Compensation for Reduced Land Value Following Compulsory Acquisition

The Land and Environment Court awarded compensation to the claimant for the diminished value of their remaining land after a portion was compulsorily acquired for the M7 Westlink. The court considered factors including market value, disturbance, and injurious affection due to the visual impact of the project.

Land and [ADDRESS] of New South Wales

CITATION : [NAME] v [NAME] Authority of New South Wales [2004] NSWLEC 643 APPLICANT: [redacted] RESPONDENT: [redacted] FILE NUMBER(S) : 30189 of 2004 CORAM: Pain J KEY ISSUES: Compulsory Acquisition of Land :- Compensation for the diminished value of residual land following acquisition of abutting land for the M7 Westlink - Injurious affection LEGISLATION CITED: Land Acquisition (Just Terms Compensation) Act 1991, s 42, s 54(1), s 55, s 66 [NAME] Act 1993 CASES CITED: [NAME] v [NAME] of Land Tax (1915) 20 CLR 231 15/11/2004 DATES OF HEARING: 16/11/2004 17/11/2004 DATE OF

JUDGMENT: 11/18/2004

APPLICANT: [redacted] LEGAL REPRESENTATIVES: RESPONDENT: [redacted]

JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

Pain J

18 November 2004

30189 of 2004 [NAME] v [NAME] Authority of New South Wales

JUDGMENT

1 Her Honour: Prior to 10 October 2003 the Applicant, [NAME], owned the whole of Lot 16 DP 833741 known as [ADDRESS], Casula ("the Parent Land"). On 14 May 2003 a deposited plan was registered which divided the Parent Land into two separate lots being Lot 21 DP 1052978 which is 13,440 m2 and Lot 23 DP 1052987 which is 147.3 m2. By notice published in the Government Gazette on 10 October 2003, the [NAME] Authority of New South Wales ("the [NAME]") compulsorily acquired Lot 23 DP 1052987 ("the [NAME]") pursuant to the [NAME] Act 1993 for the purpose of constructing the M7 Westlink, formerly known as the Western Sydney Orbital. Lot 21 in DP 1052978 ("the [NAME]") remains in the ownership of the Applicant.

2 A compensation notice dated 17 November 2003 issued by the [NAME] under s 42 of the Land Acquisition (Just Terms Compensation) Act 1991 ("the Just Terms Act") offered the Applicant the sum of $46,500 in compensation for the compulsory acquisition of the land. The Points of Assessment of Compensation filed by the [NAME] pursuant to Pt 13 r 8 of the Land and [ADDRESS] indicates that this figure included $42,00 for market value and $4,500 for disturbance and did not include any sum intended to compensate the Applicant for any loss in value of the [NAME] as a result of the acquisition by the [NAME] of the [NAME].

3 The Applicant has appealed to this Court under s 66 of the Just Terms Act against the amount of compensation offered in the compensation notice. The Points of Claim filed by the Applicant claimed $2,224,300 in total compensation, representing $60,000 for the market value of the [NAME], $14,300 for disturbance and $2,150,000 for the loss in value of the [NAME] due to the impacts of the proposed M7 Westlink.

4 I was assisted by [NAME] at the hearing, and we had the benefit of a view of the [NAME], the [NAME] and the developments adjoining the [NAME]. At the time of our inspection, works for the proposed M7 were under construction.

The Land 5 The western boundaries of the [NAME] and the [NAME] immediately adjoin the M5 motorway.

6 The [NAME] is a cleared, vacant, level, and triangular shaped lot of 147.3m2 which is located at the south western corner of the [NAME].

7 The [NAME] is a cleared, very slightly sloping, and slightly irregular-shaped lot of approximately 13,440m2 with a frontage of 100.59m to [ADDRESS], a rear boundary of 113.86m and side boundaries of 103.79m and 150.76m. At present one two-storey dwelling and a number of sheds and outhouses are located on the [NAME] which is otherwise vacant. The [NAME] is bounded: (a) to the north by [ADDRESS], Casula; (b) to the east by [ADDRESS]; (c) to the south by [ADDRESS], Casula; and (d) to the west by the [NAME] (on the southern portion of the western boundary only) and the M5 motorway. A 4m high concrete noise barrier, constructed as part of the M5 motorway works, located on land owned by the [NAME], runs along the western boundary of the [NAME].

8 Both the [NAME] and the [NAME] are currently zoned residential 2(a) under the Liverpool Local Environmental Plan 1997.

The Land Acquisition (Just Terms Compensation) Act 1991 9 The Just Terms Act regulates the basis on which compensation is payable for the compulsory acquisition of land. Section 54(1) of the Just Terms Act states that: The amount of compensation to which a person is entitled under this Part is such amount as, having regard to all relevant matters under this Part, will justly compensate the person for the acquisition of the land.

10 Section 55 of the Just Terms Act relevantly states that: 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 [NAME] by reason of the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired.

