Land and Environment Court New South Wales

• Medium Neutral Citation: Goluzd v Minister Administering the Environmental Planning and Assessment Act 1979 [2012] NSWLEC 25
• Hearing dates: 7-10/2/2012
• Decision date: 24 February 2012
• Jurisdiction: Class 3
• Before: Biscoe J

Decision

Compensation determined in the sum of $572,000.

• Catchwords: COMPULSORY ACQUISITION OF LAND:- of residential oceanfront land for purpose of foreshore reservation area and park - compensation for market value - before and after valuation method applied - whether area by survey rather than area by title should be adopted - whether fluvial boundary noted on title as approximate location of high water mark should be construed as mean high water mark - highest and best use as a large single dwelling home site capable of accommodating a modern residence - whether land had subdivision potential - injurious affection to the residue land in the after valuation scenario - statutory disregard of effect of foreshore building line - where notional foreshore building line should be located - whether rate per square metre approach based on comparable sales is appropriate for a single dwelling allotment.
• Legislation Cited: Environmental Planning and Assessment Act 1979 s 74C; Land Acquisition (Just Terms Compensation) Act 1991 ss 55, 56; Pittwater Local Environmental Plan 1993 cl 11(2); NSW Coastal Policy 1997; Preliminary Advice Pittwater 21 Development Control Plan cll B2.2, C4.7 D1.10; Surveying and Spatial Information Regulation 2006 cll 5, 51; Surveyor General's Directions No. 6: Water as a Boundary: Procedures; Warringah Local Environmental Plan 1985
• Cases Cited: 7-Eleven Stores Pty Ltd v City of Sydney Council [2004] NSWLEC 154, 138 LGERA 125; Castle Constructions Pty Ltd v North Sydney Council [2007] NSWCA 164, 155 LGERA 52; Castle Constructions Pty Ltd v North Sydney Council [2007] NSWLEC 459; Coffs Harbour Environment Centre Inc v Minister for Planning (1994) 84 LGERA 324; Commissioner of Taxation of the Commonwealth of Australia v St Helens Farm (ACT) Pty Ltd (1991) 146 CLR 336; Graham Trilby Pty Ltd v Valuer-General [2008] NSWLEC 217; Head v Pittwater Council [2006] NSWLEC 429; North Sydney Council v Ligon 302 Pty Ltd (No 2) (1996) 93 LGERA 23; Pointe Gourde Quarrying and Transport Co Ltd v Sub-Intendant of Crown Lands (Trinidad) [1947] AC 565; RK Morgan Holdings Pty Ltd v Melbourne and Metropolitan Board of Works (1992) 77 LGRA 102; Roads and Traffic Authority (NSW) v Muir Properties Pty Ltd [2005] NSWCA 460, 143 LGERA 192; Smith v Roads and Traffic Authority of New South Wales [2005] NSWLEC 438; Sunlea Investments Pty Ltd v State of New South Wales (1998) 9 BPR 16,707 (NSWCA); Sydney Harbour Foreshore Authority v Walker Corporation Pty Ltd [No 2] [2006] NSWCA 386, 68 NSWLR 487; Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2009] NSWLEC 219, 173 LGERA 155; Zhang v Canterbury City Council [2001] NSWCA 167, 51 NSWLR 589
• Texts Cited: Australian Property Institute, Valuation Principles and Practice, 2nd ed (2007) Australian Property Institute (Inc)
• Category: Principal judgment
• Parties: John Christopher Goluzd (Applicant); Minister Administering the Environmental Planning and Assessment Act 1979 (Respondent)
• Representation: COUNSEL: Mr T Robertson SC (Applicant); Mr I Hemmings (Respondent); SOLICITORS: Woolf Associates (Applicant); Hunt & Hunt (Respondent)
• File Number(s): 30520 of 2011

Judgment

1 On 1 April 2011 the respondent Minister compulsorily acquired the rear half of an oceanfront, residential lot owned by the applicant, Mr John Goluzd, at 33 Marine Parade, Avalon under the Land Acquisition (Just Terms Compensation) Act 1991 (Just Terms Act). As gazetted, the land was acquired "for the purposes of the Environmental Planning and Assessment Act 1979" (EPA Act). The purpose may be more particularly described as a foreshore reservation area and park. These proceedings under the Just Terms Act are an objection to the statutory offer of compensation which was in the amount of $416,804.

2 The applicant claims compensation for the market value of the acquired land as at the acquisition date in the sum of $1 million. The respondent contends that the market value was $350,000. These amounts are based on the respective assessments of the parties' valuers who adopted the before and after method of valuation.

3 In my opinion, adopting the same valuation method, the market value was $555,000. The applicant's additional claim for compensation for disturbance loss is agreed in the sum of $16,804. Accordingly, I determine compensation under the Just Terms Act in the total sum of $571,804, say, $572,000.

4 I acknowledge the assistance of Acting Commissioner Cowell.

JUST TERMS ACT

5 The Just Terms Act provides:

55 Relevant matters to be considered in determining amount of compensation

In determining the amount of compensation to which a person is entitled, regard must be had to the following matters only (as assessed in accordance with this Division):

(a) the market value of the land on the date of its acquisition,

...

(d) any loss attributable to disturbance,

...

(f) any increase or decrease in the value of any other land of the person at the date of acquisition which adjoins or is severed from the acquired land by reason of the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired.

 

56 Market value

(1) In this Act:

market value of land at any time means the amount that would have been paid for the land if it had been sold at that time by a willing but not anxious seller to a willing but not anxious buyer, disregarding (for the purpose of determining the amount that would have been paid):

(a) any increase or decrease in the value of the land caused by the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired...

6 The traditional approach to the s 56(1)(a) disregard in the case of zoning involves the following steps:

(a) Identify the zoning of the land at the date of acquisition.

(b) Determine whether the imposition or retention of that zoning was part of the carrying out of the public purpose or part of the proposal to carry out the public purpose for which the land was acquired.

