Valuation of Compensation for Land Acquired for Freeway

The Court considered the valuation of compensation for land acquired for a freeway, including the market value of the land, the value of resources affected by the acquisition, and any injurious affection caused by the project. The Court used a Discount Cash Flow (DCF) model to assess the value of the resource.

OUTCOME: Allowed

[NAME_1]: [COMPANY_3] v [COMPANY_6] (No 6) [2015] NSWLEC 18 Hearing dates: 16-18, 21-25, 28-30 July 2014, 16, 17, 22-24, 29-30 October 2014, 19 November 2014 Decision date: 17 February 2015 Jurisdiction: Class 3 Before: Pain J Decision: See paragraph 447 Catchwords: COMPULSORY ACQUISITION OF LAND – compulsory acquisition of part of land for freeway – whether compensation for market value includes value of quarry resource in land – disturbance claim by quarry operating tenant does not exclude claim for market value of resource affected by acquisition by landowner of acquired land – highest and best use can include more than one use of land – application of discount cash flow (DCF) model to value resource – value to be attributed in DCF model to risk of no approval of quarry extension in before scenario– extent of loss of access to resource in after due to need for safety buffer around freeway – value of non-quarry land in before and after using comparable sales method Legislation Cited: Cessnock Development Control Plan 2006 Cessnock Local Environmental Plan 1989 cl 11A(2) Environmental Planning and Assessment Act 1979 Pt 3A s 75B, s 75W, s 96 Environmental Planning and Assessment Regulation 2000 cl 8J Land Acquisition (Just Terms Compensation) Act 1991 s 3, s 11, s 12, s 15, s 18, s 20, s 37, s 39, s 40, s 41, s 42, s 43, s 54, s 55, s 56, s 59, s 61 Maitland Local Environmental Plan 1993 State Environmental Planning Policy (Major Development) 2005 Sch 1 Cases Cited: [NAME_7] Corporation v [NAME_7] of Port Adelaide Enfield [2001] SASC 207; (2001) 115 LGERA 137 [COMPANY_8] v Minister for Water Resources (1988) 65 LGRA 410 Allandale Blue Metal Pty Ltd v Roads and Maritime Services [2013] NSWCA 103; (2013) 195 LGERA 182 [COMPANY_9] v [COMPANY_6] (No 4) [2014] NSWLEC 102 [COMPANY_10] v [NAME_5] Authority of [NAME_1] [2008] NSWLEC 112; (2008) 160 LGERA 375 Boland v Yates Property Corporation Pty Ltd [1999] HCA 64; (1999) 74 ALJR 209 [COMPANY_11] v Minister for Planning and [2013] NSWLEC 48; (2013) 194 LGERA 347 Caruso v Sydney Water Corporation [2008] NSWLEC 320 Collex Pty Ltd v Roads and Traffic Authority [2006] NSWLEC 579; (2006) 149 LGERA 234 Commonwealth of Australia v Hazeldell Ltd (1918) 25 CLR 552 Commonwealth of Australia v Hazeldell Limited [1921] 2 AC 373 Dasreef Pty Ltd v Hawchar [2011] HCA 21; (2011) 243 CLR 588 [NAME_12] v [NAME_14] the Environmental Planning and Assessment Act 1979 [2014] NSWCA 33; (2014) 199 LGERA 198 [COMPANY_16] v [NAME_14] the Environmental Planning and Assessment Act 1979 [2010] NSWLEC 88; (2010) 177 LGERA 43 George D Angus Pty Ltd v Health Administration Corporation [2013] NSWLEC 212 Health Administration Corporation v George D Angus Pty Ltd [2014] NSWCA 352 Jameson v Rail Corporation New South Wales [2014] NSWLEC 83 Lake Macquarie City Council v Luka [1999] NSWCA 447; (1999) 106 LGERA 94 [NAME_7] v Commonwealth of Australia (1993) 46 FCR 67 Maidment v Roads and Traffic Authority (NSW) [2006] NSWLEC 606; (2006) 153 LGERA 249 Makita (Aust) Pty Ltd v Sprowles [2001] NSWCA 305; (2001) 52 NSWLR 705 Marroun v Roads and Maritime Services [2012] NSWLEC 199 McBaron v Roads and Traffic Authority (NSW) (1995) 87 LGERA 238 McDonald v Roads and Traffic Authority (NSW) [2009] NSWLEC 105; (2009) 169 LGERA 352 Minister v Matford Nominees Pty Ltd [1973] 2 NSWLR 58 Mir Bros Unit Constructions Pty Ltd v Roads and Traffic Authority (NSW) [2006] NSWCA 314 [COMPANY_17] v [NAME_5] Authority of [NAME_20] (1998) 101 LGERA 30 [COMPANY_21] v [COMPANY_6] (No 3) [2012] NSWLEC 57 Randwick Municipal Council v Valuer-General (1960) 5 LGRA 387 Roads and Traffic Authority (NSW) v Collex Pty Ltd [2009] NSWCA 101; (2009) 165 LGERA 419 Roads and Traffic Authority (NSW) v McDonald [2010] NSWCA 236; (2010) 79 NSWLR 155 Roads and Traffic Authority (NSW) v Mosca [2006] NSWCA 159; (2006) 146 LGERA 335 Roads and Traffic Authority v Peak [2007] NSWCA 66 Scott Revay v Ku-ring-gai Council [1994] NSWLEC 112 [NAME_23]" Inc v Roads and Traffic Authority (NSW) [2007] NSWLEC 673 The Minister v [NAME_1] Company Limited [1916] HCA 48; (1916) 22 CLR 56 Tolson v Roads and Maritime Services [2014] NSWCA 141; (2014) 201 LGERA 367 Vilro Pty Ltd v Roads and Traffic Authority (NSW) [2010] NSWLEC 234; (2010) 179 LGERA 47 Texts Cited: [NAME_24], The Valuation of Businesses, Shares and Other Equity, (fourth edition 2003, [NAME_27]) Category: Principal judgment Parties: [COMPANY_3] (Applicant) [COMPANY_6] (Respondent) Representation: Counsel: [redacted] [NAME_32] SC with [NAME_34] (Respondent) Solicitors: [redacted] [NAME_37] (Respondent) File Number(s): 30853 of 2010

JUDGMENT

COMPENSATION CLAIM FOLLOWING COMPULSORY LAND ACQUISITION 1. On 12 February 2010 the Respondent [NAME_38] ([NAME_39]) compulsorily acquired part of land owned by [COMPANY_3] ([NAME_40]) for the Hunter Expressway (HEX) under the Land Acquisition (Just Terms Compensation) Act 1991 (the Just Terms Act). [NAME_40] has appealed to this Court seeking more compensation than the amount of compensation determined by [NAME_41] to be payable for the land acquired. I thank [NAME_46] for his assistance in this matter. 2. [NAME_40] seeks compensation of $5,874,929 for the acquisition comprising compensation for market value and injurious affection (s 55(a) and s 55(f) Just Terms Act) of $5,555,929 and for loss attributable to disturbance (s 55(d) and d 59(f)) of $319,000. [NAME_39] contends compensation of $215,000 for the land acquired and $26,000 for disturbance should be awarded.

3. At the date of acquisition [NAME_40] was the registered proprietor of eight lots being lots 162, 165, 166, 167, 177 and 198 DP755204 and part portion 76 DP75228 and part portion 1 DP755231 (the parent parcel). Lot 162 fronts [ADDRESS]. [NAME_39] compulsorily acquired lot 203 [ID], lots 7 and 9 [ID] and lot 77 [ID] (the acquired land) for the purposes of the [NAME_5] Act 1993. The area of the parent parcel was 630.89ha and the area of acquired land was 54.6892ha leaving an area of 576.0908ha (the residue land) in the ownership of [NAME_40].

4. After the acquisition [NAME_40]'s land was split and part is separate from the parent parcel. The HEX is a four lane highway which now runs through the property. Residue land in part of lot 76 (145.40ha) is located on one side of the HEX to the north-east of the parent parcel. It can be accessed by a purpose built tunnel from the parent parcel under the HEX which is accessible by a locked gate for which [NAME_40] has the key. This access was required to be provided as part of the conditions of approval for the HEX project. One of the issues requiring determination is whether legally guaranteed access was provided to [NAME_40] at the date of acquisition. Lot 162 in the north-west has also been split by the HEX and one part of 32.96ha (now part lot 201 [ID]) is now separate from the parent parcel. The separate lot has access to [ADDRESS].

5. The parent parcel and the residue land benefit from development consent DA 118/679/23 (the 1979 consent) which relates to lots 177 and 198. No land from lots 177 and 198 was acquired by [NAME_39]. The development consent permits use of lot 177 and 198 for the purpose of a blue metal (andesite) quarry subject to conditions 1-12 as set out in the letter from [NAME_7] dated 8 May 1979. There is no limit on the extraction rate of the resource or the number of truck movements in the consent. Development consent conditions 7, 8 and 10 provide:

7. The applicant shall consult with the [NAME_48] and prepare a plan satisfactory to the Service for the control of erosion and for the restoration of quarried areas. The applicant shall adhere to the plan to the satisfaction of the Mines Department, [NAME_48]. This condition shall cover the whole of the site including the provision of access [NAME_5].

8. The applicant shall retain ownership of all land within 1 kilometre of the quarry whilst the quarry is in operation. … 10. The majority of timber in the paddock to the North East of the quarry shall be retained to act as a buffer.

1. The quarry access road extends beyond lots 177 and 198 and in the before scenario ran through lots 166, 165 and 162 (now lot 201) to [ADDRESS].

2. On 21 March 2012 [NAME_49] in [COMPANY_21] v [COMPANY_6] (No 3) [2012] NSWLEC 57 determined that the development consent DA 118/679/23 permitted quarrying within a large circle depicted on the plans which were submitted with the development application (quarry circle). His Honour's decision was appealed in Allandale Blue Metal Pty Ltd v Roads and Maritime Services [2013] NSWCA 103; (2013) 195 LGERA 182. The appeal was dismissed. Quarrying has taken place outside the quarry circle.

Disturbance claim by [NAME_50]

1. From 1 August 1995 [NAME_40] leased the parent parcel to [COMPANY_21] ([NAME_50]) for a period of five years. Occupation of the land by [NAME_50] after 1 August 2000 has been on the basis of holding over from month to month under cl 3.2 of the lease. The lease can be terminated on one month's notice. By cl 5.1 and item 7 of the Reference Schedule to the lease [NAME_50] is permitted to use the land for the purpose of "Quarry, minerals and other materials processing and manufacturing". [NAME_50] pays rent of $70,000 per annum to [NAME_40]. The permitted use retained by the lessor [NAME_40] is "agricultural and pastoral pursuits including agistment" on any part of the land upon which the lessee's use was not being carried out for the time being. 2. [NAME_50] the tenant and quarry operator also lodged a claim for compensation following the acquisition by [NAME_39] based on loss of profits due to reduced access to the andesite resource on lots 177 and 198 according to [NAME_39]. After also commencing Class 3 proceedings in relation to the amount assessed by [NAME_41] and following the decision of the Court of Appeal, [NAME_50] accepted the amount of compensation assessed by [NAME_41] in the amount of $807,758 and those proceedings were discontinued. [NAME_41]'s [NAME_43]'s report ([NAME_51]) was in evidence. This identifies that [NAME_50] was paid compensation on the basis of a disturbance loss under s 55(d) and not any amount for market value. This is confirmed in the order made by the Court on 25 June 2012 (exhibit 9 tab 46 p 1594).

Land Acquisition (Just Terms Compensation) Act 1991 1. The objects of the Just Terms Act are contained in s 3: 3 Objects of Act (1) The objects of this Act are: (a) to guarantee that, when land affected by a proposal for acquisition by an authority of the State is eventually acquired, the amount of compensation will be not less than the market value of the land (unaffected by the proposal) at the date of acquisition, and (b) to ensure compensation on just terms for the owners of land that is acquired by an authority of the State when the land is not available for public sale, and (c) to establish new procedures for the compulsory acquisition of land by authorities of the State to simplify and expedite the acquisition process, and (d) to require an authority of the State to acquire land designated for acquisition for a public purpose where hardship is demonstrated, and (e) to encourage the acquisition of land by agreement instead of compulsory process.

1. The following sections of the Just Terms Act were referred to by the parties in the course of argument: Part 2 Acquisition of land by compulsory process Division 1 Pre-acquisition procedures 11 Notice of intention to acquire land by compulsory process (1) An authority of the State may not acquire land by compulsory process unless the authority has given the owners of the land written notice of its intention to do so. (2) The authority of the State is not prevented from acquiring the land by agreement after giving the proposed acquisition notice. 12 Owners to be given notice (1) A proposed acquisition notice need only be given to all the owners of the land who: (a) have a registered interest in the land, or (b) are in lawful occupation of the land, or (c) have, to the actual knowledge of the authority of the State, an interest in the land. (2) If the proposed acquisition notice relates only to a particular interest in land, the notice need only be given to all such owners of that interest. … 15 Particulars to be included in proposed acquisition notice A proposed acquisition notice given to an owner of land must: (a) be in the form prescribed by the regulations or (if no such form is prescribed) in the form approved by the Minister, and (b) specify the authority of the State proposing to acquire the land, and (c) contain a description sufficient to identify the land proposed to be acquired, and (d) specify the period within which the land will be compulsorily acquired, and (e) request any owner who wishes to claim compensation for the acquisition to lodge with the authority of the State a claim for compensation within the period specified in the notice (being not less than 60 days after the notice is given to the owner), and (f) be accompanied by the form for a claim for compensation under section 39. 18 [NAME_42] to be notified of proposed acquisition notice An authority of the State must, as soon as practicable after giving a proposed acquisition notice, notify [NAME_41] of the proposed acquisition notice. Division 2 Acquisition procedures 20 Effect of acquisition notice (1) On the date of publication in the Gazette of an acquisition notice, the land described in the notice is, by force of this Act: (a) vested in the authority of the State acquiring the land, and (b) freed and discharged from all estates, interests, trusts, restrictions, dedications, reservations, easements, rights, charges, rates and contracts in, over or in connection with the land…. Part 3 Compensation for acquisition of land Division 1 Entitlement to compensation 37 Right to compensation if land compulsorily acquired An owner of an interest in land which is divested, extinguished or diminished by an acquisition notice is entitled to be paid compensation in accordance with this Part by the authority of the State which acquired the land. Division 2 Claims for compensation 39 Claim for compensation (1) A person who wishes to claim compensation under this Part must lodge a claim in accordance with this section with the authority of the State that is acquiring the land concerned. (2) A claim for compensation must be in the form prescribed by the regulations or (if no such form is prescribed) in the form approved by the Minister…. 40 Owner claiming compensation must disclose particulars of other persons with an interest in land (1) A person who claims compensation under this Part must state, in the claim form, whether the person is aware of any other person who has an interest in the land and who may be entitled to compensation. (2) If the person is aware of such an interest, the claim must contain such particulars of the interest as are required by the requisite claim form. 41 [NAME_42] to be given copy of claim for compensation (1) An authority of the State must, as soon as practicable after receiving a claim for compensation in respect of a compulsory acquisition (or proposed compulsory acquisition), give [NAME_41] a copy of the claim. (2) [NAME_41] may determine the amount of compensation to be offered to a former owner of land for a compulsory acquisition of the land: (a) before or after the acquisition takes effect, and (b) even though the former owner has not made a claim for the compensation. Division 3 Post-acquisition procedures relating to compensation 42 Notice of compensation entitlement and offer of compensation (1) An authority of the State which has compulsorily acquired land under this Act must, within 30 days after the publication of the acquisition notice, give the former owners of the land written notice of the compulsory acquisition, their entitlement to compensation and the amount of compensation offered (as determined by [NAME_41]). (2) The compensation notice must be given to all former owners of the land who, immediately before the acquisition: (a) had a registered interest in the land, or (b) were in lawful occupation of the land (but only if the authority of the State considers they are entitled to compensation), or (c) had, to the actual knowledge of the authority of the State, an interest in the land which entitles them to compensation…. 43 Particulars to be included in notice of compensation entitlement and offer of compensation A compensation notice given to a former owner of land must: (a) be in the form prescribed by the regulations or (if there is no prescribed form) the form approved by the Minister, and (b) notify the owner that the land has been compulsorily acquired, and (c) state that the owner is entitled to compensation, and (d) offer to pay a specified amount of compensation as determined by [NAME_41] and be accompanied by a form of deed of release and indemnity for completion if the offer is accepted, and (e) inform the owner of the right to object to the amount offered. Division 4 Determination of amount of compensation 54 Entitlement to just compensation (1) The amount of compensation to which a person is entitled under this Part is such amount as, having regard to all relevant matters under this Part, will justly compensate the person for the acquisition of the land. (2) If the compensation that is payable under this Part to a person from whom native title rights and interests in relation to land have been acquired does not amount to compensation on just terms within the meaning of the Commonwealth Native Title Act, the person concerned is entitled to such additional compensation as is necessary to ensure that the compensation is paid on that basis. 55 Relevant matters to be considered in determining amount of compensation In determining the amount of compensation to which a person is entitled, regard must be had to the following matters only (as assessed in accordance with this Division): (a) the market value of the land on the date of its acquisition, (b) any special value of the land to the person on the date of its acquisition, (c) any loss attributable to severance, (d) any loss attributable to disturbance, (e) solatium, (f) any increase or decrease in the value of any other land of the person at the date of acquisition which adjoins or is severed from the acquired land by reason of the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired. 56 Market value (1) In this Act: market value of land at any time means the amount that would have been paid for the land if it had been sold at that time by a willing but not anxious seller to a willing but not anxious buyer, disregarding (for the purpose of determining the amount that would have been paid): (a) any increase or decrease in the value of the land caused by the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired, and (b) any increase in the value of the land caused by the carrying out by the authority of the State, before the land is acquired, of improvements for the public purpose for which the land is to be acquired, and (c) any increase in the value of the land caused by its use in a manner or for a purpose contrary to law. (2) When assessing the market value of land for the purpose of paying compensation to a number of former owners of the land, the sum of the market values of each interest in the land must not (except with the approval of the Minister responsible for the authority of the State) exceed the market value of the land at the date of acquisition. 59 Loss attributable to disturbance 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. 61 Special provision relating to market value assessed on potential of land If the market value of land is assessed on the basis that the land had potential to be used for a purpose other than that for which it is currently used, compensation is not payable in respect of: (a) any financial advantage that would necessarily have been forgone in realising that potential, and (b) any financial loss that would necessarily have been incurred in realising that potential.

Summary of [NAME_40]'s claim under s 55(a) and (f)

1. The valuation approach in the before scenario adopted by [NAME_40] may be summarised as the hypothetical purchaser being a quarry operator who purchases the land in the before scenario as a quarry, a parcel of land capable of immediate subdivision and the balance of the land being an attractive rural residential development opportunity which was significantly diminished in value in the after scenario, with values based on these multiple respective uses.

2. Compensation is payable for the acquired land and injurious affection of the residue land and should be calculated by use of the before and after method of valuation as the acquisition of land was partial. An additional reason this method should be used is because a consequence of the acquisition has been reduction of the amount of the resource that can be extracted from the residue land. Part of the land that could be used in the before scenario if the quarry is extended cannot be used due to the presence of the HEX.

Accordingly, a consequence of the acquisition is that there will be a lesser cash flow from quarrying available in the after scenario for use of the residue land than there would be in the before scenario for the parent parcel. Consequently, compensation is payable under s 55(f).

3. In determining the market value of the acquired land and injurious affection of the residue land, the parties to the transaction referred to in s 56 of the Just Terms Act would take into account the following facts and circumstances in the before situation:

1. The highest and best use of the parent parcel and residue land is for the purpose of a quarry;

2. A modification of the consent to enable quarrying of resource in the proposed modified quarrying area would be likely to obtain approval at minimal cost or delay; and 3. Quarrying within the quarry circle can continue under the consent while the application for extension into the proposed modified quarrying area is prepared, lodged and determined.

1. In the after situation, parties to a hypothetical sale of the acquired land or the residue land would consider that as a consequence of the acquisition of the acquired lands, further extraction in the quarry circle and any modification of the consent to permit extraction in the proposed modified consent area would make the operation of the quarry subject to greater restriction and operating cost than would have been imposed but for the proposal to carry out a public purpose on the land.

2. Provision of a buffer zone will effectively prevent the extraction of quantifiable reserves of andesite by blasting within that buffer zone; carefully designed and controlled blasts can be carried out up to 300m away from the HEX. To maintain the safety of the 300m buffer, additional controls will need to be implemented to manage the risk of flyrock and to limit it to within the buffer zone which will incur additional operating costs.

3. Due to increased visibility of the quarry from the HEX, additional air quality and visual impact measures must be adopted at additional operating cost including:

1. Additional dust mitigation measures from high-pressure water sprays and wind breaks around dust sources; and 2. Installation of additional bitumen sealing;

1. Additional fencing will also be required along the eastern boundary of the land.

2. At the acquisition date, parties to a hypothetical sale of the acquired land or the residue land would consider that as a consequence of the acquisition, and the maintenance of a buffer zone area, there will be 6,180kt of product in the proposed modified consent area. The additional restrictions that would be imposed on the operation of the quarry in order to obtain less total product means that the life of quarry operations has decreased by 1.7 years. The price paid in the after scenario will be significantly less than in the before scenario both because there is less land in the after scenario but also because an account needs to be taken of these material adverse effects on the ability to extract resource from part of that land.

3. Compensation under s 55(a) and s 55(f) will include the difference in the market value of the quarry before and after the acquisition. The market value of land with a highest and best use as a quarry may be calculated as comprising: 1. the net present value of projected cash flows for continued quarry operations until exhaustion of quarriable reserves of resource calculated using the discounted cash flow (DCF) model; 2. the residual value of the land (quarry and surrounds) after cessation of quarrying; plus 3. the residual value of quarry assets, plant, equipment and infrastructure after cessation of quarrying.

Summary of [NAME_39]'s case 1. [NAME_40] is only entitled to just compensation for what it actually lost. That is, compensation for 54.6892ha of land acquired (s 55(a)), severance loss if any (s 55(c)), injurious affection if any to other land (s 55(f)) and disturbance loss (s 55(d)). [NAME_40] was leasing the land to [NAME_50] to use for a hard rock quarry and [NAME_40] was using the remaining residue land for grazing purposes. [NAME_50] has claimed and been compensated for the financial loss suffered of profits foregone from being unable to win andesite on the residue land sterilised by the HEX. 2. [NAME_39]'s secondary position is that whilst a DCF valuation is apposite to the valuation of a business it cannot be employed to determine compensation for market value of land or loss of value to other land on a "before and after" basis in this case. The disturbance loss to [NAME_40]'s business caused by the carrying out of the public purpose is nominal, $70,000 for 1.7 years, not loss of resource for 12.3 years following acquisition. The appropriate valuation method to use to determine the market value of the acquired land is a piecemeal valuation of the land acquired on a per hectare basis.

Evidence 1. In support of its claim, [NAME_40] relied upon:

1. Affidavit of [NAME_53] sworn 3 June 2011;

2. Affidavit of [NAME_57] sworn 29 May 2014;

3. Statement of [NAME_60] dated 11 June 2014; (valuation methodology) dated 3 June 2011 (quarry operations and safety);

4. Statement of evidence of [NAME_63] dated 29 May 2014 (business expenses);

5. Statement of evidence of [NAME_66] dated 11 June 2014 (resource modelling);

6. Statement of [NAME_69] dated 12 May 2011 (blasting safety);

7. Joint blasting report filed 9 November 2011;

8. Statement of evidence of [NAME_72] dated 19 July 2013 (town planning);

9. Supplementary statement of evidence of [NAME_75] dated 12 August 2013;

10. Joint statement of [NAME_75] and [NAME_76] on quarry issues filed 23 December 2013;

11. Joint statement of [NAME_75] and [NAME_79] on subdivision issues filed 23 December 2013;

12. Statement of evidence of [NAME_80] dated 24 February 2014 (ecology);

13. Statement of [NAME_83] dated 17 June 2014 (NPV cash flow);

14. Statement of evidence of [NAME_84] dated 17 June 2014 (residual land value);

15. Joint report of valuation witnesses: business value; and 16. Joint report of valuation witnesses: land value. 1. [NAME_40] tendered:

1. A plan dated 19 January 2010 showing no quarry circle (exhibit A);

2. A plan dated 17 June 2014 showing no quarry circle (exhibit B);

3. A plan dated 19 January 2010 showing the quarry circle (exhibit C);

4. A plan dated 17 June 2014 showing the quarry circle (exhibit D);

5. An extract of the HEX planning materials (exhibit E);

6. An aerial photograph dated 17 June 1979 (exhibit F);

7. Exhibit C marked up by [NAME_87] with surplus land (exhibit G);

8. Invoices on stockyards (exhibit H)

9. Plans marked up by [NAME_88] (exhibit J);

10. Conditions of Approval – F3 to [ADDRESS] (exhibit K);

11. Noise and blasting assessment by [NAME_90] dated 18 June 2014 (exhibit L);

12. Extracts from Google maps and the Wandin Valley estate website (exhibit M);

13. Extract of Australian Standards – Explosives (exhibit N);

14. Joint analysis and adjustment of comparable sales (exhibit O);

15. Overlay plans by [NAME_40] in response to the Commissioner's query (exhibit P);

16. DP1129191P – [NAME_91]'s sale 1 (exhibit Q); and 17. Extract from [NAME_93]'s book The Valuation of Businesses, Shares and Other Equity (fourth edition 2003, [NAME_27], p 64-75) (exhibit R). 1. [NAME_39] relied on the following statements of evidence and joint reports: 1. [NAME_94] (geology) filed 9 September 2011; 2. [NAME_97] (engineering) filed 9 September 2011;

3. Joint geology engineering report filed 17 October 2011; 4. [NAME_100] (blasting) filed 9 September 2011;

5. Joint blasting report filed 9 November 2011; 6. [NAME_76] (town planning) filed 9 September 2011 and 25 October 2013;

7. Joint town planning report on quarry issues filed 23 December 2013;

8. Joint town planning report on subdivision issues filed 23 December 2013; 9. [NAME_101] (geomorphology) dated September 2013; 10. [NAME_104] (ecology) filed 19 November 2013;

11. Joint ecology report filed 4 April 2014; 12. [NAME_107] (land valuation) dated 19 June 2014;

13. Joint land valuation report dated 15 July 2014; 14. [NAME_109] (business valuation) dated 26 June 2014; and 15. Joint business valuation report dated 18 September 2014. 1. [NAME_39] tendered the following evidence:

1. Letter from [NAME_90] to [NAME_39] dated 7 July 2014 and a current quarry operations plan (exhibit 1);

2. Picture of a D6 dozer (exhibit 2);

3. View list and attached maps (exhibit 3);

4. Court book volume 1 (exhibit 4);

5. Court book volume 2 (exhibit 5);

6. Court book volume 3 (exhibit 6);

7. Agreed bundle volume 1 (exhibit 7);

8. Agreed bundle volume 2 (exhibit 8);

9. Agreed bundle volume 3 (exhibit 9); 10. [NAME_88]'s curriculum vitae (exhibit 10);

11. Map marked up by [NAME_112] of Kurri Sand Swamp Woodland (exhibit 11);

12. Aerial photograph showing a 500m setback (exhibit 12);

13. Exhibit D marked up by [NAME_75] of rehabilitation at February 2010 (exhibit 13);

14. Bundle of maps showing "residences" (exhibit 14);

15. Joint experts report on conditions and costs of rehabilitation (exhibit 15);

16. Figure 1.3 of noise and blasting report marked up by [NAME_75] (exhibit 16);

17. Aerial photograph showing 1,000m setback (exhibit 17); 18. [NAME_79]'s mark up of quarry on map of environmentally sensitive land (exhibit 18);

19. Brochure of Tremayne (exhibit 19); 20. [NAME_113] report on [NAME_115]'s sale 1 (exhibit 20);

21. Planning certificate for [NAME_115]'s sale 4 (exhibit 21); 22. [NAME_116]'s statement of evidence (exhibit 22);

23. Supplementary joint report of business valuers (exhibit 23);

24. Overlay plans by [NAME_39] in response to the Commissioner's query (exhibit 24); and 25. Email from [NAME_118] to Mr [NAME_119] of [NAME_120] (exhibit 25).

