNESS DAVIS: It does have the added constraint of the setback from the canal which Euston Road doesn't have but that's not the point I'm making in footprint. Footprint is basically the shape of the site and I also look and reason for inter alia is I look at-- TOMASETTI: No, no, stay with footprint configuration, if you don't mind, because that's your phrase, you see. WITNESS DAVIS: Well, it goes to footprint configuration. It goes to footprint configuration because it's partly the shape of the site, partly the accessibility of the site to street frontages. TOMASETTI: Well, you see, ease of access is a separate matter which you've referred to in 128D and you know very well that the shape of a site is entirely different to the concept of footprint configuration which refers to the development on the site, don't you, Mr Davis? WITNESS DAVIS: I'm not referring to development on the site. I'm referring to the shape of the site. TOMASETTI: So his Honour is to understand the words "footprint configuration" as in effect meaning shape? WITNESS DAVIS: Broadly, yes. TOMASETTI: And is the Slazenger site, we didn't visit that. Is that a rectangular site? WITNESS DAVIS: No, but it has two street frontages. TOMASETTI: Is it a long narrow site? WITNESS DAVIS: Not particularly. TOMASETTI: Okay. So it's equivalent, is it, to the subject site with two street frontages? WITNESS DAVIS: No, I think it's superior to the, I think, to the residue land because both street frontages can be used for access there whereas it's not the case here. TOMASETTI: So you made a 10% downward adjustment in relation to the Slazenger site, inter alia, on account of footprint configuration, did you? WITNESS DAVIS: No. I, look. TOMASETTI: Is that how we understand it? WITNESS DAVIS: If it's not clear to the Court I will repeat it. I've looked at a number of matters. Some of them are of no consequence. Some of them I've made adjustments for… 1. It is difficult to discern, from Mr Tomasetti's questioning of Mr Davis and Mr Davis' answers, any intelligible understanding of what Mr Davis really meant was encompassed by the 10% adjustment he had made for the factors said to be covered by what he dealt with in the four elements of (128)(d) of his statement of evidence. 2. There was certainly no basis to explain how each element was quantified, let alone how it was justified. Relying on "inter alia" (as Mr Davis sought to do - Transcript, 2 March 2018, page 215, lines 10 and 11) as a catch-all to call up other undisclosed potential factors for his 10% adjustment is no answer. An expert is under an obligation to articulate and explain the facts, assumptions and conclusions in that expert's analysis. 3. Then I remembered that, in Chapter 6 of Through the Looking Glass by Lewis Carroll, the author describes Alice's conversation with Humpty Dumpty. It is clear that Alice is having some difficulty with understanding what Humpty Dumpty is talking about. Things become clearer (albeit in a perverse sort of way) after the following exchange: 'When I use a word,' Humpty Dumpty said, in rather a scornful tone, 'it means just what I choose it to mean — neither more nor less.' 'The question is,' said Alice, 'whether you can make words mean so many different things.' 'The question is,' said Humpty Dumpty, 'which is to be master — that's all.' 1. Such an approach to that which was set out by Mr Davis in (128) of his report would provide a basis for understanding what he was saying - however, it provides no assistance to me in these proceedings. It certainly provides no basis upon which I could rationally accept his adjustment of 10% for the matters he deals with in (128). Mr Davis' further adjustment of 10% 1. In his individual statement of evidence, Mr Davis explained (at (145) to (147) of Exhibit B, Tab 15, folios 1046 to 1047) the basis upon which he derived a further 10% downward adjustment to be applied to the residue land as a consequence of vehicle movement/traffic impacts. 2. During the course of his oral evidence, he had the following exchange with Mr Tomasetti (Transcript, 2 March 2018, page 211, line 21 to page 212, line 6): WITNESS DAVIS: Well there's clearly - in my mind - a material risk that traffic on Venice Street can build up to one degree or another. It depends on whether or not you take Mr McLaren as being a - a - as being correct or maybe Mr Hollyoak who said the problem will be a - quite limited but if I were a hypothetical purchaser or if were advising a hypothetical purchaser, looking at the layout of Venice Street as opposed to the before situation, I would be saying that in the before situation you're able - you have complete flexibility as to how you use your own land. In the after situation, ingress and egress onto Venice Street may be - there - there - there is quite a reasonable possibly - may be interrupted by - by traffic build ups. I'd also be saying that the design of Venice Street with this - in the words of both traffic engineers - unusual bubble at the top to turn around and come back into - into the traffic emerging from WestConnex, is - is a - is - is quite ungainly and would not be the sort of ingress and egress that you would have with a more common industrial site with frontage to a - to - to - to a main road unimpeded by the - the characteristics of Venice Street. LAZARUS: So on the assumptions that I put to you, Mr Davis, what do you say would be the impact on value in the after case? WITNESS DAVIS: I think there would be a material effect on - on the value of the residue. I think that a hypothetical purchaser who was well informed - even if they didn't have traffic engineer's advice - if I were a valuer I would be saying - look, there - there - there - there is - in my view as a valuer - a material risk that ingress and egress onto Venice Street may be much less practical than you have in the before situation. That you may have trucks - articulated vehicles that can't turn right because of a build up of traffic going out of the site - can't turn right into Venice Street, they therefore would have to go up to the - the bubble and in doing that there's every possibility that they would have to wait for the - their gap in the traffic so that they could cross to the centre lane of Venice Street. It's just not a great solution to ingress and egress of the residue land and I hold the view because of that that there would be a material effect on value. 1. Mr Davis concluded that a further downward adjustment of 10% was necessary to account for these factors. A close reading of his written and oral evidence on this point does not disclose any rational basis for his derivation of the extent to which he says that this adjustment is required. Although 10% is not an extreme adjustment, and is well within what might ordinarily be regarded as a conventional adjustment range, nonetheless, because of what appears to be the bundling up by Mr Davis of all the potential vehicle movements/traffic impacts postulated by Mr McLaren without any attempt to dissect them, I am unable to accept the validity of this adjustment, given the varying natures of my factual findings, earlier set out, concerning matters where there was an evidentiary competition between Mr McLaren and Mr Hollyoak. Conclusion on Mr Davis' approach to the residue land 1. I have set out above what I considered to be the flaws in Mr Davis' approach to considering whether or not there has been any adverse impact on the starting value of the residue land as a consequence of the acquisition of the land for the creation of Venice Street. As a consequence, his evidence provides no basis upon which I could conclude that there was any downward adjustment required to the $1,575 per square metre starting value for the residue land. General conclusion on the valuers' evidence concerning the residue land 1. For the reasons earlier set out, there is no basis on the evidence of either Mr Lunney or Mr Davis that would enable me to conclude with confidence that there had been some downward impact on the value of the residue land. This arises, in summary, because Mr Lunney says that the positives and negatives for the residue land cancel out, whilst, for the reasons set out in detail, Mr Davis provides no coherent basis to support the downward adjustment he maintained was essential to be applied to the pre-acquisition value of the parent parcel of $1,575 per square metre as at the date of acquisition. 2. That, therefore, requires me to "do the best I can" as the judicial valuer to consider the various factors I have earlier discussed between [66] and [144] in order to reach a conclusion as to whether Mr Lunney's "no net outcome" position is appropriate or whether some alternative position should be reached. 3. As was observed by Spigelman CJ, with whom Beazley, Bryson and Basten JJA and Campbell J agreed, in Leichhardt Council v Roads & Traffic Authority of NSW (2006) 149 LGERA 439; [2006] NSWCA 353 at [83]: A judge of the Land and Environment Court is perfectly entitled to reject the whole of the expert evidence and, drawing on the experience of the Court, to do as best s/he can to identify an appropriate level of discount or, relevantly, an appropriate quantum of adjustment to the comparable sales figure by reason of the existing use rights of some of those sales. 1. Unlike the position described above by the former Chief Justice, in this instance I am left not with choices between competing adjustments by the valuers for the parties but having to consider, tabula rasa, each of the potential adjustment factors and assign some value to it (if I consider some value is warranted). In undertaking this approach, I should take an approach more favourable to the dispossessed owner when I am satisfied that there is some reason to make an adjustment (Sydney Water Corporation v Caruso [2009] NSWCA 391 (Caruso)). Consideration of the various factors potentially impacting the residue land Introduction 1. I now turn to consider what adjustments, if any and whether positive or negative, are warranted to the value of the residue land. The cumulative outcome of this consideration will define what compensation (if any) is due to the Company for any impacts on the residue land as a consequence of the acquisition of Lot 1 for the construction of Venice Street. The impact of the broader WestConnex project 1. In his table of collectively self-cancelling, post-acquisition impacts on the value of the residue land, Mr Lunney proposed that there was an overall beneficial effect that would arise as a consequence of the carrying out of the overall WestConnex project (of which the New M5 public purpose forms part). 2. To the extent that there might be an identified factor supporting such a proposition, it was said to be the fact that the WestConnex project had required the acquisition of some 100 hectares of industrial-zoned land in what could be regarded as the industrial-zoned area within which the parent parcel was located (whether that industrial-zoned land was within the local government area of the Council or that of the City of Sydney being irrelevant). 3. Mr Lunney expressed the view that this reduction in the available area of industrial-zoned land was applying some upward pressure on the value of similarly zoned land, such as the parent parcel, and that this pressure continued to apply to the residue land post-acquisition. 4. On the other hand, Mr Davis expressed the opinion that, to the extent that there was upward pressure on values of industrial-zoned land in the broader precinct, this pressure was arising from the acquisition and redevelopment for residential purposes of approximately 100 hectares that had previously been available, it is to be inferred, at the northern or north-eastern end of this precinct. 5. It was Mr Davis' opinion that there was no general upward valuation pressure as a consequence of the broader WestConnex project and that any upward pressure on the value of industrial land for the reason which he had identified would not be applicable to either the parent parcel or the residue land, as they were not suitable for redevelopment of the type he identified as the potential upward pressure-causing factor. 6. It is unnecessary for me to resolve this conflict of opinion. This is because neither Mr Lunney nor Mr Davis was able to point to any market evidence which would provide a basis for contemplating quantification of such an impact - market evidence being that which would be required for this purpose. 