(c) If the answer to question (b) is yes, that zoning is notionally set aside and the potential of the land, and ultimately its market value, is answered by determining how the land would have been zoned, at the date of acquisition, but for the proposal to carry out the public purpose.

See Sydney Harbour Foreshore Authority v Walker Corporation Pty Ltd [No 2] [2006] NSWCA 386, 68 NSWLR 487 at [57] - [61], restating Smith v Roads and Traffic Authority of New South Wales [2005] NSWLEC 438 at [63] per McClellan CJ.

7 In Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2009] NSWLEC 219, 173 LGERA 155 at [180] I commented:

The "traditional" approach owes much to cases decided under different resumption compensation legislation, which were analysed in Smith v Roads and Traffic Authority (NSW) . However, that approach does not employ the language of s 56(1)(a)...It does not refer to a decrease or increase in the value of the land, which is the subject of the s 56(1)(a) disregard. Its shortcuts are the unstated assumptions that the imposition or retention of zoning decreased or increased the value of the Land compared with its value if the Land otherwise would have been zoned differently, and that such a change in value is within the contemplation of s 56(1)(a).

THE LAND

8 33 Marine Parade is prime oceanfront land on the northern headland of Avalon Beach. It enjoys sweeping panoramic views of the Pacific Ocean to its south and Avalon Beach to its west, as well as a largely natural headland to its east.

9 Like all the lots between Avalon Beach and the subject land and the adjacent lot on its other side, the parent land is long and thin and runs in a general southerly direction from Marine Parade to the ocean.

10 The acquired land comprises approximately the rear half of the parent land. It is vacant and unimproved, has ocean frontage and no road access. The acquired land is cut approximately in half by a steep, high and inaccessible cliff with rocks and ocean below. The cliff drops steeply between 16 and 18 metres to the rocky northern end of Avalon Beach. The cliff face and area below cannot be developed.

11 There is an older style one storey beach house covering an area of 125 square metres on the northern half of the retained land close to the road. There is a fall of about 8 metres from the rear of the house to the cliff line.

12 The respondent caused the parent land to be subdivided for the purpose of the subject acquisition. The subdivision was a step in the acquisition process and its effect on value has to be disregarded under s 56(1)(a) of the Just Terms Act.

13 Title details are as follows:

Parent land:	Lot 95 DP 8394
Acquired land:	Lot 1 DP 1160788
Retained land:	Lot 2 DP 1160788

LOCALITY

14 Avalon is a Sydney Northern Beaches suburb situated in the Pittwater local government area and located about 31 kilometres north of the Sydney CBD.

15 Avalon is predominantly a low density residential suburb with some pockets of medium density townhouses, apartments and retirement village developments. The surrounding development on both sides of Marine Parade is predominantly a mix of prestige and older style one and two storey detached dwellings.

16 The southern parts of all the existing residential lots (including the subject land) on the southern side of Marine Parade are zoned 9(b) Reservation - County Open Space or 6(a) Existing Recreation "A" and extend to the ocean.

ZONING

17 Under cl 10 of the County of Cumberland Planning Scheme, which was gazetted in 1951, the acquired land was reserved for "Foreshore reservations and places of natural beauty or advantage". In 1963 it was reserved for "County open space" purposes in the Warringah Planning Scheme. In 1985 it was zoned Reservation - County Open Space 9(b) under the Warringah Local Environmental Plan 1985.

18 At the acquisition date, the residue land was zoned 2(a) Residential "A" and the acquired land was zoned 9(b) Reservation - County Open Space under the Pittwater Local Environmental Plan 1993 (LEP).

19 In the 9(b) Zone the only development permitted without development consent is foreshore reservations and parks; and with development consent: drainage, roads and certain utility installations.

20 Under cl 30 of the LEP, upon the acquisition by the respondent of any 9(a) zoned land, the land is deemed to be included in Zone 6(a) (and not Zone 9(a)). In the 6(a) Zone, development permitted without development consent is any land use set out under the heading "Permissible Uses Exempt" in any relevant plan of management; and development permitted with development consent is any land use set out under the heading "Permissible Uses Requiring Development Consent" in any relevant plan of management. The relevant plan of management is the Bangalley Headland Reserve and North Avalon Headland Plan of Management (Plan of Management). In the Landuse - Planning Table, under the heading "Permissible Uses Exempt", the Plan of Management permits appropriate sustainable low impact recreation activities and facilities (other than buildings) on Zone 6(a) land. Under the heading "Permissible Uses Requiring Development Consent" it includes buildings ancillary or incidental to the reserve and major facilities (not buildings) being viewing platforms, bridges, educational facilities and the like. One of the local objectives listed in cl 2.7 of the Plan of Management is to protect and enhance the natural environment and scenic landscape qualities of the reserve.

COMMON GROUND

21 In relation to the s 56(1)(a) disregard, it is common ground, and I accept, that:

(a) The actual zoning of the acquired land since 1951 and the actual location of the foreshore building line are part of the carrying out of, or the proposal to carry out, the public purpose (of creating a foreshore reservation and park) for which the land was acquired. The acquired land has been reserved for acquisition for that purpose since 1951. The provisions of the instruments since 1951 referred to at [17] above demonstrate that the resuming authority had a plan or proposal, which has been partly implemented, to create a foreshore reservation and park on and surrounding the subject land. That policy continues to be implemented, as is clear from the NSW Government's NSW Coastal Policy 1997.

(b) The actual zoning and the actual foreshore building line affected the value of the land.

(c) Therefore under s 56(1)(a) they should be notionally disregarded.

(d) The alternative or underlying notional zoning of the acquired land should be assumed to be 2(a) Residential "A", so that, at the date of acquisition, the whole of the parent land should be taken as zoned 2(a).

(e) The notional foreshore building line should be located above the cliff line. However, the parties differ substantially as to its precise location.