[NAME_87] and [NAME_121]

1. The affidavit of [NAME_87] sworn on 3 June 2011 was read by [NAME_40]. [NAME_87] is a director and shareholder of [NAME_40] (par 1.1). [NAME_40] has entered into a lease with [NAME_50] (annexure MF 2). [NAME_40] and [NAME_50] are companies associated with the [NAME_123]. [NAME_50] is the company used by the [NAME_123] to operate a quarry on the land owned by [NAME_40] at [NAME_2] (par 1.4). Although the lease has expired between [NAME_40] and [NAME_50] and is in a period of holdover [NAME_40] does not intend to terminate the lease and will not change the rent arrangements under the lease until [NAME_50] has fully exploited the andesite resource available on the land (par 1.5). Pursuant to the lease [NAME_40] continues to operate a grazing business on the land (par 1.6). 2. [NAME_87] states that the existing caretaker's [NAME_124] is on the [ADDRESS] frontage of the land whose occupant acts as a caretaker for the agricultural and quarry related activities on the land and observes entry into the quarry (par 1.7). After construction of the HEX the [NAME_124] will be separated from the larger [NAME_40] holding and it will no longer be practical for the caretaker to keep close watch over the land, especially people entering through the [ADDRESS] frontage (par 1.8). [NAME_87] outlines [NAME_40]'s proposal for a new caretaker's [NAME_124] which is to be a modest brick veneer [NAME_124]. [NAME_87] has made enquiries of local project home builders about the proposed [NAME_124] and anticipates it will cost $250,000 plus GST to construct the [NAME_124] including the connection of services and installation of appropriate access. The location of the proposed [NAME_124] is shown in annexure MF 3 (par 1.9). The location is within the noise shadow of the HEX (as shown in annexure MF 4) and will require additional acoustic treatment to allow it to be occupied which will cost a further $30,000 plus GST based on advice [NAME_87] has received from project home builders (par 1.10). [NAME_87] outlines his reasons for the proposed location of the [NAME_124] (par 1.11). 3. [NAME_87] states that [NAME_40] has existing stockyards on the [ADDRESS] frontage which have been severed from the area used principally for [NAME_40]'s grazing activities causing [NAME_40] not to be able to use the stockyards. [NAME_40] is constructing new stockyards for which costs are estimated. A quote for the construction of the stockyards is attached (annexure MF 5) in the amount of $23,800 plus GST. Some civil works and fencing will also be required estimated at $15,400 plus GST (par 1.12). 4. [NAME_87] was cross-examined about cattle yard expenditure and the proposed house expenditure including the agricultural activities that are carried out upon the land. In cross-examination [NAME_87] stated that the existing [NAME_124] is occupied by a [NAME_125] who pays a commercial lease rate to [NAME_40] (T 167 l 33- 168 l 4, 169 l 48-49). As a director of [NAME_50] [NAME_87] stated that maintaining security for the quarry and its operations is important given the equipment and explosives magazine on site, stockpiles and the quarry pit (T 168). As a director of [NAME_40] [NAME_87] stated that [NAME_40] has responsibilities to its cattle and the public given that cattle can break out of the property if fences are brought down and they can stray onto the road (T 169 l 12-24). [NAME_126] has responsibilities concerning the cattle to observe their security (T 175 l 7-14). The occupier would rarely have a role in receiving the cattle and getting them onto the farm (T 176 l 3-5). The occupier does not normally have responsibility for looking after the cattle when they are delivered to the property or when the cattle are dispatched and are ready to go to market (T 176 l 11-17). [NAME_126] would check the front area of the property to ward off passing traffic or people that decide to break in usually along [ADDRESS]. The breaking in could be into both the quarry and the grazing business (T 178 l 31-49). In response to a question stating that "you don't need a new house on the land for the manager to keep a close eye on the cattle, do you?" [NAME_87] replied "yes, you can go out and tend to the cattle…" (T 180 l 30-34).

5. Exhibit H showing the invoices for the construction of the new cattle yards were tendered during the cross-examination of [NAME_87]. Exhibit H shows that 34 hours were logged for work by a D6 Dozer. In cross-examination [NAME_87] stated that this 34 hours was for work on the cattle yards and the adjacent watering dam (T 193 l 26-44). 6. [NAME_87] was also cross-examined concerning the differences [NAME_50] has made or is in the process of making in an application under s 96 of the Environmental Planning and Assessment Act 1979 (EPA Act) to modify the consent. [NAME_87] was also cross-examined about the blasting that is carried out on the land in relation to or by [NAME_50].

7. The affidavit of [NAME_121] sworn on 29 May 2014 was read by [NAME_40]. [NAME_121] has a minority shareholding in [NAME_40]. He was not a shareholder at the date of acquisition (par 1.1). He is a director and shareholder of [NAME_50] and was at the date of acquisition (par 1.2). [NAME_50] leases the land from [NAME_40]. [NAME_121] understands that [NAME_40] or [NAME_50] can terminate the lease on one month's notice (par 1.6). 8. [NAME_50] and [NAME_40] are companies associated with the [NAME_123] in that members of the [NAME_123] have been, or are, directors and/or shareholders of each company. The directors and shareholders of [NAME_40] and [NAME_50] were not identical at the date of acquisition. [NAME_121] understands that as a director of [NAME_50] he is under an obligation to manage [NAME_50] in its best interests. Since before the date of acquisition it has been and remains his intention that [NAME_50] does not propose to terminate the lease and intends to continue operating the quarry until the andesite resource on the land is extracted down to the 40mRL. [NAME_121]'s understanding has been and is that if [NAME_40] were to sell the land to a third party it is likely that the lease would be terminated (par 1.7). 9. [NAME_50] retained [NAME_127] in 2009 to prepare a computer model for the quarry that incorporates all of the relevant characteristics of the resource and the development plans of [NAME_50]. A copy of a summary of the model was attached to [NAME_121]'s affidavit (par 1.16, SF 9). The 1979 consent was also attached to this affidavit (par 1.17, SF 10).

10. Although the lease between [NAME_50] and [NAME_40] has expired and is in a period of holdover [NAME_50] intends (and intended at the date of acquisition) to fully exploit the andesite resource available on the land in accordance with the model. If the HEX was not constructed this would have involved [NAME_50] quarrying to within 30m of the eastern boundary of the land (par 1.18). It will no longer be possible for [NAME_50] to fully exploit the resource on the land because the quarry would be within about 100m of the HEX. The HEX will be too close to the quarry to safely carry out blasting activities in that area. There are no other feasible methods for extracting the resource at the quarry (par 1.19). 11. [NAME_121] has consulted with [NAME_128] and [NAME_129] about the extent to which [NAME_50] can continue to operate the quarry once the HEX has been constructed. Both have given evidence in these proceedings. [NAME_121] received advice that the potential for flyrock from blasting will require a minimum standoff of 300m to be maintained between the quarry and the HEX. [NAME_121] also received advice that the blasting practices previously used by [NAME_50] need to be changed and more rigorous and expensive methods will need to be implemented. [NAME_50] will implement these recommendations once the HEX becomes operational (par 1.20). 12. [NAME_121] contacted [COMPANY_131] ([NAME_130]), the explosives contractor used by [NAME_50], and advised [NAME_130] of the additional measures recommended by [NAME_128] and [NAME_129]. In response [NAME_130] provided an outline of the various approaches to implementing the recommended measures ([NAME_130] letter) which was attached (par 1.21, SF 12). The [NAME_130] letter dated 31 May 2011 states that the two options for service supply are: 1. [NAME_50] to continue to design and fire shots with a basic face profile and boretrack service of drill holes to be performed by [NAME_130] charged at $1,250 per day. 2. [NAME_130] to provide full "Rock-On-Ground" service with a schedule of rates included. 1. [NAME_50] will incur an additional cost of at least $3,250 per blast to implement the recommendations of [NAME_128] and [NAME_129] (laser profiling and bore tracking costing $1,250 per blast and double priming for each hole at $2,000 per 80 hole blast). [NAME_50] carries out approximately 30 blasts per year (par 1.22). As the quarry gets within 700m of the [NAME_50] will transition to option 2 in the [NAME_130] letter. Once the quarry gets within 500m of the [NAME_132] states that [NAME_50] will transition to option 3 in the [NAME_130] letter but no such option is specified (par 1.23). Under option 2 ([sic 1]) with [NAME_50] doing the drilling the cost per blast will be $27,040 (an additional $5,000 per blast over the pre-acquisition situation). Under option 3 ([sic 2]) with others doing the drilling the cost per blast will be $28,480 (an additional $6,440 per blast over the pre-acquisition situation) (par 1.24).

2. Adopting an average annual production of 775,000 tonnes per year and allowing a minimum 300m standoff from the [NAME_121] considers that [NAME_133]'s model demonstrates that the presence of the HEX will reduce the life of the quarry from 14.7 years to 12.9 years from the date of acquisition (par 1.25).

3. As a result of the HEX more people will be able to observe the operation of the quarry which in [NAME_121]'s experience would bring with it a substantial risk of complaint from users of the HEX about dust arising from the quarry (par 1.28). The bunding installed by [NAME_134], the contractor engaged by [NAME_39] to build the relevant part of the HEX, has reduced visibility of the quarry from the HEX but has not eliminated it (par 1.29).

4. For the quarry to continue to operate efficiently following acquisition further dust mitigation measures will need to be implemented through water based dust suppression measures. A quote from [NAME_135] for the cost of these measures is attached (SF 13) estimated at $99,500 plus GST (par 1.30). [NAME_121] is also concerned about dust plumes as a result of blasting which can only be mitigated by not blasting in unfavourable weather conditions. This can only be achieved through the installation of an on-site weather station (par 1.31). Two dust trackers will also be necessary so that [NAME_50] has adequate information to respond appropriately to any complaints (par 1.32). A quote by [COMPANY_136] for the installation of a weather station and dust trackers is attached (SF 16) at $68,555 plus GST with an ongoing annual calibration fee for the three dust trackers of $750 per year for the balance of the life of the quarry (par 1.33). 5. [NAME_121] also considers that dust plumes from the haul road to the quarry could generate complaints from users of the HEX. He estimates that an additional 2km of bitumen sealing on the [NAME_5] within the quarry will be required. [NAME_138] has provided a quote for this work (SF 17) at $90,000 plus GST which assumes that [NAME_50] would supply the required aggregate products which he estimates would have a further market value of $20,000. [NAME_121] states that this will be cheaper than the ongoing use of water carts to suppress dust (par 1.34). 6. [NAME_121] has security concerns arising from the presence of vehicles so close to the quarry, particularly access to the quarry from the east. He considers that additional fencing along the eastern boundary is required to ensure that the quarry is not accessed by unauthorised persons. A quote for this was obtained from [COMPANY_139] (SF 20) of $36,894 including GST (par 1.36). 7. [NAME_121] states that in his experience if [NAME_40] were to sell the land or lease it to someone other than [NAME_50] who wished to operate the quarry it is likely that the operator would incur the additional costs he has identified (par 1.42). 8. [NAME_121] was cross-examined about the blasting practices undertaken by [NAME_50]. When [NAME_121] was asked about the advice he had received from [NAME_129], [NAME_121] stated that [NAME_129] had said that the blast design is high and that there is always room for improvement (T 268 l 7- 44). When [NAME_50] has blasted within 20 or 40m to property boundaries [NAME_50] has excluded people from what [NAME_50] considered was a safe distance from the blast. [NAME_121] considered that a safe distance was 500m (T 269 l 19-24). People were excluded by advising them of the blasting and sending a sentry to check that all was clear (T 269 l 29-31). [NAME_50] started laser profiling, bore tracking and double priming in 2014 (T 270 l 47- 271 l 9). [NAME_50] has implemented these measures within the quarry circle to see how they worked (T 271 l 37 – 272 l 10). In response to the statement that this extra work is not required by reason of the presence of the [NAME_121] stated "that's correct, I suppose" (T 272 l 17-19). 9. [NAME_87] and [NAME_121] were also cross-examined about disturbance items which were claimed by [NAME_50] and what if any items for which [NAME_50] was paid had actually been constructed. These issues are not relevant given the reasoning in this judgment. As such this evidence has not been summarised.

Geological evidence/extent of resource 1. A joint geology/engineering report dated 17 October 2011 was prepared by [NAME_128], called by [NAME_40], [NAME_140] and [NAME_141], called by [NAME_39]. This stated that the experts agreed on the physical topographic site setting of the existing quarry and any future quarrying to the east, the geological setting, the quarry products and the future quarry design. After some disagreement on the amount of resource able to be harvested and the provision of further data to [NAME_140] the experts were broadly in agreement on the amount of andesite likely to be located within a 300m buffer around the HEX.

2. The extent of the andesite resource based on two possible pit designs was the subject of an undisputed report by [NAME_133] engineer for [NAME_40]. Given the agreement on this issue it is unnecessary to set this out further.

Other Part 3A quarry approvals 1. [NAME_141], mining engineer, prepared a statement of evidence dated 9 September 2011 attached four project approvals. Project approval dated 6 January 2010 for the [NAME_142] under Pt 3A (exhibit 4 tab 8 p 210) was subject to the following conditions: BLASTING AND VIBRATION Airblast Overpressure Limits 8. The Proponent shall ensure that the airblast overpressure level from blasting at the project does not exceed the criteria in Table 4 at any residence on privately-owned land. Operating Conditions 12. During quarrying operation on site, the Proponent shall implement best blasting practice to: (a) conduct blasting operations in accordance with AS 2187.2 – Explosive Storage, Transport and Use; (b) minimise flyrock and dust and fume emissions from blasting; (c) protect travellers on the [NAME_74] (d) protect the safety of people and livestock and the serviceability of private property and public infrastructure; to the satisfaction of the Director-[NAME_44]. Blast Management Plan 13. The Proponent shall prepare and implement a Blast Management Plan for the project to the satisfaction of the Director-[NAME_44]. This plan must: (a) be submitted to the Director-[NAME_44] for approval prior to the commencement of blasting activities; and (b) include a protocol for evaluating blasting impacts on, and demonstrating compliance with, the blasting criteria in this approval for all privately-owned residences and other structures. METEOROLOGICAL MONITORING 21. During the life of the project, the Proponent shall ensure that there is a suitable meteorological station in the vicinity of the site that complies with the requirements in the Approved Methods for Sampling of Air Pollutants in [NAME_1] guideline.

1. Modification approval dated 21 December 2010 for the Ardglen Quarry Extension under Pt 3A (exhibit 4 tab 8 p 237) was subject to the following conditions: BLASTING AND VIBRATION Operating Conditions 10. The Proponent shall implement best blasting practice to: (a) protect the safety of people, property, public infrastructure and livestock; and (b) minimise the dust and fume emissions from blasting at the project, to the satisfaction of the Director-[NAME_44].

11. The Proponent shall not undertake blasting within 500 metres of any privately-owned land or any land not owned by the Proponent, unless suitable arrangements have been made with the landowner and any tenants to minimise the risk of flyrock-related impact to the property to the satisfaction of the Director-[NAME_44]. AIR QUALITY Monitoring 17. The Proponent shall prepare and implement an Air Quality Monitoring Program for the project, in consultation with DECCW, and to the satisfaction of the Director-[NAME_44]. This program must: (a) use a combination of high volume air samplers and dust deposition gauges to monitor the dust emissions from the project; (b) include a protocol for demonstrating compliance with the air quality impact assessment criteria in this approval; and (c) be submitted to the Director-[NAME_44] for approval prior to any works being undertaken in the Extension Area. METEOROLOGICAL MONITORING 18. The Proponent shall ensure the project has a suitable meteorological station in the vicinity of the site which complies with the requirements in Approved Methods for Sampling Air Pollutants in [NAME_1] guideline, to the satisfaction of the DECCW and the Director-[NAME_44].

1. Project approval dated 16 June 2008 for the Rockley Falls Quarry under Pt 3A (exhibit 4 tab 8 p 271) was subject to the following conditions: BLASTING AND VIBRATION Operating Conditions 11. The Proponent shall implement best blasting practice to: (a) ensure that no flyrock leaves the site; (b) protect the safety of people, property, and livestock; (c) minimise the dust and fume emissions from blasting on the site; and (d) co-ordinate blasting on site with the blasting at the adjoining Lubke quarry to minimise the potential cumulative blasting impacts of the two quarries; to the satisfaction of the Director-[NAME_44].

1. Project approval in 2007 for the Marulan South hard rock quarry and associated infrastructure under Pt 3A (exhibit 4 tab 8 p 295) was subject to the following conditions: Operating Conditions 14. The Proponent shall implement best blasting practice to: (a) ensure that no flyrock leaves the site; (b) protect the safety of people, property, and livestock; and (c) minimise the dust and fume emissions from blasting on the site, to the satisfaction of the Director-[NAME_44]. METEOROLOGICAL MONITORING 21. During the project, the Proponent shall maintain a suitable meteorological station on (or in close proximity to) the site to the satisfaction of the DEC and Director-[NAME_44]. This station must satisfy the requirements in the Approved Methods for Sampling of Air Pollutants in [NAME_1] publication.

Rehabilitation 1. [NAME_128], geologist, called by [NAME_40], and [NAME_141], called by [NAME_39], prepared a further joint report dated 28 July 2014 on conditions and costs attaching to the site rehabilitation scenario at the quarry as identified by [NAME_141] in plan 1 extraction plan attached to his statement of evidence dated 8 September 2011. This joint report (exhibit 15) resolved a large amount of the earlier disagreement between them.

2. Concerning the cost of rehabilitation of the areas of 101.3ha shown on plan 1 annexed to [NAME_141]'s statement of evidence dated 8 September 2011 (exhibit 15): 1. [NAME_128] states that there is/has been no quarry rehabilitation plan submitted or approved since 1979 (par 4). [NAME_141] agreed (par 9). 2. [NAME_128] states that the detailed analysis undertaken by [NAME_141] in 2011 represents a fair and reasonable attempt to estimate the likely costs to rehabilitate the 101.3ha (calculated as 108.0 minus 6.7ha from plan 1) of land disturbed by quarry and quarry related activities up until February 2010 (par 6). Mt [NAME_99] agreed (par 11). 3. [NAME_128] states that a number of key planning and cost assumptions are open to debate which should be based on more detailed planning and would require considerable additional time to audit to plus or minus 10% reliability (par 7). [NAME_141] did not comment on this (par 12). 4. [NAME_128] concluded in relation to [NAME_141]'s 2011 estimate of total rehabilitation costs for the 101.3ha (shown on plan 1) at $2.527 million, these being that (par 8):

1. The total cost of rehabilitation of the 101.3ha studied by [NAME_141] could have been as high as being "in the order of $2 million"; however 2. That a substantial portion of this cost could have been offset by the excavation, re-processing and sale of significant quantities of crushed hardstand material removed from the 27ha occupied by process plant and stockpiles, during site rehabilitation; and 3. The land was required to be rehabilitated for use as grazing land not alternative uses where expensive re-grassing/vegetating were not required. 1. [NAME_143] par 8 [NAME_141] states that his and [NAME_143] opinions of the cost of rehabilitation of the area shown on plan 1 are presented in annexure A (par 13): 1. [NAME_141]'s original estimate in his statement of evidence dated 8 September 2011 was $2.527 million. 2. [NAME_141]'s revised estimate as detailed in appendix A is $2.224 million. 3. [NAME_143] estimate as detailed in appendix A is $2.003 million.

1. Concerning the estimate of the cost of rehabilitation of those areas assuming a new or modified consent allowing quarrying beyond the quarry circle to within 200m of the HEX or 300m of the HEX requiring rehabilitation of an additional 10.2ha if 200m and 7.3ha if within 300m of the HEX: 1. [NAME_128] states that the responsibility for future rehabilitation would rest with the quarry operator, in this case the hypothetical purchaser (in early 2010). [NAME_128] states that the concept of [NAME_50] retaining the liability to rehabilitate the site would be operationally unviable under these circumstances and that the hypothetical purchaser would have had to negotiate and sign a lease with the landowner, [NAME_40] (par 16). 2. [NAME_128] believes that such a lease would be expected to include clauses requiring compliance with all existing approvals and licences as well as a requirement that quarry land be remediated to a condition that ensured no net loss of intended land value (par 17). 3. [NAME_128] believes that the purchaser of the quarry would then have commissioned staged extraction and progressive rehabilitation planning ensuring compliance with lease conditions at the lowest possible cost (par 18). 4. [NAME_128] states that in the absence of requisite rehabilitation plans he adopted the extractive industry formulated figures of $2.50 per square metre rehabilitated (par 19). 5. [NAME_128] estimated $255,000 for the 10.2ha to within 200m of the HEX and $182,500 for the 7.3ha to within 300m of the HEX (par 20). 6. [NAME_141] would apply a rate of $2.65 per square metre (par 25). 7. [NAME_141] stated that in the absence of a detailed rehabilitation plan linked with staged quarry development he would apply a rate of $26,474 per hectare to the area disturbed by any future approved quarry areas to estimate the cost of rehabilitation. [NAME_141] made this estimate on the basis that (par 27):

1. He has previously estimated the cost of rehabilitating domain 4 - active quarry and voids at $1,066,921 (table 2) over the existing quarry area of 40.3ha as defined on plan 1. 2. [NAME_128] and [NAME_141] have agreed that the rehabilitation cost estimate for domain 4 - active quarry and voids at $1,066,921 (table 2) over an existing quarry area of 40.3ha as defined on plan 1 represents a "fair and reasonable attempt to estimate the likely costs to rehabilitate."

Blasting 1. Blasting practice is in issue in the after acquisition scenario because of the impact of the HEX on the ability of the hypothetical purchaser to extract andesite from within 200m or 300m from the HEX. [NAME_121] was cross-examined about what [NAME_50] is currently doing on the land with regard to blasting. [NAME_39] also cross-examined the blasting experts concerning the before acquisition scenario to seek support for two submissions it made. One was that the likelihood of consent being granted in the before scenario was speculative because blasting would be occurring too close to property boundaries. The other submission was that incurring of costs for laser profiling and bore tracking did or should have occurred in the before and after scenarios, not the after scenario only. 2. [NAME_129], blasting engineer and consultant, and [NAME_128] were called by [NAME_40]. [NAME_88], consulting engineer, was called by the [NAME_39]. [NAME_129] states that the standard of blast designs at the quarry are high and the overall standard of drilling and blasting is likely to be moderately high (exhibit 4 tab 10 par 5). In [NAME_129]'s opinion, current blast designs are satisfactory for controlling flyrock. The designs that he examined in the 33 blast records (33 blasts fired during the 330 day period ending 15 December 2010) were also satisfactory for controlling flyrock (exhibit 4 tab 10 p 335 par 5, p 339 par 8). 3. [NAME_129] explained figure 4 of his statement (exhibit 4 tab 10 p 349) in cross-examination (T 453-455). Figure 4 shows a blast within a quarry from a bird's eye view (T 453 l 43-44). Flyrock can occur up to 700m forward of the blast face and up to 500m rear of the blast face (T 454 l 21-25). This is a "no go zone" for people during a blast (T 454 l 47- 455 l 1).

4. In the joint report (exhibit 4 tab 12) the experts agreed that there is a need for a buffer zone (development standoff) between the HEX and the quarry operations (par 1.1). Provision for such a buffer will effectively prevent the extraction of quantifiable reserves of hard rock by blasting from within that buffer zone (par 1.2). One of the reasons for this buffer is to protect persons travelling on the HEX from blasting operations (par 1.3). The additional controls that need to be implemented to manage the risk of flyrock and to limit it to within the buffer will incur costs. Such costs attach to the following (par 1.4):

1. Increased supervision of drilling blastholes - blasthole setout from survey;

2. Blasthole quality assurance (QA) including drill log creation and review, collar survey, blasthole length measurement, boretracking of blastholes, blasthole diameter monitoring;

3. Quarry face survey through laser profiling and face inspection;

4. Blast designs based on determined geology and geometry;

5. Review of as-built blastholes;

6. Blasthole charging QA;

7. Blasthole stemming QA;

8. Allocation and connection of millisecond delays; and 9. Misfire recovery in minimum buffer zone environment.

1. At the quarry the risks from blasting are, in decreasing order of priority (par 1.6):

1. Flyrock projected beyond the buffer zone;

2. Distraction of motorists due to the visual impact of a blasting operation from noise/airblast, dust or ground movement;

3. Visibility reduction due to blast-generated dust;

4. Generation of toxic fumes that have travelled beyond the buffer zone; and 5. Ground vibration (not considered a risk to persons travelling in vehicles).

Buffer distance 1. There is a strong relationship between the level of design and operational control in drilling and blasting and the maximum flyrock distance (par 1.7)

2. The experts disagreed on the safe minimum width of the buffer between the HEX and quarry blasts (par 2.1). Experts for [NAME_40] believe that the minimum width of the buffer should be at least 300m (par 2.2). [NAME_88] believes that the buffer could be reduced to 200m (par 2.3). 3. [NAME_129] and [NAME_128] believe that any buffer width shorter than 300m would be unsafe for motorists. They believe that risks associated with an error in drilling, charging or stemming of blastholes become unacceptable and that the possible consequences of such an error become totally unacceptable (par 3.1). In cross-examination [NAME_129] stated that he would not recommend blasting within 200m of the HEX but it is possible at a cost (T 488 l 10-19). [NAME_129] stated that it would be impractical but has not done a cost analysis as he is not a coster (T 489 l 7-11). 4. [NAME_128] states that [NAME_88] takes little or no account of the variability of geology at [NAME_2], prescribes interpretive tasks that are unachievable and fails to explain that the formula he uses to predict flyrock range is underpinned by modelling conducted in granite, a significantly different rock type to the altered andesites being quarried at [NAME_2] (par 3.1.1). In cross-examination [NAME_88] stated that notwithstanding that the material he had relied upon in his analysis was granite, he would advise a hypothetical purchaser in February 2010 he nevertheless could rely upon this model in formulating a blasting distance. [NAME_88] would advise the purchaser of the limits of the models that he had relied upon including that the advice is based on granite and that granite is a different product to andesite (T 433 l 9-31). 5. [NAME_128] states that in predicting the potential range of flyrock under normal blasting conditions, [NAME_88] has relied heavily on assumptions and equations of [NAME_145] in 2009 but ignores later advice from [NAME_148] concerning the quarry in 2011 (par 3.1.3).

6. The experts agreed that carefully designed and controlled blasts can be carried out within 300m of urban areas and important infrastructure (par 3.1.4).

7. Points that lead [NAME_88] to believe that a buffer distance of 200m is possible are (exhibit 4 tab 12 p 389):

1. Where burden is sufficient the quality of the material matters less than the amount;

2. Current blasts at [NAME_2] appear to be well controlled;

3. Where true face burdens are uncontrollable then buffer blasting may be utilised;

4. True stemming burdens may be controlled by measurement which identifies discontinuities and allows rectification to occur; and 5. Once true burdens are controlled the remaining issue is linear charge. Where product has collected in voids the design charge diameter may be significantly increased. In this situation the use of a buffered face will adequately deal with this.

Reducing maximum flyrock range 1. [NAME_129] states that to reduce the maximum range of flyrock blast designs need to be modified and implemented with more care, accuracy and attention to detail. To do this requires an increase in the combined cost of drilling and blasting (exhibit 4 tab 10 par 7.1 p 337). 2. [NAME_129] states that maximum flyrock range can be reduced at the quarry by (exhibit 4 tab 10 par 7.5 p 337): 1. using designed stemming lengths that are never shorter than 17 times the blasthole diameter or 70% of the drilled burden distance; 2. removing, ejecting, dissolving the top of any charge for which the actual stemming length would be less than the designed stemming length; 3. using a relatively long stemming column in any front-row blasthole that shoots to a deep power trough or to a free face; 4. using stemming material that consists of graded angular crushed rock with a high ejection resistance per metre of column length instead of drill cuttings; 5. using drilled burden distances that are never smaller than about 25 times the blasthole diameter and that never have errors exceeding 10%; 6. preparing bench tops better; 7. laser profiling the face; 8. marking out the positions of blasthole collars more accurately; 9. reducing collaring errors; 10. limiting bench heights to about 15m; 11. reducing errors in the inclination and azimuth of blastholes; 12. boretracking; 13. reducing errors in the drilled inclined length of blastholes and by better controlling fallback and backfill; 14. collaring redrilled blastholes in locations that minimise errors in actual burden distance; 15. double priming every blasthole; 16. locating drop cut blasts as far from personnel and damageable property as possible; 17. using delays that provide good progressive relief of burden and by connecting these up with considerable care and accuracy; and 18. developing the quarry in such a manner that the only face within 450m of the HEX: 1. is parallel to the HEX; and 2. is continually pushed back (by blasting) towards the HEX.