7. It follows that, with respect to the proposal by Mr Lunney that I should conclude that there was an uplift factor to be taken into account, as a result of the overall WestConnex project, when considering the post-acquisition value of the residue land is rejected. Reduction in size 1. It is accepted valuation theory that, for similar sites, the value per square metre of a smaller site will be greater than that which is to be applied to a larger site. In this instance, as the resumption of the land for the creation of Venice Street has, self-evidently, reduced the area of the parent parcel by that amount, the starting rate of $1,575 per square metre for the residue land requires an upward adjustment to be taken into account as a consequence of its reduced area. 2. Mr Davis proposed that this should be reflected by an upward adjustment of 2.5% for the residue land. Mr Lunney (table in Exhibit J) agreed that this was reasonable. 3. Therefore, when considering what the net adjustment (if any) should be to the starting rate per square metre for the residue land, this agreed adjustment is to form part of that consideration. The impact of redevelopment commencement timing 1. Mr Lazarus raised the question of whether a hypothetical developer would assume a longer development period was necessary, following Mr Ronen's evidence that the site was a difficult one to work with, and contended that a downward adjustment was warranted (Applicant's written submissions, pages 18 to 19). He put this proposition to Mr Lunney (Transcript, 2 March 2018, page 244, line 38 to page 246, line 11): LAZARUS: Well, perhaps if I could remind you about Mr Ronen's evidence. You referred to the fact that he needed many attempts in order to plan this development based, as you said, on his requirements and I think you said in the end he managed to squeeze it in. Do you recall him giving that evidence? WITNESS LUNNEY: I recall him talking about a, I think it was an iterative process where there was plans drawn and destroyed and he formed the view that there was commercial viability issues. I do remember some discussion about that. LAZARUS: And his evidence, which I'm asking you to accept for the purpose of these questions, was that those issues were a product of complexities with the residue site. That's what I want you to accept, Mr Lunney. WITNESS LUNNEY: I can make that assumption. LAZARUS: So if you make that assumption, it would follow, wouldn't it, that a hypothetical developer of the residue land would assume a longer development period. Do you agree with that? WITNESS LUNNEY: If I assumed what your client said and only what he said, and that's the only information the purchaser had, I think that's the only conclusion they could draw but as I think I said before, I don't believe the town planning or the architectural evidence in this proceedings suggested that there would be any LAZARUS: No, but you would defer to their expertise in relation to that matter? WITNESS LUNNEY: To the detainers [sic - should be 'designers"] and the architects? LAZARUS: Correct. WITNESS LUNNEY: Precisely. LAZARUS: Now, what I'm putting to you is that if you accept Mr Ronen's position that it's a difficult site and that therefore there would be a longer period required to develop the site for a hypothetical developer, that is something that you ought to bring to account in the after case. Do you agree? TOMASETTI: I object. I object, your Honour. That's not a pleaded matter. It's not suggest that the subject site creates any difficulty for designing a development application and that the development application planning stage would be prolonged and that that would have any impact of value. That's not alleged. LAZARUS: I don't need to plead that, your Honour. HIS HONOUR: The question, it seems to me, properly arises out of Mr Ronen's evidence. I'll permit it. LAZARUS: Thank you, your Honour. You would have to accept, wouldn't you, that there would be a downward adjustment in the after case upon those assumptions? WITNESS LUNNEY: So as I understand the question, if there was an expectation that the DA approval process would be materially longer in the after scenario because of and only because of the partial acquisition and the carrying out of the public purpose works-- LAZARUS: Correct. WITNESS LUNNEY: --is that something that would need to be considered? Well, on those assumptions, yes, it would need to be considered. LAZARUS: It would be a material matter. Because if, for example, it took six months longer or nine months longer, that's a period of time during which a developer would be held out of the fruits of the purchase. And there would be holding costs and all the other costs arising from delay. Correct? WITNESS LUNNEY: That is true, there is an income, an existing income on the site. But - but notwithstanding that a, you know, time - time is an important consideration of a developer so you would sooner have a site that you can get DA quicker than one that there was going to be some material delay. 1. As earlier discussed, the reasonable conclusion is that the development application/approval and subsequent processes would take a maximum of 12 months from commencement of engaging an architect for the purpose of designing a redevelopment of the residue land through to completion of a tendering process to obtain a contractor to construct such a development after preparation of construction certificate plans. 2. I have earlier set out, at [116], my conclusion that, although construction of Venice Street might add some complexity to access to the residue land for construction purposes, there is unlikely to be any interference of any significance to the construction of a redevelopment of the residue land. To the extent that there is any risk arising with respect to redevelopment of the residue land, that risk would arise as a result of the necessity for coordination between the construction contractors engaged with undertaking a redevelopment of the residue land and the contractor constructing Venice Street. 3. Overall therefore, I do not consider that there would be any impact requiring compensation on the timing of redevelopment of the residue land as a result of the construction of Venice Street. Reduction in rental income potential 1. As at the date of acquisition, there were 58 parking spaces available on the parent parcel. Truck parking spaces between the existing buildings on Lots 24 and 25 (buildings which remain on the residue land) were used by Secure Logistics as part of their logistics business. As a consequence of the acquisition of Lot 1 for the creation of Venice Street, the traffic experts agreed that the relocation of the lost parking spaces to locations within the site would result in the loss of parking and manoeuvring area for trucks (Exhibit A, page 393). Following construction of Venice Street, there will be around 130 meters of parking spaces along Venice Street, providing parking for around 21 cars. This reduction in parking spaces available to serve employees of businesses on the residue land, or visitors to them, or that were required for activities of such businesses, was acknowledged by Mr Lunney as posing a likely risk to rental income potentially able to be derived from the residue land during the period pending redevelopment of that residue land. 2. Secure Logistics had tenanted portion of the parent parcel, utilising the central parking area. The tendered material contains information concerning the commercial arrangement and this company's termination of its tenancy (Exhibit C, Tabs 26(g), 28 and 29). Secure Logistics was paying an annual rental, as at the date it vacated, of $279,000 plus GST (the GST component being irrelevant for this consideration as it is a pass-through payment only). 3. Mr Lazarus' closing submissions addressed the impact of the acquisition of the land for (and subsequent construction activities to create) Venice Street on the pre-redevelopment potential for rental income from the residue land 87 While the agreed highest and best use of the residue parcel is to re-develop the existing buildings, the ability for the hypothetical purchaser to receive passing income until the redevelopment was undertaken was an attractive aspect of the residue parcel and thus Mr Lunney agreed that the security of these tenancies would be an important matter for a hypothetical developer. 88 Mr McLaren's evidence was that this loss of car parking spaces would render the Secure Logistics lease unworkable. Mr Lunney accepted that a purchaser might have reasonably expected Secure Logistics not to renew its lease in these circumstances and included the risk to rental income as a factor for which a downward adjustment could be considered. 89 Based on the traffic advice, the hypothetical parties on the acquisition date would have foreseen a significant risk that the Secure Logistics rental income (representing almost 50% of the total passing income) could be at risk. This foresight was confirmed by Secure Logistics' vacation of its lease following the acquisition date but prior to the expiry of a renewed lease on the basis of its contention that the lease had been frustrated by the acquisition of Lot 1. 90 For these reasons, this factor supports a significant downwards adjustment. 1. Mr Lunney's comment in Exhibit J with respect to the potential impact on rental income of the residue land during the pre-redevelopment period was: Not possible to quantify/isolate by reference to direct market evidence. Not likely to be significant. 1. I am satisfied that the foresight referred to in Mr Lazarus' closing submissions reproduced above in reliance on the post-acquisition vacating of the residue land is permissible as confirming a reduction in the passing rent being a matter to be taken into account (Housing Commissioner of New South Wales v Falconer and Others [1981] 1 NSWLR 547). 2. Mr Lazarus' closing submissions dealt with the second -10% adjustment factor proposed by Mr Davis. Mr Lazarus did so at (95) to (100). In (100), Mr Lazarus wrote: Further, although the -10% adjustment primarily covers operational access issues, it also reflects the other factors set out above (smaller development footprint and loss of passing rental income) which would not by any means have been trivial matters for a purchaser seeking to redevelop the residue parcel for industrial purposes. 1. Mr Lazarus' footnotes to these elements concerning the second -10% adjustment proposed by Mr Davis refer me to various transcript references (footnotes 100 to 104) or to elements in either Mr Davis' individual written material or in joint valuation material related to traffic matters concerning egress from the site. 2. None of this material provides me with any assistance in addressing the question of whether or not (and, if so, to what extent) I should make some specific and segregated allowance for the reduction in the rental income potential of the site during the period post Secure Logistics vacating of the site and the commencement of the hypothetical redevelopment. An allowance of this nature would not be as compensation for lost rent - such a claim is not before me. It would be to reflect what reduction in purchase price for the residue lands would be necessary to cause a hypothetical purchaser to buy in circumstances where the total existing rental stream could not be maintained pending commencement of redevelopment as a consequence of site limitations occasioned by the acquisition of the land for construction of Venice Street. 3. However, I do consider such an allowance should be made. Such a reduction in rental income potential would apply during the period from the termination by Secure Logistics and the commencement of the redevelopment process. 4. The termination date of the Secure Logistics lease was 30 April 2018. Secure Logistics vacated in late 2017 (the evidence before the Court did not disclose the precise date), with a further, at least, four months to run on this lease. However, for the reasons set out at [111] to [115], a hypothetical redevelopment could be assumed to commence from the beginning of March 2018 - at which time Secure Logistics would have been required to vacate had they remained in possession of the portion of the residue land occupied by them. 5. It seems to me that, rather than the more usual adoption of a percentage adjustment to reflect this impact, a potential percentage impact for which I do not consider I have any satisfactory evidentiary basis, I consider that the appropriate course to follow is to have the parties derive a monetary sum to reflect this loss. 6. Application of past rental income (excluding GST) at the calculable daily rate for the period of rentable vacancy would reflect the amount a purchaser in the hypothetical transaction would reduce the otherwise offered purchase price for this purpose. 