22 It is also common ground, and I accept, that:

(a) The highest and best use of the parent land at the acquisition date was as the site of a large single dwelling home site, capable of accommodating a modern residence with or without a secondary dwelling. Nevertheless, the applicant presses a claim that something extra must be given for the lost subdivision potential of the parent land.

(b) Market value should be determined on the before and after basis.

ISSUES

23 The two broad issues are:

(a) the development potential of the subject land; and

(b) how comparable sales are to be analysed, adjusted and applied to the subject land.

24 The assessment of development potential is affected significantly by, first, whether the area of the land should be according to survey or title and, secondly, the location of a notional foreshore building line disregarding the existing foreshore building line by reason of s 56(1)(a).

SUBMISSIONS

25 In summary, the applicant submits that:

(a) The survey area of the subject land should be adopted rather than the approximate title area.

(b) The notional foreshore building line should be located 5 metres above the cliff line, as proposed by the applicant's town planner.

(c) The approach to valuation should be comparable sales on a rate per square metre basis, not a per lot basis.

(d) The respondent's approach to valuation ignores most of the injurious affection to the retained land in the after valuation case including:

(i) loss of privacy once the proposed public purpose is more fully implemented, by reason of public access to the acquired land from Avalon Beach and the public path (nominated as 25 Marine Parade) between 23 and 27 Marine Parade;

(ii) the sense of enclosure from the future fencing of the boundary between the residue land and the acquired land;

(iii) reduction in the development potential of the residue land; and

(iv) reduced ability to take advantage of sweeping views from a house built closer to the cliff line, including one built over the acquired land.

(e) Something extra should be allowed for the subdivision potential lost.

(f) The market value of the acquired land should be assessed at $1 million.

26 The respondent's submissions may be summarised as follows:

(a) The title area should be adopted rather than the survey area.

(b) The notional foreshore building line should be located close to the existing foreshore building line, as proposed by the respondent's town planner.

(c) The approach to valuation should be comparable sales on a per lot basis, not a rate per square metre basis.

(d) The possibility of public access to the acquired land at some unknown time in the future cannot support the applicant's reduction in value of the residue land in the after scenario.

(e) The parent land had no subdivision potential because, by reference to its area by title, subdivision was not permissible under the LEP minimum lot area limitation and the more stringent minimum lot area limitations under the Preliminary Advice Pittwater 21 DCP (DCP). The larger area by survey should not be applied and in any case does not satisfy the DCP minimum lot area limitation. Moreover, other DCP and foreshore building line hurdles stood in the way of subdivision.

(f) It is accepted that the building envelope in the after valuation scenario is smaller than the building envelope in the before valuation scenario. This is a necessary consequence of the mathematical equation called up by the DCP: 40 per cent x site area. However, in the after scenario a substantial and prestigious home could still be erected on the retained land sitting behind the respondent's proposed foreshore building line.

(g) The market value of the acquired land should be assessed at $350,000.

SURVEY AREA

27 The area of the parent land and the area of the acquired land are greater by survey than indicated approximately on the title. The area is relevant to the applicant's contentions that: (a) the parent land had subdivision potential, (b) generally, the larger the area the greater the value of the land taken, and (c) the larger the area the greater the development rights. As regards the first contention, having assumed that the whole of the parent land is zoned 2(a), subdivision is not possible unless each allotment created will have an area of not less than 700 square metres: cl 11(2) LEP. This required the parent land to have an area of at least 1,400 square metres. Its area by title is only 1,315.2 square metres. However, its area by survey is 1,474.6 square metres. The survey extends the title length of the eastern boundary by 12.9 metres and the western boundary by 11.6 metres.

28 In my opinion the area according to survey, rather than title, should be adopted for the purposes of this case.

29 The applicant caused the acquired land to be surveyed for the purpose of these proceedings. Dimensions by survey and by title are as follows:

Parent Land:

	Frontage	Depth (m)	Area (m2 )
By survey	12.305	118.28/122.32	1474.6
By title	12.305	106.68/109.42	1315.2

Acquired land:

	Frontage	Depth (m)	Area (m2 )
By survey	12.34	61.78/66.07	787.2
By title	12.34	50.18/53.17	627.8

Retained land:

	Frontage	Depth (m)	Area (m2 )
By survey/title	12.305	56.5/56.25	687.4

30 The certificate of title of the parent land describes it as Lot 95 in Deposited Plan 8394. This DP was prepared in 1916. It shows the fluvial southern boundary of the parent land and the other lots on the northern headland as "Approximate position of high water mark". The word "mean" is struck out before the word "high". The long eastern and western boundaries of each lot are described by measurements followed by "to H.W.M." (that is, "high water mark").

31 A surveyor, Mr Philip Youdale, surveyed the acquired land for the applicant for the purposes of these proceedings and gave evidence. Mr Youdale is an experienced surveyor, there is no contrary expert evidence, and I accept his evidence. He said that the references to "high water mark" and "H.W.M." on the 1916 DP meant "mean high water mark" at the time the DP was made. The "mean high-water mark" is defined in the Surveying and Spatial Information Regulation 2006 cl 5 as "the line of mean high tide between the ordinary high-water spring and ordinary high-water neap tides". Mr Youdale said in his report that the mean high water mark has been defined as the line at RL 0.555 metres, relative to Australian Height Datum. His survey determined precisely the position of the mean high water mark, which was significantly further south than its "approximate" position referred to in the 1916 DP. The area of the land by survey is therefore significantly greater than indicated approximately by reference to the title, as set out at [29] above.

32 Clause 51 of the Surveying and Spatial Information Regulation provides:

51 References to high-water mark and tidal waters in previous survey plans

For the purposes of preparing a survey, in any previous survey plan or other description of land:

(a) a reference to high-water mark is taken to be a reference to mean high-water mark...

...

unless a contrary intention appears.