1. In cross-examination [NAME_129] stated the measures outlined in par 7.5 of his report should not necessarily be implemented for quarrying in the existing quarry circle. There was one instance of flyrock travelling 600m several years ago (T 476 l 47-50). 2. [NAME_129] also stated that these measures would involve extra costs (T 489 l 44-50). In undertaking measures up to a 200m standoff [NAME_129] stated it would be necessary to have competent people manage the process, [NAME_130] is not necessarily the only provider of such competence (T 491 l 20-27).

Laser profiling, bore tracking and double priming 1. In cross-examination [NAME_129] stated that bore tracking is leading edge practice in hard rock quarries, quarries in environmentally sensitive locations (T 467 l 11-12, 469 l 8-11). [NAME_88] stated that bore tracking and laser profiling are current best practice for a hard rock quarry like [NAME_2] (T 474 l 39-43). [NAME_88] stated that laser profiling and bore tracking is a reasonable measure for controlling flyrock, he is not sure about [NAME_1] but in Queensland the regulation specifically mentions that reasonable measures must be taken (T 483 l 7-12). [NAME_88] stated that if the risk of column dislocation was identified and double priming was a reasonable and effective step to address that risk, double priming would be best practice (T 476 l 26-28).

Costs 1. To control the drill and blast variables in order to reduce the buffer zone to 200m [NAME_88] stated that the following factors would need to be implemented (exhibit 4 tab 11 p 379):

1. Appointment of a responsible, experienced drill and blast professional with demonstrated capability in the blasting operations in sensitive areas to oversee all aspects of the drill and blast quality;

2. A drill log of every hole to be completed by the drill operator which identifies the rock conditions in every blasthole with regard to broken ground, loss of returns, cracks, vughs, inter alia;

3. An assessment and signoff of the drill hole log by the shotfirer and blast supervisor prior to loading commencing;

4. A visual assessment and photographic record and completion of a checklist for the face including assessment of crest conditions prior to each blast;

5. Pattern layout based on the face assessment and confirmed through laser profiling;

6. Front row burdens confirmed by borehole survey matched to face profiling;

7. Proceduralised and documented handover of drilled bench to shotfirer, noting condition and any abnormalities;

8. All holes loaded to a designed stemming height and confirmed by dipping after loading. Results recorded on load sheet and signed off by shotfirer;

9. Procedure developed and in place to recover overloaded holes;

10. Crushed aggregate stemming material to pass an acceptance test to ensure it meets required specifications. It is expected that this will be available from existing quarry stockpiles; and 11. High speed video of every blast to be taken and analysed for any evidence of incipient bursting. 1. [NAME_88] stated that the provision of the additional services over and above the current blasting practices will incur the additional costs per cubic metre estimated as follows (exhibit 4 tab 11 p 380):

1. Drill and blast procedure review performed six monthly at $6,750 each = $0.03 2. QA dedicated shot crew member for stemming control inter alia = $0.12 3. Laser profile and boretrack = $0.21 4. Drill log for ground conditions = $0.05 5. Dedicated "clean" stemming material = $0.03 6. In addition where the buffer zone is further decreased to 150m from 200m drill and blast engineer/consultant to attend every blast = $0.18. 1. [NAME_88] states that the implementation of the recommended controls must be done before the operation approaches the 300m zone in order to confirm that the blast operation is performing as designed. A minimum of six test blasts should be undertaken with all modified controls in place to confirm flyrock management. This will add an estimated $0.44 x 30,000 x 6 blasts = $79,200 in cost (exhibit 4 tab 11 p 381). [NAME_88] estimated the cost to implement improved blasting practices as $0.44 per bank cubic metre (BCM). If required the increase in costs due to a reduction in blast hole diameter from 102mm to 89mm is expected to be $0.62 per BCM. Therefore the additional cost to recover 275,000 additional cubic metres is estimated at $121,000 for increased level of control, alternatively if required $170,500 for a reduction in blast hole diameter and increase in stemming length (exhibit 4 tab 11 p 381). In cross-examination [NAME_88] stated that these are extra costs required to move from a 300m buffer to a 200m buffer, represented by the 44 cents BCM (T 432 l 30-43). In later oral evidence [NAME_88] stated that 44 cents BCM is an error because he would advise the use of laser profiling and bore tracking to the operator of the quarry in 2010, so the 21 cents is not an extra cost (T 483 l 35- 485 l 13). 2. [NAME_128] noted that whilst [NAME_88] has tendered estimates of additional costs his cost assumptions do not reconcile with actual costs being incurred, nor with quotations from [NAME_130] for more controlled blasting closer to the HEX (exhibit 4 tab 12 p 397). [NAME_128] states that the current comparison between quarry costs and those projected by [NAME_88] is as follows: 1. [NAME_50] (via [NAME_121]) costings:

1. Current practice - $2.69 per BCM 2. Option 1 greater than 700m - $3.09 per BCM 3. Option 2 greater than 500m, less than 700m - $3.24 per BCM 4. Option 3 greater than 300m, less than 500m - $3.55 per BCM 1. [NAME_88] costing to 200m:

1. Contract price - $3.50 per BCM 2. Option A improve practices - $3.99 per BCM 3. Option B option A plus 89 dia holes - $4.61 per BCM

Planning evidence 1. [NAME_79], town planner, was asked by [NAME_39] to address the likelihood of obtaining development consent to extract andesite beyond the circle on the map attached to the consent and into the area identified by [NAME_140] including likely restrictions such as buffers, disregarding the public purpose, and any restrictions such as buffers having regard to the public purpose. 2. [NAME_79] would have advised that some expansion of the quarry may have been achievable on lots 177 and 198 but there would have been concern about the impact of further truck movement through areas where tourism was increasingly prevalent and impact on road infrastructure. Expansion towards the eastern and southern boundaries would have been unlikely unless the potential impacts such as noise, dust, flyrock and vibration on neighbouring properties were adequately addressed and a minimum 1,000m buffer was provided from neighbouring land by the expanded quarry. 3. [NAME_7] (the Council) would have been concerned about the physical and environmental impacts of truck movements on traffic including tourist traffic along [ADDRESS]. The 1979 consent conditions relating to retention of ownership of land within one kilometre and preventing further subdivision of that land were indicative of the long-established requirement for quarry-related development to safeguard the amenity of neighbouring land. Future conditions would be likely to be more onerous given the Cessnock Development Control Plan 2006 (CDCP 2006) requires a minimum 1,000m buffer between category C and A uses to separate incompatible uses. In the absence of such a buffer expansion was unlikely to be approved. Dispensation from the 1,000m buffer was unlikely given the changing nature of the neighbourhood to rural residential and tourism. The neighbouring lots to the south have development potential for residential dwellings or tourist-related development. The location of the additional andesite to the east and south means that such a buffer cannot be provided. Potential for impact on vegetation including endangered ecological communities (EECs) would require assessment 4. The Lower Hunter Regional Strategy dated October 2006 by the Department of Planning identified the subject land and neighbouring land as a resource area.

5. Likely conditions of consent disregarding the public purpose imposed by the Council include a buffer of 1,000m from neighbouring land with the onus on the developer to show that a lesser distance was appropriate. Given that [NAME_7] was well aware of potential land use conflicts with quarries and mines the CDCP 2006 was prepared with this in mind. A rehabilitation plan would be required prior to any consent for expansion. All rehabilitation would be at the expense of an applicant. The imposition of truck movement limits to and from the quarry could reasonably be anticipated, such as tonnage extraction limits per annum.

6. Having regard to the public purpose, conditions of consent would require a 1,000m buffer from the southern boundary. The required buffer for the road would be less at 500m as the road is a category B land use. Similar conditions to those required without the road would apply. It is still unlikely that the existing quarry would have been permitted to expand further east, north or south. Provision of direct site link to the HEX for southbound trucks would assist in addressing concerns about trucks on local [NAME_5]. 7. [NAME_75], town planner, was asked by [NAME_40] to address in his report the advice he would give a prospective purchaser of [NAME_40]'s land about its ability to lawfully operate and extract the andesite resource present on the land in the before and after scenarios and the likelihood of approval of an application to expand the quarry. A hypothetical purchaser could apply to modify the existing consent under s 75W or s 96 of the EPA Act or make a new application under Pt 3A. At the time of acquisition the quarry met the criteria for a Pt 3A project in Sch 1 of the State Environmental Planning Policy (Major Development) 2005 (Major Development SEPP). A s 75W application was possible assuming production rates, truck movements and environmental impacts did not substantially increase from the existing operation. A modification of the consent would be achievable in a realistic time frame at a cost of $300,000 and would ensure the realisation of the resource in the before scenario.

8. There are existing discrepancies between the existing consent and existing operations, as areas of the pit and materials stockpiles are outside the circles on the indicative plan, the crushing plant and related equipment is not within the smaller circle designated for this purpose, the access road is in a different location to that shown on the indicative quarry plan, some crushing plant and stockpile related development has extended marginally beyond the boundaries of the land to which the consent applies. These discrepancies are relatively minor and could be included in a s 75W application. There have been very few complaints about truck movements. Traffic impacts would be assessed in any new application. No new or greater impacts would arise from continued operations to warrant restriction.

9. Environmental matters that would be considered by a consent authority in an application to expand the quarry include noise, vibration, dust, flyrock, ecology, archaeology, water, traffic, visual, hazards and waste impacts. The environment protection licence (EPL) at the date of acquisition authorised 500,000 tonnes of land based extraction, since increased to two million tonnes per year (in June 2011). The quarry expansion would have to be designed to avoid, mitigate or compensate for any affectation to EECs. Ecological factors would not prohibit extension of the quarry. A buffer of less than 1,000m is likely to be required given noise, vibration, dust, visual and flyrock impacts, with 500m to the nearest non-quarry owned residence more likely. Additional conditions would be likely to be imposed under s 75W or Pt 3A in line with contemporary practice. These conditions would not be likely to unduly restrict the before or after scenario pit design. Likely conditions in the after scenario would include measures to control dust and noise emissions so that no nuisance would be caused to neighbours, a blast management plan to ensure no flyrock reaches the HEX, a rehabilitation plan and program, specification of biodiversity offsets and a management plan for the offset areas inter alia. With the introduction of the HEX near the quarry the risk presented by flyrock means it will no longer be safe to extract all of the andesite resource in the before scenario pit design. It is likely a 300m buffer between the HEX and the nearest active quarry face would result in the after case pit design. 10. [NAME_141]'s rehabilitation costs are based on closure of the quarry, not an appropriate basis for estimating rehabilitation requirements and costs because rehabilitation would continue to occur while quarrying is taking place. The conditions of consent identified by [NAME_141] as likely to be imposed are based on conditions imposed on new or modified quarries between 2007 and 2011 which are not comparable to the [NAME_149]. Three are for new quarries which would have more extensive conditions. The Ardglen extension approval is for a quarry with many more nearby residences, 15 within approximately 500m distance.

11. The planners prepared separate reports on the advice they would give a hypothetical purchaser of the quarry about its subdivision potential for residential purposes in the before and after scenarios. [NAME_75] identified in the before scenario that a buffer distance of 500m would be required between private residences and active quarrying and processing facilities. Appropriate arrangements would also need to be made about sharing and any consequential need for upgrading the quarry access road. Bushland on lot 76 would also be a constraint. With a minimum lot size of 40ha the parent parcel could contain five lots concurrent to quarrying shown in figure 1 with 11 lots after quarrying being feasible (figure 2). With varying lot sizes the parent parcel could contain 7 lots concurrent to quarrying and 15 lots after quarrying, as demonstrated in figures 6 and 7 in his report. For the after scenario [NAME_75] showed 3 to 6 lots (figures 5-8) and 9 to 13 lots after quarrying (figures 8-11). 12. [NAME_79] considered there was no loss in development potential for residential lots resulting from the acquisition as cl 11A(2) of the Cessnock Local Environmental Plan 1989 (Cessnock LEP 1989) allowed reduced size lots resulting from the acquisition for the new road to retain their former lot entitlement ([NAME_40] disputes that this clause applies). While lots 167, 168 and 761 were affected by the acquisition they did not have rural lot subdivision potential pre-acquisition due to site constraints primarily associated with vegetation and bushfire risk. The subdivision potential of lot 162 was also unaffected.

13. In the joint planning report of [NAME_75] and [NAME_79] (quarry) the planners agreed that, at the date of acquisition, the relevant provision under the EPA Act was s 75W.

14. The planners agreed that the subpoenaed documents obtained from [NAME_7] confirm that there had been about six historical complaints to the Council about noise, dust and truck movements from the quarry. [NAME_75] believes the receipt of such a small number of complaints over an operational period of more than 30 years demonstrates that the quarry is both well located and operated.

15. The planners agreed that surrounding land to the south and east of lots 177 and 198 was of a rural nature. A Crown reserve runs along the eastern boundary of lot 177, and rural land beyond. The planners agreed that the distance between the quarry circle and: 1. the eastern boundary of the subject land was about 500m, 2. the southern boundary of the subject land was about 20m, and 3. the western boundary of the subject land was about 840m.

1. The subject land traverses the local government boundaries of both [NAME_7]. The portion of the subject land occupied by the quarry operation was within the Cessnock local government area. In addition to rural uses, the broader area also contains tourist uses associated with the surrounding wine region and rural residential development.

Environmental planning instruments 1. The planners agreed that at the acquisition date the environmental planning instruments which were most relevant to the quarry operation on the subject land were those as set out in Appendix B of [NAME_79]'s original statement and the provisions of Pt 3A of the EPA Act as existed at the date of acquisition. [NAME_79]'s Appendix B contains both a description of some applicable instruments and commentary on them. [NAME_75] disagreed with much of the commentary, including that extractive industries are prohibited in the 1(a) Rural zone (par G) and that the CDCP 2006 "required" buffers of 1,000m between Category C and A land uses (par N and O).

Likely planning approach of any future expansion - Part 3A 1. The planners agreed that a development satisfying s 75B of the EPA Act would have been that to which Pt 3A of the EPA Act applied and that other relevant provisions are cl 8J of the Environmental Planning and Assessment Regulation 2000 (EPA Regulation) and Sch 1 of the Major Development SEPP. The planners agreed that a development for an extractive industry that proposed to extract more than 200,000 tonnes of extractive material per year or extracts from a total resource of more than five million tonnes (being that subject to the development application or other relevant application under the EPA Act) was a development to which Pt 3A of the Act applied, being a development identified in Sch 1 of the Major Projects SEPP to which s 75B of the EPA Act applied.

2. The planners agreed that a Pt 3A modification proposal to the consent would need to satisfy s 75W of the EPA Act and meet the requirements of cl 8J(8) of the EPA Regulation. The planners agreed that those aspects of the existing quarry that had extended beyond the quarry circle, and any other works that departed from that consent, required regularisation.

Likely buffer conditions for expanded quarry 1. The planners disagreed as to whether a likely buffer required under a Pt 3A approval for any future quarry extension and/ or expansion would be measured to the neighbouring property boundary, or to a dwelling located on that property. [NAME_79] would have advised a hypothetical purchaser that a buffer for the subject quarry would be measured from the site boundary for any application under Pt 3A. The typical approach of the Department of Planning where it has required buffers around quarries has been to measure the required buffer of a quarry from the property boundary of the land in question. A similar approach is reflected in the CDCP 2006 control for quarries of [NAME_7]. A proponent's environmental assessment report would address issues of safety, noise and air quality.

2. Neighbouring land has the potential to support tourist-related accommodation in particular. The potential to use neighbouring land for those purposes would support the necessity for buffers to be measured from the property boundary. The planners agreed that land to the south and east of the site was in zone 1(a) rural under the Cessnock LEP 1989, in which a range of uses were permissible. These included commercial vineyards; art gallery; bed and breakfast; holiday cabins; integrated tourist development; waste management facility; church; dwelling house; educational establishment; motel; service station; tourist recreation facilities; rural industry; home industry; tourist shops; and [NAME_44] stores. [NAME_79] said that a minimum lot size of 40ha for subdivision did not limit the use of neighbouring land for the above uses. 3. [NAME_75] agreed that a range of land uses are permissible in the 1(a) rural zone and that tourism development on neighbouring land is possible. In practice [NAME_75] believes the consent authority would consider both existing development on the properties concerned and the infrastructure available there. Most properties to the south of the quarry either have a residence already or do not have road access, and in these cases [NAME_75] believes approval of additional development, including for tourism, would be unlikely, particularly if it were affected by existing noise from the quarry.

4. The planners prepared a joint report on subdivision. [NAME_75] in particular was cross-examined about his hypothetical subdivision maps in figures 1-11 of his original subdivision report given the location along a changed quarry access road. As the land [NAME_43] [NAME_115] called by [NAME_40] did not rely on this evidence there is no utility in further canvassing it.

Oral evidence 1. [NAME_75] gave oral evidence of his expertise in advising on numerous quarry applications and his role on the Joint Regional Planning Panel (JRPP) for western Sydney which included consideration of a number of quarry proposals. In relation to blasting impacts, reference was made to [NAME_129]'s figure 4 which prescribes a zone defined by the dots outlining the circle inside which there could be uncontrolled generation of flyrock. [NAME_75] considered the figure reflected a number of assumptions by [NAME_129] of what would be likely to occur. [NAME_75] considered a peer review would be undertaken of such evidence to determine what should be proposed. Clearance distance is crucial only if it affects real property and livestock. Asked in relation to [NAME_143] quarry plan and the quarry extension to the east whether the quarry face would be likely to face west, [NAME_75] agreed that, considering [NAME_129]'s figure 4, flyrock would potentially land on property directly to the east of lot 198. As quarrying progressed to the east the risk would become more prevalent. That land is predominantly grazing land. If that was the only evidence before the consent authority the andesite resource could not be safely excavated in the standoff zone identified on p 66 of exhibit 4. On that set of assumptions the HEX has no impact on sterilisation of the resource. Measures need to be taken to minimise risk to humans and property although risk cannot be eliminated completely. As the quarry progresses to the east toward lot 198 blasting practices would have to be more controlled and limited in size. [NAME_75] could not comment on the technical effort or cost of doing so.

2. The quarry is a regionally significant resource for the Hunter Region being included in the Lower Hunter Regional Strategy. The [NAME_142] consents are different to the subject quarry and the conditions are not applicable. [NAME_75] was cross-examined on dust deposition and air quality modelling for the [NAME_142] project. [NAME_75] stated that quarry has asbestos contamination in the dust. There is limited comparison of the [NAME_142] quarry and the subject quarry in terms of surrounding residences. The Ardglen quarry has 15 residences within 500m of the quarry. There would be no need for a meteorological station on site as the quarry would usually rely on data for the broader locality. Sealing of internal access road, installation of high pressure water sprays on stockpiles, weather station (while desirable) would not be considered necessary by the consent authority.

3. The [NAME_142] consent does not require flyrock to be contained on that site. It can be acceptable under a blast management plan between the operator and an affected property for flyrock to fall on open grazing country. If flyrock must be contained on site blast practices can be modified to do so. While technically possible, measures will be more expensive, or a buffer is required inter alia. [NAME_75]'s advice to a hypothetical purchaser would be a condition requiring a blast management plan and special blasting practices was likely. If this is not acceptable to the operator then they would have to make arrangements with the adjoining property owner. In the before scenario, if there is no change to blasting practices and no agreement with the property owner to the east then a setback of 500m for flyrock would be necessary. If [NAME_143] quarry plan were to be implemented, which shows quarrying within 40m of the eastern boundary, there would be a need to employ additional blasting techniques or make arrangements with neighbours or a combination of both. Such agreements are common in [NAME_75]'s experience where a consent authority considers there is a risk of flyrock going beyond the property boundaries.

4. In relation to remediation [NAME_75] did not agree that this had been de minimis to date. Asked to mark where remediation had occurred [NAME_75] indicated areas of regrowth of vegetation including EEC identified areas on exhibit D (exhibit 13). [NAME_75] was asked about the guidelines for extractive industries and quarries dealing with rehabilitation. [NAME_75]'s advice in the before scenario to a hypothetical purchaser would be that they must provide a safe and stable landform, requiring reforming of the landform and that would need to be revegetated which has to be done in the context of the intended land use. Fencing would not be required once safe conditions were established. In relation to fencing of the eastern boundary given the very steep quarry face of some 30-40m it would depend on whether the site was properly supervised.

5. The Minerals Council Mine Rehabilitation Handbook deals with mines which are much larger than quarries. The operator of the quarry would bear the cost assuming [NAME_141]'s figures and approach are correct, which is disputed. A bond was required in four consents attached to [NAME_141]'s statement at a rate of $2.50 per square metre. There are difficulties with construing the existing consent condition 7. It refers to restoration but this cannot be done where material has been removed. It is only possible to rehabilitate. [NAME_75]'s advice would be that condition 7 is difficult to interpret. The person who holds the consent is liable for rehabilitation costs. An application for modification would include a rehabilitation plan which would say something about timing. Condition 7 says nothing about timing. The Ardglen quarry conditions require the proponent to progressively rehabilitate the site. Any rehabilitation would take place over time commencing before the end of the project. There is a high degree of flexibility in timing given no timing is specified in consent condition 7. Progressive rehabilitation would be logical and desirable. [NAME_75] did not consider it was difficult to give advice on the certainty of approval of an application for modification as this case was not unusual, the quarry had a long operating history, and the surrounding land use is well known and typical.

6. A setback necessary to meet air quality and noise criteria at nearby residences would be required. It would not need to be 1,000m. The CDCP 2006 has no application to Pt 3A applications. A merits based approach would not require such a large buffer. In the after scenario, [NAME_75] would advise that no requirement for a weather station or high pressure water sprays on stockpiles or sealing of the internal access road or dust deposition gauges (while desirable) would be required as consent conditions. It is likely dust deposition gauges would be required in the before scenario and much more likely in the after scenario as a condition of approval. In [NAME_75]'s experience a biodiversity offset management plan would be required and what occurs would depend on its terms. 7. [NAME_79] considered the operating buffer would be 500m based on his examination of other Pt 3A approvals for mines and/or quarries with conditions imposed requiring flyrock to be kept wholly within the subject land or set to a minimum of 500m from the property boundary for protection of neighbouring land. These are likely to be more typical than the 1,000m under the CDCP 2006 given the approval is under Pt 3A. In [NAME_79]'s first report he did not consider Pt 3A because he assumed the original quarry had a limit of 100,000 tonnes per year and he assumed the extension would be the same. A large number of matters would have to be dealt with anew as the existing consent is very lightweight and it is likely it would have to be surrendered.

8. Biodiversity offsets are secured by a plan required as part of the environmental assessment process. These can be required to be fenced and restrictions on title by way of a covenant.

9. The extra lot on lot 162 meets the minimum lot size suggesting the use would be approved. Site suitability would then be considered such as environmental constraints and the existence of impacts inhibiting that use. The line of sight along [ADDRESS] is good at that point and it unlikely to be a constraint on access points to the road. 10. [NAME_79] was asked to agree that there were a number of vineyards in the locality and tourist destinations. [NAME_79] did not go or drive on the view beyond the site visit. Selling off the western lot when the quarry road was passing through it would be a poor planning outcome with likely land use conflicts between residential and quarry use. The requirement of consent condition 7 that one kilometre of land be kept in quarry ownership would inhibit subdivision of lot 162. Provided that the lot was not within the one kilometre zone and was an adequate separation distance from quarry activities then it could be possible to create a separate lot of 40ha. The Council would have been cautious given the potential for conflict. [NAME_79] did not consider his advice was conservative. Lot 162 is presently used as part of the quarry operations. Introducing a third party resident would give rise to potential for conflict in the Council's mind. The hours of operation under the existing consent are unlimited and could give rise to dust, noise and traffic issues. The Council does not generally introduce residential uses where there are sensitive edges to quarries as in this case. There was no loss of subdivision potential of lot 162 because cl 11A(2) of the Cessnock LEP 1989 envisaged scenarios such as this to allow reduced size lots. [NAME_79] agreed the clause did not permit subdivision into lots smaller than 40ha (so that it is solely a housing entitlement).

11. The Lower Hunter Regional Strategy (October 2006 continuing at date of acquisition) identifies the [NAME_2] land on a map showing known resources. [NAME_79] accepted that the strategy envisaged the exploitation of non-coal extractive resources identified in the plan. Clearing can occur as long as cl 42(2) of the CDCP 2006 is satisfied and subject to condition 10 of the 1979 consent that the majority of timber in the paddock to the north-east of the quarry should be retained as a buffer. Various uses are permissible without consent such as the existing grazing. Grapevines could be planted for a commercial vineyard or stables. If an application was made to the Minister the Council would make submissions based on the CDCP 2006. Rarely is a DCP given great weight but the observations of a council are considered. 12. [NAME_79] has never acted for a proponent of a Pt 3A application for a mining or extractive industry. He has twice advised objectors in western Sydney about four years ago. A Minister would be mindful of the need for buffers but these may be of a lesser distance than those in the CDCP 2006 in relation to categories A, B and C land uses. He accepted the CDCP 2006 was a guideline document and further stated that each case would be assessed on its own merits. 13. [NAME_79] cannot be definite about the location of residences to the west of the [NAME_40] land. He did not know whether any of the other blue squares on exhibit 14 apart from [NAME_150] and [NAME_151] were houses. In February 2010 the closest residence he was aware of was in the southernmost part of the lot to the east of lot 198. [NAME_79] could not say if the land immediately to the east of lot 198 was unoccupied by any structure or person in 2010. He agreed this land was subject to low intensity use.

14. Flyrock buffers in the four Pt 3A consents in evidence measure the buffer from the property boundary unless there is an arrangement with neighbours in certain cases or require no flyrock on neighbouring land (see joint report on quarry issues at par 92, 97). [NAME_142], Ardglen, Marulan and Rockley Falls consents are referred to by [NAME_141]. [NAME_79] also considered the [NAME_152] and [NAME_153] consents. These consents were considered as relevant to February 2010, not being approvals issued afterwards by the Minister. Approvals such as [NAME_142] issued after the date of acquisition should be treated with caution as these may reflect changes in policy. [NAME_79] has not considered policy changes on blasting between 2008 and 2013. [NAME_141] referred to [NAME_142], approved on 6 January 2011. [NAME_79] agreed this is potentially contemporaneous with when the Minister might have determined an approval for [NAME_40]. [NAME_79] agreed that a Pt 3A approval process took a more merit based approach and was more flexible than his earlier evidence as there was no strict numerical buffer or restriction or requirement that flyrock stay on the site. The requirements for an exclusion zone were a component of the blast management plan. The impact of a development would not be imposed on a third party but a consent may provide for negotiation with a neighbour but that is a high risk approach. [NAME_79] would advise a purchaser of the need for a buffer or no flyrock off site. 15. [NAME_79] was also asked about the Ardglen approval and Rockley Falls quarry conditions of approval. Neither has an unqualified requirement that no flyrock leave the site. The Rockley Falls consent required the implementation of best blasting practice to ensure no flyrock leaves the site. That would have to be demonstrated to the Director-[NAME_44]'s satisfaction. [NAME_79] considered it was standard practice that some consideration of neighbouring land is required in relation to flyrock, therefore this is an expectation for privately owned land to be safeguarded. [NAME_79] did not look at all Pt 3A approvals for hard rock quarries prior to the date of acquisition and could not say how many had different blasting conditions to those he looked at. 16. [NAME_79] agreed there was no documentary evidence of any concern raised about the quarry by Cessnock or Maitland Councils. If there was correspondence from a council saying that the consent was being complied with that would be some comfort to a purchaser but no such letter is on file. The Council was aware that it could not impose further conditions on the quarry in the absence of an application to extend. One response from [NAME_7] to a complaint showed the officer had looked into the consent. [NAME_79] agreed there was no enforcement action by the Council during the quarry's life. Stockpiles can be placed in the smaller circle and in the area to the north of lot 198.

17. As to the requirement in the HEX approval for a 2:1 offset of [NAME_154], [NAME_79] would have deferred to an expert on EEC offsets.

18. In the before scenario the buffer of 500m from the property boundary was likely to be imposed but this could be adjusted based on best blast management measures being required. [NAME_79] did not agree that his view that the same advice in the before and after scenarios was unduly conservative (the blasting experts say a 200m or 300m buffer from the HEX is satisfactory). He did not agree the Minister would be concerned only with the separation distance from the HEX as a more sensitive land use than unused rural land.