7. Given that the time period to be covered is comparatively short, I consider it unlikely that any discounting would be necessary. This amount is to be accounted for in the Company's favour as part of the calculations arising from these miscellaneous impacts as later summarised in my conclusion concerning the overall impacts on the residue land. 8. The parties are to calculate the sum derived from applying the daily rate in the final rental arrangement for Secure Logistics to cover the period from the actual termination of that company's occupancy until the beginning of March 2018. This reflects the end of the period I have determined would follow from the date of acquisition of the land for Venice Street until a hypothetical redevelopment of the residue land would commence. This sum is to be rounded up to the nearest $1,000 and included in the orders to be settled by the parties. Reduced building footprint on the residue land 1. There are two matters to be observed concerning the potential for redevelopment of the residue land. The first arises from the joint report discussion by the valuers of what, in the market, would be the likely highest and best use to be achieved by a redevelopment. They said (Exhibit B, Tab 17, folio 1111): We agree that, although the "B7 - Business Park" zoning which applies to the Parent Parcel and the Residue Land is more flexible in terms of the range of permissible uses and the development standards, particularly height of building and maximum floor space ratio controls, any large scale redevelopment of the Parent Parcel or the Residue Land for commercial purposes (e.g. the two nine storey office towers which were the subject of the 2010 master plan consent) may prove to be commercially unviable. In forming our opinion in this regard we have considered the predominantly "industrial" nature of the locality and surrounding development. We agree that the more likely form of any redevelopment would be traditional "industrial" development rather than large-scale "commercial" development. We agree that the November 2015 sale of the Parent Parcel reflected a value which was consistent with "industrial" land values in the locality and did not reflect any demonstrable premium for the "B7" zoning or the 2010 master plan consent which had been obtained in respect of the Parent Parcel. 1. It is in the context of this agreement, as to the highest and best use, that it is appropriate to turn to the Joint Architectural Report (Exhibit A, Tab 10) where Mr Farkash and Ms Polkinghorne, for the RMS, discussed potential development yields for the site. Table 1 of their joint report comprised the analysis of the before-and-after acquisition warehouse development options considered by them. There was agreement that the "before" scenario would have permitted a 0.51:1 FSR to be achieved whilst, in the "after" acquisition scenario, only an FSR of 0.45:1 could be achieved. As expressly agreed by these experts, there is a 0.06 difference in FSR between the before-and-after scenarios. 2. It is clear from Table 1, at folio 532, that these witnesses agree that the existing electricity easement has no impact on the FSR potential in either the "before" or "after" scenario. 3. With respect to the possibility of a reduced building footprint for the residue land, Mr Lunney wrote: Not possible to quantify/isolate by reference to direct market evidence. Not likely to be significant. Architectural experts agree that the 51% and 46% site cover options are only two options, and that the maximum FSR of 3:1 could likely be achieved with appropriate design. Architects agreement may also be inconsistent with part of electricity easement/ROW. 1. Mr Lunney's comment, set out above, forms part of the table in Exhibit J, where Mr Lunney proposed the balancing out of the various potential positive and negative impacts on the residue land. The potential to achieve a maximum FSR of 3:1, as noted by Mr Lunney in his above comment, is an FSR outcome achievable on the basis of one of the office complex analyses set out by the architectural experts at folio 533. Such a potentiality is in conflict with the agreement by Mr Lunney with Mr Davis that the highest and best use outcome in response to market conditions would be a warehouse style development. Given his agreement with Mr Davis on this point, the possibility of a 3:1 FSR outcome is to be set aside. 2. The second element of his comment that the agreement of the architectural experts may be "inconsistent with the easement" lacks foundation because, as earlier noted, the architectural experts agreed that the potential FSR for a warehouse development in either the before or the after scenario was not impacted by the easement. 3. This reduction in potential development yield for a warehouse redevelopment on the residue land is 11.8%. Given the agreement between the architectural experts and their precision in identifying the factors to underpinning this calculation, it is not appropriate to undertake any rounding off of this percentage adjustment. An adjustment in the Company's favour to this extent is therefore warranted to reflect this negative impact on the development potential of the residue land. The new access from the north 1. Mr Lunney's comment concerning the new access from the north via the Venice Street slip road was: Not possible to quantify/isolate by reference to direct market evidence but undoubtedly and (sic) advantage. 1. I am satisfied that the ability of westbound traffic to access the residue land utilising the Venice Street slip road from Gardeners Road and then Venice Street proper results in a significant positive benefit to the residue land. This arises because, in the pre-acquisition context, westbound vehicles were obliged to drive past the parent parcel and across the Alexandra Canal before finding a way where it would be possible to turn to travel in an easterly direction to turn left into the access to the parent parcel via what has become the acquired land. 2. During the course of the site inspection, we needed to undertake such a manoeuvre in the small bus in which we were being conveyed. The nature of the necessary movement to permit the return along Canal Road, crossing the canal into Ricketty Street, was not an easy one and, for a truck of any significant size (whether rigid body or articulated being irrelevant, in my view), would be a manoeuvre of difficulty. 3. This, in my assessment, would act as a significant disincentive for any potential utilisation of a facility of the nature hypothesised as being a warehouse facility as envisaged by the architectural experts. 4. I have earlier set out, in the discussion of the evidence of Mr McLaren and Mr Hollyoak and issues arising therefrom, the benefits to the residue land that will become available as a consequence of the construction of the northern slip-road access to the site. This access will act, for valuation purposes, in two quite separate ways. First, if the left turn from Ricketty Street into Venice Street (as in its proposed design that would cause trucks turning left to access development on the residue land crossing the centre line of Venice Street) was accepted to be not likely to be ameliorated by design modification, the ability of trucks seeking access to development on the residue land to travel around the block to access the residue land by a southbound movement in Venice Street would offset such disadvantage. In this regard, any allowance for this aspect of the northern access advantage would merely offset the disadvantage of the poorly designed left-turn access from Ricketty Street. It is, therefore, in valuation terms, neutral for the purposes of my analysis. 5. However, the creation of a new, effective and convenient access to the residue land for westbound vehicles of any type is a significant benefit requiring quantification. 6. While I appreciate that Mr Lunney has not attempted to nominate what adjustment factor might be applied for this benefit, as a consequence of his balancing out conclusion, I am left, as the judicial valuer, doing the best I can with the information available to me, to determine such a factor. The necessity to do this arises as Mr Davis, as well, has not proposed what such a positive adjustment factor for the residue land might be. 7. The potential commercial advantage of this significantly enhanced and direct access for westbound vehicles warrants an upward adjustment to the residue land to reflect the inherent value of such access. Doing the best I can, I consider that this adjustment should be 10%. Egress from the residue land post-redevelopment 1. Mr Davis was asked by Mr Lazarus whether he felt that the impacts of queued traffic in Venice Street on egress from the residue land would have a material effect on the value of the residue land. The exchange was in the following terms (Transcript, 2 March, page 211, line 21 to page 212, line 6): WITNESS DAVIS: Well there's clearly - in my mind - a material risk that traffic on Venice Street can build up to one degree or another. It depends on whether or not you take Mr McLaren as being a - a - as being correct or maybe Mr Hollyoak who said the problem will be a - quite limited but if I were a hypothetical purchaser or if were advising a hypothetical purchaser, looking at the layout of Venice Street as opposed to the before situation, I would be saying that in the before situation you're able - you have complete flexibility as to how you use your own land. In the after situation, ingress and egress onto Venice Street may be - there - there - there is quite a reasonable possibly - may be interrupted by - by traffic build ups. I'd also be saying that the design of Venice Street with this - in the words of both traffic engineers - unusual bubble at the top to turn around and come back into - into the traffic emerging from WestConnex, is - is a - is - is quite ungainly and would not be the sort of ingress and egress that you would have with a more common industrial site with frontage to a - to - to - to a main road unimpeded by the - the characteristics of Venice Street. LAZARUS: So on the assumptions that I put to you, Mr Davis, what do you say would be the impact on value in the after case? WITNESS DAVIS: I think there would be a material effect on - on the value of the residue. I think that a hypothetical purchaser who was well informed - even if they didn't have traffic engineer's advice - if I were a valuer I would be saying - look, there - there - there - there is - in my view as a valuer - a material risk that ingress and egress onto Venice Street may be much less practical than you have in the before situation. That you may have trucks - articulated vehicles that can't turn right because of a build up of traffic going out of the site - can't turn right into Venice Street, they therefore would have to go up to the - the bubble and in doing that there's every possibility that they would have to wait for the - their gap in the traffic so that they could cross to the centre lane of Venice Street. It's just not a great solution to ingress and egress of the residue land and I hold the view because of that that there would be a material effect on value. 1. I have concluded that there may be occasional and limited queuing impacts on vehicles, particularly longer trucks, wishing to egress from the residue land with such impacts occurring for the comparatively short period of time for the evening peak Monday to Friday. I accept that there will, therefore, be occasions when such vehicles may need to turn left in the Venice Street in order to use the turning at its northern end to be able to use Venice Street to effect the necessary left turn into Ricketty Street to provide a safe and effective exit from redevelopment and the residue land. I also accept that the access point to the residue land could not be relocated sufficiently to the north to provide complete amelioration of this potential impact. This conclusion is consistent with the evidence of Mr McLaren and Mr Hollyoak, when taken together, on this point. 