33 The respondent contends that the strike out of the word "mean" in the 1916 DP indicates a contrary intention.

34 Mr Youdale disagreed with this contention. He indicated that there would be no difference of opinion between surveyors experienced in this type of work as to the consequences of striking through the word "mean" in the 1916 DP. In his view, the fact that the word "mean" was struck out suggested that the original Crown grant used the terminology "high water mark". He considered that the eastern and western boundaries of the parent land shown on the 1916 DP were ambulatory boundaries, dependent on the precise location of the mean high water mark. He explained that in surveying practice in the later part of the nineteenth century and the early part of the of the twentieth century, the terms "mean high water mark" and "high water mark" were interchangeable. In the 1920's or possibly the 1930's, uniformity was introduced by adopting the terminology "mean high water mark".

35 Mr Youdale said that it was the practice of surveyors in the late part of the nineteenth century and the early part of the twentieth century to take account of decisions of the courts concerning the definition and description of boundaries. This is significant because in Sunlea Investments Pty Ltd v State of New South Wales (1998) 9 BPR 16,707 (NSWCA) at 16,709 Beazley JA (Mason P and Sheller JA agreeing) accepted the principle of construction of land grants established in 1854 that:

High water mark means the mean high water mark being the median tide between the springs and the neaps; Attorney General v Chambers (1854) 4 DeG M & G 206; 43 ER 486.

36 This meaning is now entrenched in cl 51 of the Surveying and Spatial Information Regulation and the definition in cl 5: see [31] - [32] above.

37 The modern DP 1160788 was prepared by another surveyor, Mr Malcolm Drummond, for the purposes of the subdivision of the parent land and the acquisition of the acquired land: see [12] above. It described the southern boundary as "H.W.M. by DP 8394 (shown as approx.)". Mr Youdale explained that that was because Mr Drummond did not survey the land and had to refer back to what was on the earlier 1916 DP.

38 In my opinion, having regard to the evidence and legislation referred to above, the southern boundary of the parent land and the acquired land is the mean high water mark, and that is what is meant by the reference to "high water mark" in the 1916 DP.

39 The respondent says that that is not the end of the matter because Mr Youdale said in his report that confirmation of the actual dimensions can only be obtained in an application to the Land Titles Office for amendment of Title. The respondent seizes upon this to submit that: (a) even if the area is to be surveyed to the mean high water mark (as I accept), that will extend the length of the eastern boundary 12.9 metres and the western boundary by 11.6 metres compared with the title dimensions; (b) this is a "substantial variation" in the position of the mean high water mark and therefore requires the approval of the Minister administering the Crown Lands Act according to the Surveyor General's Directions No 6 entitled "Water as a Boundary: Procedures" para 7.2; and (c) no such approval has been obtained. Paragraph 7.2 is entitled "Mean High Water Mark Boundaries". Paragraph 7.2.2 is entitled "Consent to Changed Boundary". However, Mr Youdale said that it would be up to the Land Titles Office as to whether the Minister's approval was required, that he would definitely be able to get the Minister's approval, and that it was a process with which he had some experience.

40 Mr Youdale suggested that (assuming paragraph 7.2 of the Surveyor General's Directions applies at all) para 7.2.1 might apply rather than 7.2.2. Paragraph 7.2.1 is entitled "Consent to Unchanged Boundary" and provides:

The need for a specific approval of the Crown Lands Office may be dispensed with in cases where the plan, when lodged at Land & Property Information (LPI) bears a certification by the surveyor. That certification must state that the position of Mean High Water Mark on the ground, as depicted on the plan, is substantially the same as that shown on a previous plan that had an approval to the MHWM definition .

41 As I understand Mr Youdale's position, there is an unchanged southern boundary because it was always the mean high water mark, whose location on the 1916 DP was marked as approximate. All he did was to determine its precise location. The respondent submits that that is still not the end of the matter because paragraph 7.2.1 requires certification that the mean high water mark is the same as that shown on a previous plan that had an approval to the mean high water mark definition and, as Mr Youdale accepted, there was no such plan.

42 Although it was not explored before me, this might be overcome by the procedure which para 7.2.1 goes on to establish: "In the event that consent was not obtained to the previous plan, an approval for the determination of Mean High Water Mark must be sought from the Minister administering the Crown Lands Act 1989". However, it is unnecessary to express a final view on that point because of my conclusions at [43] - 44] below.

43 The applicant submits that paragraph 7.3 applies to the exclusion of paragraph 7.2 of the Surveyor General's Directions. Paragraph 7.3 is headed "Identification Surveys of Waterfront Properties" and states (inter alia) that "Mean High Water Mark is a title boundary no different to any other. Therefore, differences in the location of Mean High Water Mark...should be identified and reported". Mr Youdale gave evidence to the effect that: (a) paragraph 7.3 applied in the present case; (b) identification surveys are generally used for the transfer of properties and are different from boundary surveys which define boundaries for title purposes; and (c) if he had been asked by a potential seller of the subject land to do a survey for the purpose of a contract showing the site area and the location of the high water mark boundary, it would not have been necessary to comply with paragraph 7.2 requiring approval. Thus, in my view, a purchaser of the acquired land would have become aware of its actual area through such an identification survey, which is ordinarily attached to a sale contract.

44 I think too that the Just Terms Act requires compensation to be awarded for the loss of the actual area of compulsorily acquired land, and in this case that has been established by survey.

45 For these reasons, I propose to adopt the survey area rather than the area indicated approximately on the title.

FORESHORE BUILDING LINE

46 A foreshore building line under the DCP applies to properties that abut or adjoin a waterway. It is relevant to the development potential of the subject land.

47 At the acquisition date, the DCP foreshore building line ran across the residue land about 7.5 metres to the north of its boundary with the acquired land. The foreshore building line ran from Avalon Beach to the headland behind existing houses on the various lots and close to the most southerly of those houses. Through an historical anomaly, there has been for many years a house on the headland on a battleaxe block at 41 Marine Parade to the east of the acquired land, which is located significantly further south than the houses on all the lots to its west between it and the beach. The foreshore building line deviates considerably to the south to skirt around this house. Otherwise the headland and the rear parts of lots on or proximate to the cliff, including the subject land, are uncluttered by buildings.