Ecological evidence 1. [NAME_155], ecologist called by [NAME_40], prepared a statement of evidence dated 24 February 2014 (exhibit 5 tab 20). [NAME_112], ecologist called by [NAME_39], prepared a statement of evidence dated 19 November 2013 (exhibit 5 tab 21). [NAME_155] and [NAME_112] prepared a joint statement dated 2 April 2014 (exhibit 5 tab 22).

2. Confirming the consequences for the agreement as to mapping the ecology experts were cross-examined concerning: 1. [NAME_156] - vegetation on site;

2. Type of advice sought by parties to a hypothetical sale regarding:

3. The status of the biobanking system;

4. Extent of likely impacts/loss of EEC;

5. Extent of biodiversity offsets needed/available; and 6. The likelihood of approval/consent based on the impact of expanded quarrying on EEC.

Mapping of loss of EEC agreed 1. The experts agreed the amount of [NAME_157] (HU551) and Swamp Oak (HU634) that would be lost if a modification or new consent were granted depended on which pit design was adopted (T 509 l 10-15). If [NAME_158], for [NAME_39], pit design was used 12.692ha of [NAME_157] and 1.711ha of Swamp Oak would be lost in 2010. If [NAME_143], for [NAME_40], pit design was used 11.508ha of [NAME_157] and 1.57ha of Swamp Oak would be lost in 2010 (exhibit 5 tab 22 p 917).

Other Part 3A projects 1. [NAME_112] stated that it is of relevance to the [NAME_149] extension that an increased offset was required for the [NAME_137] "as it was found that they had illegally cleared 2ha of native vegetation" (exhibit 5 tab 22 p 921). In [NAME_112]'s opinion the identity of who undertook illegal clearing is not relevant, it would still be taken into account in determining offsets (T 551 l 40-44). [NAME_112] summarised offsets for other Pt 3A projects as follows (exhibit 5 tab 22 p 921):

1. Coal projects are generally 1 to 3 (offset):1 (cleared), except for the White Haven Coal Projects with 6:1 for Tarrawonga in the Gunnedah Basin and 14.5:1 Werris Creek Mod 1 on the Liverpool Plains.

2. Gold projects are 4:1 to 8:1.

3. Quarries vary from 2 to 14.4 (offset):1 (cleared).

Extent of biodiversity offsets required 1. The experts disagreed about the ratio of offsets that would be required. [NAME_112]'s opinion is that the offsetting ratio that would be required at the acquisition date is approximately 1 (cleared):6 (conserved) based on both biobanking calculations and other Pt 3A quarry approvals. At best 1 (cleared):5 biodiversity offset would be required given the ongoing clearing of native vegetation on the [NAME_40] land and the [NAME_137] biodiversity offset requirement (exhibit 5 tab 22 p 927). [NAME_112] would warn a hypothetical purchaser to be wary because there had been clearing beyond the consent and to expect a 6:1 offset ratio (T 564 l 38-40). This assessment was informed by the historical clearing, other Pt 3A projects and biobanking (T 564 l 43-44). [NAME_112] did not accept that her 6:1 ratio was unreasonable or overly conservative (T 564 l 19-29). 2. [NAME_155] disagreed. The offset outcome for HU551 of 3.3:1 would be suitable when compared with approvals at the time for similar vegetation communities in the region ([NAME_160]). An additional 35ha of Swamp Oak Forest (HU634 at 95% cleared) would be in excess of the offset requirements, should a 6:1 offset be required. Using this additional area to compensate for any identified shortfall for HU551, would result in an offset to impact ratio of 6:1. This would be the outcome pre-acquisition which would improve as a result of the reduction in impact area for the post-acquisition scenario (exhibit 5 tab 22 p 927).

3. If [NAME_112] were advising a prudent purchaser she would look at the [NAME_161] offsetting. The entire site, including rehabilitation of the area quarried (except dams) is to be restored. Somersby Fields has clear rehabilitation aims. The [NAME_149] appears to have no clear post-quarrying land use. Somersby Fields, like the [NAME_149], is a quarry producing product widely used in the local construction industry (exhibit 5 tab 22 p 927). [NAME_112] did not view the HEX approval as comparable to the present scenario because one is for a freeway and the other is for extracting rock (T 563 l 34-48). [NAME_112] would have used the Somersby Fields Project to inform her advice to a hypothetical purchaser in 2010 (T 558-559, exhibit 5 tab 22 p 927). [NAME_112] would have used the projects outlined on p 18 of the joint report as a relevant source of information in her advice to a hypothetical purchaser (T 559-17-26). 4. [NAME_155] disagreed. Her advice focused on the provision of proposed offset areas, at a significant multiplier to the impact area when looking at total native vegetation conserved to impacted, to compensate for the impacts to the vegetation present (EECs). It would meet the [NAME_20] for the use of Biodiversity Offsets in [NAME_20] (Department of Environment and Climate change, 2008) (DECC principles) and result in a better outcome to recent approvals (as at the acquisition date) for similar vegetation impacts in the region. The hypothetical scenario was provided in the absence of rehabilitation of the quarry site. With rehabilitation, the offset outcomes would be significantly higher, resulting in an increased likelihood of approval. Rehabilitation for extractive industries is considered to be best practice and this is likely to have formed part of the conditions of approval for any quarry extension (exhibit 5 tab 22 p 927). 5. [NAME_155] used other Pt 3A projects, looking at extraction in [NAME_44], in assessing what biodiversity offset would be required (T 520 l 45-47). Making the assumption that it is of significance that the approval is for a quarry and only quarry approvals are relevant, [NAME_155] would advise a hypothetical purchaser that the ratio would likely be higher than 3:1 but also consider a range of factors such as whether other quarry approvals involved clearing of land that is of higher significance than the subject (T 521 l 17-39).

Like for like 1. [NAME_112]'s opinion is that any clearing of a vegetation community for the [NAME_149] needs to be offset by the same vegetation community (exhibit 5 tab 22 p 927). [NAME_112]'s opinion is that [NAME_155] has put two EECs together and not done a like for like analysis (exhibit 5 tab 22 p 919).

2. Concerning what was required for offsetting in 2008 [NAME_155] stated in re-examination that offsets must be targeted, they must offset impacts on the basis of like for like or better conservation outcomes. A better conservation outcome would be looking at a community that has been more highly cleared than the ones that are going to be impacted and offsetting more of that so it would provide a better regional outcome in biodiversity values (T 530 l 3-10). [NAME_155] applied this to the [NAME_149] by looking at Swamp Oak Forest that occurs on site which is more highly cleared and include more of these areas that have been more highly cleared because they would result in a better conservation outcome (T 530 l 12-21). 3. [NAME_155] did not agree with the characterisation that she has combined two different types of EECs as offsets. [NAME_155] said that there is another EEC available and when the conservation outcomes are combined conserving a range of vegetation that is endangered, that would be a good conservation outcome (T 530 l 23-30).

Extent of offset areas available on [NAME_40] land 1. [NAME_112]'s opinion is that for the pre-acquisition and post-acquisition scenarios, the offset requirements for the vegetation type HU551 are not met, even with the additional areas in the east and west of the [NAME_40] site (exhibit 5 tab 22 p 926). 2. [NAME_155] disagreed. Assuming that [NAME_112]'s mapping is used, that there is a loss of 12ha of EEC and that a ratio of 6:1 is required [NAME_155] opined that the hypothetical offset areas set out in her figure 2.1 contained wholly on the [NAME_40] site would not change (T 523 l 16-20).

3. Assuming that [NAME_112]'s mapping is used, that there is a loss of 27ha of EEC and that a ratio of 6:1 is required [NAME_155] stated that there is enough room on the [NAME_40] land to provide the offsets (T 523 l 37-41). Figure 2.1 would change to provide additional offsets in the north-western corner of lot 177 and include the vegetation on lots 165 and 166. But it would depend on the area and require the use of GIS or something similar to work out exactly what areas would be required (T 523 l 43-50). 4. [NAME_155] stated that assuming 15ha of additional land was cleared outside the quarry circle, there could be risk that offsets need to be provided for 27ha not 12.5ha (T 524 l 29-43). Given that the Department of Planning required offsets for an area of 2ha illegally cleared, there is a chance that this could be required again (T 525 l 17-24). 5. [NAME_112]'s opinion is that because of condition 10 in the consent and DECC principle 12 the north east block of the subject site may not be available for offsetting (exhibit 5 tab 22 p 920). DECC Principle 12 states:

12. Offsets must be supplementary. They must be beyond existing requirements and not already funded under another scheme. Areas that have received incentive funds cannot be used for offsets. Existing protected areas on private land cannot be used for offsets unless additional security or management actions are implemented. Areas already managed by the government, such as national parks, flora reserves and public open space, cannot be used as offsets. 1. [NAME_112] did not make any enquiries of [NAME_40] concerning its use of the north eastern corner of the quarry. [NAME_112] assumed that land was used by [NAME_40] as per the condition of consent (T 557 l 1-17). 2. [NAME_155] disagreed stating that a buffer area may be considered a type of protected area, although a definition is not provided in the DECC principles. However additional protection and management of this area would allow it to be counted towards the offset. This is unlikely to be an impediment towards counting the north east block as an offset for any development (exhibit 5 tab 22 p 920). In oral evidence [NAME_155] stated that principle 12 does not address what protected areas are and buffer areas would not be a protected area in terms of biodiversity (T 527 l 35-41). [NAME_155] stated that lot 76 would be available for use as offsets in light of condition 10 of the consent and DECC principle 12 with a low risk attached that it would not be available (T 528 l 22-31).

3. When [NAME_155] made the assumption that lot 76 is not available to be used as offsets in figure 2.1 at a 3:1 ratio for 12ha of cleared EEC there is enough land on the [NAME_40] site for offsets (T 526 l 20-25).

4. On the assumption that lot 76 is not available for offsets in figure 2.1 and the offset required is 3:1 for 27ha of cleared [NAME_155] could not say whether there would be enough offsets available in this scenario on a like for like basis without the precise figures (T 526 l 26-41). On the assumption that lot 76 is not available in figure 2.1 for 27ha of cleared EEC at a ratio of 6:1 on a like for like basis it probably would not be able to be accommodated on the [NAME_40] land (T 527 l 10-31). 5. [NAME_112] states that a major environmental issue of concern to a prudent purchaser would be that the quarry has expanded to approximately 50ha in excess of the consent (exhibit 5 tab 22 p 923). [NAME_155] states that this is not part of her scope (exhibit 5 tab 22 p 923). [NAME_155] in oral evidence agreed that this is a difference between her and [NAME_112] because [NAME_155] would advise based on what would have been present at the site assuming that she would not have known that other areas had been cleared (T 511 l 40-43). 6. [NAME_112] carried out surveying with the use of historical aerial photographs to determine the amount of historical clearing outside the quarry circle on the [NAME_40] site (T 547 l 26- 549 l 26).

The likelihood of approval/consent based on the impact on EEC 1. [NAME_112]'s opinion is that there is a real risk that consent would not be granted. For an authority to approve the proposed quarry extension with these large percentage losses of an EEC, there is a real possibility that consent may not be granted for a quarry (exhibit 5 tab 22 p 925). 2. [NAME_155] disagreed. A number of Pt 3A projects at the time of acquisition had been approved with similar impacts on threatened ecological communities (for example Bulga Open Cut Mod 4, approved at the end of 2009 included impacts to 19ha of [NAME_157], one hectare of Hunter Lowland Forest Red Gum Woodland). [NAME_155] would have advised a prospective purchaser that suitable potential offsets were available at the subject site to compensate for the impacts of an extension. The proposed offsets provide like for like or similar quality vegetation (with additional areas at a higher conservation status protected than cleared (Swamp Oak Forest)) at ratios that are consistent with the offset requirements for the region ([NAME_160]) and vegetation communities impacted at the time of the advice in 2010 (exhibit 5 tab 22 p 925).

3. Making the assumption that the necessary offset could not be provided on the [NAME_40] land [NAME_155] stated that one option is that approval would not be granted. Another option is that offsets could be located offsite, and if provided there would not be a reason why approval would not be granted. [NAME_155] has not carried out the identification of off-site offset areas in these proceedings (T 512 l 27- 42).

Threshold question: is [NAME_40]'s claim for market value and injurious affection double dipping and therefore impermissible 1. [NAME_39] submitted that [NAME_40]'s claim is not available under the Just Terms Act because compensation for the loss of the quarry resource has already been claimed and paid to the tenant [NAME_50]. As stated earlier [NAME_50] conducts a quarrying operation on part of the land. It leases the quarry from [NAME_40] on a month to month basis for $70,000 per year. [NAME_40] retains the right to graze cattle.

2. Prior to the acquisition [NAME_50] through its director [NAME_87] submitted a Form 2 claim for compensation. The claim included the "sterilisation of andesite resource that has occurred as a result of the [NAME_162]'s proposed acquisition". The Form 2 states the following (exhibit 9 tab 45 p 1568): 2 Claim by [NAME_50] 2.1 A copy of the Lease that exists between [NAME_50] and [NAME_40] forming the basis of the claim by [NAME_50] under the Land Acquisition (Just Terms Compensation) Act 1991 ('the Just Terms Act') has been provided to the [NAME_162] on 1 August 2007. [NAME_50] operates a hard rock quarry from the land the subject of the lease. The [NAME_50] claim includes a claim for the diminution in value of the Quarry brought about by the sterilisation of andesite resource that has occurred as a result of the [NAME_162]'s proposed acquisition. This claim is made under section 55(a) of the Just Terms Act. It includes a disturbance claim under section 59(f) of the just Terms Act for the following items: (a) The relocation of an explosives magazine; (b) The carrying out of additional fencing; (c) The implementation of further air quality measures at the Quarry; and (d) Costs (though this could, in part, be made under section 59(a) of the Just Terms Act). 1. [NAME_41] determined the amount of compensation to which [NAME_50] was entitled was $807,758 for disturbance under s 55(d). [NAME_41]'s report included the following statements: value of mineral resource sterilised $456,036; relocation of magazine and security fencing $100,661; weather station and dust monitoring $61,200; dust suppression at processing site $106,700; and sealing of haul [NAME_5] $41,250 giving a total of $765,850.

[NAME_39]'s submissions 1. The valuation methodology should not take into account the loss of any andesite resource because, firstly, that is not [NAME_40]'s loss, secondly, [NAME_50] has been compensated for that, thirdly, Health Administration Corporation v George D Angus Pty Ltd [2014] NSWCA 352 held that direct loss of profit claims must be determined under s 59(f) (T 1587). [NAME_40]'s case is counter factual - it claims a financial loss for a sterilised rock resource which could only be exploited by the carrying on of a quarry business on the land. [NAME_40]'s business was not an active entity engaged in quarrying.

2. At the date of acquisition [NAME_40] had leased the land to a related family company, [NAME_50], pursuant to a lease dated 1 August 1995. This was by reason of the family relationship a secure tenure although [NAME_50] was holding over under the lease. The undisputed fact is that [NAME_50] had been quarrying on the land virtually since the quarry was established in 1981 or so. As a matter of fact, [NAME_50] was carrying out a business of quarrying on the land and [NAME_40] "continues to operate a grazing business from the land". [NAME_87]'s oral evidence was that [NAME_40] had run cattle on the land for 30 years; is currently holding 80 head of cattle; and is earning less than $10,000 per annum from that activity, an activity not adversely affected by the acquisition.

3. In the present case, the interest to be valued is [NAME_40]'s reversionary interest under the lease. There is no evidence that [NAME_40] intends to terminate [NAME_50]'s interest on 30 days notice. [NAME_40]'s ability to use the areas of the identified land for grazing where no quarrying was occurring must also be considered. If [NAME_40]'s loss was to be properly calculated on the before and after basis, then it would yield either a $nil result or a small amount in accordance with [NAME_118]'s calculations. 4. [NAME_40] will not in fact lose any income caused by the carrying out of the public purpose. Before acquisition it obtained a rental of $70,000 per year from [NAME_50]. After acquisition it obtains a rental income of $70,000 per year. Both before and after the acquisition it earns around $10,000 per year from grazing. The Just Terms Act requires an assessment of actual loss incurred or likely to be incurred arising out of [NAME_40]'s actual use of the land as a consequence of the acquisition. The actual use of the land was that of cattle grazing and leasing of it to a quarry operator. [NAME_40] did not have and never has had a quarry business. [NAME_40]'s counter factual contention is that the value of [NAME_40]'s interest is to be determined by reference to a hypothetical buyer who would terminate the lease of [NAME_50] with the minimum notice. That buyer would calculate the value of the land by essentially calculating the value of the business carried on by [NAME_50].

5. There is one amount of money that is available for compensation and persons entitled to compensation are entitled to share it, not claim compensation for the same loss twice. The compensation must be just to both the person from whom an interest is acquired and the taxpayer who funds the acquisition.

6. Loss of income is only to be awarded pursuant to s 55(d) and s 59(f) where applicable ([NAME_163]) because the loss must arise out of [NAME_40]'s "actual use" of the land. The amount of compensation to which a person is entitled is expressed in s 54(1) as being to "justly compensate a person for the acquisition of the land". The focus is on loss. The object of the Just Terms Act is to place the person with the monetary equivalent of what has been taken. 7. [NAME_40]'s claim if allowed is a double dip. Acceptance of the proposition that there should be no double dipping by both [NAME_40] and [NAME_50] for the lost andesite resource is not a matter involving an application of any "just compensation override", but rather the selection of the method of valuation to be utilised in this case in order to determine compensation pursuant to the heads of compensation in s 55. [NAME_39]'s essential contention is that the Court ought not accept a method of valuation which is predicated on a loss which another has suffered and which has been adequately compensated for.

8. Under the scheme of the Just Terms Act as found in sections 11, 12, 15, 18, 20, 37, 39, 40, 41, 42, 43 and 54 considered in Lake Macquarie City Council v Luka [1999] NSWCA 447; (1999) 106 LGERA 94 by Handley JA at [55]-[72], various sections provide a textual indicator to ensure that compensation is paid in proportionate shares. There his Honour contemplated that if those with an equitable interest were entitled to compensation, there may have to be an adjustment of what the registered proprietor was awarded in compensation.

9. The [NAME_40] claim cannot be dealt with in isolation from [NAME_50]'s claim. Double dipping is to be avoided as found by [NAME_49] in [COMPANY_16] v [NAME_14] the Environmental Planning and Assessment Act 1979 [2010] NSWLEC 88; (2010) 177 LGERA 43 at [64]-[65].

[NAME_40]'s submissions 1. [NAME_40]'s claim is not double dipping. At the date of acquisition [NAME_40]'s interest in land was as registered proprietor, subject to a lease, and having the legal right to terminate the lease on one month's notice. [NAME_40] is entitled to claim compensation for market value as defined under the Just Terms Act for that interest.

2. The determination of compensation for market value requires consideration of a sale transaction between a "willing but not anxious" seller and buyer on the date of acquisition: s 56(1). That is a hypothetical transaction. The intentions of the actual owner (let alone the actual lessee) in respect of future use of the land is not a relevant consideration: The Minister v [NAME_1] Company Limited [1916] HCA 48; (1916) 22 CLR 56 at 63-64 (Griffiths CJ), 70-71 (Barton J) and 77 (Isaacs J). It is incorrect to suggest that the actual intention of [NAME_40] and [NAME_50] (to continue their lease arrangements after the date of acquisition until all the resource is quarried) is relevant to the determination of the market value of [NAME_40]'s interest in land at the date of acquisition. The market value of [NAME_40]'s interest in land is the amount that a willing but not anxious purchaser would pay for it, and that purchaser would pay an amount that reflects the fact that, as the incoming owner, it could and would immediately terminate the [NAME_50] lease and itself quarry and sell the andesite resource in the land.

3. It would be open to an incoming owner to keep the monthly tenancy to [NAME_50] on foot. The terms of the lease are obviously uncommercial at $70,000 per year and not a market rental for the lease of the land. A number of the witnesses agreed with that proposition, but it is so clear that it does not need specific evidence. A quarry operator would be interested in buying land in respect of which it can terminate an existing lease within one month and then start quarrying itself. That is the basis of [NAME_40]'s claim for market value of the quarry component of the [NAME_40] land.

4. The market value of land includes the value of resources in the land that can be quarried per Commonwealth of Australia v Hazeldell Ltd (1918) 25 CLR 552 affirmed on appeal in Commonwealth of Australia v Hazeldell Limited [1921] 2 AC 373 at 380, Collex Pty Ltd v Roads and Traffic Authority [2006] NSWLEC 579; (2006) 149 LGERA 234 at 251, 264-265 upheld on appeal in Roads and Traffic Authority (NSW) v Collex Pty Ltd [2009] NSWCA 101; (2009) 165 LGERA 419 at 444-446, [NAME_7] Corporation v [NAME_7] of Port Adelaide Enfield [2001] SASC 207; (2001) 115 LGERA 137 at 147-148. [NAME_50] was paid compensation for loss attributable to disturbance under s 55(d). [NAME_40] is entitled to compensation based on market value of the land determined as a hypothetical transaction at the date of acquisition.

[NAME_40]'s claim for market value and injurious affection not double dipping 1. [NAME_39] submitted that the loss of winning the andesite resource can be compensated for only once and [NAME_50] has been compensated for that loss. [NAME_40] cannot therefore be compensated for that loss regardless of whether the DCF approach or another method of valuation is used. [NAME_39] relied on the scheme in the Just Terms Act as a whole referring to a number of sections (11, 12, 15, 18, 20, 37, 39, 40, 41, 42, 43 and 54) which it submitted emphasises compensation is payable for loss and is proportionate. These sections do not support this submission. They provide for multiple parties with an interest in land to make a claim for compensation. All the owners of land are to be given a notice under s 12 which notice must contain the details specified in s 15. All owners of an interest in land are entitled to compensation under s 37. The particulars claimants must provide are specified in s 39 and s 40 and these are provided to [NAME_41] (s 41). Section 54 states that a person is entitled to an amount which justly compensates them. That scheme does not suggest that payment of compensation is to be made in proportionate shares. [NAME_166] also does not support this submission given that Handley JA was there addressing the sharing of market value between two applicants which is not relevant to the facts before me. [NAME_39]'s submission above at par 155 relying on numerous sections of the Just Terms Act does not characterise the Just Terms Act appropriately. There is no textual support in the statute for the proposition that there is one amount of money that is available for compensation.

2. The words actual loss used by [NAME_39] do not appear in the Just Terms Act. As [NAME_40] submitted the basis on which compensation is payable is stated in the various subsections of s 55. Market value is defined in s 56(1). That the Just Terms Act in s 56 provides for the claim made by [NAME_40] is the essential answer to [NAME_39]'s argument on this issue. That the descriptions of both [NAME_50] and [NAME_40]'s claims refer to "loss of andesite resource" does not result in a conclusion that the different bases for awarding compensation overlap (double dip). As the authorities relied on by [NAME_40] identify above at par 160, the market value of land includes resources in the land. The owner of the land owns the resource, to which a value can be attributed as a hypothetical purchaser will pay for that value.

3. In [NAME_163], the Court of Appeal upheld a claim of disturbance loss to a corporate tenant of land for the substantial loss in profits resulting from a need to take an obstetrics practice further away from a local hospital than the practising doctor considered appropriate. Compensation was paid to both the landowner for the loss of its market value of land and the corporate tenant. [COMPANY_167] was the registered proprietor of the land (at [14]) which made a claim for compensation that settled (at [15]). At [16] Tobias JA stated: Due to the limited interest of the respondent [the corporate tenant] in the [ADDRESS] land, it had no relevant market value and none was claimed.

Accordingly, the respondent's claim for compensation was limited to losses attributable to disturbance… 1. Tobias JA stated that loss due to disturbance is a "separate" head of compensation under the Just Terms Act, whereas before the commencement of the Just Terms Act, it was not (at [47]). For this reason, his Honour concluded (at [56]) that a claim for lost profits was appropriate as a claim under s 59(f). As [NAME_40] submitted, nothing in the decision is pertinent to the assessment of market value under s 55(a) other than his Honour's comments at [69] which are not relevant to this case given that [NAME_40] has the appropriate interest to receive compensation for market value since it is the landowner. At issue was the tension (alleged in that case) between s 57 (special value) and s 59 (see at [46]). As [NAME_40] submitted the consideration of the hypothetical sale of the property (undertaken pursuant to s 56) did not mean that [COMPANY_168] could not claim relocation or s 59(f) disturbance costs. 2. [NAME_163] confirms that the same factual circumstances can trigger different parts of s 55 of the Just Terms Act to result in separate payments of compensation to different applicants at [56]-[60] and [68]-[70]. The Just Terms Act according to its terms enables circumstances in which multiple persons have a right to just compensation as identified above in par 161. [NAME_163] is not supportive of [NAME_39]'s submission.

3. Cases which have considered double dipping such as [NAME_15] concern multiple claims of a single applicant which can be characterised as falling within more than one head of compensation referred to in s 55.

4. I adopt [NAME_40]'s submission that the award of compensation to [NAME_50] (for the loss attributable to disturbance suffered by that corporation) is entirely distinct from the claim for compensation made by [NAME_40]. [NAME_50] and [NAME_40] are different legal entities, each entitled to compensation in accordance with the provisions of the Just Terms Act. There is no area of overlap, double counting or double dipping. There is no provision of the Just Terms Act, or any applicable authority, that limits or reduces the compensation to which [NAME_40] is entitled by reference to the amount of compensation for which [NAME_50] agreed to settle its claim for compensation.

5. As [NAME_40] submitted, the Just Terms Act avoids "double counting" between two different applicants in s 56(2), which applies to the assessment of market value. That section has no application here as [NAME_50] was not compensated for the market value of the land.

6. As [NAME_40] submitted, the Just Terms Act avoids "double counting" by a single applicant only by s 61 and by requiring the determination of compensation to take care to identify, in a particular case, if there is any overlap in the quantified amounts of different matters: Tolson v Roads and Maritime Services [2014] NSWCA 141; (2014) 201 LGERA 367 at [111]. The hypothetical sale of the land in [NAME_12] v [NAME_14] the Environmental Planning and Assessment Act 1979 [2014] NSWCA 33; (2014) 199 LGERA 198, which concerned s 61 and does not have much relevance for this matter, did not have the consequence that the applicants were denied disturbance claims where market value was also awarded.

7. I agree with [NAME_40]'s submission that it is not appropriate for the Court to go behind the conclusions of the [NAME_43] [NAME_51] for [NAME_41] as to the basis on which he awarded compensation for disturbance. [ADDRESS] order awarded compensation for disturbance under s 55(d) to [NAME_50]. [NAME_51] took into account the sterilisation of the andesite resource (about which I make no comment) is irrelevant to [NAME_40]'s claim for market value which includes valuing the resource as part its land.

Highest and best use in mind of hypothetical purchaser 1. Both parties agreed that the most likely hypothetical purchaser is a quarry operator who would cancel the month to month lease held by [NAME_50]. They disagreed in part about the highest and best use such a purchaser would apply to the land. There was extensive discussion in the written evidence of various experts and in parties' submissions as to the highest and best use of the land, which changed over the lengthy hearing period. It is unnecessary to summarise all of this.

[NAME_40]'s submissions 1. There is no principle of law or valuation methodology that states that the highest and best use must always be described as a single use. Nothing requires that the highest and best use be singular. Indeed, there are several cases where the highest and best use was determined in "parts": see, for example, [NAME_169] (in which case the analysis at trial was accepted by the Court of Appeal), Caruso v Sydney Water Corporation [2008] NSWLEC 320 at [86], [145], [159], [COMPANY_17] v [NAME_5] Authority of [NAME_20] (1998) 101 LGERA 30 at 50, Randwick Municipal Council v Valuer-General (1960) 5 LGRA 387 at 401.

2. The quarry component of the land is the primary use and most valuable component of the land. In the hypothetical sale transactions before and after acquisition the prospective purchaser would be a quarry operator. Additionally there were and are additional components of value of the [NAME_40] land, such as the ability to use (or even subdivide and sell) areas of land outside the area affected by and used for quarrying operations. According to [NAME_115] and [NAME_75] the non-quarry land also has value beyond being buffer land for the quarry for rural uses such as grazing or vineyards, as permitted under the Cessnock LEP 1989. After the cessation of quarrying activity, there will be a large area of rehabilitated land suitable for rural residential use.