2. On the other hand, Mr Davis proposed (Exhibit F at (13)) that this impact, in itself, warranted a 10% adjustment downward in the value of the residue land. I am unable to accept this proposition. Although the traffic experts' evidence warrants the conclusion that there will be an adverse impact, it is, overall, one of a very modest nature. 3. I have earlier set out what would be appropriate to be drawn from the traffic experts (adopting a Caruso approach to be taken for valuation purposes) as to the risk to be factored in by a hypothetical purchaser of the residue land for impacts and egress from a future redevelopment. During the course of his cross-examination of Mr Davis, Mr Tomasetti obtained a concession that the impact of any restriction on egress which might arise would be limited to 5% (Transcript, 2 March 2018, page 235, lines 22 to 27). 4. However, in his written closing submissions, Mr Lazarus dealt with this concession in the following terms: 97. However, the cross-examination and assumptions put to Mr Davis proceeded upon a completely false premise. It was wrongly put to Mr Davis that the traffic experts had agreed that queues at the intersection in the PM peak would be in the order of 5-6 metres. In fact, the experts had only agreed that this was the case in the AM peak not the PM peak. The experts agreed that, if there was to be a problem, it was likely to be in the PM peak, not the AM peak, hence the absence of consideration of the AM peak by Mr McLaren in Ex H. As set out above, the experts do not agree on the likely queues in the PM peak primarily due to their conflicting views as to the expected traffic volume increases on Ricketty St. 98. Accordingly, Mr Davis's concession in Ex 4 can be disregarded. 1. I accept the criticism that Mr Lazarus makes of the inaccuracy of the underlying assumption as to the timing of the peak hour put to Mr Davis that provided the foundation for his concession. However, the inaccuracy was merely one of timing (that is, as to which peak period might cause the negative impact on egress from the hypothetical redevelopment and the residue land). 2. Even accepting Mr McLaren's pessimistic assumptions as to future traffic volumes and their impacts on the Venice Street/Ricketty Street intersection congestion playing on the egress from the residue land, such impact is confined to imposing a constraint during a single peak period. The advice to the hypothetical purchaser of the residue land, even if sought from a traffic expert and given to the detail to be drawn from Mr McLaren's evidence before me, such an impact would be a modest one but one requiring, at least, consideration for a valuation impact assessment by such a hypothetical purchaser. 3. A proper understanding of the traffic evidence did not disclose that there was any particular reason suggesting that the timing of the impact (that is, which was the peak period during which the impact arose) was of any relevant importance. A careful rereading of the written and oral evidence of the traffic experts persuades me that the necessary conclusion, for valuation purposes, could simply be based on the fact of a potential, limited time period, impact on such egress requiring trucks to turn left when exiting the hypothetically redeveloped residue land and thus requiring use of the turning head of Venice Street in order to be able to effect and exit into Ricketty Street. 4. As a consequence, although the timing basis for Mr Davis' concession that this impact might be limited to 5% was a false premise, I am satisfied that his 5% proposed adjustment is reasonable to adopt because it is based on the extent of the impact rather than upon its specific timing during the day. Overall conclusion of impacts on the residue land 1. As dealt with in this section of the judgment, I have concluded that there are a number of adjustments, some positive and some negative, which need to be made to the value of the residue land as a consequence of the acquisition of the land for the construction of Venice Street. Those adjustments are set out below. 2. The positive adjustments are: 1. an adjustment of 10% for the improved access from the north; 2. an adjustment of 2.5% to reflect the increased rate per square metre as a consequence of the reduction in the size of the residue land (this adjustment being agreed between Mr Lunney and Mr Davis). 1. The negative adjustments are: 1. an 11.8% adjustment as a consequence of the reduction in the building footprint available on the residue land; 2. an adjustment of 5% to compensate for the potential impact on egress from the redeveloped residue land to Venice Street. 1. A quantifiable allowance calculated as earlier explained, based on termination of the Secure Logistics' tenancy (this being the amount that a prudent hypothetical purchaser would consider needed to be deducted from the price that purchaser would be prepared to pay for the residue land as a consequence of the loss of income from the ability to use the residue land fully pending redevelopment). This is not an explicit allowance of a claim for rent forgone as a consequence of Secure Logistics vacating the site. It is an allowance that would be made by a hypothetical purchaser against the value of the residue land as a consequence of the loss of that income-producing opportunity. 2. This results in an overall reduction in the value of the residue land of 4.3% for which the Company is entitled to be compensated to which is to be added the Secure Logistics lease calculated amount for the reasons earlier explained. The stamp duty claim Introduction 1. The claim made on behalf of the Company as to its entitlement to reimbursement for stamp duty which would be incurred on the acquisition of land to replace the acquired land is based on the proposition that the Company was a developer involved in land banking. This was said to be in a fashion analogous to that which had been the subject of determination in Blacktown Council v Fitzpatrick Investments Pty Ltd [2001] NSWCA 259 (Fitzpatrick), where such land banking activity provided an appropriate basis for stamp duty compensation for the acquisition of replacement land to act as a substitute for land which had been acquired compulsorily. 2. It will be necessary to turn to discuss Fitzpatrick in more detail later. However, it is sufficient for present purposes to note that, in subsequent decisions of the Court (see Speter v Roads and Maritime Services [2016] NSWLEC 128 (Speter); Konduru t/as Warringah Road Family Medical Centre v Roads and Maritime Services [2017] NSWLEC 36 (Konduru); and Hatzivasiliou v Roads and Maritime Services [2017] NSWLEC 9, for example), the possible availability of a Fitzpatrick-type stamp duty reimbursement claim has been held to be a narrow one and one not available when the acquired property had been used for general investment purposes rather than for the purpose of providing the foundation for the entitlement arising in Fitzpatrick. 3. I have earlier noted that Mr Ronen provided an affidavit and was required for cross-examination. Although Mr Tomasetti objected to those portions of Mr Ronen's affidavit that dealt with his business activities and the corporate structure utilised for those purposes, I rejected that objection as I considered that those elements of Mr Ronen's evidence were relevant to my consideration of the submissions which had been made in opening by Mr Lazarus concerning the recent decision by Pain J in SNS Pty Ltd v Roads and Maritime Services [2018] NSWLEC 7 (SNS) (the relevant extract from which is set out below). 4. In SNS, her Honour was dealing with a claim for compensation which included an element seeking compensation for stamp duty for the acquisition of a replacement property. It is to be inferred from the terms of the relevant, brief extract from her Honour's decision (in which she explained why the claim should succeed in those proceedings) that the land banking activities to be taken into account were not those of SNS alone, but those of Mr Royal, the sole director and shareholder of SNS and a number of other companies where Mr Royal operated, through this grouping of companies, as a developer whose activities qualified, collectively, to be treated in a Fitzpatrick fashion for a stamp duty compensation claim determination. The relevant passage in SNS 1. The relevant extract from her Honour's decision in SNS is at [345] to [347], a passage which reads: Stamp duty (points of claim at [26]-[30]) 345. 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]. 346. 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. 347. 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. Mr Ronen's evidence 1. Portions of Mr Ronen's written and oral evidence are relevant in my consideration of whether or not the Company might be entitled to compensation for stamp duty to be incurred on the purchase of new land replace the acquired land. 2. To start, it is appropriate to reproduce, from Mr Ronen's affidavit, that portion engaged by this issue (omitting the table of companies and the information concerning them which appeared immediately after (7) of his affidavit). For the purposes of this discussion, in my view, there are only two matters from this table which required noting. 3. The first is that it sets out the details of the holding entity for each of the other properties comprising Mr Ronen's individual businesses said to be held in a fashion consistent with the nature of the landholdings held by Mr Royal, described in the extract from SNS earlier set out. 4. The second, because it is referred to in Mr Ronen's oral evidence, is the fact that Mr Ronen holds land at 87-103 Epsom Road, Roseberry through an entity known as The Warehouse Pty Ltd, an entity which presently conducts a mixed use business of small-scale warehousing combined with self-storage units at this site in Epsom Road. As will be seen from the below reproduced extract from Mr Ronen's oral evidence, Mr Ronen had purchased the parent parcel, using the Company as an acquisition vehicle, for the purposes of development of the parent parcel as a replacement for the business conducted at Epsom Road, a business which Mr Ronen had intended would be relocated to the parent parcel. The relevant portions of Mr Ronen's affidavit, comprising (8) to (15) are in the following terms: Development of the Parent Parcel 8 Canal Aviv was incorporated on 28 August 2015 for the purpose of purchasing and developing the Parent Parcel. 9 I am very experienced in operating 'warehouse storage' and 'self storage' facilities. Typically 'warehouse storage' facilities comprise separate undercover storage areas of 70-500 square metres used by small to large businesses for storage/warehousing purposes. Typically, 'self storage' facilities comprise separate undercover storage areas of 10-15 square metres and are used by individuals and small businesses for storage purposes. 10 The following Land Development Properties currently contain or formerly contained a warehouse storage and/or a self storage facility: • 5 Link Road Rosebery; • 87-103 Epsom Road Rosebery (the Epsom Storage Facility); and • 167-169 Cremorne Street Richmond. 11 The Epsom Storage Facility comprises both warehouse storage and self storage facilities. 12 It was my intention, upon acquiring the Parent Parcel, to demolish the existing warehouses and re-develop the land with new warehouse storage and self storage facilities. I intended that these facilities would provide a location to which I could transfer my existing customers at the Epsom Storage Facility, as I intended that that site would be redeveloped into a residential and commercial building. 13 Following receipt of notice that the Acquired Land was to be acquired, I decided that a warehouse storage and self storage development was unlikely to viable on the Residue Land, due to the Residue Land being too small to accommodate both kinds of facility. 14 Accordingly, I decided to only re-develop the Residue Land with self storage facilities. I considered that some or all of my self storage customers at the Epsom Storage Facility would provide a good customer base for the future self storage facility. 