48 It is common ground that the actual foreshore building line affected value and should be disregarded under s 56(1)(a) of the Just Terms Act, and that a notional foreshore building line should be substituted which disregards the 9(b) Reservation - County Open Space zoning. It is also common ground that this notional foreshore building line should be located above the cliff line. The question is: how far above? The applicant's town planner, Mr Harvey Sanders, placed it only 5 metres above the cliff line. The respondent's town planner, Mr Robert Player, located it on the residue land close to and just south of the actual foreshore building line. If Mr Sanders' location were to be accepted and assuming the side setback controls in the DCP (2.5 metres on one side and 1 metre on the other), he calculated that under the DCP controls the available building area on the parent land would be 605 square metres. If Mr Player's location were to be accepted, the available building area on the parent land would be 403 square metres.

49 Clause D1.10 of the DCP applies a foreshore building line to land, as indicated on the Foreshore Building Line Map. It prohibits development between the foreshore building line and property boundary adjacent to the waterway, except development for the purpose of boating facilities, an in-ground swimming pool at natural ground level, fencing, works to enable pedestrian access, and seawalls. It provides that where structures permitted within the foreshore building line obstruct or are likely to obstruct pedestrian access along the foreshore, alternative access must be provided around such structures.

50 The "Outcomes" stated in cl D1.10 are as follows:

To achieve the desired future character of the Locality.

To preserve and enhance local views of the foreshore to reinforce and protect the Pittwater's natural context and enhance legibility.

To encourage view sharing through complimentary siting of buildings, responsive design and well-positioned landscaping.

To ensure the amenity of foreshore areas is enhanced and protected.

To ensure that development adjacent to public domain elements such as rivers, foreshores, streets, parks, bushland reserves and other public open spaces, compliments the landscape character, public use and enjoyment of that land.

The visual impact of development when viewed from the waterway is reduced.

To achieve an uncluttered setback which enhances the legibility of the foreshore character of Pittwater.

To enhance the spaciousness and protect the vegetation, landforms and the natural landscape of the foreshore.

To protect and improve pedestrian access along the foreshore, where applicable.

51 Of particular significance in this case are the prescribed outcomes of an uncluttered setback which enhances the legibility of the foreshore character of Pittwater and the reduction of the visual impact of development when viewed from the waterway (which includes the waterway at Avalon Beach). It seems to me that the applicant's proposed location of the foreshore building line only 5 metres above the cliff line - well to the south of the houses on the other lots to its west - is not harmonious with those outcomes.

52 It is true that the foreshore building line on the southern headland of Avalon Beach is located a similar short distance from the cliff line and that is the line to which houses have been constructed there. But that is explicable. The lots on the southern headland are generally much smaller than on the northern headland. They were established under a subdivision in the early 1900's, preceding the County of Cumberland Planning Scheme. The subdivision layout dictated the development potential of the southern headland and not the other way. In contrast, the starting point for the foreshore building line for the much larger and deeper but narrower northern lots close to the beach is about 22-23 metres from the mean high water mark. There is no similar starting point for the northern headland. In the circumstances, I do not consider that the location of the foreshore building line on the southern headland should influence the decision as to where the notional foreshore building line should be on the northern headland.

53 However, I also do not agree with the respondent's proposed location of the foreshore building line. I think that it is influenced too much by the line of existing buildings on other lots and not at all by the dominant topographical feature.

54 5 to 13 Marine Parade, closer to the beach, are unaffected by the 9(b) Reservation - County Open Space zoning. Their foreshore building line is about 22-23 metres from the dominant topographical feature in this location, namely, the mean high water mark. As one moves further east towards the subject land, the dominant topographical feature becomes the cliff line. At first the cliff is accessible from some of the lots above to the rocks below, although no substantial building development is realistic below the cliff line. Before one reaches the subject land, the cliff becomes so steep and high that it is inaccessible from the lots above to the rocks below and no development at all is possible below the cliff line. The subject land is in this category.

55 In my opinion, it is logical and harmonious with the DCP's prescribed Outcomes to measure the notional foreshore building line in this locality from the relevant dominant topographical feature and for the setback distance to be consistent with the setback distance of the actual foreshore building line on the properties closer to the beach, that is, about 22-23 metres.

56 Therefore, my decision is that the notional foreshore building line for the subject land is on the acquired land 22 metres above its dominant topographical feature: the cliff line.

MARKET VALUE

57 It is common ground that market value should be determined by the commonly used before and after method. This method was described in Roads and Traffic Authority (NSW) v Muir Properties Pty Ltd [2005] NSWCA 460, 143 LGERA 192 at [103] - [104] by Tobias JA (McColl JA and Hunt AJA agreeing):

It is often the case that when only part of a dispossessed owner's land is compulsorily acquired, a "before" and "after" valuation exercise of the whole of that owner's land is conducted. In other words, the market value of the land before acquisition is determined (including the acquired land) as is its value after acquisition (excluding the acquired land). In this way the difference between the two values determines not only the market value of the acquired land but also captures any injurious affection to the retained land by reason of the acquisition for the public purpose. This approach will also, in an appropriate case, capture any loss due to the severance of the dispossessed owner's land by that acquisition.

In proceeding according to that approach, there has never been any doubt that the Pointe Gourde principle is applied in the "before" valuation exercise. In other words, the "before" value is determined on the basis of disregarding any decrease in the value of the land arising out of the purpose of the compulsory acquisition and any steps in the scheme leading to that acquisition. It is only in the "after" value that any decrease by reason of the proposed implementation of the public purpose for which the resumed land was compulsorily acquired is taken into account.