[NAME_39]'s submissions 1. [NAME_39] submitted that there is one highest and best use of the land being a quarry and buffer use in the before and after scenarios. No other value resides in the land in the before or after. Reliance was placed on Boland v Yates Property Corporation Pty Ltd [1999] HCA 64; (1999) 74 ALJR 209 Callinan J at [271]. Highest and best use is an amalgam of planning and valuation evidence. As it is agreed that the purchaser of this land will be a quarry operator that is the highest and best use and cannot include uses other than quarrying.

Multiple highest and best uses acceptable in theory 1. As [NAME_40] submitted, for current purposes I can consider that the highest and best use of land is simply the use of the land that is most valuable to the hypothetical purchaser and vendor. The hypothetical bargain takes place on the agreement of vendor and purchaser in relation to the highest and best use, being that use(s) which is "most profitable" (see, for example Minister v Matford Nominees Pty Ltd [1973] 2 NSWLR 58 at 59-60) or the "most advantageous" use ([COMPANY_8] v Minister for Water Resources (1988) 65 LGRA 410 at 415).

2. I can conclude that theoretically it is open to [NAME_40] to claim the highest and best use of land in the mind of a hypothetical purchaser on the basis of uses beyond the quarrying operation (which is agreed to be the most valuable use). As [NAME_40] submitted this has occurred in several cases referred to in submissions such as [COMPANY_18]. [NAME_170] does not suggest otherwise. The lengthy passage of Callinan J at [271] quoted in [NAME_39]'s submissions at par 212 simply identifies that a vendor would and should identify potential uses of property which may add value in the mind of a purchaser. While I accept in theory [NAME_40]'s submissions, whether the highest and best use in the before scenario should be determined on the bases contended for by [NAME_115] [NAME_43] (use of non-quarry land permissible for rural residential uses, subdivision of one lot) in light of other expert evidence will be considered later in the judgment.

Valuation of resource in land– is before/after approach using DCF model appropriate? 1. [ADDRESS] must resolve what is the best valuation method for assessing compensation. [NAME_40] contends for the before and after approach using the DCF method for the resource component of the land. [NAME_40] submitted that, as the landowner of land with minerals, the land value can be determined by the present value of the income stream generated by the quarry and any future potential of that use. The use of DCF analysis to calculate the net present value of projected cash flows is: 1. common throughout the mainstream quarry industry; and 2. necessary due to the absence of directly comparable sales of quarries at the material time. 1. [NAME_39] submitted that the piecemeal approach is appropriate in the circumstances of this case because the DCF method when applied correctly produces only a minimal amount of compensation that does not adequately compensate [NAME_40]. This is because the prospect of obtaining development approval to extend the quarry to within 30m of the property boundary is so speculative as to not be permitted as an assumption likely to be made by a hypothetical purchaser in calculating value. The parties also disagreed about what matters should be considered in the DCF. If the DCF is applied appropriately rigorous inputs are necessary as submitted in chapter C of [NAME_39]'s submissions.

Valuation of resource component of land 1. [NAME_93] gave expert evidence on behalf of [NAME_40] and prepared a report on the value of the andesite resource on [NAME_40]'s land dated 17 June 2014 (exhibit 5, tab 24). [NAME_93] drew on a report prepared by [NAME_128] dated 28 May 2014 (exhibit 5, tab 25). [NAME_118] gave expert evidence on behalf of [NAME_39] and prepared a report on the resource value dated 26 June 2014 (exhibit 5, tab 28), drawing on a report prepared by [NAME_171], dated 26 June 2014 (exhibit 5, tab 27). [NAME_93], [NAME_128], [NAME_118] and [NAME_171] also contributed to a joint report dated 22 July 2014 (MFI 1) which was replaced during the hearing by a joint report dated 18 September 2014 (exhibit 23) and each provided oral evidence.

2. The valuation of the resource in the before and after scenarios according to [NAME_40]'s case was summarised as follows: Before acquisition After acquisition (1) Quarry component of land [NAME_26] / [NAME_62] valuation (ex 23 par 73) [NAME_26] / [NAME_62] valuation = $20,434,000 = $17,788,000

1. [NAME_93], a corporate [NAME_43] with [COMPANY_173] having over 35 years' experience in corporate finance and valuation, provided an opinion as to the value of the resource on the basis that the hypothetical buyer of the quarry operations would be an existing quarry operator or actual or potential customers seeking vertical integration with the transaction taking around five months to complete. The hypothetical buyer would terminate the interests of [NAME_50] in the land (exhibit 4 tab 24 p 1009). The DCF model allows the valuation of the resource in the ground less the costs of winning the resource. 2. [NAME_93] in his first report opined that the value of the resource as a component of the market value of the land on a before basis was $29.0 million (the "but for" scenario) and on an after basis was $25.5 million (the "as is" scenario), excluding the value of the land and excluding tax and interest on the loss suffered, the difference being $3.50 million (I note these figures were reduced after joint conferencing) (exhibit 4 tab 24 p 998, p 1002). [NAME_93] assumed that: 1. the quarry operations should be valued as a business (p 1007);

2. DCF was the appropriate primary valuation methodology (p 1007); 3. the DCF excluded the value of the remediated land assessed by [NAME_115]; 4. the appropriate discount rate is 9.5% after tax for both the before and after scenarios (p 1016); 5. the acquisition resulted in the loss of a portion of the andesite resource within a buffer of 300m from the HEX (p 1003); 6. planning approval limits quarrying to within the 40ha quarry circle only (p 1004); 7. there is a 10% chance of non-approval of planning consent for quarrying beyond the 40ha quarry circle (p 1012); 8. the annual production rate would be 775,000 tonnes pa (p 1011); 9. the average selling price would be $13.60 per tonne increasing at 5% pa for 5 years and 4% pa thereafter (p 1012, 1013); 10. the unit production cost would be $6.60 per tonne increasing at 3% pa (p 1015); 11. rehabilitation costs would be $0.075 per tonne increasing at 3% pa (p 1016); 12. other costs would be $2.05 per tonne increasing at 3% pa (p 1015); 13. the hypothetical buyer would buy the initial plant and equipment at [NAME_50]'s book value (p 1010); 14. initial and projected capital expenditure would be equal to projected depreciation (exhibit 5 p 1015 par 92). This was agreed at the valuers' joint conference. 15. the applicable tax rate is 30% (p 1016); 16. in both the before and after scenarios, the quarry would have operated for 3.9 years to May 2014 without further planning approval (p 1019, 1022); 17. in the before scenario, the quarry would have operated for 14.5 years to January 2025 with further planning approval (p 1017); 18. in the after scenario, the quarry would have operated for 12.8 years to April 2023 with further planning approval, closing some 1.7 years earlier than in the before scenario (p 1021); 19. in the after scenario, the hypothetical buyer would incur one-off costs of $311,595 for dust suppression, weather station, fencing and road (p1023); 20. in the after scenario, the hypothetical buyer would incur increased blasting costs and weather monitoring maintenance costs (p 1024, 1025); and 21. there is no cost associated with bio-banking credits. 1. [NAME_128] provided a wide range of information and opinions which appear, in part, to have been relied upon by [NAME_93] in the preparation of his report (exhibit 5 tab 25 p 1088-1105). [NAME_128] opined the appropriate valuation approach to be the DCF, that the market for quarry products was buoyant and that the hypothetical purchaser is likely to be an owner operator including [NAME_50] who would have evaluated and retained the plant and equipment and determined a capital expenditure forecast of $1.2 million per year (p 1067, 1068, 1073-1076; 1069-1071, 1071-1073, 1077-1079). The experts agreed the hypothetical purchaser would purchase initial plant and equipment at a cost of $4.3 million (MFI 1 p 8 par (l), exhibit 23, par 23, 27 (n)).

2. Concerning rehabilitation and dust control, [NAME_128] opined that rehabilitation would be "fairly straightforward" and "not a major cost issue" if undertaken on a progressive basis, estimating a cost of $0.075 per tonne, with dust control measures costing $278,358 (p 1084-1086 par 5.10, p 1086-1087 par 6.4). Subsequently the valuers agreed that rehabilitation costs would be $0.10 (indexed) per tonne (exhibit 23 par 27(r)). For dust control the experts agreed dust suppression measures would cost $99,500 (exhibit 23 par 27(l)). 3. [NAME_118], a forensic accountant with [NAME_174] having around 45 years' experience in accounting, auditing and taxation, provided an opinion as to the value of the land on the basis that the land is an essential component of a business activity under three scenarios (exhibit 4 tab 28 p 1285): 1. that the hypothetical purchaser is a quarry operator who will operate the quarry to the end of its life, remediate and sell the land (scenario 1); 2. that the hypothetical purchaser is an investor who leases the land to [NAME_50] on the existing terms, remediates and sells the land (scenario 2); and 3. that the hypothetical purchaser is an investor who leases the land to a quarry operator on market terms, remediates and sells the land (scenario 3). on the alternative bases that extraction of more than 100,000 tonnes per year was either permitted by planning consent (alternative A) or would require amended planning consent (alternative B) (p 1286). As the parties essentially agreed the most likely purchaser is a quarry operator (scenario 1) the other two scenarios need not be considered. Alternative A now cannot arise as consent for an expansion of the quarry is required leaving alternative B. 1. [NAME_118] opined that the value of the land on the basis that the land is an essential component of a business activity under scenario 1 may be summarised as follows (p 1287): Altve A Altve B Before After Diff Before After Diff $'000 $'000 $'000 $'000 $'000 $'000 3,300 3,231 99 3,273 3,180 93

1. [NAME_118] usefully summarised the assumptions he applied in the cashflows inputs into the DCF model in a table (exhibit 5 tab 28 par 4.2) which identifies 20 assumptions. [NAME_118] assumed that: 1. the quarry operations should be valued as a business as a "going concern" (p 1288);

2. DCF was the appropriate primary valuation methodology (p 1285, 1289); 3. the DCF included the value of the remediated land assessed by [NAME_91] (before scenario $2.45 million, after scenario $2.235 million) increasing at 2% pa (p 1290, 1299); 4. [NAME_118]'s assumption of the discount rate, assuming quarry compliant, changed from 8.75% in his report (exhibit 23 p 1304 par 5.11) to 9.5% in joint report (exhibit 23 par 28) 5. the acquisition resulted in the loss of a portion of the andesite resource within a buffer of 200m from the HEX (p 1287); 6. the planning approval limits quarrying to within the 40ha quarry circle only (p 1286); 7. the estimated costs of application to modify the planning approval would be $225,000 (p 1294); 8. the annual production rate would be 750,000 tonnes pa (p 1290, 1292); 9. the average selling price would be $16.83 per tonne increasing at 3% pa (p 1297); 10. the unit production cost would be $9.90 per tonne increasing at 3% pa (p 1297); 11. rehabilitation costs would be $33,933 per hectare (p 1294, 1295); 12. other costs would be $3.40 per tonne increasing at 3% pa (p1297); 13. plant and equipment was part of the market value of the land (exhibit 5 p 24 par 7.1); 14. capital costs would be $1.30 million pa increasing at 3% pa (p 1296); 15. the applicable tax rate is 30% (p 1290, 1301); 16. a shortened quarry life due to lack of planning approval did not require consideration; 17. in the before scenario, the quarry would have operated for 15.5 years (exhibit 5 tab 28 annexure E p 1334); 18. in the after scenario, the quarry would operate for 14.5 years (exhibit 5 tab 28 annexure E p 1334); 19. in the after scenario, the hypothetical buyer would incur one-off costs of $635,461 for dust suppression, weather station, fencing, road and relocation of the explosives magazine and test blasts (p 1292, 1293); 20. in the after scenario, the hypothetical buyer would incur increased blasting costs and weather monitoring maintenance costs of $98,250 (p 1291, 1293); and 21. the cost of bio-banking credits is approximately $1,000 per credit growing at 3% pa (p 1300, 1301). 1. [NAME_118] applied a discount rate supplied by [NAME_171] which represented the risk of the extension application for the quarry not being approved. [NAME_171], a registered [NAME_43] with Colliers International Valuation & Advisory Services Pty Limited for six years in the valuation of quarries in particular, prepared a report dated 26 June 2014 in response to questions from [NAME_118] and gave expert evidence on behalf of [NAME_39]. [NAME_171] provided a range of information and opinions which were relied upon by [NAME_118] in the preparation of his report (exhibit 5 tab 27). [NAME_171] opined that the list of material risks which would be identified by a quarry operator as hypothetical purchaser included the extent of reserves in the approved quarry circle, supply agreements, the prospect of additional approval for extraction in adjoining areas, the approved extraction rate (output and truck movements), the extent, progress and aims of rehabilitation, EECs, disturbed watercourses and "other planning and consent issues" (p 1268, 1269, 1270). Specific risks identified were the risk of the approval of an extraction rate more than 100,000 per year and whether extraction outside the circle would be approved. The extraction rate risk was based on advice from [NAME_79] extracted at par (d) of the report (p 1269). Paragraph 2(b) of his report refers to the existing consent as limiting the extraction rate and given that, he considered there was a breach of the current consent.

2. Concerning the appropriate discount rate, [NAME_171] opined: 1. a discount rate of 12.5% if the quarry was compliant with consent conditions (exhibit 5, tab 27, p 1271) 2. a discount rate of 17.5% before tax assuming the cash flows are to be derived from quarry operations outside the approved area (meaning not approved extractions as I understand it); and (p1272) (meaning as I understand his evidence the risk of getting approval for the expansion of the quarry) 3. a discount rate of 9.0% assuming the cash flows are to be derived from the ultimate disposal of the land following completion of the quarry operations and remediation of the land (p 1272). This rate was agreed by all valuers. 1. [NAME_118] also undertook a check of [NAME_171]'s discount rate applying a weighted average cost of capital (WACC) to arrive at a higher discount rate. 2. [NAME_93], [NAME_128], [NAME_118] and [NAME_171] also contributed to a joint report dated 22 July 2014 which was replaced during the hearing by a joint report dated 18 September 2014 and each provided oral evidence. Following their second joint conference, [NAME_93], [NAME_128], [NAME_118] and [NAME_171] agreed a large number of matters, including that the market value of the land for the duration of the quarry operations to be the sum of (exhibit 23 p 8): 1. the net present value to the hypothetical purchaser (as new land owner) of projected cash flows from operating the quarry until exhaustion of the quarriable reserves; 2. the net present value to the hypothetical purchaser of the residual value of the land (quarry and surrounds) after cessation of the quarrying; and 3. the net present value to the hypothetical purchaser of the residual value of the quarry assets that would be owned by the hypothetical purchaser as land owner (comprising plant, equipment and infrastructure) assuming that the hypothetical owner is also the operator after cessation of quarrying.

1. The experts agreed that the hypothetical buyer would terminate the interests of [NAME_50] in the land (p 9 par 27h) and agreed the valuation of the quarry operation component of the land to be (p 21, par 73): Applic Resp A Resp B Quarry Component of Land Value $000 $000 $000 ([NAME_26]) ([NAME_111]) ([NAME_111]) Before Value 20,434 16,448 15,739 After Value 17,788 15,507 15,169 Difference 2,645 941 570

where "Resp A" assumes no requirement for laser profiling and bore tracking and "Resp B" assumes such a requirement (p 21, par 73).

1. Further, following their joint conference, [NAME_93], [NAME_128], [NAME_118] and [NAME_171] agreed on the following (exhibit 23): (a) the quarry operations should be valued as a business; (b) DCF was the appropriate primary valuation methodology (p 8); (d) the appropriate discount rate is 9.5% after tax for both the before and after scenarios assuming that the quarry was operating with all necessary approvals (p 11 par 28); (f) the value of quarry operations relating to the resource outside the approved quarry circle is reduced due to the risk that approval may not be granted (though the experts disagreed as to the extent of that risk and how it should be quantified (exhibit 23 par 27(d)); (g) estimated costs of application to modify the planning approval would be $225,000 (p 9 par 27(g)); (i) the average selling price would be $13.60 per tonne increasing at a range from 5% pa to 3% pa over the period 2011-2021 (p 10 par 27(i), (j)); (j) (l) the unit production cost and other costs would be $9.09 per tonne increasing at 3% pa (p 10 par 27(k), (q)); (k) rehabilitation costs avoided due to reduced extraction volumes would be $0.10 per tonne indexed (p 11 par 27(r)); (m) the hypothetical buyer would buy the initial plant and equipment at $4.73 million (p 8 par 23, p 10 par 27(n)); (n) capital costs would be $1.20 million pa increasing with inflation (p 10 par 27(o)); (o) the applicable tax rate is 30%; (p) the assumed agreed quarry life without further planning approval (q) in the before scenario, the assumed agreed quarry life; (r) in the after scenario, the assumed agreed quarry life (exhibit 23, par 22, 24) (s) in the after scenario, the hypothetical buyer would incur one-off costs of $311,595 for dust suppression, weather station, fencing and road (p 10 par 27(l)); and (t) in the after scenario, the hypothetical buyer would incur increased blasting costs and weather monitoring maintenance costs (p 10, par 27(m)). 1. [NAME_93] prepared the following tabular representation of the areas potentially available for quarrying and their valuation discount assumptions (exhibit 23, par 15). [NAME_175] [NAME_175] [NAME_176] [NAME_176](1) Disc Prob 9.5% 100% 9.5% 100% Approved 2.93Mt(2) Unapproved 9.5% 90% 12.25% 82.5% >300m 6.99Mt(2)(4) 300m buffer Unapproved 9.5% 90% 12.25% 71.4% -300m 0.96Mt(2) 200m buffer

[NAME_175] [NAME_175] [NAME_176] [NAME_176] Disc Prob(1) 9.5% 100% 9.5% 100% Approved 2.93Mt Unapproved 9.5% 90% 12.25% 82.5% >300m 6.99Mt Unapproved 9.5% 0%(3) 12.25% 71.4% -300m 0.96Mt

Note: 1. [NAME_176] prob is the implied probability that expresses [NAME_118]'s discount rate as the combination of the agreed discount rate for approved quarry with a probability of approval.

2. Tonnage from each area includes saleable overburden.

3. After the [NAME_39] land acquisition, [NAME_93] values the resources closer than 300m at nil, relying on [NAME_40]'s blasting expert ([NAME_128]). In [NAME_93]'s opinion, even if it were technically possible to blast in this zone, a purchaser would attach a low value to this resource (equivalent to no more than 10% probability factor) due to the high risk of non-approval and uncertainty about blasting costs. [NAME_118] assumes the same risk for this zone before and after the [NAME_39] land acquisition, relying on [NAME_39]'s blasting expert's opinion that it could be utilised.

4. Differences of view in respect of the value of this region have limited effect on the value of the loss as the before and after value of this region only differ by the additional costs (blasting and related).

1. Following their second joint conference [NAME_93], [NAME_128], [NAME_118] and [NAME_171] disagreed on the following (exhibit 23): (c) the DCF excludes the value of the remediated land comprising the quarry ([NAME_40]) or includes the value of the remediated land ([NAME_39]) (p 12-14, 22); (e) the acquisition resulted in the loss of a portion of the andesite resource within a buffer of 300m ([NAME_40]) or 200m ([NAME_39]) from the HEX (p 5, p 9 par 27(e)); (g) there is a chance of non-approval of planning consent represented by probability factor of 90% ([NAME_40]) or 12.25% discount rate ([NAME_39]) for quarrying beyond the 40ha quarry circle (p 5, p 8 par 27(d); p 18, par 65, 66, 67, 68); (h) the annual production rate would be 700,000 tonnes pa or more ([NAME_40]) but more than 100,000 tonnes pa is not approved ([NAME_39]) (p 18, par 63, 64); (k) rehabilitation costs are not avoided due to reduced extraction volumes (p 11, par 27(r)); and (u) costs associated with bio-banking credits (p 16, par 51, 52).

1. In addition [NAME_39] identified disagreement in relation to how blasting costs should be factored into the DCF model ([NAME_39] closing submissions p 103, 105) (roman i). The date of incurring costs for dust suppression, weather stations, security fencing and road sealing is not agreed ([NAME_39] closing submissions p 105, 117) (roman ii).

2. The topics (k) and (u) were no longer disputed in final submissions by [NAME_39] and I do not need to further consider these.

3. The resource valuation experts were cross-examined in relation to their respective approaches. [NAME_93] was cross-examined extensively about the beta figure he adopted but as this could relate only to the base discount rate of 9% which was agreed by the business valuers it is unnecessary to set out this evidence. 4. [NAME_93] explained the difficulties associated with determining the subjective input variables required to properly calculate the discount rate, such difficulties being overcome by the adoption of a probability based approach. 5. [NAME_118] concurred with [NAME_93]'s explanation of such difficulties, adding that caution is required in reflection of risk in either the discount rate or the cash flow (but not the same risk in both) and the challenges of reflecting risks specific to the subject property separately to risks generic to the industry. However, [NAME_118] added that there was no scientific basis for the level of probabilities assessed by [NAME_93]. 6. [NAME_93] did not agree that his approach to the assessment of probability was inconsistent with the example in his book (which provided three assessments of probability by way of example), having adopted a "central best estimate" rather than considering a series of scenarios and selecting the most appropriate. 7. [NAME_93] stated that [NAME_171] provided no scientific basis for the adjustment to the discount rate adopted. In his opinion if the same discount rate is applied to all cash flows then the cash flows that don't need to vary based on any risk are adversely affected in the same way as cash flows that do vary. The inputs to the discount rate are not intended to be subjective but rather are to be based on objective verifiable evidence, unlike the approach of [NAME_171] which introduces unnecessary uncertainties.

8. In cross-examination it was proposed that the adjustment of the discount rate by 5% by [NAME_171] was so [NAME_44] and unsupported by reasoning as to be unreliable. [NAME_171] stated that the determination of the discount rate was based on his informed value judgment based on his experience and was very subjective. [NAME_171] agreed that the 1979 consent had no limit placed on tonnage extracted or truck movements. [NAME_171] identified twelve matters affecting the discount rate. It was put to him that his approach was likely to lead to a disproportionately erroneous valuation because the discount rate he selected is applied to all the cash flows, not just specific cash flows to which the risk attaches, which proposition he did not accept or deny. 9. [NAME_118] agreed that the columns attributed to him by [NAME_93] in the table in par 15 of the second joint report (exhibit 23) were a "mathematical exercise" to interpret his discount rate approach in the form of [NAME_93]'s probabilistic approach and were acceptable although he would not express his conclusions in that way.

Value of remediated lots 177, 198 after quarrying in DCF model 1. [NAME_40] also seeks an additional amount for injurious affection for remediated lots 177 and 198 after the cessation of quarrying, assessed by [NAME_115] at $515,009 based on a diminution of the before value by 20% due to being "less attractive because near HEX" in the after scenario, as reflected in [NAME_40]'s table in par 330. [NAME_93] did not include any amount for the remediated quarry land in his DCF model, stating this was considered separately by the land [NAME_43] [NAME_115] called by [NAME_40]. 2. [NAME_118] included a value of the resource beneath the land together with a value for the surface of the remediated quarry land after quarrying had ceased in his DCF model. [NAME_118] applied inputs for the valuation of the surface of the land provided by [NAME_91] using a comparable sales methodology and comprising a before valuation of $2,450,000, an after valuation of $2,235,000 and a growth rate for land value of 2% as represented by assumptions 17 and 18 in [NAME_118]'s table and discussed in his report (exhibit 5, tab 28, page 1285, par 1.2). 3. [NAME_118] [NAME_45] on the advice of [NAME_91] did not consider an additional amount for injurious affection to be appropriate, with the difference between [NAME_91]'s before and after land value as applied in the DCF model reflecting only that land lost through compulsory acquisition.

DCF model input – risk of obtaining approval to expand quarry too speculative? 1. Calculating a present value for a future income stream arising from the right to extract minerals is a long established valuation practice. This can be achieved by applying the DCF method as has occurred in other cases such as [NAME_7] Corporation v Enfield, and as the business valuers agree. An important factor in the DCF modelling in this case is the amount of risk attributed by a hypothetical willing but not anxious purchaser to the likelihood of getting approval for the quarry expansion to enable quarrying beyond the quarry circle. The inputs to the DCF in the before scenario are disputed, in particular the extent of risk of approval for expansion of the quarry in the before scenario. It is common ground that without the potential to expand, there is no difference in the before and after scenarios applying a DCF method of valuation. In [NAME_40]'s Compensation Schedule (MFI 3) the value of the quarry in the before and after scenarios without approval is unchanged at $11.8 million. If that is the case the compensation payable is nil or minimal, suggesting another approach to valuation should be used, as [NAME_39] submitted. It is therefore necessary to determine the risk attributable to the likelihood of approval in the before scenario in the mind of the hypothetical purchaser.

[NAME_40]'s submissions - before scenario inputs to DCF 1. [NAME_40] submitted that parties to a hypothetical sale in the before and after scenarios would consider a modification under Pt 3A was very likely. Before the acquisition date the parties to a hypothetical sale of the acquired land or the residue land would have known that significant quantities of andesite are located in the quarry circle and the residue land beyond the quarry circle. The resource on the subject land is identified in the Lower Hunter Regional Strategy which confirms the importance of the asset by asserting that all land use change in the vicinity of such mineral resources "be compatible with continued access to the resource". In addition, at about the time of acquisition, operators in the hard rock industry were forecasting an impending boom by late 2009/early 2010 when demand would outpace supply.

2. Parties to a hypothetical sale of the acquired land or the residue land would consider that approval of the modification of the consent under s 75W of the EPA Act was very likely and, when granted, would enable the extraction of the additional andesite in the quarry circle and residue land beyond the quarry circle (the proposed modified consent area). [ADDRESS] should find that a reasonable prospective purchaser (in the hypothetical sale transaction) would have taken the view that there were extremely good prospects of modification of the consent (or an additional approval) to permit the owner to exploit the andesite resource in the ground outside the area of the circle on the indicative plan. A combination of factors would have given a purchaser that understanding: 1. the consent does not explicitly or expressly limit quarrying to the indicative circle; 2. the quarry circle is identified as an "indicative" quarrying area, which a lay person would understand to mean a [NAME_44] indication of the area for quarrying, rather than a geographical limitation on quarry operations; 3. even if legal advice had been sought by a prospective purchaser, the issue was not straightforward and an adviser was very unlikely to have been dogmatic in a view that the quarry circle operated as a condition on the physical extent of quarrying (as is demonstrated by, among other things, the dissenting judgment in the Court of Appeal); 4. the quarry had operated for many years with virtually no complaints about the operation, and no complaints at all about the area of quarrying activity; and 5. the andesite resource was of regional significance and was in strong demand from purchasers in the Hunter Valley.

1. Section 56(1)(c) has no role to play as there is evidence from [NAME_75] that the Court would accept that there is potential to regularise past unlawful activity and ensure that future works will be lawful. [NAME_40] submitted that the price bargained for would reflect the value of land as having the potential for future quarrying outside the quarry circle (and eventual rehabilitation and re-sale). Again, this is because the parties to the transaction would consider that achievable and it is their view that matters, not the actuality of those circumstances.

2. The purchaser and vendor would therefore conduct negotiations concluding that: 1. quarrying operations can be continued on the site, securing present cash flows as at the acquisition date with few risks; and 2. there was a high likelihood that approval would be granted for continued extraction of an important resource to other areas of the land around the existing quarry. 1. [NAME_40] relied on the evidence of [NAME_75] to establish that a modification of the consent would be achievable in a realistic timeframe of 9 -12 months at a cost up to $300,000 and would ensure the near-to full realisation of the resource in the before scenario (exhibit 4 tab 13 par 46, 63-64). With a demonstrable history of good performance over several decades, some studies might be required to show that the environmental impacts are reasonable but it is unlikely that any significant change to the operations would be imposed by conditions of the modification. 2. [NAME_93]'s risk figure of 90% likelihood of approval in the DCF (see table exhibit 23 par 15) is appropriate.

[NAME_39]'s submissions 1. There is no added value in the before scenario arising out of any potential expansion of the quarry because such a putative expansion is so risky and speculative. Valuing potentialities, which is permissible, does not permit speculation. Speculation is not permitted in the valuation exercise (see Vilro Pty Ltd v Roads and Traffic Authority (NSW) [2010] NSWLEC 234; (2010) 179 LGERA 47 at 91 citing [NAME_23]" Inc v Roads and Traffic Authority (NSW) [2007] NSWLEC 673 at [112], Mir Bros Unit Constructions Pty Limited v Roads and Traffic Authority (NSW) [2005] NSWLEC 467 per McClellan J at [28], and on appeal in Mir Bros Unit Constructions Pty Ltd v Roads and Traffic Authority (NSW) [2006] NSWCA 314 at [73] and [77]).