15 A development application was submitted in November 2017 for a self storage facility on the Residue Land. 1. Mr Ronen's intentions for the parent parcel were the subject of elements of his oral evidence. First, he said (Transcript, 1 March 2018, page 150, line 27 to page 151, line 6): TOMASETTI Q. Mr Ronen, it's correct, is that, that Canal Aviv has never done a development of its own? A. No. Q. It was incorporated shortly before the Company executed a put and call option with respect to the property at Ricketty Street? A. Correct. Q. And it was incorporated for the purposes of ultimately owning the property if the put and call option was exercised. A. Correct. Q. It has no other real estate? A. No. Q. And your intention at the time of purchasing 1 3 Ricketty Street was that a Company would be incorporated as a special purpose vehicle to own that property and that property alone. A. Correct. When you say, "That property alone," can you - can you explain exactly what you mean? Q. When the Company was incorporated-- A. Yes. Q. --it was incorporated for the purposes of owning the property at 1-3 Ricketty Street? A. Correct. Q. Which was by the canal? A. Correct. 1. He also said (Transcript, 1 March 2018, page 151, lines 24 to 27): Q. It was then your intention to purchase the property at 1-3 Ricketty Street in the name of the Company and for the Company to hold that property for redevelopment. A. Correct. 1. Mr Ronen gave evidence concerning two aspects of the proposed future use of the residue land. He explained why he did not consider that the residue land could be developed in the fashion which he had originally intended, and that he now regarded the site as solely suitable for a self‑storage development. He said (Transcript, 1 March 2018, page 161, line 45 to page 163, line 1): TOMASETTI Q: …You say, and just looking at paragraph 12 of your affidavit if you would, "It was my intention upon acquiring the parent parcel to demolish the existing warehouses and redevelop the land with new warehouse storage and self storage facilities." A. That's right. Q. Now, when you say "upon acquiring the parent parcel", when exactly are you referring to, because when I read this affidavit thought you meant after you completed the sale. A. Well, I had intentions to develop it as a self storage facility before I bought the parcel. Q. To develop it as a self storage facility? A. Correct. Q. You've put in a development application, you've told us in your affidavit-- A. Correct. Q. --to the council for a self storage facility. A. Correct. Q. Is that the kind of self storage facility that you intended to develop the land with when you entered into the put in call option? A. No. Q. How was it different? A. In the type of product that the facility would provide. Let me explain on that. The various products that we provide storage, some of them are warehouse storage and some of them are self storage. Some are boxes storage. Various, you know, various products. Having bought the land at Ricketty Street enabled me to do warehousing storage as I currently have and self storage. Q. I just want to understand with precision what you're saying there. If you look at paragraph 12 you say, "It was my intention upon acquiring the parent parcel". You've told us that you entered into a put in call option on 1 September 2015. You settled the sale, I think, sometime after November 2015. When are you referring to as the point in time, sorry. At what point in time are you referring to in paragraph 12 by the phrase "acquiring the parent parcel"? A. Well before I put the call option on, so my intention Q. Before you acquired it? A. Before I acquired my intention was to develop the site for self storage including warehouse storaging and self storage facility. Q. You've told us that a couple of days after signing the put in call option you became aware that it was the Government's intention to acquire lot 1. A. Yeah, that's right. Q. When was it, then, in relation to that moment that you first decided not to develop the land with a warehouse? A. I was in a break overseas. When I came back I think I was about three weeks away. I came back. We had a look at the residue land and quickly realised we had the time and architect working on trying to squeeze in warehousing together with self storage. It just didn't make financial sense and we had to drop warehousing. 1. Mr Ronen also gave evidence concerning what he anticipated were the relevant business development time horizons for the establishment of solely a self-storage business on the residue land. His evidence in this regard was in the following terms (Transcript, 1 March 2018, page 166, lines 12 to 34): TOMASETTI Q. …On the assumption that it's approved, let's make a hypothetical that it's approved tomorrow, when do you intend to start work on the development? A. Very shortly after that. Q. So that would involve you, I take it, in preparing construction plans for a construction certificate. A. Yeah. Once it's approved, yes. Q. And you've done that kind of - that is you personally or companies with which you've been involved have done developments in the past. A. Many. Q. And you would anticipate to prepare a construction certificate or construction documents to accompany a construction certificate application and to obtain the construction certificate would take some time no doubt. A. Yes. Q. Six to nine months. A. Less. Q. Less. How long do you think? A. Three at best, six at most. 1. In November 2017, a development application was lodged with Bayside Council (the Council) seeking development consent to the establishment of a self-storage facility on the residue land. The Statement of Environmental Effects (SEE) accompanying the development application lodged with the Council discloses that it was prepared for the purposes of the lodgement of a development application by Storage Plus. This SEE became Exhibit 3. 2. It is to be observed that the development application plans are annotated as having been prepared by MCHP Architects, with Storage Plus as the client. Consideration of this claim Introduction 1. There are two potentially necessary steps to my consideration of whether the stamp duty claim should succeed. The first involves an assessment against what should be regarded as the relevant approach to be derived from Fitzpatrick. If, after such an assessment, the Company is entitled to stamp duty compensation, that is the end of the matter. However, if the Company has no such entitlement on this basis, it will then be necessary to consider whether or not, in SNS, Pain J has determined some further basis upon which an individual director/sole shareholder who undertakes development using disparate corporate entities should be regarded in an agglomerated fashion for the purposes of such an entitlement and, if so, how that might require to be applied in the present circumstances. The Fitzpatrick principles 1. As I earlier indicated, Fitzpatrick has been applied to exclude stamp duty claims in circumstances where the compulsorily acquired investment property had been held as a passive investment (for example, as in Speter and Konduru). 2. The critical elements underpinning the decision in Fitzpatrick that compensation for stamp duty for the acquisition of land to replace acquired land can be seen in the following extract from that decision: 26 The respondent submitted that the word "actual" had been inserted to emphasise to the reader that the use had to exist in fact, and to distinguish such a use from a future use, or a potential use, and pointed out that if the question had to be decided independently of the Just Terms Act, a future use or potential use might have been the subject of compensation for disturbance: Brewarrana Pty Limited v Commissioner of Highways [No. 2] (1973) 32 LGRA 240 at 247. 27 Although at first blush this gives the word "actual" little apparent work to do, I think it is correct. The reasoning in Royal Newcastle Hospital and in Brickworks was recognised by the Parliament: the 1985 amendment to the Environmental Planning and Assessment Act recognised the reasoning and legislated to narrow the benefits conferred by the reasoning; and the Just Terms Act also recognises the reasoning, and operates to narrow the benefits otherwise conferred in the granting of compensation for loss attributable to disturbance. However, in the circumstances of this case, the financial costs in question were associated with the actual use by the respondent of the acquired land. 28 "Relating to actual use" The appellant contended that the costs incurred in buying the replacement land did not relate to the actual use of the acquired land. However the expression "relating to" is of wide import, and the findings of fact of Lloyd J, set out above, lead to the conclusion that the respondent purchased the replacement land, in order to replace one parcel of developable land with another for the purposes of its business. This seems to me to be correct. In the circumstances of this case, both the need and the occasion for the purchase of the replacement land related to the actual use of the acquired land, that is, to conduct its business the respondent needed to acquire and then hold the replacement land for later subdivision and resale. … 34 The respondent replied, saying that its business was that of developing land for profit, and that it was not a passive investor. If it wanted to continue in this business, it had to do what it in fact did, namely buy other land. I consider that this is correct, and note that Wilcox J was of the same view (obiter): Banno v Commonwealth of Australia (1993) 34 FCR 32 at 40. 1. Although, in Fitzpatrick, the acquired lands were held as a "greenfields" development site and the land in the parent parcel was acquired by the Company as a "brownfields" development site, I do not consider that that plays any part, in my assessment, concerning the compulsory acquisition of the Venice Street portion of the parent parcel. 2. There is, however, a critical difference between the Fitzpatrick circumstances and the circumstances which are here applicable. In Fitzpatrick, the acquired land was held for the purposes of development and on-sale and was not proposed to be used by the Fitzpatrick interests for any long-term business purpose - that is, the land in Fitzpatrick could be regarded as development land held purely for transactional purposes. 3. On Mr Ronen's evidence, the position with respect to the acquisition by the Company of the parent parcel is distinctly different. It can be seen from the elements of his evidence, written and oral, earlier set out that the purpose for which the Company had acquired the parent parcel was to develop it and then proceeding to operate the development site as part of the ongoing business interests of Mr Ronen. 4. Although it might be reasonable to assume (which I do for the purposes of this analysis) that the Company might not remain the owner of the development on the parent parcel after it had gone ahead but that that ownership might have been transferred to Storage Plus upon the transfer of the Epsom Road business, such a transaction would be entirely intra-interests for Mr Ronen rather than evidencing a development intention of a transactional nature. 5. The development activity proposed (in whatever fashion within Mr Ronen's interests) was an operational one rather than a transactional one, and therefore had no relevant similarity with the circumstances arising in Fitzpatrick so as to cause any stamp duty entitlement to arise for the Company on a Fitzpatrick basis. The decision in SNS 1. I have earlier set out the relevant paragraphs from her Honour's decision in which she explained, briefly, why she had concluded that the stamp duty claim in those proceedings should be granted. It is not necessary to repeat them. 2. There are two observations to be made concerning this aspect of her Honour's decision in a case which covered a wide range of matters in contest between the parties necessitating her Honour's consideration. 3. First, Mr Royal's business interests, which were mentioned in the above extract at [212], were also dealt with by her Honour earlier in her decision where she said (at [329] to [330]): Stamp duty on replacement land 329. 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. 330. 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. These comments, to the extent that they provide any assistance in understanding the nature of Mr Royal's development activities, make it more likely than not, that his development activities were of a transactional nature and thus fit in the development activities attracting a stamp duty compensation entitlement as in Fitzpatrick. 