58 His Honour's reference to the " Pointe Gourde principle" should be understood as a reference to s 56(1)(a) of the Just Terms Act, which must be interpreted according to its own terms but which has its roots in the seminal case of Pointe Gourde Quarrying and Transport Co Ltd v Sub-Intendant of Crown Lands (Trinidad) [1947] AC 565. His Honour's reference to "injurious affection" to the retained land should be understood as a reference to s 55(f), which also must be interpreted according to its own terms but which has its roots in the pleasingly ambiguous historical description "injurious affection" (not to be confused with its meaning in an unrelated emotional context).

59 Valuation evidence was given by Mr Kent Wood for the applicant and Mr Trevor Good for the respondent. They agreed that the highest and best use of the parent land was as a large single dwelling home site capable of accommodating a prestigious residence with or without a secondary dwelling. Nevertheless the applicant presses a claim that something extra must be given for lost subdivision potential.

Development potential - subdivision

60 I am not satisfied that the market at the acquisition date would have regarded the land as having any significant subdivision potential.

61 Although DCP provisions are not mandatory, they must form the focus, or focal point, of the consent authority's deliberations: Zhang v Canterbury City Council [2001] NSWCA 167, 51 NSWLR 589 at [75]. In the present case the DCP controls and other matters referred to below raise formidable hurdles to the asserted subdivision potential of the parent land, and are also relevant when otherwise considering its development potential.

62 First, the minimum lot width control is 16 metres (cl B2.2). The subject land has a frontage of only 12.305 metres and an average width of only 12.2 metres.

63 Secondly, the minimum building area control is 175 square metres (cl B2.2). According to the applicant's proposed plan of subdivision, ultimately attached to the town planners' joint report, the building area on the acquired land is only 142 square metres.

64 Thirdly, the driveway width control is that: "Where a right-of-carriageway to another lot is provided over a lot, the width of that right-of-carriageway shall not be more than 20% of the required minimum width of the lot over which it is located": cl C4.7. There is a dispute as to the interpretation of this control. The respondent submits that in order for the control to make sense, the right-of-carriageway must not be more than 20 per cent of the width of the proposed lot; the average width of the proposed lot is only 12.2 metres; the driveway is 3 metres; and therefore the 20 per cent control is not complied with. The applicant's competing construction is that this ignores the reference to the "required" minimum width, which is 16 metres, and as the driveway is 3 metres the control is satisfied. It is unnecessary to resolve this issue. It is sufficient to say that the availability of these competing constructions would have represented a risk in the perception of the market.

65 Fourthly, the parent land did not have the minimum lot areas required by the DCP. By title its area was less than 1,400 square metres. However, by survey, which I have earlier accepted, its area was just over 1,400 square metres. Given that it is common for a survey to be attached to a contract for sale, I consider that the hypothetical purchaser at the acquisition date would have been aware of the survey area. The LEP cl 11(2) requires that each allotment created by a subdivision must have a minimum lot area of 700 square metres. Although this would not have been satisfied by the title area, it was satisfied by the survey area. However, the DCP cl B2.2 requires a minimum lot size of 1,200 square metres, far in excess of what was achievable under a subdivision of the subject land.

66 The applicant submits, however, that this provision of the DCP has no effect under s 74C(5)(b) of the EPA Act which provides:

74C Preparation of development control plans

...

(5) A provision of a development control plan (whenever made) has no effect to the extent that:

(a) it is the same or substantially the same as the provision of an environmental planning instrument applying to the same land, or

(b) it is inconsistent with a provision of any such instrument or its application prevents compliance with a provision of any such instrument.

67 The LEP is an "environmental planning instrument" but the DCP is not: s 4. In my opinion, "inconsistent" here is to be given its ordinary and natural meaning. A provision of a DCP will be inconsistent with a provision of an LEP if there is want of consistency or congruity, lack of accordance or harmony or incompatibility, contrariety, or opposition with it: Coffs Harbour Environment Centre Inc v Minister for Planning (1994) 84 LGERA 324 (CA) at 331 per Kirby P. This was approved in Castle Constructions Pty Ltd v North Sydney Council [2007] NSWCA 164, 155 LGERA 52 at [41] - [42] and [55] where Tobias JA (Bell J agreeing) held that the natural meaning of inconsistency included where a paramount provision of an environmental planning instrument was intended to be an exclusive code or exhaustive statement. This was followed by me in Castle Constructions Pty Ltd v North Sydney Council [2007] NSWLEC 459 at [94] - [96].

68 The respondent submits that the DCP provision merely provides for finer detail and therefore conforms with the LEP.

69 Section 74C(1)(a) of the EPA Act empowers a relevant planning authority to prepare a DCP if it considers it necessary or desirable to make more detailed provision with respect to development to achieve the purpose of an environmental planning instrument applying to the land concerned. In North Sydney Council v Ligon 302 Pty Ltd [No 2] (1996) 93 LGERA 23 at 30 Cole JA (Meagher JA and Abadee AJA agreeing) held:

...Generally the development control plan must conform to the North Sydney Local Environmental Plan (s 72(3)). However that does not mean that where a use is permissible with consent under a North Sydney Local Environmental Plan , "more detailed provisions" regarded as desirable or necessary and specified in a development control plan may not regulate the circumstances in which a use is permissible with consent. There is no reason in principle why those "provisions" would not have the character either of a "prohibition" unless certain criteria are satisfied, or of a "development standard", which permits a development only on satisfaction of certain criteria.

70 In 7-Eleven Stores Pty Ltd v City of Sydney Council [2004] NSWLEC 154, 138 LGERA 125 at [25] Lloyd J held that that was the relevant test.

71 The respondent submits, and I accept, that it is unnecessary to decide the inconsistency point because non-compliance with the DCP's 1,200 square metre minimum is a risk that in any event must be taken into consideration in the ultimate valuation exercise.

72 Fifthly, the position of the notional foreshore building line, which I have decided earlier, inhibits the location of a dwelling on the acquired land.