2. These submissions are directed to the potential to expand which is identified by [NAME_40]'s town planning expert, [NAME_75], in figures 2.3 and 2.4 of his report. These figures represent the before and after scenarios and the putative loss of andesite resource in the after. A hypothetical purchaser of [NAME_40]'s interest would not have paid anything for the potential to expand as identified in [NAME_75]'s report. If the Court accepts any of the following five reasons then any expansion is speculative and would not add value.

Reason one – buffer (planning issue)

1. A consent authority would have been likely to require a 1,000m buffer from neighbouring land because of noise, dust, vibration and amenity impact on the neighbours ([NAME_79]'s statement exhibit 4, tab 15, p 514, joint report par 90-91, [NAME_79]'s oral evidence T 604 l 46 to 605 l 26). If either a 1,000km buffer or a 500m buffer were to be imposed from the property boundaries there is no prospect of an expansion into the area [NAME_75] contends for. This is shown on exhibit 12. [NAME_121] states that in the before scenario quarrying would have been conducted up to 30m of the eastern boundary (exhibit 6 p 1445 par 1.18).

2. In the CDCP 2006 the buffer between Category C uses (such as quarries) and Category A uses (such as rural residential development) measured from "the property boundary to the affected land use" a minimum self contained buffer is 1000m (exhibit 7 tab 15 p 398). The "[i]ssues of concern to the Council are noise, vibration, dust, fly rock, visual intrusion, contamination of surface and ground waters and blast over-pressure". The CDCP 2006 would not have the same status in assessing an approval under Pt 3A as under Pt 4, but this is a fair representation of the merit matters of concern that have been identified as relevant by [NAME_79].

Reason two – flyrock 1. The proposed quarry expansion is almost to the edge of the eastern boundary of lot 177, apparently without any type of buffer. This would mean that in the before scenario, flyrock would have left the site and landed on neighbouring property. Buffers must be on the land of the applicant: [redacted] 2. [NAME_129] provides a depiction in figure 4 of his report to demonstrate the spread of flyrock based on "no extra effort" being put into current blast practice which he explained in oral evidence as representing flyrock occurring up to 700m forward of the blast face and up to 500m rear of the blast face, making it a "no go zone" for people (T 453 l 23 to 454 l 48). With modified blasting practice, flyrock can be better contained than this. However that involves a significant cost. In this respect [NAME_40] has failed to quantify this, so there is no evidence before the Court, which would allow it to precisely quantify the cost of the implementation of [NAME_129]'s suggested improvements to the existing practices. This in turn means that there is no evidence before the Court to allow it to assess whether a prospective purchaser would see value in the effort which might be put into controlling blasting practices.

3. The combined effect of this evidence and the other quarry approvals is such that a potential purchaser would not add any value for the potential to expand into the area designated by [NAME_75] because of the very significant risks that such an application would be refused because, absent acquiring additional land to the south and east, the subject land does not have a sufficient buffer. Ultimately, [NAME_75] agreed with the proposition that a proper understanding of [NAME_129]'s evidence demonstrates that any expansion of the type suggested by [NAME_40] is in fact not viable because of the spread of flyrock onto neighbouring properties ([NAME_75]'s oral evidence T 582). If [NAME_129]'s evidence is correct [NAME_75] conceded that there was little prospect of an expansion in the manner in which he had originally contended (T 597 l 37 to 603 l 18).

Reason three – ecological constraints 1. Expansion would not be plausible given the ecological constraints of the subject land. The evidence of the [NAME_39]'s expert [NAME_112] is:

1. The proposal to expand the quarrying activity would result in the loss of 12.692ha of [NAME_157] (exhibit 5 tab 21 p 738);

2. An additional 15ha of [NAME_157] has been cleared as a consequence of the quarry activities occurring outside of the quarry circle (exhibit 5 tab 21 p 734, 738);

3. A total loss of 27ha (that is the addition of those two areas) represents a loss of 26% of the total [NAME_157] on the subject land (exhibit 5 tab 21 p 738); 4. [NAME_157] is an EEC (exhibit 5 tab 21 p 740);

5. The "removal of 26% of the habitat on the Subject Land, as approximately 12% of the estimated 105ha of habitat in the locality, is considered to be highly important to the long term survival of the ecological community in the 5km radius locality" (exhibit 5 tab 21 p 741) and as a consequence "[f]or an Authority to approve the proposed quarry extension with these large percentages of loss of an endangered ecological community, there is a real possibility that Consent may not be granted";

6. If consent were to be granted, then by application of the Department of the Environment, Conservation and Climate Change's Principles for the Use of Biodiversity Offsets in [NAME_20] (2008) (DECC Principles) (Principle 10) an offset of "like for like" is required;

7. As [NAME_177] said in [COMPANY_11] v Minister for Planning and [2013] NSWLEC 48; (2013) 194 LGERA 347 at [205]: "[i]t is not appropriate to trade offsets across different ecological communities. Where a project impacts on a specific ecological community, any offset must relate to that same ecological community which is impacted", the consequence of this is that the offset vegetation the subject of a condition, would be [NAME_157];

8. The offset ratio to be applied would be 6:1 based on [NAME_112]'s assessment of other approvals (or at least 5:1 as was the case in [NAME_137]'s Dunmore Quarry) (exhibit 5 tab 22 p 923);

9. That ratio would not only be applied to the 12.692ha proposed to be cleared as a consequence of the proposed expansion, but also the 15ha cleared outside of the quarry circle without consent. This means a total of 6:1 applied to 27ha on a like for like basis would require conservation of 162ha of [NAME_157] on the subject land; and 10. The subject land only contains 48.96ha of the species on the subject land.

1. As a consequence of that, there is not sufficient land in the ownership of [NAME_40] for it to be able to comply with a condition of consent of that type. 2. [NAME_40]'s expert, [NAME_155], did not agree with all of the propositions raised by [NAME_112]. There are three key areas of disagreement. Firstly whether the additional 15ha of cleared [NAME_157] outside of the quarry circle would be included in the calculations for offsetting. [NAME_155] did not address this in her primary report or take issue with it in the joint report. In oral evidence she appeared to accept the proposition that it was necessary to include this loss in the calculations for offsetting (T 524 l 29 to 525 l 27).

3. Secondly, on the issue of "like for like". Although Bulga was not available at the date of acquisition, the determination by [NAME_177] as a matter of law, confirms the views adopted by [NAME_112] as to why she is correct in saying that "like for like" properly construed in this case would require offsetting of [NAME_157].

4. Thirdly, the ratio of offset. The evidence of [NAME_155] was that an offset of 3:1 was sufficient and the basis for this difference she contends is that, [NAME_112]'s cited examples of coal operations in addition to quarries when she conducted her analysis. In any event, even if a ratio of 3:1 were applied to 27ha, there is not enough [NAME_157] on the site for [NAME_40] to be able to obtain a consent with a condition to that effect. That proposition is evident from [NAME_112]'s mapping and it was put to [NAME_155] (T 526 l 7).

5. The effect of this evidence is that a hypothetical purchaser would be forced to consider buying other offset land in the locality with sufficient [NAME_157], before a condition of any quarry expansion consent for offsetting could be complied with.

Reason four – poor operating record 1. In written submissions the fourth reason relied on was that the consent authority would not accept that there has been 30 years of good operation. This submission cannot be relied on in light of my earlier ruling in [COMPANY_9] v [COMPANY_6] (No 4) [2014] NSWLEC 102 and oral rulings made in the course of the hearing. The only unlawful operation before the Court is the quarrying outside the quarry circle, in the manner determined by [NAME_49] in [COMPANY_21] v [COMPANY_6] (No 3) [2012] NSWLEC 57 and affirmed on appeal. I consider this contention which seeks to rely on other allegedly unlawful actions falls away.

Reason five – no extension granted in fact 1. Consent to expand has not been applied for. There is some evidence in exhibit 1 that there are some steps being taken to commence the process. Often in cases of this type, an applicant might point to a consent which postdates the acquisition and submit that this confirms the foresight that consent was likely to have been obtained. Here the opposite conclusion is available. I agree with [NAME_40] this factor is irrelevant and impermissibly calls for considering actual facts in what is required to be a hypothetical inquiry under the Just Terms Act.

[NAME_93]'s approach to the risk of approval 1. The real issue is how this potential for the expansion contended for by [NAME_75] impacts on determining if the parties to a hypothetical sale at the date of acquisition would have added value arising out of this putative potential. The approach employed by [NAME_93] is unreliable as an input into the DCF method of valuation. The [NAME_39] made five criticisms of the way [NAME_93] took into account the risk of non-approval in his valuation methodology.

2. Firstly, it is not within [NAME_93]'s expertise to apply a figure of 90% to the likelihood of approval. [NAME_75] had specifically given him that figure, it is not within his expertise to be able to say it. This is very similar to the evidence given by [NAME_178] in Dasreef Pty Ltd v Hawchar [2011] HCA 21; (2011) 243 CLR 588. [NAME_178] called for one purpose, tried to give expert evidence about another issue in the case in which he had no expertise.

3. Secondly, the figure of 90% is made up. It is an expression of an opinion that [NAME_93] has formed from his non-expert reading of [NAME_75]'s evidence. He has not said why he has formed the view it is 90% not 80% or something else. This approach is antithetical to that which Heydon JA dealt with in Makita (Aust) Pty Ltd v Sprowles [2001] NSWCA 305; (2001) 52 NSWLR 705 at 745 [87].

4. Thirdly, 90% is based only on [NAME_75]'s evidence. The only way in which [NAME_93]'s 90% probability of approval conclusion could be accepted is if the Court accepts all of [NAME_75]'s evidence and rejects all of [NAME_79]'s evidence.

5. Fourthly, the way [NAME_93] has applied his method is inconsistent with the way he says it should be applied in his text book (a component of which was tendered as exhibit R). [NAME_93] should have not just taken one figure from [NAME_75], he should have taken [NAME_79]'s or other views and input these as a "best case", "more likely case" and "worst case". This is not a case where he can reliably reduce the issues into a single all (90% probability of a 300m buffer with unspecified conditions) or nothing (10% probability of nothing). The other experts have given advice that not only influence the 90% versus 10% split, but other outcomes might arise in this case. This was [NAME_118]'s criticism, which is set out in the joint report (exhibit 23 par 46-47). 6. [NAME_93] was asked about the prospect of an approval with a range of different conditions, which could also be an option (requiring land acquisition for example, or with different compensatory habitat offset requirements) but he had failed to take account of any of those circumstances in this analysis. [NAME_118]'s criticism of this method was that to make it reliable one would essentially have to reflect all different outcomes and add them up, which in [NAME_118]'s view is impractical (T 1263 l 20 - 1264 l 31).

7. Fifthly, the manner in which [NAME_93] has applied his DCF valuation is unreliable because such a critical input which creates a very significant influence on cash flows [present value], is reduced to a bare 90% approval with unspecified conditions at a 300m buffer. On his own evidence set out in the compensation schedule (MFI 3) the value with approval is $31.2 million and the value without approval is $11.8 million (a difference of $19,400,000). [NAME_93]'s guesswork, not based on the experts' evidence other than [NAME_75], not modified by what [NAME_75] said in the witness box, makes a near $20 million difference in this modelling. That is "engaging in conjecture rather than knowledge" which is the very definition of speculative. [NAME_93]'s particular model for cash flows is too speculative to be used as a matter of valuation principle in accordance with Roads and Traffic Authority (NSW) v Mosca [2006] NSWCA 159; (2006) 146 LGERA 335 and [NAME_180] inter alia.

[NAME_40]'s submissions in reply 1. There is no evidence that a modified consent for an expanded quarry cannot be issued for the land, the highest that the [NAME_39] witnesses state it is to draw attention to what they say are risks of non-approval. The issue actually in dispute between the parties is the level of risk that a purchaser would attach to the prospects of future quarry expansion (including regularisation of unauthorised extraction) when making the purchase. In that regard, the hypothetical purchaser does not reflect only on the prospects of a successful grant of a modification to the consent but upon a combination of factors.

[NAME_39]'s reason one – buffer 1. There is no need for the imposition of additional buffers from the boundaries because the land is surrounded by largely vacant rural land with the only risks being to livestock or, in rare instances, people managing agricultural pursuits. The history of [NAME_50]'s operation over three decades demonstrates how these risks have been well managed in the past and could continue to be well managed by the new operator following modification of the consent.

2. Importantly, the evidence of [NAME_75] and [NAME_128] confirm that relevant planning policies and economic considerations would support the maximum extraction of the resource. There was a strong market for this regional resource. This would ensure that no use would be permitted on the surrounding land if that caused interference with the extraction activity (CDCP 2006 (exhibit 7 tab 15 p 398 (cl 4.2.4) and compare cl 4.2.8 (at p 399) and cl 4.3 at p 400-401). This makes buffers from the boundary of the parent parcel unnecessary and so unlikely to be a concern to the parties to the transaction.

3. The [NAME_39]'s oral submissions commenting on the complaints history (T 1559) is not a fair reflection of the evidence about complaints. On a proper analysis there is a very small number of complaints, made by an even smaller number of complainants. The alleged "complaints history" against the operation of the quarry is not worthy of any weight in the Court's assessment.

4. Further, the planners agreed that there was no significant history of regulatory interest in the past operations (exhibit 4 tab 17 par 35). [NAME_79] agreed that there was no evidence he could discover on a reasonable search of the relevant files of any council action (T 822) or any other compliance action by a regulatory authority (T 825).

[NAME_39]'s reason two – flyrock 1. In fact, no changes need to be made to blasting and quarry operations in the before scenario (statement of [NAME_129] exhibit 4 tab 10 p 325, 339; compare [NAME_129] at T 480 l 39-49; and see also [NAME_87] at T 254 l 13-31). The history of the use demonstrates that reasonable measures have been put in place by [NAME_50] over time that properly managed risks of harm to neighbouring properties in an appropriate manner allowing blasts to occur within close proximity to neighbouring land where that land is largely vacant and those risks can be controlled ([NAME_121] T 266 l 36-46). A modification of the consent to allow for future operations to extract the resource beyond the quarry circle would not involve any significant operational constraints associated with the blasting operations.

2. The evidence of [NAME_129] and [NAME_128] both support the position that blasting practices on the parent parcel could continue with no changes as the land is not in an "environmentally sensitive" location. It is incorrect for the [NAME_39] to submit that [NAME_129]'s evidence is that blasting near the eastern boundary (in the before scenario) means flyrock "would have left the site". [NAME_129]'s evidence was that there needs to be an area around a blast that is a "no-go zone". In other words, these areas need to be managed to ensure that harm will not come to people in those areas. [NAME_129] did not consider that the zone needed to be kept clear of animals (T 480).

3. The evidence of [NAME_75] was that buffers/separation distances are not required where there are agreements with neighbouring landowners and (hence) well-managed blast zones (T 672). The extract of [NAME_75]'s evidence in the [NAME_39]'s submissions required him to assume that there was no such agreement or management practices in place. However, this is not what a purchaser would consider as achievable in the before scenario. [NAME_75]'s evidence was that such management arrangements or agreements are common in the quarrying industry (T 730-731). This is reflected in the incorporation of such agreements as a management method in the Australian Standard for Blasting (exhibit N and T 802-803).

4. Recognition that proper management of blasting practices, agreements about dealing with neighbours and the use of neighbouring land are part and parcel of the industry, requires the rejection of the [NAME_39] contention that only separation distances can work in these situations. [NAME_75]'s extensive experience with arranging such agreements can be compared with [NAME_79]'s complete lack of any experience with such matters (shown at T 804). This explains why [NAME_79] took such a conservative view of the need for a separation distance under the CDCP 2006 - his evidence is based on a desktop analysis of planning controls, not a genuine appreciation of the way vendors and purchasers actually approach the matter.

5. In the extract of [NAME_75]'s evidence highlighted by [NAME_39], [NAME_75] was asked to make three separate and significant assumptions in order to then obtain the answer emphasised. These assumptions were that: (i) that every quarry wall that was blasted was west-facing (despite [NAME_75]'s experienced opinion that blasts would not be designed for such faces); (ii) that a blast clearance distance of 300m behind the blast face is required (that is that this zone cannot be shrunk with good management or an agreement with a neighbour); and (iii) that a condition was imposed on any approval in the before scenario requiring an absolute standard of no flyrock leaving the property (despite [NAME_75]'s evidence that such conditions are not imposed, but rather, consistent with the types of conditions put before the Court, the obligation is to use best endeavours or best practices to prevent flyrock leaving a site to the satisfaction of the Director-[NAME_44]).

6. In order to rely on [NAME_75]'s answers in that regard, the [NAME_39] must make good each of those assumptions and it cannot do so on the evidence before the Court.

7. The most likely condition dealing with blasting was one that required the preparation of a Blast Management Plan to the satisfaction of the Director-[NAME_44] and which did not impose any restriction prohibiting flyrock from leaving the site but, instead, to manage the risk associated with it (T 672). The likely conditions, in [NAME_40]'s submission, would have been conditions such as conditions 11 and 12 in the approval for the [NAME_142] (exhibit 4 tab 8 p 217) or conditions 10 and 11 of the Ardglen Quarry (exhibit 4 tab 8 p 245) being the types of conditions imposed on quarries by the Minister around the date of acquisition. These conditions, contrary to the [NAME_39]'s submissions, do not prohibit flyrock leaving the site of a quarry. They simply require it to be managed. That is what the hypothetical purchaser would have assumed in the before scenario.

[NAME_39]'s reason 3 – ecological constraints 1. A prudent purchaser would not expect that the gold standard identified by [NAME_112] would be likely to apply. In using the DECC Principles for the Use of Biodiversity Offsets in [NAME_20] (2008) (DECC Principles), [NAME_155] specifically notes that Principle 10 would apply to the subject land so that the potential for conservation of a large degree of Swamp Oak Forest (HU634) within the site provides a significant overall benefit (given the scale of previous clearing of that EEC enables it to be classified as of a greater conservation status) to offset the clearing of Central Hunter Greybox (HU551) (joint report exhibit 5 tab 22 p 920). [NAME_155]'s analysis of other approvals containing biodiversity offsets results in a likely imposition of a need to conserve at a ratio of 3:1, which could be accommodated on [NAME_40]'s land (exhibit 5 tab 20 p 679 par 23, joint report exhibit 5 tab 22 p 923). This matches the analysis undertaken by the town planning experts (exhibit 4 tab 13 p 424 [NAME_75]), Planners' joint report on quarry issues tab 17 p 596 par 84).

2. To the extent that [NAME_112] disagrees with [NAME_155]'s analysis, to posit a required offset ratio of 6:1 that could not be achieved on site, it relies and depends on a series of questionable assumptions or conclusions. One problem is that approximately 27ha of "native vegetation" would be included in the assessment as "historical clearing" (joint report exhibit 5 tab 22 p 918-919) (well prior to the modification application) even though [NAME_112] agreed that she could not accurately survey historical clearing (T 547 l 26-27). This need for a historical accounting was based on a questionable analysis of past approvals (T 550-551). Another problem is that no accounting would be made of the conservation benefit of protecting Swamp Oak Forest on the land. Indeed this is a particularly problematic position as [NAME_112] made no inquiries of the use of the land undertaken by [NAME_40] on the north eastern paddock (where such conservation could take place) (T 556-557). [NAME_112] assumed that this land was not used by [NAME_40] in the past, which meant that she did not take into account any environmental benefit from the land becoming protected (joint report exhibit 5 tab 22 p 920).

3. The result is that an approval of a modification application in the before scenario was likely to result in a requirement for offsetting the biodiversity impacts caused by the expansion which can be accommodated on the site. 4. [NAME_39]'s submissions misstate [NAME_155]'s acceptance of a "risk" and turns this into acceptance that it was "necessary" to include an area of 15ha of cleared [NAME_157] in the amount of vegetation for which an offset would be required. In any event, it is not possible for the Court to determine on the evidence whether the 15ha of cleared [NAME_157] was cleared unlawfully. A number of legal findings would have to be made to come to that conclusion that cannot be made on the evidence. This includes whether there were exemptions available under the relevant native vegetation legislation that applied at the time. The relevant community was not listed as an EEC until (coincidently) the date of acquisition (exhibit 5 tab 22 p 907). There is no reason why the hypothetical purchaser would assume that additional offsets for clearing of an EEC, before it was listed as such, would be required.

5. The decision of [NAME_177] in Bulga was a merits assessment involving conclusions that were applicable on its own facts. [NAME_177] was not purporting to create a rule of law applicable in all circumstances, but even if his Honour had intended to do that, there is no attempt to contravene the principle in this case

[NAME_93]'s approach to the risk of approval 1. It is not correct to say that [NAME_93] simply ascribed a "probability" of an approval of 90% (based upon the evidence of [NAME_75]). [NAME_93] described his approach precisely at T 1441-1442 and 1259.

Risk of approval for expanded quarry as input to DCF model not speculative 1. In [NAME_181] at [15], Handley JA (with whom Mason P and Bryson JA agreed) stated: The basic principle of compensation law is that the land must be valued at the relevant date in its existing condition with all its potentialities as potentialities [COMPANY_182] (in liq) v Darling Harbour Authority (1991) 24 NSWLR 156 at 175-176; 73 LGRA 47 at 65-66 citing [NAME_184] v [NAME_188], Vizagapatam [1939] AC 302 at 313 and [NAME_189] v Minister for Public Instruction (1956) 95 CLR 245 at 268-289.

1. The issue arises on the [NAME_39] case of whether the evidence of the advice about the potential for quarry expansion likely to be given to a prudent hypothetical purchaser and vendor is impermissible speculation. The possible expansion plans to the east in the before and after scenarios are identified in [NAME_75]'s evidence in figures 2.3 and 2.4. Given the evidence before the Court such a purchaser will receive conflicting advice concerning the level of risk attaching to that issue. [ADDRESS] as judicial [NAME_43] determining compensation should follow established principles: 1. where assessing a chance (or likelihood of approval as in this case) it will rarely be possible to demonstrate that any particular figure is correct, [NAME_7] v Commonwealth of Australia (1993) 46 FCR 67 Wilcox J at 83; 2. a genuine doubt relevant to value should be resolved in favour of a more liberal estimate, Maidment v Roads and Traffic Authority (NSW) [2006] NSWLEC 606; (2006) 153 LGERA 249 at [49] citing well-known High Court authorities.

1. It is necessary to resolve what advice the prudent hypothetical purchaser and vendor would receive as at the date of acquisition. The hypothetical purchaser and vendor would be informed in this case by the extensive and conflicting evidence on various planning, ecological and buffer issues received by the Court. As is often the case in matters of this kind and magnitude the Court is far better informed than either of the hypothetical parties it must consider is likely to be. The key question to be determined in this part of the judgment is the advice concerning the likelihood of approval for expansion of the quarry to enable winning of the resource to the east depicted by [NAME_128] or [NAME_140] a hypothetical purchaser and vendor is likely to receive (and so inform the price paid). That likelihood in the mind of the hypothetical purchaser in particular then informs the level of uncertainty which should be attributed to the likelihood of winning the resource in the DCF model applied by [NAME_93] and [NAME_118].

2. The presence of andesite is not limited to the quarry circle. Significant amounts lie outside the quarry circle. [NAME_40] commissioned detailed modelling of the site to determine the extent of the resource on the land both within and outside the quarry circle which is not challenged. The data produced by [NAME_40] shows a significant potential supply of andesite resource within and outside the quarry circle plan in the 1979 consent at the acquisition date. This is not in dispute between [NAME_140] and [NAME_128] and is detailed in the uncontested evidence of [NAME_133] of 11 June 2014. At the acquisition date, parties to a hypothetical sale of the acquired land or the residue land would consider that there was 2,650kt of obtainable andesite within the quarry circle and a further 7,360kt of product within the proposed expanded consent area.

3. The significance of the andesite resource is identified in part by the inclusion of the [NAME_2] land in the Lower Hunter Regional Strategy. As explained by [NAME_128]: There are about six hard rock quarries operating in the Hunter Valley, you know, the Hunter Valley has a demand market for about 3.5 to 4.3 million tonnes a year of hard rock product. In the nine or ten years up until 2010, this quarry, the [NAME_149] averaged sales of about 740,000 tonnes per annum, I think specifically it was 738, and that represents about 21% of the demand for quarry products in the Hunter Valley. At the time of resumption which was February 2010, the period leading up to that from about October, November 2009, it became very obvious that there was a leap in demand coming from the Hunter Valley markets, and in fact this quarry went on to produce, two years in a row, two - 1.4 million tonnes a year which is about 33% of the market. … the quarry is not just regionally significant, it's critically significant to the Hunter Valley to supply of quarry materials… 1. The strategic importance of the quarry was also identified by [NAME_75] in his written and oral evidence. [NAME_79] accepted as he must that the land was identified in the Lower Hunter Regional Strategy.

2. In terms of the operational history of the site, the quarry has been in existence since approximately 1980. As [NAME_40] submitted there have been a very small number of complaints over that period up to the date of acquisition, by a very small number of complainants. [NAME_190], who made complaints in 1982 (exhibit 9 tab 37 p 1316), resided at Bishops Bridge, as did [NAME_192] who complained in 1985 (exhibit 9 tab 37 p 1311). [NAME_194], who complained in 2001, lived on [NAME_2]. All these complainants live well away from the quarry outside any potential buffers. The Council files show no complaints made about the quarry for many years before the date of acquisition. I agree with [NAME_40] that the [NAME_44] absence of complaints over the life of the quarry, as suggested by [NAME_75] in his evidence (see par 91) would not have been of any concern to the hypothetical purchaser as a matter he, she or it would consider the Minister might take into account in an application for extension of the quarry. The [NAME_39] case overstated the history of complaints in relation to the quarry.

3. Further, the quarry had operated for many years with no regulatory concern about the quarry operations, either from the local council or the EPA, given that there is no evidence of this before the Court.

4. As [NAME_40] submitted, s 56(1)(c) has no application to its case. A relatively minor incursion of the quarry into an area outside the quarry circle by [NAME_50] in the belief that it was permitted by the consent in 2010 would not be considered by the Minister for Planning as a reason to refuse development approval for a Pt 3A application. This is confirmed by the uncontested evidence of [NAME_75] that the likelihood of regularising the operations with a further approval was high and that this can be done within 9-12 months at a cost of about $300,000.

Buffer 1. [NAME_39] submitted that a large buffer of 1,000m or 500m will be required by a consent authority relying on [NAME_79]. [NAME_75]'s evidence conflicts in important respects with [NAME_79]'s evidence particularly in relation to the likely extent of any buffer in the before scenario. [NAME_79] initially stated in his written report that a 1,000m buffer from the property boundary (in contrast to the quarry operation) was likely to be imposed if [NAME_7] was the consent authority because of the provisions of the CDCP 2006. Subsequently, he considered the buffer likely to be imposed by the Minister for Planning under Pt 3A was smaller, in the order of 500m from the property boundary. Buffers of this size would prevent an expansion of the quarry, as was clear from the identification of buffer zones from the property boundary of lot 177 and 198 and other possible receptors in exhibit 24. 2. [NAME_75] considered 300m from the quarry site was a likely buffer distance given the significance of the resource in the Hunter area, which I consider [NAME_79] underestimated. The relatively complaint free operation of the quarry for a lengthy period and the surrounding rural nature of the neighbouring land used largely for grazing informed [NAME_75]'s views. [NAME_75] has extensive practical experience in advising quarry operators in relation to applications for consent and also in assessing such developments as a member of the Western Sydney JRPP. [NAME_79] had a much more limited experience of this kind.

3. I consider [NAME_75] provided a realistic assessment of what the Minister for Planning would be likely to consider in a Pt 3A application in relation to this quarry and prefer his advice to a prudent hypothetical purchaser on this aspect of the case to that of [NAME_79]. I agree with [NAME_40] that [NAME_79]'s advice was too conservative. [NAME_39] submitted that there were houses in the vicinity as represented in exhibit 24 which identifies receptors R11 and R12 as near the quarry land and that buffer distances from these would prevent expansion, the evidence did not establish that these receptors were residences. [NAME_79] was unable to identify which receptors shown in exhibit P or exhibit 24 were houses as opposed to sheds. A prudent hypothetical purchaser would consider that any buffer imposed would be likely to be in the order of 300m from the quarry site. The need for a safety buffer would not be a basis for refusal of an approval to extend the quarry.