1. In these proceedings, there is no suggestion that any entity within Mr Ronen's business interests holds any interest in the parent parcel of the type necessary to give rise to a claim on behalf of that entity and that no such claim has been made). The transcript records the following (Transcript, 5 March 2018, page 296, line 42 to page 297, line 9): HIS HONOUR: I have two questions for you, Mr Lazarus. The first: is it correct that no entity of Mr Ronen's— LAZARUS: Sorry, no? HIS HONOUR: Mr Ronen. LAZARUS: Yes. HIS HONOUR: No entity. LAZARUS: Entity? HIS HONOUR: Other than Canal Aviv had any legal interest in the parent parcel in any fashion which would have permitted that entity to make a separate compensation claim? LAZARUS: So far as I'm aware, that's correct. 1. As her Honour indicated in SNS, at [329] as set out above, SNS operated a development business and the acquired land was part of the land bank and stock-in-trade of that enterprise. 2. That is clearly not the position in these proceedings. The Company is a single-purpose vehicle which acquired the parent parcel for the purposes of its redevelopment for an ongoing enterprise to be conducted by the Company (the fact that that enterprise might have been transferred to another company within Mr Ronen's holding structure being immaterial, in my view). The Company is not a developer in the transactional sense that appears to have been the position in SNS (even assuming some form of corporate aggregation might be permissible). 3. When this is combined with the absence of any entity within Mr Ronen's corporate business structure having any legal interest in the parent parcel, any reliance on SNS as providing a basis for a successful claim for stamp duty compensation on behalf of the Company is misplaced. Conclusion on the stamp duty compensation claim 1. As I have found that there is no available foundation to permit the success of this stamp duty compensation claim, it must be rejected. The land tax claim Introduction 1. The Company's liability to pay land tax during 2017 arose by virtue of the operation of s 3AL of the Land Tax Act 1956 (the Land Tax Act). This provision imposes a taxation liability on the owner of land to which the tax applies, with that liability arising as a consequence of ownership of the land on 31 December 2016. The Land Tax Act, having created the liability as at that date, then makes provision for payment of the calculated taxation amount in a series of instalments during the following calendar year (relevantly, 2017 in this instance). 2. As the resumption of the acquired land took place in February 2017, that acquisition did not trigger any ameliorative statutory provision in the Land Tax Act as no such provision exists. The taxation liability, based on the value of the whole of the parent parcel, remained falling on the Company to meet the instalments calculated on the 31 December 2016 statutory land value. 3. The Company claims that it is entitled to compensation for its land tax liability that remained falling on it for the proportion of the parent parcel represented by the acquired land and calculated based on the proportion of the 2017 calendar year after the date of acquisition when the Company no longer had the benefit of ownership of the acquired land. 4. This element of the Company's compensation claim is framed as being based on s 59(1)(f) of the Land Acquisition Act or, in the alternative, the claim is made as a component of the market value of the acquired land under s 55(a) of the Act. Quantum of the land tax claim 1. Although, at the commencement of the hearing, there was disagreement as to what would be the compensable amount arising to be paid by the RMS under this head of claim if it was successful, Mr Lunney and Mr Davis discussed this matter further. As a result of those further discussions, agreement was reached that, if the Company had a claim on this basis, the amount of compensation appropriate to be awarded was $35,871.54 (Exhibit B, folio 1163). 2. The claim for reimbursement of portion of the land tax liability which arose for the Company attributable to the acquired land for the period of time between the date of acquisition and the end of 2015 is an entitlement said to arise either as an element of the market value of the acquired land or, in the alternative, as a disturbance loss pursuant to s 59(1)(f) of the Land Acquisition Act ("losses" as satisfying relevant tests falling within the scope of this section - George D Angus Pty Limited v Health Administration Corporation (2013) 205 LGERA 357; [2013] NSWLEC 212). The valuers' land tax evidence 1. Mr Lunney and Mr Davis both addressed the question of land tax. The matter was dealt with, initially, by a separate report prepared by Mr Davis, with Mr Lunney preparing a specific report in response to Mr Davis' document. 2. The relevant extract from Mr Davis' land tax report (Exhibit B, Tab 18) was set out at folios 1158 to 1159 in the following terms: 7. In my experience, upon settlement of a real property conveyance, an apportionment of statutory liabilities occurs, consistent with the time apportionment of such liabilities at the date of settlement. In the case of Land Tax, it is assessed annually on a calendar year (1st January to 31st December), and if the settlement were to occur on 30th June, the vendor of the land would be responsible for Land Tax for 6 months. An adjustment to final settlement consideration would reflect any payment, for the ensuing 6 months of the Land Tax year, which had been paid by the vendor prior to the settlement date. 8. In the case of the Property acquisition, the dispossessed owner/vendor, in accordance with the assessment notice addressed to it, paid the full amount of Land Tax at each instalment date, all of which post dated the date of acquisition. 9. As such, it is my opinion that any Land Tax paid by the dispossessed owner, in respect of the 2017 Land Tax year, for the period post dating the date of acquisition, should be paid as part of the acquisition settlement in this instance. … 13. In my opinion, settlement of compensation to the dispossessed owner of Lot 1 in DP551509 should include an amount in respect of excess Land Tax paid by the dispossessed owner for the 2017 Land Tax year. This amount is $94,859.99 (Ninety Four Thousand Eight Hundred and Fifty Nine Dollars and Ninety Nine Cents). 1. In response, Mr Lunney's report on this issue was at Exhibit B, Tab 19, where he wrote, at folios 1161 to 1164, the following: 6. Paragraphs 7-9. Whilst I agree that it is common for land tax to be adjusted upon settlement, the statement made by Mr Davis infers that this happens without exception. I do not agree that land tax adjustments occur without exception. Land tax adjustment is optional. I note that the standard Real Institute of NSW (RINSW) sale contract which is used in NSW includes a number of choices the parties can elect to make, one of which is whether or not a land tax adjustment is required (a yes/no box is provided for the parties to select)… 7. … I agree that it is common for the parties to agree that a land tax adjustment is required however in my experience land tax is not adjustable in every sale… 8. I note that, for the purpose of calculating the land tax which was paid in respect of the Acquired Land, Mr Davis appears to have made the (incorrect) assumption that the actual Statutory Land Value (SLV) of the Acquired Land was $5,950,000 (Supplementary Davis Report, paragraph 11)… 13. … On this basis, I have estimated the "notional" SLV of the Acquired Land as follows: 2,259 square metres x $940/ square metres = $2,377,260. This is 21.43% of the total SLV of the Parent Parcel. By substituting my estimated (or notional) SLV for the Acquired Land for the SLV of $5,950,000, which was included in Mr Davis' calculations, I have calculated non-refundable or non-adjustable land tax which was paid in respect of the Acquired Land as follows: $42,122.52 x 85.16% = $35,871.54. The actual acquisition of the Acquired Land (by Government Gazette) was not on terms which imposed a liability on RMS requiring it to adjust for land tax paid. Accordingly, it would appear to me that no contractual claim may be made against RMS for a land tax rebate or adjustment. If there was to be any claim for land tax adjustment it would seem to me that it could only made under either: • Market Value - Section 55(a) or • Disturbance (presumably Section 59(1)(f))… It is my understanding that the nature of the sale (compulsory acquisition) of the Acquired Land was such that an adjustment or partial refund of land tax which had been paid was not required. 1. It is clear that there is agreement between Mr Lunney and Mr Davis that there is provision in the standard contract for the sale of land to permit an agreement between the parties to a transaction that there should be an adjustment in the determination of the final settlement sum to reflect land tax liabilities; and 2. There was significant disagreement between Mr Davis and Mr Lunney as to the frequency of this occurring. Mr Davis advanced the proposition, as can be seen from the above extract, that such an adjustment was virtually universal in transactions of the nature which would, hypothetically, be undertaken with respect to the acquired land. Mr Lunney, on the other hand, although conceding that such adjustments did occur, was not prepared to agree that this was a universal, or near universal, practice in such transactions. I note, in this regard, that the footnote in Mr Lunney's land tax report relevant to this comment acknowledges that this opinion is formed by him as a result of his examination of sales contracts in such transactions rather than out of his valuation practice experience. The Carlewie decision. 1. In Sheahan J's decision in Carlewie Pty Ltd v Roads and Maritime Services [2017] NSWLEC 78 (Carlewie), his Honour rejected a claim for land tax reimbursement compensation. His Honour wrote, at [169] to [178]: 169 Despite intransigent opposition by RMS to the Applicant's claim for land tax, the Applicant's final reply submissions filed 21 April 2017 persisted (pars 40ff) with the claim, to be met by continued strenuous opposition form RMS (supplementary written submission filed 4 May 2017. 170 There is no dispute about the underlying facts. The Applicant paid land tax on the subject land, referable to the liability which arose as at the effective date for the striking of the tax at midnight on the 31 December 2014, that is to say, prior to the date of compulsory acquisition of the land on the 6 July 2015. The tax was apparently paid by instalments, and the amounts actually paid in February and April 2015 totalled $73,735.00. 171 Reliance is placed by the Applicant on the terms of the standard contract for sale, which was employed in several of the sales of allegedly comparable lands in this case. Clause 16.6 of the standard contract (Exhibit A9) is specifically identified: 16.6 If the purchaser serves a land tax certificate showing a charge on any of the land, on completion the vendor must give the purchaser a land tax certificate showing the charge is no longer effective against the land. 172 The Applicant argues (Applicant's Reply subs, pars 42 to 44): 42. There are multiple examples of the Standard Contract for the Sale of Land before the Court. Exhibit A9, to take an example, shows Land Tax being something capable of "adjustment" between the parties. However, clause 16.6 of the Standard Contract ensures that property is generally transferred free of any charge effective against the land arising from land tax. Accordingly, the Court can accept it as general practice that land tax will have been paid in advance by a vendor and recovered by way of an adjustment carried out at settlement and therefore either an express or implied component of the "amount that would have been paid for the land if it had been sold". 43. Accordingly, it is giving effect to the statutory direction in s 56(1) of the Just Terms Act to have the bargain encompass ordinary transactional processes such as an adjustment for land tax consistent with the standard contract. 