The Issues The Joint Statement of Issues 11 In accordance with directions made by the Court the parties filed a Joint Statement of Issues on 12 November 2004 setting out the issues in dispute between the parties as follows: 1 Section 55(a) – Market Value 1.[ADDRESS] needs to determine the market value of Lot 23 DP 1052987 ([NAME]) as at 10 October 2004 (Acquisition Date) pursuant to sections 55(a) and 56 of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) (Act). The [NAME] has an area of 147.3m2.

1.2 In determining market value for the [NAME], the following issues arise: (a) What constituted an appropriate development of Lot 16 DP 833741 (Parent Parcel) for the purpose of identifying the development potential of the Parent Parcel as at the Acquisition Date (i.e. was it conventional subdivision, integrated housing or multiple dwellings)? (b) What number of allotments or multiple dwellings was appropriate for the Parent Parcel at the Acquisition Date? (c) What are the comparable sales? (d) What analysis of, and adjustments to, the comparable sales ought to be made to arrive at a $ rate per square metre for the Parent Parcel? (e) What $ rate per square metre should be applied for the purpose of determining the market value of the [NAME] at the Acquisition Date? 2 Section 55(f) – Injurious Affection 2.[ADDRESS] needs to determine whether there was any increase or decrease in the value of Lot 21 DP 1052987 ([NAME]) at the Acquisition Date by reason of the carrying out of, or the proposal to carry out, the Western Sydney Orbital Project, now known as the Westlink M7 (Project) pursuant to section 55(f) of the Act. The [NAME] has an area of 13,590 square metres. 2.2 In determining the above question, the Court needs to have regard to: (a) Any change in the noise impact on the [NAME] arising from the carrying out of, or the proposal to carry out, the Project and in particular: (i) what is the change in noise impact arising from the carrying out of, or the proposal to carry out, the Project? And (ii) what mitigation measures, if any, would the landowner be required to undertake itself arising from the carrying out of, or the proposal to carry out, the project? (b) Any visual impact of the Project on the [NAME] arising from the carrying out of, or the proposal to carry out, the Project and in particular: (i) whether the visual impact of the elevated section (Structure) of the Project adjacent to the [NAME] ([ADDRESS]) can be ameliorated without diminishing the internal amenity of the individual dwellings? And (ii) the extent to which landscaping on the land between the [ADDRESS] and the [NAME] owned by the Respondent would mitigate the visual impact of the Structure?

(c) Any change in air quality on the [NAME] arising from the carrying out of, or the proposal to carry out, the Project; and (d) Any increased accessibility of the [NAME] to and from the locality arising from the carrying out of, or the proposal to carry out, the project.

The [NAME] 12 In the course of the hearing the parties agreed that the market value for the whole of the [NAME] is $350 per m2. Accordingly, the Applicant is entitled to $51,555 (147.3 m2 x $350 per m2) for the market value of the [NAME]. This resolves Issue 1.

13 While the Joint Statement of Issues did not mention disturbance, the Applicant's Points of Claim included a claim for disturbance and the parties agreed on the last day of the hearing that the Applicant was entitled to the sum of $4,846.16 for disturbance.

The [NAME] 14 The [NAME] were of the agreed opinion that the highest and best use of the [NAME] would be for development for multiple dwellings in accordance with the residential 2(a) zoning of the land under the Liverpool Local Environmental Plan 1997. By comparison with the sales of other en globo properties suitable for similar residential development, the valuers agreed that the [NAME] would, assuming that there had been no proposed M7 Westlink, have had a value of $350 per m2 immediately before the date on which the [NAME] acquired the [NAME]. As stated above, the [NAME] is 13,440m2 in size. Therefore the parties agreed that the market value of the [NAME], assuming no injurious affectation resulting from the M7 Westlink, was $4,704,000.

15 On the second day of the hearing the Applicant decided that she would no longer press her claim in relation to any decrease in the value of the [NAME] resulting from the noise impacts of the M7 Westlink. Therefore the Court is no longer required to determine issue 2.2(a).

16 The only outstanding issues which remain for determination by the Court are Issues 2.2(b), (c) and (d) as they relate to Issue 2.1 in the Joint Statement of Issues.

The Evidence 17 The Applicant relied on the written and oral evidence of: (a) [NAME], a town planner; and (b) [NAME], a valuer.

18 The Respondent relied on the written and oral evidence of: (a) [NAME], a town planner; and (b) [NAME], a valuer.

Issue 2.2(b) – Visual amenity 19 The Applicant claims a 7% decrease in the "before" value of the whole of the [NAME] as a result of the visual impacts of the proposed M7 Westlink based on [NAME]'s evidence, that is, a decrease of $329,280 ($4,704,000 x 7%; or 7% x $350 per m2 x 13,440m2). The evidence of [NAME], the [NAME]'s valuer, was that the reduction in value of the [NAME] was in the range of $117,600 to an absolute maximum of $200,000 (that is, from 1% to 4.25% of $350 per m2 x 13,440m2).