Flyrock 1. The present quarry operations are occurring very close to the southern boundary of the quarry land, as close as 20-30m. Adjoining the boundary is a high cliff face on [NAME_40]'s land beyond which blasting occurs. [NAME_129] identified the current practices on site attested to by [NAME_121] as adequate with some room for improvement. At present when blasting is to occur the neighbours on the adjoining grazing land on the southern boundary are alerted so that they have the opportunity to remove stock.

2. It was clear from the view that the area around the quarry is sparsely populated and used for grazing. That informs the views of the hypothetical purchaser on this topic. The hypothetical purchaser is also informed by [NAME_75], [NAME_129] and [NAME_143] evidence summarised above that current practices could continue safely given the location of the quarry. All three experts have extensive experience in the quarry industry in [NAME_20]. 3. [NAME_39] contended that [NAME_129]'s evidence in figure 4 of his report which shows flyrock thrown 700m forward of a blast and 500m to the rear if no extra measures are taken in relation to current blasting practice means that there can be no safe expansion of existing operations without incurring significant cost. There is no evidence before the Court of what such costs would be and therefore what a hypothetical purchaser might think.

4. This is not an accurate reflection of [NAME_129]'s evidence as applied to the [NAME_40] land, which I consider is more accurately reflected in [NAME_40]'s submissions that [NAME_129] and [NAME_128] considered that blasting practices could be safely continued in any expansion. [NAME_129] considered there had to be an exclusion zone around a blast and that could be managed (and was being managed at the date of acquisition). The exclusion of animals from such a zone is not generally required. [NAME_40]'s submissions in relation to [NAME_75]'s evidence are summarised above in par 244-247 and should be accepted given [NAME_75]'s extensive practical experience in the approval and regulation of quarries. Such advice to a prudent hypothetical purchaser is likely in these circumstances. [NAME_75]'s qualified concession relied on by [NAME_39] (above at par 221) does not assist [NAME_39] for the reasons given by [NAME_40] in par 244.

Consent conditions 1. Related to flyrock issues is the types of conditions which might be imposed on any expanded quarry operations. [NAME_93] and [NAME_118] made no assumptions about what development consent conditions might be imposed on a quarry expansion approval. [ADDRESS] heard extensively from both parties and their planning experts about the conditions of approval of other quarries both before and after the date of acquisition. [NAME_128] was also cross-examined on this topic. Any conditions imposed are likely to be more rigorous than the currently applicable conditions found in the 1979 consent, reflecting current approaches to regulating quarries. The condition requiring all land within one kilometre of the quarry to be retained in [NAME_40] ownership is less likely to be assumed by the prudent hypothetical purchaser given my conclusion in the previous section that a 300m buffer from the quarry site is likely. It is straightforward to conclude that conditions relating to blasting and flyrock management are very likely to be required.

2. The conditions particularly scrutinised were those relating to blasting and flyrock control for the Ardglen, Rockley Falls, [NAME_142] quarries attached to [NAME_141]'s affidavit. Relevant conditions are set out in par 50-53. The purpose of considering possible conditions of consent is not immediately apparent given that the imposition of conditions suggests that approval has been granted, contrary to the [NAME_39] case that it is unlikely to be granted. As I understand the [NAME_39] case the advice a prudent hypothetical purchaser might receive about possible conditions is to determine if these would be unduly restrictive.

3. In relation to blasting and the type of condition likely to be imposed [NAME_40] contended for conditions 12 and 13 in the [NAME_142] quarry consent (2010) or conditions 10 and 11 of the Ardglen quarry consent (2008) as the types of conditions likely to be imposed. These conditions do not prohibit flyrock leaving the site of a quarry but require the preparation of a blast management plan and/or implementation of best blasting practice. They require it to be properly managed and that is submitted by [NAME_40] to be the assumption of a hypothetical purchaser. This is supported by [NAME_75] as summarised in par 103. In his view agreement with the neighbours on blasting practices can be arranged and be safe and that accords with current practice at the quarry as attested to by [NAME_121]. [NAME_128] was also cross-examined about possible conditions and he considered these would be minimal given the location of the quarry well away from residences with grazing uses on neighbouring land. 4. [NAME_39] contended for the more onerous conditions in the Rockley Falls and Marulan approvals which specify that no flyrock should leave the site, according to [NAME_75] who was familiar with their location, those locations are more sensitive than the subject site. The Ardglen quarry is located close to residences and the relevant condition, set out in par 51, does not require that no flyrock should leave the site but rather that the proponent should implement best blasting practice to protect the safety of people inter alia. Reliance was placed on [NAME_196] by [NAME_39]. That case does not assist in these circumstances as it was a merits appeal that turned on its own facts.

5. A prudent hypothetical purchaser receiving advice from [NAME_75] and [NAME_128] both of whom have extensive experience in their respective disciplines in the quarry sector in [NAME_20] would consider the relevant Minister is unlikely to grant approval for an expansion with conditions so strict that resource recovery could only be achieved at great additional expense, if at all, in the before scenario. I accept [NAME_143] opinion that conditions of approval will not be extremely rigorous given the long standing and successful operation of the quarry for over thirty years.

Ecology 1. Land adjacent to the quarry circle that would be the subject of a modification application holds vegetation comprising two EECs (joint ecology report exhibit 5 tab 22 p 929). Any approval for a modification would therefore require an assessment of the environmental impact of removing that vegetation for the purposes of accessing the resource. The ecologists agree on the type and location of the two EECs on the land (HU634 and HU551).

2. Ecology was not referred to by [NAME_93] so that I infer this evidence was not considered in his attribution of a 90% likelihood of approval being granted. Assuming the conflicting evidence of [NAME_112] and [NAME_155] was available to a prudent hypothetical purchaser, I must determine what would be in the mind of such a purchaser, and whether that should inform the risk of approval in the DCF model however expressed by the business valuers.

3. Four issues emerge from the evidence of the ecologists and the parties' submissions. In relation to whether 15ha of vegetation has been cleared illegally as [NAME_112] found after considering historic clearing based on her assessment of aerial photographs and historic consents, I agree with [NAME_40] that the Court is not in a position to make any conclusive finding that the identified clearing was illegal. Such a finding would require greater evidence and submissions before the Court concerning how relevant native vegetation conservation laws applied at relevant times, which is beyond the scope of what is before me. As [NAME_40] submitted one of the EECs was listed as such only on the date of acquisition. It follows that I cannot conclude finally that the clearing of an additional 15ha beyond the agreed approximately 12ha of EECs to be cleared in any quarry expansion will have any role to play in the mind of a hypothetical purchaser in terms of the potential offsetting requirements of a consent authority. A hypothetical purchaser would be alerted to this issue based on [NAME_112]'s advice. They would not assume that 27ha must be offset.

4. As to the advice that would be obtained about the likely offset ratio to be imposed, based on the conflicting evidence of the ecologists a prudent hypothetical purchaser would be told a range from 3:1 to 6:1 could be imposed but that the lower end is more likely. The planners agreed with [NAME_155] that a ratio of 3:1 was a likely requirement. A ratio of 6:1 appears to be in the upper range of the Pt 3A approvals considered by both ecologists. The importance of this advice is then the advice the hypothetical purchaser would receive on whether any offset could be accommodated on the land beyond lots 177 and 198, the heavily timbered lot 76 being one potential option. [NAME_112] considered that lot 76 could not be included due to DECC principle 12 as it was part of the buffer required by condition 10 of the 1979 consent. I consider that [NAME_155]'s advice about the likely application of the DECC principles in existence in 2010 summarised above in par 137 is the more likely approach the Minister would apply, meaning that lot 76 could be identified for offsetting of EECs. A prudent hypothetical purchaser would consider there was a low risk that lot 76 was not available for that purpose.

5. As to advice on whether like for like offsetting would be required, contrary to [NAME_39]'s submissions, the advice could not have included the approach taken in Bulga, a merit appeal directed to a particular development, as that had not been determined in 2010. Of greater relevance is the application of the relevant DECC principles applying in 2010, as identified by [NAME_155] in her evidence. As these applied in 2010 like for like was not necessarily required where the overall conservation benefit achieved would be better under [NAME_155]'s approach. 6. [NAME_39] put a number of assumptions to [NAME_155] in cross-examination such as if lot 76 was not available for offset, 27ha of cleared EEC had to be offset and a ratio of 6:1 on a like for like basis was required (the most conservative case contended for by [NAME_39]). [NAME_155] stated that given these assumptions the necessary offset could not be accommodated on the [NAME_40] land. Given my findings above that none of these assumptions would be considered as "givens" by a hypothetical purchaser this concession appropriately given by [NAME_155] has no relevance. I note that on the assumption that 12ha would be required to be offset at a ratio of 3:1 and lot 76 was not available [NAME_155] considered there was sufficient other land available for offsetting on [NAME_40]'s land. Such advice to a hypothetical purchaser would suggest the accommodation of offsetting on site was likely.

7. Ultimately, the key question for the application of this evidence is whether there is a likelihood of approval being refused, as [NAME_39] submitted, in the mind of a prudent hypothetical purchaser. I do not accept that submission. This evidence would not be considered by a hypothetical purchaser as likely to lead to a refusal of approval.

8. Even assuming the most conservative advice being [NAME_112]'s advice of a like for like offset of 6:1 of the EECs of 27ha would be required so that all the necessary area of offset could not be accommodated on the [NAME_40] land does not result in the conclusion that refusal of approval was likely. A prospective purchaser would be likely to assume at worst that additional land elsewhere would be required to be purchased as part of the conditions for any approval (on the agreement of the experts that biobanking credits would not have been likely as at the date of acquisition in early 2010).

Final conclusion 1. Overall the hypothetical purchaser would consider that an expanded quarry is likely to be approved with conditions enabling the resource to be extracted. There is a risk of obtaining that approval which must be given a quantitative representation in some form in the DCF model. The business valuers disagree on how this should be done.

DCF model – probability factor or varying discount rate 1. [NAME_39] identified two aspects of approval as relevant to risk in the DCF model. Firstly, the likelihood of approval for quarrying beyond the 40ha quarry circle. Secondly, the likelihood of approval for quarrying more than 100,000 tonnes per year. The first aspect is raised in this part of the case.

2. The business valuers agreed that using the DCF method is appropriate. Both identify the need to include a risk of approval quantitatively in the DCF model, suggesting an acceptance by the business valuers that this should be done. The reflection of risk is not susceptible to precise mathematical analysis and requires the exercise of professional judgment. The expert evidence identifies three approaches to the reflection in the DCF model of the risk of gaining approval of a quarry expansion namely [NAME_118] adopting [NAME_171], [NAME_118] applying a WACC, and [NAME_93] partly adopting [NAME_75]. 3. [NAME_40] criticised [NAME_171]'s reflection of risk through a discount rate adjustment of 5% as opaque, unjustified and not in accordance with the correct approach to the discount rate. The discount rate should not be used to reflect some risks according to [NAME_93], who applied instead a probability-based adjustment factor to cash flows. 4. [NAME_93] assessed the risk of approval of quarrying beyond the quarry circle by assuming the probability of non-approval of 5%-10% (equating to a probability of approval of 90%) in the DCF model opining that a reasonable purchaser would conclude that the lack of a significant planning issue, the good operating track record of the quarry and its regional significance would create a favourable basis for gaining further planning approval, with a pool of potential purchasers such that none would be overly conservative, selecting a probability of non-approval of 10% (exhibit 5, tab 24, p 1012).

5. According to [NAME_93] (at T 1441) the matters which informed his consideration were: There are to put it rather simply, there are three keys things that come into the view about the probability of being able to mine a much bigger area of the resource. There are [NAME_75] and the contrary view that you've just referred to, there's [NAME_128], there's the history of the business, and then there are all these background things about quarries and their economics and how much demand there was in the area and how much these things are very dependent on location and all of the booming conditions, the relevant time in the Hunter Valley, and you weigh all that up as a willing but not anxious purchaser and you say on the balance of that, in rather simple terms, the most likely case is it will go ahead, which in this case was a 90% probability, and the worst case is it would go no further than the quarry circle, which was a 10% probability. and at T 1445-1446: …what is at stake here is what this thing is worth. I act for vendors in the area, I act for purchasers in the area, I've acted in the industry, in extractive industries for 40 plus years. With great respect, I probably have a better feel for what purchasers and vendors do than the town planners, and what's seriously at issue here is value, and I formed a view about the probabilities of how value would be assessed and that's what I've done. and at T 1447: purchasers and vendors form a view about the best estimate they can make of future cash flow and they determine price on that basis. If something goes wrong with the approval basis and the purchaser is wrong, that's life in commerce. On the other hand, if the approval is much better than the purchaser thought and much lower cost or whatever the facts are, then the purchaser wins, but that's commerce, it's just the marketplace. and at T 1259: When one has an agreed series of revenue, cost and production statistics, as in this case, bar a couple of items which are matters for other experts which remain outstanding, one has cash flows and one has a discount rate. But of course things don't always turn out as one expects. And strictly theoretically what one does is does a series of alternative scenarios and applies either a probability to each of those scenarios. Or alternatively, if the matter is somewhat simpler, one simply applies a probability to what's called a "central best estimate" of those cash flows, and again subject to the couple of valuation matters outstanding, that central best estimate is not in debate. In terms of a potential, willing but not anxious buyer and seller negotiating the sale of this land at the relevant date, they would take into account all these things, and they would assess value, allowing for the probability that either things would go ahead exactly as they thought, or that there may be some risk to that happening, and what I have done is a central best estimate calculation that allows for the risk.

1. There are five criticisms of this reasoning by [NAME_39] summarised above in par 231-236 which overlap, some of which could also be applied to [NAME_171]'s evidence. The criticisms include a lack of expertise, failure to provide reasons and reliance solely on [NAME_75]'s written report (whose opinion was said to be altered in cross-examination although I do not accept that it was).

2. The assessment of probability of approval by [NAME_93] is in part a matter of his professional expert opinion as identified in the transcript extracted above and is not grounded entirely in [NAME_75]'s evidence. I do not accept the criticism of [NAME_93] by [NAME_39] to the effect that he has given evidence outside his expertise as an experienced business [NAME_43]. The principles in Dasreef do not require consideration. He is also criticised for failing to identify his reasoning process as is required by Makita. His reasoning process was adequately articulated in his written report and his oral evidence. 3. [NAME_118] stated that there was a large range of alternative approvals that a hypothetical purchaser may achieve on an application to extend the quarry. To properly apply [NAME_93]'s probabilistic approach each possible approval outcome should be identified, modelled by discounted cash flow, a probability then attached and the results summed. This is a very labour intensive approach.

4. In my opinion, this is the difference between a single application of professional judgment (being the 90%/10% probability selected by [NAME_93]) and multiple applications of professional judgment such as numerous possible approvals to which a different probability is subjectively attached, being numerous expressions of professional expert opinion rather than one.

5. If the criticism of [NAME_93]'s approach is the subjective assessment of probability, I do not consider this criticism to be addressed by [NAME_118]'s proposed alternative probabilistic approach. 6. [NAME_39] submitted that the approach in [NAME_93]'s book The Valuation of Businesses, Shares and Other Equity (exhibit R) extracted at par 202 of [NAME_39]'s submissions suggests [NAME_93]'s approach was inconsistent in this case. According to the extract of the probability adjusted cashflow section [NAME_93] should have taken the worst, most likely and best case as the multiple issues requiring consideration means that a single figure of 90% is not able to represent with any accuracy all the issues. That criticism which was also made by [NAME_118] in oral evidence referred to by [NAME_39] in submissions at par 301. As [NAME_118] suggests there are several possible scenarios which could be modelled. [NAME_93] addressed this criticism through adoption of a "central best estimate" rather than considering a series of scenarios individually. I do not consider there was a failure to properly apply his book (the fourth criticism). 7. [NAME_118] approached the risk of approval by applying an adjusted discount rate based on the advice of [NAME_171]. [NAME_171] opined that, based on his experience as a quarry [NAME_43], a discount rate of 12.5% pre-tax (or 8.95% after tax) would be adopted if the quarry was compliant with consent conditions and a discount rate of 17.5% pre-tax (or 12.25% after tax) would be "reasonable" for the non-compliant quarry indicating a margin of 5% pre-tax (or 3.5% after tax) to reflect the risk of approval (exhibit 5 tab 27 p 1270, 1271, 1272; tab 28 p 1302). The 12.25% after tax discount rate is the relevant figure as it assumes further approval is required to win resource outside the quarry circle. I note that such an assessment of the discount rate by [NAME_171] is also a matter of professional expert opinion and is not grounded in any specific evidence.

8. I further note that [NAME_118] undertook a "reasonableness check" of [NAME_171]'s 12.5% pre-tax (8.75% after tax) discount rate applying a risk adjusted WACC and found it to be too low (exhibit 5 tab 28 p 1304). [NAME_118] calculated an after-tax risk adjusted WACC of 12.9% after-tax, significantly higher that the after-tax rate of 8.75% based on [NAME_171]'s advice. More relevantly in the second joint report [NAME_118] applied the rate of 12.25% (after tax) which relates to [NAME_171]'s 17.5% before tax rate. The WACC figure could be a useful check if the various inputs to the WACC are each validly determined. These figures were not considered by [NAME_93]. Given some of the inputs require subjective analysis there is room for disagreement in relation to them. Ultimately this evidence had limited relevance as it was not fully explored in the hearing. 9. [NAME_171]'s assessment of the risk of gaining approval to expand the quarry was too pessimistic and based on matters I have not accepted. Apart from unlawful quarrying outside the quarry circle which was not a matter known to [NAME_40] at the date of acquisition there are no other illegalities in relation to the approval which suggest an expansion approval is particularly risky. The existing consent has no limits on the amount extracted or the number of truck movements so that his observation in his report at p 1271 that the current consent provides much less extraction than what was extracted up to the acquisition date is not accurate. This was also identified in cross-examination. Nor do I consider there is any risk that less than 100,000 tonnes per year will be approved (as I discuss again below in par 321), another factor [NAME_171] took into account based on [NAME_79]'s advice and his own opinion based on his experience according to his report. That opinion is also too conservative. According to his oral evidence [NAME_171] considered an additional 5% increase in the discount rate for these two factors was warranted, accepting this was a subjective judgment based on his professional experience. He did not provide a separate component within the discount rate as between the two factors. He was cross-examined concerning how much he attributed to each factor but could not provide a precise response. I agree with [NAME_40]'s criticism of his evidence that it was too opaque. 10. [NAME_118] considered [NAME_93]'s approach was subjective which is correct, as is the approach taken by [NAME_171]. I conclude that both the probability factor adopted by [NAME_93] and the adjusted discount rate approach of [NAME_171] adopted by [NAME_118] are dependent upon the professional opinion of the respective expert witnesses.

11. One important difficulty with the discount rate approach of [NAME_118] and [NAME_171] identified in oral evidence is that the discount rate applies to all cashflow inputs although these are not necessarily matters for which a risk factor has relevance. It is therefore a poorly targeted approach to the adjustment for risk in the DCF model in this case at least. I therefore prefer the probability factor approach.

No speculation 1. The fifth criticism of [NAME_39] was that [NAME_93] engaged in conjecture and speculation in arriving at the figure of 90%. That the figure is a critical input in the DCF model and has a significant financial outcome in increasing the value of the quarry business by several million dollars is not relevant to whether it is speculation. I agree with [NAME_40] that the valuation of the land, including the potential for extraction of the andesite resource, does not involve speculation in the sense asserted by [NAME_39]. There is no speculation about whether or not there is a resource present in the land capable of extraction - that is agreed by the geological experts (exhibit 4 tab 9 p 321). What is involved is a consideration of the potentialities of the land: before acquisition, the risk that a consent authority would not have approved expanded quarrying activities; after acquisition, the risk that extraction of the known resource that is within 300m of the HEX would not be permitted. There is credible evidence from [NAME_75] and [NAME_128] in particular, which I have accepted, that (both before and after acquisition) a purchaser would have considered that the resource would be likely to be approved for extraction. That evidence stands in contrast to the speculation invited in the circumstances in [NAME_180] v [NAME_5] Authority, referred to in [NAME_39] submissions at par 152.

[NAME_93]'s 90% probability of approval be applied in DCF model? 1. The 90% likelihood of approval is an opinion based on several factors including the evidence of [NAME_75]. I need to determine if I should accept [NAME_93]'s opinion of 90% in its entirety given the range of factors additional to those considered by him, such as likely buffer requirements and whether there are any material ecological constraints.

2. I have determined that the circumstances underlying the assumptions made by [NAME_93] about what a hypothetical purchaser may consider in relation to the risk of approval based on the evidence of [NAME_75] and [NAME_128] and other of [NAME_40]'s witnesses are correct. My findings support the assumptions applied by [NAME_93]. Although buffer, flyrock and ecology were not explicitly considered by [NAME_93] my findings result in the conclusion that [NAME_93]'s 90% does not need to be modified. As his evidence suggested he considered the central best estimate is a valid approach and I see no basis for disagreeing with that conclusion. I accept [NAME_93]'s 90% probability factor to be applied in the DCF model.

Resolution of cashflow inputs to DCF model 1. [ADDRESS] accepts that the DCF method can be usefully applied to value the resource in the land in the before and after scenarios. The remaining disputes between the parties concern the cashflow inputs into the DCF beyond those already discussed above and relate to:

1. Extent of the buffer along the HEX;

2. Whether additional blasting costs should be included for the after scenario;

3. The timing of incurring costs for fencing inter alia;

4. The risk associated with approval to extract more than 100,000 tonnes; and 5. The value of the remediated land after the quarry ceases.

Extent of the buffer in after scenario (200m v 300m) 1. [NAME_93] assumes a 300m and [NAME_118] assumes a 200m buffer from the HEX in the after scenario based on their different respective instructions. [NAME_40] identified the changes in operations that [NAME_50] has made namely:

1. Forecasting the imposition of a 300m buffer area to the HEX in which blasting activity cannot occur to maintain safety to the users of the HEX ([NAME_121] 29 May 2014 par 1.18);

2. Better design and carrying out of blasting activity to allow blasting activity up to the 300m buffer ([NAME_121] 29 May 2014 par 1.19-1.23);

3. Installation of greater dust mitigation measures and bunding to screen the site from the HEX (([NAME_121] 29 May 2014 exhibit 6 tab 33 p 1546-1547); and 4. Fencing of the site ([NAME_121] 29 May 2014 par 1.33). 1. [NAME_40] submitted that changes that [NAME_50] has made to operations on the [NAME_40] land would also have been obvious to a potential purchaser [NAME_45] in reliance on [NAME_143] and [NAME_129]'s advice. [NAME_40] submitted that nothing less than a 300m buffer zone would ensure safety to users of the HEX (exhibit 4 tab 12 par 3.1). The need for safe buffer distances, as one element of changed blasting practices, only arises in the after scenario due to the presence of the HEX (T 480 l 10-20). The imposition of a 300m buffer from the HEX, and other measures introduced due to the presence of the HEX, result in greater cost in extracting less resource from the site. This creates a substantially different value in the after scenario. 2. [NAME_40] submitted that [NAME_88]'s evidence that the risks to HEX travellers could be managed so that blasting could occur within 200m of the HEX should not be accepted. His evidence is based on a technical and theoretical analysis that the very author of the report he quotes rejects (exhibit 4 tab 12 par 3.1.3). [NAME_88]'s analysis is not well founded because:

1. He did not attend the site (T 406 l 16);

2. It is unclear what, if any, of his report is his own work (T 407 l 4-33);

3. His analysis assumes a uniform material, like granite (T 433 l 10-32); and 4. His analysis did not account for downstream effects of changing blasting practice as blasting gets nearer to the HEX (T 438-439). 1. [NAME_39]'s position is that the ability to blast close to the HEX with a buffer of 200m is simply a matter of more detailed and costly blasting practices. [NAME_88] considered the likely costs and thought them feasible. [NAME_129] thought they are possible but might be uncommercial, but had not specifically turned his mind to the exercise (T 488 l 7-28, 489 l 7-43).

Buffer in after scenario of 300m 1. I accept [NAME_40]'s submission that the buffer from the HEX in the after scenario should be 300m distant. I do not accept the evidence of [NAME_88] that the risks of blasting 200m from the HEX could be managed to make such a buffer appropriate because his model was based on granite (a different material to andesite which is at the [NAME_149] according to [NAME_128]) (T 433). [NAME_88]'s analysis relied on the opinion of [NAME_148] in 2009 (exhibit 4 tab 11 p 372) but ignored later advice from [NAME_148] in which [NAME_148] stated that the appropriate buffer from the HEX should be 300m (exhibit 4 tab 12 par 3.1.3). [NAME_88] did not explain why his analysis did not alter following this later advice from [NAME_148]. A prudent hypothetical purchaser would not wish to assume more risk than is wise. 2. [NAME_129] accepted that blasting within 200m of the HEX is possible at a cost, as [NAME_39] submitted, he also stated that it would be impractical and would not recommend it (T 488-489). Given his lengthy experience this is considered and practical advice a prudent hypothetical purchaser would accept.

Blasting costs additional in after scenario? 1. [NAME_40] submitted that the evidence of [NAME_88] that he would advise a hypothetical purchaser or vendor that, even in the before scenario, significant additional costs should be self-imposed upon an operator in the nature of laser profiling and bore tracking, is not well founded and should not be accepted by the Court. [NAME_88]'s evidence was clearly influenced by his understanding of "best practice" required under Queensland regulations (T 482 l 34-39, 483 l 7-12, 483 l 30-34). By comparison, [NAME_129] understood that laser profiling might be "best practice" for quarries "in environmentally sensitive locations" (such as next to freeways (T 479 l 16-20, 480 l 43-44)) but that "quite a lot of people don't use it" (T 467 l 11-12). [NAME_128] has a similar view (exhibit 23 par 56). There is no good reason to think that these additional blasting practices were likely to have been required or taken up on the [NAME_40] land before acquisition. 2. [NAME_40] submitted that [NAME_121] explains in his affidavit the different operations (and hence) costs involved for [NAME_50] resulting from the presence of the HEX (p 1544-1550). Despite cross-examination on the topic, [NAME_121] did not accept that current blasting practices on site have or would change irrespective of the HEX (T 268 l 6-14, 269 l 10-46). Introduction of these measures in 2014 was to "see how it worked" (T 271 l 44). This is consistent with the common position of the experts on blasting (exhibit 4 tab 12 par 1.3-1.6). The concession made (at T 272 l 16-19) must be understood in that context. That is, though there have been extra efforts made by [NAME_50] (at greater cost) involving laser profiling and bore tracking within the quarry circle, and these are (due to their distance from the HEX) not directly attributable to a need to control flyrock to the HEX, those measures are only being introduced to the site at all because of the future need to operate more controlled blasts as the quarry edges closer to the HEX. 3. [NAME_39] submitted that laser profiling and borehole tracking are best practice and should have been implemented in the before scenario (T 469 l 9-12, 474 l 40 - 475 l 7). [NAME_39] also relied on the evidence of [NAME_121] to submit that laser profiling and bore tracking are occurring (from 2014) at the [NAME_149] in any case (T 270 l 35 - 272 l 19). These measures would have had to be implemented in any case, if a quarry extension were granted, because it would require quarrying close to the southern and eastern boundaries of [NAME_40]'s land.

Blasting costs in after scenario additional 1. I accept [NAME_40]'s submissions based on the evidence of [NAME_129] that laser profiling and bore tracking were not necessary or required in the before scenario. These costs as agreed by the blasting experts in the joint report at par 1.4 include:

1. Increased supervision of drilling blastholes;

2. Blasthole quality assurance;

3. Quarry face surveying;

4. Better blast design including laser profiling and bore tracking as well as double priming;

5. Review of as-built blastholes;

6. Blasthole charging quality assurance;

7. Blasthole stemming;

1. I do not accept [NAME_88]'s evidence that laser profiling and bore tracking would have been used on the [NAME_40] land in the before scenario because his evidence is based largely on the need to comply with best practice standards as required by Queensland regulations (T 483 l 7-12). Even though [NAME_129] gave evidence that laser profiling and bore tracking are best practice in the industry (T 469 l 8-11), his evidence was directed to quarries in environmentally sensitive locations (T 467 l 11-12), which the [NAME_149] was not in the before scenario. [NAME_128] has a similar view to [NAME_129], that these practices are only used where there are problematic environmental and/or safety issues and/or their use can be justified on a return on an additional operating expenditure basis. Neither of these situations, [NAME_128] stated, would have applied to the before scenario at the [NAME_149] (exhibit 23 par 56). 2. [NAME_50] had begun the use of laser profiling and bore tracking at the [NAME_149] away from the HEX in the quarry circle in 2014. [NAME_121] stated that this was only for the purpose of trialling the use of these practices for when they would be necessary for blasting closer to the HEX (T 271 l 37 - 272 l 10) which evidence I accept.