44. If the Court were not to make that adjustment, this would result in a windfall gain to the State (or unjust enrichment at the expense of the taxpayer) and result in an "amount" that is not consistent with s 56(1) because it is not consistent with market practice. In addition, it would mean that the Applicant has not obtained market value for its land which would be contrary to the objects, particularly s 3(1)(a), of the Just Terms Act. 173 The Respondent contends that the Applicant is not entitled to compensation for the amount of land tax paid ($73,735.00), and its reasons are set out in the Respondent's final supplementary submission. Two main reasons are advanced for rejection of the claim (par 2): (a) As a matter of principle, compensation for the market value of the land is to be determined by reference to the purchase price of a notional sale of the land, not the purchase prices as subsequently adjusted by the parties to reflect whatever agreement they might come to about liability for land tax, council rates, utility charges and other comparable "adjustments"; (b) In any event it is not open on the evidence in this case to find that the prospective purchaser would have been willing to pay to the vendor as part of the market value of the land an "adjustment" amount of $73,735 as a notional repayment to the vendor of its previous payments of land tax. The Respondent goes on to say (pars 3 to 7): 3. The market value of land under s 56 of the Just Terms Act is the purchase price that would be agreed between willing but not anxious hypothetical parties to a sale transaction on the date of acquisition. Market value does not turn on the particular position of the actual owner of the land, in that it does not turn on decisions made by the actual owner about payment of rates, taxes, utilities and other services in respect of the land. Whether or not the parties to a contract for the sale of land decide that the amount agreed between them (as the purchase price) should be adjusted for matters of that sort is a question for each individual transaction - what is clear, however, is that any such adjustment is to an adjustment to the purchase price for the land and it is the purchase price that shows the market value of the land. 4. The applicant has not referred to any decided case in which compensation for market value has been held to include as a component an amount that reflects repayment to the applicant of an amount of land tax previously paid by the applicant in respect of the land. The absence of such authority supports the contention made above that as a matter of principle the amount claimed is not encompassed within the market value of the land. 5. The respondent acknowledges that a vendor's previous payments of amounts as land tax may be one of many possible "settlement adjustments" that might be made upon completion under a contract for the sale of land. As the applicant says at ARS [42], Ex A9 is an "example" that "shows Land Tax being something capable of "adjustment" between the parties" (emphasis added). As clause 14.1 in Ex A9 notes, adjustments may be made for "rates, water, sewerage and drainage service and usage charges, land tax and all other periodic outgoings". So far as land tax is concerned, the effect of clause 14.4.1 of the standard contract is that the parties must adjust for land tax "only if land tax has been paid ... and this contract says that land tax is adjustable". It is also necessary to note that the provisions of the standard contract may be deleted or modified by special conditions and Ex A9 provides an example by its deletion in special condition 32(n) of standard clause 14.4.2. 6. Further to clause 14.4.1, there is on the first page of the standard contract for sale of land (and Ex A9 and Ex A8 are examples) a provision for the parties to indicate "yes" or "no" to the proposition "Land tax is adjustable". Accordingly, there is no default position under the standard contract for sale - in each case it is a matter for the parties to the transaction to nominate whether or not land tax will be an adjustment to the purchase price. 7. In this case, neither the evidence, nor the way the case was run, permit the conclusion that the market value of the land would have included an additional amount of $73,735 (or any other additional amount) on account of repayment of land tax payments previously made by the applicant, since: (a) There is no expert valuation evidence to that effect from either valuer; (b) The proposition was not put to either valuer; (c) There is no evidence that the price achieved for the comparable sales was influenced at all by the consideration of payment of land tax and/or the time of the tax year at which the transactions occurred; (d) There is no default position under the standard contract for sale of land, since in each case the parties must agree "yes" or "no" to the proposition that land tax is adjustable under the contract; (e) There is no evidence supporting the proposition that the parties to the hypothetical transaction would have agreed that the purchaser would be liable to pay an additional adjusted amount in respect of land tax; and (f) In particular, there is no evidence as to the general practice (if there is one) in sales of substantial industrial land, so far as payment of land tax is concerned. There is no evidence supporting the applicant's submission that "the players in the market place are just [sic adjust] the land tax" (T506.35). 175 The Applicant eschewed any reliance on any specific head of compensation, including s 59(1)(f) of the JTC Act. The definition of "market value" in s 56(1) provides that "market value" of any 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. 176 We agree with the Respondent that the adjustment of the purchase price for land tax is something negotiated between an actual vendor and the actual purchaser of a property, and that the purchase price indicates the market value of the land, upon which the tax would be levied. 177 Had there been any evidence that it is a consistent practice in the market, with respect to the sale of industrial property, that land tax is adjusted in a particular way, there might have been some basis for the Applicant's claim. 178 However, as the evidence stands, the Court must conclude that the Applicant has not made out a case for the inclusion of the amount of $73,735.00 in its claim for market value under s 55(a) of the JTC Act. The RMS' submissions 1. In his closing submissions, Mr Tomasetti dealt with the market value basis for this element of the Company's claim by saying (Respondent's written submissions (54) to (57)): 54 … The Respondent says no compensation or Land Tax can be ordered. 55 The Applicant's claim for an adjustment for land tax as part of market value is not supported by any evidence of a consistent approach in the market. 56 The valuation experts agree that, firstly, land tax would not in their opinion form a component of the market value of property. 57 Secondly, they agree that a land tax adjustment is a contractual option and not universal. It is but one of many adjustments that may be made as part of a contract for the sale and purchase of land. The Company's position 1. The submission made by Mr Lazarus on this point was in the following terms (Transcript, 27 February 2018, page 25, lines 31 to 49): …In relation to land tax, the facts very simply are these: my client has paid land tax for the calendar year 2017; no refund is possible from the OSR, so we've in effect paid for ten months' land tax in respect of the acquired land which they did not own at the relevant time. As your Honour would no doubt be aware from your Honour's own experience but there is, in any event, evidence from Mr Davis to this effect, there is a common practice in the sale of industrial properties and, dare I say, most properties for land tax to be adjusted upon the sale so as to avoid the sort of detriment that we are talking in this case which is a windfall gain to the State government. So we put that proposition either as part of the assessment of market valued under 55(a) or, in the alternative, we say it's wasted expenditure and, therefore, recoverable as disturbance under 59(1)(f) but viewed from the lens of just terms, your Honour, it can't possibly be just that we've paid land tax in respect of land that we didn't own to the State government but can't recover it back from the State government or indeed anyone else. 1. Mr Lazarus goes on to say, in his closing submissions (Applicant's written submissions at (151) to (159)): 151. Section 56(1) of the Act defines market value as follows (emphasis added): 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… 152. The words used in s 56(1) are "the amount that would have been paid for the land." This directs attention to the quantum of money paid by the willing but not anxious hypothetical purchaser in consideration for the obtaining of the relevant interest in land from the hypothetical seller. It is not necessarily the "purchase price" agreed between the hypothetical parties, but rather can also take into account the sort of adjustments (such as land tax) that are customarily made as between parties to a sale contract to bring to account amounts paid or liabilities incurred relating to the subject land in respect of a period of time after the change of ownership. Were it otherwise, the statutory "guarantee" of just compensation mandated by the Act would not be fulfilled. Consistent practice 1. In Carlewie, his Honour said (as earlier reproduced): 177 Had there been any evidence that it is a consistent practice in the market, with respect to the sale of industrial property, that land tax is adjusted in a particular way, there might have been some basis for the Applicant's claim. 1. I questioned Mr Tomasetti during the course of his opening submissions as to whether there was a practice on the part of the RMS to make an adjustment for land tax. His response was that there was not (Transcript, 28 February 2018, page 35, line 32). 2. Mr Lazarus, in his closing submissions, put forward the argument that: 153. A relevantly identical claim was recently considered in Carlewie v Roads and Maritime Services [2017] NSWLEC 78 (see [169]-[178]). 154. The Court in that case concluded that the applicant had not made out its claim but observed that there may have been a basis for the claim had there been evidence of a consistent practice in the market for an adjustment of land tax consistent with the amount claimed (see [177]-[178]). 155. The applicant in these proceedings has adduced evidence of such a practice in two ways. 156. First, Mr Davis, based on his experience, attests that such an adjustment would usually be made. Mr Lunney agrees that this is a common practice with sales of commercial and industrial land. 157. Secondly, the contract for sale and purchase of the parent parcel itself, executed in November 2015 (relatively shortly before the acquisition date), included such an adjustment. 158. This provides cogent evidence of a market practice for an adjustment reflecting the applicant's claim - evidence that was absent in Carlewie. Conclusion on the market value land tax claim 1. It seems to me, in the final analysis, that a market value-based claim pursuant to ss 55(a) and 56(1) of the Land Acquisition Act for reimbursement of land tax must inevitably fail on a first principles' basis. 2. In this regard, the valuers have missed the fundamental point in their discussion of adjustments for incorporation in the settlement sum arising out of transactions for such properties. They have failed to note that such adjustments, if agreed to, occur in the calculation of the settlement sum, not in the negotiation of the market value recorded on the contract for sale. The market value, arising out of the hypothetical transaction mandated by the statutory provisions, has one determine what is the price for the land that would be agreed to between the hypothetical "willing but not anxious" vendor and a hypothetical "willing but not anxious" purchaser. Such a process envisages a meeting of minds to determine what would be that market value. The amount thus agreed would be "the amount that would have been paid for the land" for the purposes of s 56(1) of the Land Acquisition Act. 3. Having determined that amount, the parties may, depending on the basis of their agreement, make adjustments to that amount to derive the appropriate settlement sum to be paid by the purchaser to the vendor. What adjustment factors may have been agreed (whether land tax; non-fixture inclusions; council rates or other outgoings - whether statutory or not) is a matter that forms part of the negotiation but does not form part of the identified amount that would have been paid for the land. They are factors which are, if agreed to, ones that lead to the calculation of a final transaction price, a final transaction price likely to vary to some degree dependent on the settlement date when the outcome of the transaction is crystallised and ownership of the property passes from the vendor to the purchaser. 