20 Both valuers agreed that this exercise required subjective analysis based largely on their experience as valuers. However, [NAME] did undertake analysis of two sales, being [ADDRESS], Casula ("LN2") and [ADDRESS] ("LN3"), which adjoin the [NAME]. LN2 was a privately negotiated purchase by the [NAME] and is not necessarily representative of an open-market transaction.

21 LN3 was of unsewered land. When comparing LN3 and LN2 with each other, adjustments to the sale prices would have to be made for this and other differences, including a large adjustment for the upward movement of the market between the two sale dates. [NAME] said that LN2 was affected only by the M5, whereas LN3 was affected by impacts from both the M5 and the proposed M7 Westlink. [NAME] was of the opinion that LN2 reflected a value for that property of $406 per m2 as at 10 October 2003. But this value of $406 per m2 seems too high, when one takes into account the fact that the valuers and parties have agreed that, having regard to other sales evidence, the "before" value of the [NAME] (assuming no M7 Westlink proposal) was $350/m2. Also, in comparing both LN2 and LN3 with the [NAME], the [NAME]: (a) has a more regular shape; (b) is much larger than LN2 and LN3; (c) is proportionally less affected by traffic noise.

Accordingly, the Court does not derive much assistance from LN2 and LN3 in assessing the decrease in value of the [NAME] on account of the proposed M7 Westlink.

22 I give no weight to an offer made by [NAME] for the Applicant's property in 2002, even assuming it is admissible (see [NAME] v [NAME] of Land Tax (1915) 20 CLR 231), in assessing the decrease in value of the [NAME] as a result of the visual impacts of the proposed M7 Westlink.

23 The M7 Westlink will, when built, consist of several elevated long fly-overs or ramps to the west, north and north-east of the [NAME] and will affect, to varying extents, the whole of the [NAME] when developed. At the closest point, one of the M7 [NAME] will be 30m from the western boundary of the [NAME]. While most of the M7 [NAME] are reasonably distant to the north and north-east, these [NAME] will have a dominant visual impact. I am of the view that the [NAME] landscaping will not be a sufficient screen for the M7 Westlink road works. The large earth mound, consisting of a landscaped "pyramid" which is proposed as a "gateway" feature for the M7 Westlink, will block some views of the M7 [NAME] but will not, in my view, greatly diminish the visual impact. While no layout of the likely future development of the [NAME] was in evidence it is clear that, whatever layout is ultimately adopted, parts of the M7 [NAME] or acoustic barriers are likely to be seen from the access driveways, or common areas and many of the units (particularly from the first floors) of any future multiple-dwellings development which occurs on the [NAME]. Different parts of the [NAME] and the various units in any proposed development will be visually affected to varying degrees, and it is appropriate to apply an average percentage reduction in the "before" value of the whole of the [NAME].

24 I am of the opinion that the decrease in value of the [NAME] due to the visual impacts of the M7 works would be in excess of what [NAME], the [NAME]'s valuer, described as his absolute maximum of $200,000. As the judicial valuer, I will adopt a reduction of five percent of the "before" value of $4,704,000.

Accordingly, the compensation payable for the reduction in the value of the [NAME] as a result of the visual impacts of the proposed M7 Westlink is $235,200.

Issue 2.2(c) - Air pollution 25 The claim for air pollution was described by the Applicant's valuer, [NAME], as insignificant in that it would likely result in a one percent decrease in the value of the whole of the [NAME]. No evidence was adduced to support the Applicant's claim in this regard, with [NAME] simply considering that this is a matter which would be taken into account by a hypothetical prudent purchaser. While the [NAME]'s valuer, [NAME], was of the opinion that no allowance should be made in respect of air pollution, I am prepared to allow a small reduction in value of about $15,000 due to air pollution having seen the site and the extensive nature of the M7 Westlink road works.

Issue 2.2(d) - Access 26 The [NAME] argued that there would enhancement in value of the [NAME] due to greater accessibility to Blacktown, [ADDRESS] and Penrith which will be provided by the M7 Westlink. There was minimal evidence on this issue and I do not consider that the evidence provided was sufficient to warrant a finding that the value of the [NAME] is enhanced.

Issue 2.1 – Compensation Payable for the Decreased Value of the [NAME] 27 Taking into account the amounts by which I have determined that the value of the [NAME] will be adversely affected by the visual impacts and air pollution resulting from the M7 Westlink, I determine that the compensation payable for the decrease in value of the [NAME] is $250,000.

Orders [ADDRESS] makes the following orders: 1. Compensation under the Just Terms Act is determined in the sum of $306,401.16, representing: (a) a market value of the [NAME] of $51,555 (s 55(a)); (b) a loss attributable to disturbance of $4,846.16 (s 55(d)); and (c) a decrease in the value of the [NAME] of $250,000 (s 55(f)). 2. The exhibits may be returned. 3. The question of costs is reserved.

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