73 Sixthly, given the difficult circumstances of the potential subdivision, a prudent purchaser would probably speak to the council. There is evidence that Mr Matthew Edmonds, Principal Officer - Development for Pittwater Council, is of the opinion that it would be difficult to anticipate that any consent authority acting reasonably would consent to the hypothetical residential subdivision. Mr Player's opinion was that a subdivision application would likely be refused by the council and the Court on an appeal. Mr Sander's opinion, at least, is that he did not believe the likelihood of securing a development consent to be "as remote as is suggested" by Mr Player. However, he accepted that the probability was low, and the risk of not getting subdivision approval was high. According to Mr Wood, that would lead to a profit and risk of 40 per cent on a hypothetical subdivision assessment, at which level one might as well "give the game away, it's not worthwhile". None of the experts considered that the highest and best use of the land was for subdivision.

74 Having regard to the above matters, in my opinion the market at the acquisition date would have considered that a subdivision application would most likely be refused by the council, and the Court on an appeal. In my opinion, the market would not have attached any premium for the prospect of obtaining subdivision development consent.

Development potential - residential single

75 The valuers agreed that the prime method of valuation is by directly comparable sales evidence and that the most relevant comparable sales for single dwelling allotments are in Avalon at -

• 21 Marine Parade
• 526 Barrenjoey Road
• 524 Barrenjoey Road
• 95 Marine Parade

76 Mr Wood considered the first two sales listed above provided the best evidence. 524 and 526 Barrenjoey Road are on the southern headland of Avalon Beach. Barrenjoey Road is the busy main road through Avalon.

77 The valuers disagreed on the correct basis for comparable valuation. Mr Wood valued on a rate per square metre basis. He deduced a rate of $3,300 per square metre for the subject land by reference to rates for four comparables ranging from $2,693 per square metre to $3,220 per square metre for areas ranging from 771.4 square metres to 1,151 square metres. He then applied the rate of $3,300 per square metre to his assessment of the developable area, 991.2 square metres, of the parent land being the title area of 1,315.2 square metres less 324 square metres of steeply sloping cliff (and rocks below) that could not be developed. Mr Good valued on a per lot basis. He rejected the rate per square metre basis. In his opinion, while the rate per square metre basis is appropriate for commercial, retail, industrial and residential en globo land, serviced residential land with a single building right is not analysed on that basis as either a standard valuation practice or by prospective purchasers in the market place. In his view, residential land values are more dependent upon the property's location/aspect and building right entitlement than the strict land area, and calculation of a simple pro-rata value rate is a flawed approach in this context.

78 Applying their contrasting approaches to the before and after method of valuation, Mr Wood arrived at a market value of $1 million and Mr Good arrived at a market value of $350,000 for the acquired land, as follows (rounded):

Mr Wood

Before ($3,300 per square metre x 991.2 m 2 )	$3,270,000
After ($3,300 per square metre x 687.4 m 2 ) Diminution in value	$2,270,000 $1,000,000

Mr Good

Before (987.4m 2 of developable area)	$2,850,000
After (687.4 m 2 ) Diminution in value	$2,500,000 $ 350,000

79 As Mr Wood based his assessment on Mr Sander's notional foreshore building line at about 5 metres north of the cliff, his before valuation should be revised downward to reflect my determination of the position of the foreshore building line. Mr Good based his assessment on Mr Player's notional foreshore building line and conceded in oral evidence that if it was closer to the cliff there may be something more in value. As I have determined it is closer to the cliff, Mr Good's before valuation should be revised upwards to reflect my determination.

80 There was put to Mr Good in cross-examination a publication of the Australian Property Institute, Valuation Principles and Practice (2nd ed), which says that when using direct comparison in the valuation of vacant urban land, the comparison may be made on the basis of a unit of comparison including, for example, rate per square metre. Mr Good's rather devastating response was that: (a) in 35 years of practice he had never applied a rate per square metre valuation to a single residential allotment, although he agreed that it was appropriate in commercial, industrial retail and residential en globo valuations; (b) he had never seen a rate per square metre used before in a single dwelling allotment valuation; (c) he had never seen Mr Wood use it before in that context in the 30 years he had been doing work with Mr Wood; and (d) because of this matter he had discussed it with other senior valuers and confirmed that it was not something that other valuers had used. None of this evidence was contradicted by Mr Wood and I accept it. I also accept Mr Good's opinion that the rate per square metre basis is flawed in this context. Accordingly, I reject the rate per square metre basis adopted by Mr Wood and adopt the per lot basis adopted by Mr Good.

81 In my view, the injurious affection to the residue land in the after valuation scenario includes, consistently with the applicant's submissions, the following:

(a) Loss of absolute ocean frontage. The retained land will no longer have the existing natural connection to the cliff and ocean.

(b) Loss of privacy and peacefulness due to public access to the acquired land at some time in the future from the public path known as 25 Marine Parade and from Avalon Beach. The council could construct seating and protective rails above the cliff, as it has already done at other viewing points in the Bangalley Headland Reserve. The public access to the acquired land will be over further land to be acquired, enabling the public to walk on and otherwise enjoy the acquired land and much of the headland. The timing is controlled by the acquiring authority and the council and it is unclear when it will occur. However, nine cliff top lots to the east/north of the acquired land and one cliff top lot to its west have already been purchased or compulsorily acquired for the same public purpose. They comprise most of the headland. Access from the public path will happen upon acquisition of the remaining unresumed land between the path and the acquired land (No 33). The rear part of No 29 has already been acquired. That leaves only two further acquisitions (the rear parts of 27 and 31). The public will then have access to a large part of the headland including the acquired land. This is the dispossessed owner's only opportunity to claim compensation for the consequential loss of amenity.

(c) A sense of enclosure and also loss of views from, say, a swimming pool as a result of fencing across the boundary of the retained and acquired lands. An in-ground swimming pool is a permissible use of land below the foreshore building line pursuant to the DCP. The council's Plan of Management envisages that any future development of the residue land would include a condition requiring fencing on that boundary.

(d) A loss of the more sweeping views that were obtainable from the retained land, including from a house that could previously have been built in part on the acquired land above the notional foreshore building line.