4. Properly understood, even if a land tax adjustment took place in the near universal circumstances envisaged by Mr Davis, the adjustment sum would not form part of the market value encompassed within ss 55(a) and 56(1) of the Land Acquisition Act. 5. This entirely conventional analysis of the statutory provision makes it obvious that the Company's claim for a compensation element for land tax based on ss 55(a) and 56(1) of the Land Acquisition Act must fail. Land tax and s 59(1)(f) of the Land Acquisition Act 1. As I have earlier noted, Mr Lazarus submitted that the Company's land tax compensation claim was maintainable under s 59(1)(f) of the Land Acquisition Act, if it was not maintainable under s 56(1) of that Act. As I have explained why a claim is not maintainable pursuant to that provision, it is now necessary to turn to consider whether it is maintainable under the former one. 2. It is appropriate to start by setting out the terms of s 59(1)(f). It reads: 59 Loss attributable to disturbance (1) In this Act: loss attributable to disturbance of land means any of the following: … (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 [emphasis added]. 1. I now turn to consider the relevant statutory provisions concerning liability for, or exemptions from, land tax as they provide the framework for the Company's liability and the question of whether the Company's obligation to pay the tax can be said to fit within the scope of this "disturbance" provision of the Land Acquisition Act so as to give rise to a valid compensation claim under that provision. 2. As I have earlier noted, the Company's liability to pay land tax arises pursuant to the provisions of s 3AL of the Land Tax Act. This provision is in the following terms: 3AL Levy of land tax after 31 December 2008 (1) In respect of the taxable value of all the land owned by any person at midnight on 31 December in any year (commencing with 2008) there is to be charged, levied, collected and paid under the provisions of the Principal Act and in the manner prescribed under that Act, land tax for the period of 12 months commencing on 1 January in the next succeeding year and at the applicable rate. (2) For the purposes of this section, the applicable rate is: (a) the rate of land tax payable as specified in Part 1 of Schedule 13, except as provided for by paragraphs (b), (c) and (d), or (b) if the land is subject to a special trust—the rate of land tax payable as specified in Part 2 of Schedule 13, or (c) if the owner of the land is a non-concessional company and the taxable value of group land holdings of the non-concessional company does not exceed the premium rate threshold—the rate of land tax payable as specified in Part 3 of Schedule 13, or (d) if the owner of the land is a non-concessional company and the taxable value of group land holdings of the non-concessional company exceeds the premium rate threshold—the rate of land tax payable as specified in Part 4 of Schedule 13. (3) For the purposes of this section: (a) a reference to group land holdings of a non-concessional company is a reference to all land owned (whether jointly or severally) by members of the group of which the non-concessional company is a member on which land tax is payable, and (b) a reference to a group is a reference to a group within the meaning of section 29 (7) of the Principal Act. (4) This section is subject to section 27 (2A) of the Principal Act (which relates to the assessment of land that is the subject of a special trust or that is jointly owned by a non-concessional company). (5) If the total amount of land tax payable pursuant to this section by any person in any year would, but for this subsection, be less than $100, no land tax is payable. (emphasis added) 1. There are a number of statutory exemptions to the liability that would otherwise arise pursuant to this provision. Some, such as the concessional financial threshold below which land tax on landholdings does not arise, are entirely unrelated to the use of the land. Other exemptions arise as a direct consequence of the use to which the land is put by its owning entity. These exemptions include that the land is used by individuals who occupy the land as a principal place of residence (s 5B of the Land Tax Act) or the land is used for defined primary production purposes (s 10AA of the Land Tax Management Act 1956). Exemptions of this latter type clearly arise as a consequence of the nature of the use to which the land is put. 2. However, although some of the exemptions arise as a consequence of the use of the land, it is clear from the terms of the earlier set out provision that the basal liability that applies (unless the landowner is able to take advantage of one of the various nominated exemptions), arises solely from the ownership of the land. The use of the land is irrelevant in the context of the liability-imposing provision. 3. As at the date of acquisition of Lot 1 for the purpose of creating Venice Street, the use of that acquired land was, as earlier described, a combination of the provision of access and of parking spaces. The liability for payment of land tax pursuant to s 3AL of the Land Tax Act did not arise as a "direct and natural consequence" of these uses of the acquired land. 4. The liability arose solely as a consequence of the Company's ownership of the land as at 31 December 2014. The bare fact that the land tax liability arises from this ownership at that date, and that that liability remains on the Company despite the resumption of the acquired land, cannot, on a proper construction of the terms of s 59(1)(f) of the Land Acquisition Act, give rise to any entitlement to compensation in these circumstances pursuant to that provision. Conclusion on the land tax compensation claim 1. As the Company's claim for compensation for land tax liability attaching to the acquired land is unable to be maintained on either of the two bases upon which Mr Lazarus submitted created such a right to compensation, the land tax compensation claim must be rejected. Conclusion Introduction 1. Following the agreement between the valuers on the rate per square metre to be applied to the acquired land and the agreement between the parties on disbursements, there remained three matters for my determination. Those were: 1. What was the extent, if any, of the impact of the acquisition on the value of the residue land; 2. Did the Company have an entitlement to allowance for stamp duty which would be incurred on the purchase of a property to replace the acquired land; and 3. Was the claim for reimbursement of land tax for portion of the land tax year within which the acquisition had taken place a claim able to be validly maintained pursuant to either s 56(1) or s 59(1)(f) of the Land Acquisition Act? Impact on the value of the residue land 1. With respect to the impact on the value of the residue land, I have concluded that the appropriate starting rate per square metre for this consideration should be the rate per square metre agreed to by the valuers for the parent parcel as at the date of acquisition. For the reasons earlier set out, there is no valid basis to make any adjustment to this rate to establish some different, lower starting rate for consideration of impacts on the value of the residue land. As the consequence of this conclusion, the starting value for assessment of the potential impact on the residue land is $1,575 per square metre. 2. I have concluded, however, that there were impacts on the value of the residue land as a consequence of the acquisition of the land for the creation of Venice Street. In that context, I have not accepted the proposition advanced by Mr Lunney, for the RMS, that, on a "swings and roundabouts" basis, the positive and negative impacts cancel each other out. However, I have also concluded that the more global adjustments proposed by Mr Davis, for the Company, lacked proper foundation to support the basis of the quantum to be derived from the matters upon which he expressed an opinion (with the sole exception of the one adjustment - the uplift in value for the reduction in size - upon which Mr Davis and Mr Lunney had agreed). 3. As a consequence, doing as best I can as the judicial valuer, I have considered the various aspects of the traffic and valuation evidence said to have the potential to give rise to the necessity to conclude that there was an impact (whether positive or negative) on the value of the residue land. In summary, I have concluded that there were a number of factors giving rise to such impacts, with some being positive and some negative. 4. With respect to all but one of these impacts, the appropriate approach to be taken is to determine what was the cumulative impact, in a percentage adjustment sense, on the value of the residue land. Doing this has resulted in my conclusion that there was an overall negative impact on the value of the residue land of 4.3%, with this percentage to be applied to adjust, downward, the rate per square metre to the value of the residue land and thus enable the calculation of compensation to the Company for this impact. 5. However, the value to be attributed to one of the impacts on the residue land (arising from the impact on the rental income which would have been available to the owner of the residue land during the notional period between the acquisition date and commencement of a hypothetical redevelopment of the site) is appropriate to be ascertained by reference to the rental which had been obtained from Secure Logistics prior to its quitting the site. The compensation thus arising is able to be quantified, in my view, as a lump sum amount rather than a percentage adjustment to the value of the residue land. 6. As a consequence, in addition to the compensation to the Company arising from the cumulatively derived negative impact of 4.3% on the value of the residue land as noted above, a lump sum (calculated as earlier set out for the reduction in the hypothetical purchase price to compensate for the loss of income earning potential after Secure Logistics' termination pending redevelopment) is to be added to the compensation derived from the downward adjustment of the rate per square metre of the residue land. 7. The parties are to bring in Short Minutes of Order to give effect to my determination as provided for in the directions at the conclusion of this decision. The stamp duty claim 1. I am satisfied that the claim for stamp duty compensation for a future property acquisition to replace the acquired land cannot be supported, based on the principles to be derived from Fitzpatrick. I am not satisfied that the decision of Pain J in SNS provides any proper basis, when considered in light of the facts in this case, to depart from the general proposition that such stamp duty compensation claim is not generally available. 2. As a consequence, the Company fails on this claim and it is, therefore, rejected. The land tax reimbursement claim 1. For the reasons earlier set out, I am satisfied that there is no valid statutory foundation for this claim to be founded on either a market value or a disturbance basis. It is, therefore, rejected. Costs 1. As the Company has succeeded (although not to the extent sought) in its claim for compensation for a reduction in value of the residue land as a consequence of the compulsory acquisition of Lot 1 for the purpose of creating Venice Street, I am of the preliminary view that it is appropriate that the Company have its costs of the proceedings. Subject to that which follows, this should be reflected in the orders to give effect to this decision. 2. If either party proposes to seek some alternative costs order, the appropriate order is that costs are to be reserved and the parties can contact my Associate to advise whether a further hearing on costs is required or whether dealing with it on the basis of a timetable for written submissions (with the party seeking the variation going first) would be appropriate. Directions 1. I therefore give the following directions to permit finalisation of the matter: 1. The parties are directed to provide my Associate, electronically, with Short Minutes of Order to give effect to this decision. These orders are to be provided by the close of business on Wednesday 6 June 2018; 2. The matter is listed for mention before me on Friday 8 June 2018 at 9.00 am; and 3. If Short Minutes of Order are provided in accordance with (1), orders will be made in chambers and the mention in (2) vacated. ********** 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: 24 May 2018