(e) A significant reduction in development rights under the DCP controls. The residue land is only 687.4 square metres, much smaller than the areas of most of the other lots on the south of Marine Parade. The smaller the site area the more constrained the design of a house. The maximum site coverage of 40 per cent to a possible 46 per cent (cl D1.14 of the DCP) in the before scenario and the after scenario is as follows by survey (rounded):

	Before	After
40%	590 m 2	275 m2
46%	678 m 2	316 m2

82 The four comparable sales were all of oceanfront land. They occurred between March and October 2010, compared with the acquisition date of 1 April 2011, but there is no need to adjust for time because the market was flat during this period.

83 21 Marine Parade is, in my opinion, the best comparable. It is the closest in area, dimensions, proximity and date of sale. It is closer to the beach than the subject land. Like the subject land, it fronts onto Marine Parade, backs onto the ocean and is partly zoned 2(a) Residential "A" and partly 9(b) Reservation - Open Space. It is similarly long and thin but not as deep and has a smaller area. Constructed on it is a tri level contemporary residence.

84 526 Barrenjoey Road is a vacant oceanfront lot on the southern headland of Avalon Beach and on the beach side of the adjacent 524. Barrenjoey Road is a busy main road. 526 is zoned 2(a) Residential "A". It has extensive ocean and Avalon Beach views. It has a wider frontage but a smaller area than the subject parent land. An older style dwelling has been demolished and a new residence is currently being erected.

85 524 Barrenjoey Road is located on the southern headland of Avalon Beach, next door to 526. It is zoned 2(a) Residential "A". It has extensive ocean and Avalon Beach views. It has a wider frontage but a smaller area than the subject land. Constructed on it is a renovated two level residence.

86 95 Marine Parade is an oceanfront property located north of the subject land. It has a wide frontage and a smaller area than the subject. It is zoned 2(a) Residential "A". Constructed on it is a modern two storey architecturally designed residence.

87 The valuers agreed on the land value for the comparable sales, with the exception of 95 Marine Parade where they were only $50,000 apart. As that has only a nominal impact on the calculations, I have adopted a midpoint land value.

88 The valuers' respective assessments and my assessment of market value are as follows:

	Before (parent land)	After (residue land)	Acquired land
Mr Wood	$3,270,000	$2,270,000	$1,000,000
Mr Good	$2,850,000	$2,500,000	$350,000
Court	$3,110,000	$2,555,000	$555,000

89 I have reached this decision by adjusting, in both the before and after case, the comparable sales for area, frontage, view, privacy, aspect and road noise/access.

90 In the after case, area, width and privacy are the principal variants. The loss of privacy and amenity for the residue land has been discussed above at [81(b)].

91 In the before case the principal variants for the parent land are area and width, which both have a major impact on the potential use of the land for prestigious residential development. Width is a major factor due to the parent property's average width of about 12.2 metres. The DCP requires side setbacks of 2.5 metres and 1 metre leaving a development width of about 8.7 metres. This is a severe constraint compared with the Barrenjoey Road properties, which have frontages of 15 and 24.2 metres. However, I have allowed for the fact that, in my view, the market at the acquisition date would have perceived that with skilful design, strict compliance with the DCP setbacks may not be required, as appears to be the case with a number of other houses that have been permitted on Marine Parade. One example is 11 Marine Parade: see this Court's decision on an appeal against a deemed refusal of development consent in Head v Pittwater Council [2006] NSWLEC 429 and the approved plans relating thereto which are in evidence.

92 The adjustments which I consider should be made for the various factors in the before and after scenarios are expressed as percentages in the table in the annexure to this judgment. In the before scenario the adjusted values range from $2,929,000 to $3,222,600. I place the most weight on the sale of 21 Marine Parade, which requires the least adjustment and, consequently, is the best comparable, and determine the before value at $3,110,000. I have endeavoured in the after scenario to adjust to take full account of all the injurious affection to the residue land. In the after scenario the adjusted values range from $2,171,500 to $2,592,500. The adjustment to the sale of 95 Marine Parade provides an out of line result. I place almost equal weight on the other three sales and determine the after value at $2,550,000.

93 Valuation is a matter of estimation and not of precise mathematical calculation: Commissioner of Taxation of the Commonwealth of Australia v St Helens Farm (ACT) Pty Ltd (1991) 146 CLR 336 at 381 per Mason J. My percentage adjustments are estimates and should not be understood as creating an air of mathematical certainty. In this case I have found it helpful to express my earlier narrative analysis of the various factors as transparent percentage adjustments because there are only four comparable sales, they appear to be closely comparable, and relatively few adjustments are required. In many other cases, evidence in the form of tables of detailed percentage adjustments can tend to obscure rather than illuminate the valuation reasoning and may provoke tediously lengthy cross-examination. For example, if the comparison involves a wide range of sales of greatly varying comparability requiring many or large adjustments, where it would be safer to discard most as not comparable ( RK Morgan Holdings Pty Ltd v Melbourne and Metropolitan Board of Works (1992) 77 LGRA 102 at 109). Or where the adjustments have been used to work backwards from conclusions reached on the whole of the available material ( Graham Trilby Pty Ltd v Valuer-General [2008] NSWLEC 217 at [25]).

CONCLUSION

94 I have determined that the market value of the acquired land at the acquisition date was $555,000. To this there must be added disturbance loss in the agreed sum of $16,804. Accordingly, I propose to determine compensation in the total sum of $571,804, say, $572,000.

95 The orders of the Court are as follows:

1. Determination that the compensation for the compulsory acquisition by the respondent of the applicant's land known as Lot 1 DP 1160788 is $572,000.

2. The respondent is to pay the applicant's costs.

3. Liberty to apply within three working days for vacation or variation of order 2 accompanied by written submissions.

4. The exhibits may be returned.

 

annexure

Amendments

28 February 2012 - Hearing dates omission
Amended paragraphs: Cover

Decision last updated: 16 March 2012