3. The evidence concerning the costs of implementing these practices is summarised above in par 74-77. Given my conclusion that laser profiling and bore tracking would not have been required in the before scenario these costs are an appropriate cashflow input in the DCF in the after scenario. My understanding from the parties' closing submissions is that I do not need to make any specific finding on the quantum of these costs.

Timing on incurring other costs 1. 318 The valuers take different approaches to the date when costs are incurred in the after scenario for dust suppression, weather stations, security fencing and road sealing, as referred to in the evidence of [NAME_121] set out above in par 41-44. [NAME_93] applied January 2012. [NAME_118] assumed the appropriate point is when the operation would be halfway through the resource in 2019. [NAME_39] submitted that the Court should accept [NAME_118]'s approach concerning the timing of incurring costs (T 1381-1384). [NAME_118] sought information from [NAME_50] about when these costs had been incurred. No response was received. [NAME_40] had the opportunity to provide information to allow [NAME_118] to come to a different view, but failed to produce that material to verify it.

2. A prudent hypothetical purchaser would consider that the consent authority may have attached relevant conditions to the approval concerning such public safety and environmental protection issues as dust suppression, weather stations, security fencing and road sealing. These costs are likely to be incurred two years or so after the grant of any consent, a conclusion similar to [NAME_93]'s approach.

Risk associated with approval to extract more than 100,000 tonnes 1. 320 [NAME_39] relied on par 63 in the joint business valuers' report where [NAME_171] expresses his view that there would be a risk that additional tonnage of more than 100,000 per year would not get approval. [NAME_128] dismisses this in par 64 based on the track record of extraction (which is above the amount approved as identified by [NAME_79] in his 2011 report). [NAME_39] submitted that [NAME_171]'s view is consistent with [NAME_181] that "potentialities are valued as potentialities" rather than certainties and that [NAME_143] approach is wrong as a matter of valuation principle.

2. This topic was considered in relation to the likelihood of approval of an expansion of the quarry above in par 298. The statement of [NAME_171] in the joint report par 63 does not provide any reason for his view. The evidence of [NAME_128], the existing environment protection licence allowing an extraction rate well above that amount, the existing extraction rate well above that amount and the evidence of [NAME_75], which I have largely accepted above, all suggest that there is no reason for a prudent hypothetical purchaser to be concerned that the extraction rate in an approval to expand would be limited to 100,000 tonnes.

Value of remediated land after quarry ceases in DCF model 1. All the expert (resource and land) valuers agreed that the surface of the land may be considered separately to the resource beneath the land. The different approaches of the parties' business valuation experts is summarised above in par 205-206. [NAME_40]'s claim includes a valuation of the resource beneath the quarry land applying a DCF model to which was added separately a valuation of the surface of the land undertaken by [NAME_115] land [NAME_43] using a comparable sales methodology (exhibit 5, tab 24, p 1002, par 18).

2. Both parties had experts who used a DCF model to value the resource beneath the land and both parties had land valuers undertake an assessment of the value of the surface of the land using a comparable sales methodology. The primary difference in approach between the parties is that [NAME_40] kept the resource valuation and the land valuation separate whereas the Respondent's expert [NAME_118] combined them in his application of the DCF model, drawing on the evidence of the land [NAME_43] [NAME_91].

3. For reasons discussed below in relation to the valuation of the remediated quarry land I consider [NAME_91]'s approach is preferable to [NAME_115]'s and I find that there is no injurious affection of the remediated quarry land at par 415.

4. Whether the remediated quarry land should be included in the DCF model as agreed in joint conferencing I will leave to the parties to resolve in the first instance.

Rehabilitation 1. As both parties identified in final submissions, there is little difference in the evidence of [NAME_128] and [NAME_141] about the cost of rehabilitation of the quarry land, as identified in the summary of this above in par 54-56. As [NAME_40] submitted the business valuers agreed on how remediation costs should be considered in the DCF, taking an approach that such costs would be incurred on an on-going basis and off-set against profits from the quarrying operation. An incoming quarry purchaser would not assume that it would have to allow for or incur a one-off large upfront cost of remediation as part of any sale of the land.

Overall conclusion on application of DCF 1. [ADDRESS] has made various findings on the different issues relating to the application of the agreed DCF model. It will be necessary for the parties' experts to run the model again taking into account the Court's findings to arrive at a final figure for compensation for the resource.

Land component of compensation 1. The value of the non-quarry land is part of [NAME_40]'s claim in several respects. The value of the land outside the two lots devoted to quarrying is claimed at a rate commensurate with a permissible rural use. In the after scenario injurious affection is claimed for the impact of the HEX on these lots. In addition [NAME_40] contended that a 40ha lot could be subdivided and sold in the north-west corner of the original parcel in the before scenario which is injuriously affected by being incapable of subdivision in the after scenario. In addition a loss of value of the remediated quarry land lots 177 and 198 is claimed as likely to be contemplated by the prudent hypothetical purchaser after quarrying ceases in 14 years' time in the before scenario and after 12.7 years in the after scenario. Injurious affection resulting from loss of access to lot 176 in the after scenario is also claimed. [NAME_39] disputes these claims. 2. [NAME_115] [NAME_43] prepared a report on behalf of [NAME_40] on the value of the land dated 17 June 2014 (exhibit 5 tab 23). [NAME_91] [NAME_43] prepared a report on behalf of [NAME_39] dated 19 June 2014 (exhibit 5 tab 26). [NAME_115] and [NAME_91] also contributed to a joint report dated 15 July 2014 (exhibit 5 tab 29), a joint analysis and adjustment of comparable sales dated 21 July 2014 (exhibit O) and provided oral evidence. [ADDRESS] also visited the principal sales relied on during the view. 3. [NAME_40]'s case for non-quarry land values was summarised in written submissions as follows: Before acquisition After acquisition Other Land component (2) Non-operational land (411.75 ha) = surplus lands During quarrying (a) 145.4ha severed parcel (north and east of HEX lot 6 and 76) (exhibit 5 p 973) Timbered land (Pt 76, Pt 1, 168) @ $8,180 / ha (not discounted by 15% for lack of access)2 237.3ha @ $12,500 / ha = $1,189,372 (timbered land rate, [NAME_156] adjusted – Kurri Kurri sale exhibit 5 p 967) (b) 62.21 ha remaining parcel (south of HEX part lot 76, 5, 166) ([NAME_156] uplifted because parent parcel more usable since associated with large lot some of which is cleared which is important for potential use as offset in association with broader operations) @ $12,500 / ha = $2,966,250 less 30% (injurious affection) = $544,338 = $1,733,710 (a) 32.96ha severed parcel (lot 201 to north of HEX) @ $15,000 / ha less 45% (injurious affection – no subdivision potential after acquisition exhibit 5 p 968, 974, joint report p 76 – has used OA4 and 5, OA6 and 7 as comparisons) = $271,920 Cleared Land (outside quarry area) (timbered parts of lots 162, 165, 166, 167, 168) (b) 116.9ha remaining parcel (lot 201 to south of HEX, and cleared parts of lots 165, 166, 2 and 5) 174.45 ha @ $15,000/ha @ $15,000 / ha (cleared land rate, [NAME_197] adjusted (uplifted) –exhibit 5 p 967) less 30% (injurious affection – from noise, lights, inter alia exhibit 5 p 968-971) = $2,616,750 = $1,227,450 Alternatively, before acquisition a new lot in the NW corner could have been subdivided from lot 162 and sold for approx. $1,000,000 (OA3 adjusted). That potential no longer exists after the acquisition because of injurious affection of the retained land. = $1,499,370 2 approaches of [NAME_115]:

1) Pages 968-974 – visual, traffic, loss of land = what is in table 2) Used to support 1st approach – p 76 joint report row (a) – only looks at lot 162 Both approaches result in loss of $1.1 million (3) Quarry operational land (219.145 ha) after quarry stops in 14 years lots 177,198 Deferred 14.6 years @ 5% discount (exhibit 5 p 974 footnote 3) Deferred 12.9 years @ 7% discount @ $15,000 / ha (cleared land rate) @ $15,000 / ha (cleared land rate) (multiplier is 0.490964) less 20% (less attractive because near HEX (rehabilitated land) = $1,613,885 (multiplier is 0.417865) = $1,098,876 (4) Improvements Less 30% (injurious affection) =$150,000 =$105,000 Other land BEFORE=$7,346,885 Other land AFTER=$4,436,956

2 In this table, the calculation is based on the rate shown by sale [NAME_156] without adjustment, whereas in [NAME_115]'s report the rate is $12,500/ha (see T 17/10/14 page 1122-1123).

1. This table does not precisely reflect the evidence of [NAME_115]. It has been difficult to understand the evidential basis of all aspects of [NAME_40]'s claim as a result. [NAME_115] assessed the compensation payable based on comparable sales, with the following assumptions: 1. concerning quarry use outside the approved circle, [NAME_115] was instructed to assume that any necessary approvals would be obtained; (p 982, point 3); 2. concerning the use of the acquired land for rural lot subdivision, [NAME_115] opined that the land was located in "Wine Country" and that the acquisition would result in the loss of one dwelling entitlement (p 949, par 15; p 971, par 50(b)).

1. Concerning highest and best use, [NAME_115] made a number of contentions which changed over the course of his evidence. His final position if the Court understands his evidence correctly was the continuation of the use of the quarry land for the sale of hard rock material until reserves are exhausted with the balance of the land during quarrying having englobo 40ha minimum lot size subdivision potential offering attractive lifestyle living and quiet enjoyment for activities involving horses, dogs, farm livestock and hobby farming "cropping" activities away from noise which is significantly eroded after the construction of the HEX. Further, at the cessation of quarrying, the remediated quarry land also has englobo 40ha minimum lot size subdivision potential.

2. According to [NAME_115] some of the land had value in addition to the quarry activities (including the potential for expansion) because it is a large parcel of land located in a highly desirable part of Hunter Valley Wine Country. The zoning of the subject land permits a range of activities to occur without the need to obtain a development consent. This includes agriculture, commercial vineyards and stables. Such uses are commonly carried out by the quarrying industry on their operational lands. [NAME_40] contended in par 122 of its closing submissions that the non-quarry land could be used for grazing and other permissible rural pursuits while quarrying continued. 3. [NAME_91] assessed the compensation payable for the acquisition of 54.6892ha of land (a piecemeal approach) pursuant to the Just Terms Act based on comparable sales, having regard to the following (exhibit 5 tab 26 p 1183, p 1220): 1. concerning quarry use outside the approved circle, [NAME_91] noted this to be without consent and so use for a purpose contrary to law under s 56(1)(c) of the Just Terms Act (p 1204 par 52); 2. concerning the use of the acquired land for rural lot subdivision, [NAME_91] noted [NAME_79]'s opinion that there was no loss of subdivision potential though the site area was diminished in the after scenario (p 1211 par 68, 69).

1. Concerning highest and best use, [NAME_91] opined that this would reflect the underlying zoning 1(a) rural under the Cessnock LEP 1989 and 1(b) rural under the Maitland Local Environmental Plan 1993, being for rural lot subdivision after quarrying activities cease and the quarry site is remediated. [NAME_91] considered it "inconceivable that the land that is not currently used for operational purposes could be used for rural residential purposes while the quarry is operating". While the quarry is operating, [NAME_91] considered the land to be a large rural holding suitable for grazing on generally poorer quality land and soil types, and that it would make no sense to subdivide the land and so create a source of complaints about the quarry operations. In the joint valuers' report, [NAME_91] agreed that the highest and best use was "for quarry purposes" and then stated that it was as a "large rural holding, sold in one line for use as a quarry and associated buffer land", a view maintained by [NAME_91] in oral evidence.

2. Both valuers agreed that the uses in the before and after scenarios are the same but disagreed what the nature of those uses is.

[NAME_40]'s submissions 1. [NAME_115] has valued the subject land by reference to three considerations (exhibit 5 tab 29 par 74-75):

1. That the land wholly devoted to actual quarry operations will have a present value based upon the ability to use that land in the future for rural-residential purposes (a position that, oddly, [NAME_91] considered was likely but did not attribute any value to at all);

2. That part of the land surrounding the quarry could be put to "farming/rural and other uses" (mindful that agriculture, commercial vineyards and stables are all development permissible on that land without the need to obtain development consent); and 3. That a part of the land was capable of being subdivided and sold. 1. [ADDRESS] would derive little assistance from [NAME_91]'s analysis of sales. First, this is because [NAME_91] was not deriving values for the subject land as it is but rather based on a series of counter-factual situations (because he was instructed to do so). Thus (at exhibit 5 tab 26 p 1232 par 166) [NAME_91] considers that at the acquisition date the parties to the sale would "assume mining activities conducted without consent would cease and remediation requirements be enforced". [NAME_91] has analysed his sales assuming that a "downward effect" would be present for the subject land due to the unlawful mining activities and remediation requirements (par 165-167). Second, [NAME_91] has considered that the subject land could not permit other ancillary uses (par 176) though these can and do occur on the land. Further, [NAME_91]'s dismissal of these economic uses is inconsistent with the fact that land adjoining the subject land is put to these uses and has a value accordingly. [NAME_91]'s reduction to zero for any value attributable to this economic return based on a speculative consideration that these uses are "risky" (T 1158-1159) cannot withstand the fact that land around [NAME_2] has a value precisely because these uses can occur.

2. These considerations appear to have influenced [NAME_91]'s selection of sales. These counter-factual assumptions may also be the cause of [NAME_91] having entirely failed to recognise any injurious affection to the land resulting from the presence of a major freeway running through the middle of it. This position was, notably, inconsistent with his belief that subdivision of the north-west parcel was not a viable option due to the presence of the haul/access road (T 1164).

[NAME_39]'s submissions 1. [NAME_91]'s approach to highest best use that the subject land would be used as a quarry with the non-operational quarry land being quarry buffer land should be accepted.

Finding on highest and best use 1. I accept [NAME_91]'s view of the highest and best use in the before and after scenarios that while the quarry is operating on the two lots with the access road running through other lots to [ADDRESS] the surrounding land would be considered by the hypothetical purchaser, a quarry operator, as buffer land. The high value of the quarry, its relatively large size and the desirability of not having incompatible uses in its vicinity would be a highly relevant consideration for such a buyer. Use of the buffer land largely for grazing purposes is the approach I consider a prudent hypothetical purchaser would be likely to take for the majority of the non-quarry land in the before and after scenario. This finding means that there will not be injurious affection for the non-quarry buffer land in the after scenario as that highest and best use is not adversely impacted by the HEX. This also means that a piecemeal approach to compensation for the non-quarry land can generally be adopted so that compensation at a rate to be determined will be payable for the area actually acquired. 2. [NAME_40] through [NAME_115] submitted that the [NAME_2] area was part of desirable wine country, and there are some vineyards and tourist related land uses in the [NAME_44] area as seen on the view, the area remains largely rural in nature and around the quarry is grazing land. It is not comparable with wine-growing areas such as Pokolbin, visited on the view. In making that finding I am not considering the claim for subdivision of a surplus lot of 40ha in the north-west corner identified by [NAME_115] and shown in the table at par 330 as part of the cleared land. As I discuss further below there is surplus land in the north-west which is available for subdivision and sale in the before scenario which would be available for a rural residential use.

Finding on rehabilitation 1. [NAME_115] assumed that the site will be in a rehabilitated state at the conclusion of quarrying operations (p 982). [NAME_91] opined in his report that a hypothetical purchaser would assume a bond of $2.70 million to be required, noting [NAME_141]'s opinion of $2.53 million in costing. In the joint valuers' report [NAME_91] considered [NAME_50] had the obligation to rehabilitate (p 1217, 1218, par 77, 80; tab 29, p17, par 51). The business valuers have valued the resource on the basis that remediation costs would be paid on an on-going basis out of profits accumulated as part of the business plan. [NAME_91] accepted in oral evidence that no such up-front allowance need be required in any sale of the land. [NAME_40] criticised [NAME_91] on this basis, that criticism falls away given this oral evidence. As now put to one side, this issue is not material to [NAME_91]'s analysis of potentially comparable sales in any event contrary to [NAME_40]'s reliance on the downward effect referred to in [NAME_91]'s report. There is no suggestion in [NAME_91]'s report that this approach affected his selection of comparable sales. Similar observations can be made in relation to [NAME_91]'s consideration of unlawful quarrying outside the circle, a matter I have found to be irrelevant.

Comparable sales applied 1. The valuers' approach to the accumulation, analysis, adjustment and application of potentially comparable sales evidence is considered below. The accumulation of potentially comparable sales seeks to identify and establish a pool of relevant sales from which information may be deduced concerning the value of the land. The valuers identified different comparable sales and had no sales in common. The analysis of potentially comparable sales provides a basis of measurement by seeking to convert all potentially comparable sales to a common basis of expression such as a unitary rate. The valuers agreed that the common basis of expression as a unitary rate relevant to the land was a rate per hectare.

2. The adjustment of comparable sales to the subject land acknowledges the fact that no two properties are ever identical and seeks to convert those potentially comparable sales to a hypothetical expression of value as a unitary rate in the context of the land through the reflection of differences (such as size, location, use, date, inter alia) between the respective potentially comparable sales and the land. The application of potentially comparable sales to the land seeks to determine the value of the land through a consideration of the relevance (such as being limited, indirect or direct) of the unitary rate derived from those adjusted comparable sales relative to the land.

[NAME_115]'s approach to accumulation, analysis, adjustment, application 1. Concerning accumulation of potentially comparable sales, the primary comparable sale for cleared rural land with residential potential considered by [NAME_115] to derive a rate per hectare was sale [NAME_197] (exhibit 5 tab 23 p 953-960). [ADDRESS], Broke ([NAME_197]) has an area of 965ha and was sold in April 2008 for $8,250,000, being used for grazing/cropping.

2. The value of the surplus lot in the north-western corner (part lot 162 in the before scenario) is derived from lot [ADDRESS], Pokolbin (OA3). This lot has an area of 53.66ha and was sold in November 2009 for $1.25 million, being cleared land.

3. The primary comparable sale for timbered land or habitat offset (lot 76) considered by [NAME_115] to derive a rate per hectare was [ADDRESS], Pelaw Main ([NAME_156]) which has an area of 295.83ha and sold in June 2010 for $2,420,000 (exhibit 5 tab 23 p 953-960). 4. [NAME_115] analysed the above potentially comparable sales to derive a rate per hectare as follows: 1. (i) Timbered rural residential land - [ADDRESS], Broke ([NAME_197]) $7,733. Overall $11,314 Grazing/Cropping 2. Surplus lot north-western corner - [ADDRESS] (OA3) $21,897 3. Habitat - [ADDRESS], Pelaw Main ([NAME_156]) $8,180 1. For cleared rural residential land, [NAME_115] adjusted the larger sale at [ADDRESS], Broke ([NAME_197]) by $2,500 per hectare (22%) for inferior location, infrastructure, access, flooding and lifestyle aspects cumulatively to assert a rate of $13,800 per hectare for the subject land in his report. A rate of $15,000 per hectare is identified in the table in par 330. 2. [NAME_115] adjusted the sale at lot [ADDRESS], Pokolbin (OA3) for size (20%) and extent of timbering cumulatively to assert a rate of $15,000 per hectare for cleared land and $13,500 per hectare for cleared/timbered land used as a lifestyle farmlet (rural residential use).

3. For timbered/habitat land, [NAME_115] adjusted the sale at [ADDRESS], Pelaw Main ([NAME_156]) of 295.87ha showing $8,180 per hectare by $5,500 per hectare (67%) for larger size but inferior location, environmental constraints, topographical features, flooding and lifestyle aspects together with extant timbering cumulatively to assert after adjustment a rate of $13,680 per hectare for timbered parts of the subject land (particularly lot 76).

4. The adjustments undertaken by [NAME_115] as summarised in the table at exhibit 5 p 967 did not afford a high level of transparency of reasoning in relation to all these sales.

5. Four comparable sales for pairing to identify highway affectation were analysed by [NAME_115] to derive a rate per hectare as follows (exhibit 5 tab 23 p 961-966): Address Area Hectares Date of Sale Analysed Rate Per Hectare [ADDRESS], Keinbah (OA4) 52.91 July 2006 $11,340 Affected [ADDRESS], Bishops Bridge (OA5) 36.77 April 2007 $18,427 Unaffected 38.5% decrease [ADDRESS], Urunga (OA6) 31.26 May 2011 $9,597 Affected [ADDRESS], Urunga (OA7) 16.19 April 2006 $27,795 Unaffected 65.5% decrease

1. For the paired sales to identify highway affectation, [NAME_115] noted the impacts of the highway to include noise, visual, traffic, loss of privacy, seclusion, security and lifestyle enjoyment together with management problems arising from the underpass to the severed timbered land and the need for new cattle handling yards and loss of one dwelling entitlement for the split lot.

2. The relevance of these sales to the injurious affection of the surplus lot in the after scenario is unclear as that is claimed in the before scenario also on the basis of loss of subdivision potential. These sales are not directed to that issue. [ADDRESS] is not aware of any sales that can be applied to that issue.

3. In relation to the application of sales, in the before scenario for rural residential land, [NAME_115] asserts, without explanation of the relativity to his adjustment of sales, the following rates per hectare for application to the subject land (exhibit 5 tab 23 p 973): Basis Application Rate Per Hectare Non-Quarry Land, Cleared $15,000 Non-Quarry Land, Timbered $12,500 Quarry Land $15,000

1. [NAME_115] determined the value of the subject land in the before scenario in his report (exhibit 5 tab 23 p 973). This has now been summarised and refined in [NAME_40]'s table in the before scenario column set out above at par 330. 2. [NAME_115] determined the value of the subject land in the after scenario (exhibit 5 tab 23 p 973). This has also been summarised and refined in [NAME_40]'s table in the after scenario column set out above at par 330. 3. [NAME_115]'s commentary on the adjustments made in the after scenario was as follows: 1. (i) Cleared land severed, less 45%: 45% "discount" for the severed lands, reflecting loss of the dwelling entitlement, use/agricultural management problems and "highway impacts of noise, visual, traffic, elevated [NAME_2] intersection with consequential loss of "lifestyle" advantages." (exhibit 5 tab 23 p 974).

2. Cleared land part main holding, less 30%: 30% "discount" for part main holdings land, because "it is adversely impacted by highway impacts of noise, traffic, visual and so its attractiveness for future "lifestyle" hobby farms uses is eroded, and current "lifestyle" advantages. Development of this land will be problematic "after"" (exhibit 5 tab 23 p 975).

3. Timbered land part main holding, less 30%: 30% "discount" for part main holdings land, because "it is adversely impacted by highway impacts of noise, traffic, visual and so its attractiveness for future "lifestyle" hobby farms uses is eroded, and current "lifestyle" advantages. Development of this land will be problematic "after"." (exhibit 5 tab 23 p 975). 4. (iv) Quarry land, less 20%: 20% discount for "the land furthest removed from the expressway and so a reduced percentage discount is appropriate by comparison to my evidence" (exhibit 5 tab 23 p 975).

5. Quarry land deferred at 7%: "After" the deferral rate has been increased by 2% to 7%. Although the value has been "discounted" due to expressway, there is a greater risk involved because during the 13 years environmental issues (associated with the expressway) could arise – along with – public "interference" issues and greater / more onerous development consent conditions (associated with the expressway) will apply. Sale periods of the developed lots would also be extended (compared to "before"). The hypothetical buyer – although adjusting for price – would see a greater risk with the "after" property when deferring its value." (exhibit 5, tab 23, p 974)

1. For timbered land severed ([NAME_156] applied according to the table in par 330 I note that in his report [NAME_115] adjusted the sale to show $12,500 per hectare for the subject land. As noted above [NAME_115] analysed the sale of 295.83ha in June 2010 at [ADDRESS], Pelaw Main to derive a rate of $8,180 per hectare for habitat land. [NAME_40]'s case in light of this evidence is unclear given footnote 2 to [NAME_40]'s table in par 330 a habitat use for this part of the subject land has been assumed applying an unadjusted rate per hectare (despite size, location and other differences) to determine value. I will comment further on this sale shortly.

2. In his report (tab 23 p 968 par 46) [NAME_115] identifies noise affection at the [NAME_124] relying on the [NAME_39] report Noise Assessment February 2007 which identifies that there is noise affection of the [NAME_124] from the HEX.

[NAME_91]'s approach to accumulation, analysis, adjustment, application 1. [NAME_91] accumulated different comparable sales to [NAME_115]. Consistent with his opinion that, while the quarry is operating, the subject land comprises a large rural holding suitable for grazing on generally poorer quality land and soil types, [NAME_91] considered sales of large rural holdings to be relevant (p 1228, par 136). He analysed the potentially comparable sales explicitly and made explicit percentage adjustments for size, location and date of sale, affording a high level of transparency in his reasoning. Six comparable sales were accumulated, analysed and adjusted by [NAME_91] to derive a rate per hectare for comparison to the land as follows (p 1224): Address Area Hectares/description Analysed Rate Per Hectare Adjusted Rate Per Hectare Date of Sale [ADDRESS], Greta (PD1) 154.00 $4,513 $4,062 March 2014 Predominantly heavily timbered [ADDRESS], Maitland Vale (PD2) 1175.38 $4,084 $3,880 March 2014 Large grazing holding [ADDRESS], Lower Belford (1) (PD3) 101.18 $7,907 $3,953 June 2009 Predominantly cleared grazing [ADDRESS], Whittingham (PD4) 141.30 $4,246 $3,822 March 2010 Mostly timbered [ADDRESS], Lower Belford (2) (PD5) 41.93 $6,559 $3,935 February 2014 Mostly timbered [ADDRESS], Lower Belford (3) (PD6) 19.69 $6,348 $3,809 March 2010 Mostly timbered

1. [NAME_91]'s primary sale is [ADDRESS], Maitland Vale. This property comprises a large, well developed grazing property of 1175.38ha located close to Maitland, approximately 15km north-east of the subject land, which sold in March 2014, approximately four years after the acquisition date. Following analysis and adjustment, he considered this indicated a rate of $3,900 per hectare for application to the subject land (p 1228 par 138, p 1229 par 142). 2. [ADDRESS], Greta comprises a heavily timbered bush block of 154ha, adjoining the freeway at Greta, approximately 5km north-west of the subject land, which sold in March 2014, approximately four years after the acquisition date. Following analysis and adjustment, [NAME_91] considered this indicated a rate of $4,062 per hectare for application to the subject land.

3. Having regard to the analysed and adjusted rates in the range of $3,800-$4,062 per hectare arising from other comparable sales allowing for the relative level of timbered/cleared land, [NAME_91] applied the rate of $3,900 per hectare to the 54.6892ha acquired to determine a value of $213,288 rounded to $215,000 for that land acquired (p 1237, par 200; p 1240, par 217; p 1241). This was because [NAME_91] applied a piecemeal approach due to his instructions. [NAME_91]'s analysis of a rate per hectare can nevertheless be applied to value the non-quarry land as for valuation of land purposes he has carried out the necessary analysis and adjustment of comparable sales.

4. Both valuers were cross-examined extensively about their approaches to valuation and the adjustments made. The key matters in issue are identified in the parties' submissions and in the Court's discussion of these.

[NAME_40]'s submissions 1. [NAME_115] chose [NAME_197] because, like the subject land, it is a large parcel of land that might be capable of subdivision, but can really only be put to a farming use. Hence, [NAME_115] uses "lack of real subdivision options" or the fact that land is restricted to its "farm value" as a proxy for the fact that on the subject land, the range of agricultural and other uses are limited due to the presence of quarry operations (T 7/10/14 p 1020 l 16-24 and 1022-1023). [NAME_115]'s attribution of value to the timbered land was corroborated by a subsequent sale of that exact same land (exhibit 5 tab 29 p 13). 2. [NAME_156] is used to derive a rate of ecologically sensitive, desirable timbered land. There is nothing wrong in principle with the sale being one to an acquiring authority given the unique circumstance that the previous owner was an Aboriginal Land Council: compare McDonald v Roads and Traffic Authority (NSW) [2009] NSWLEC 105; (2009) 169 LGERA 352 at [53]-[62]. Similarly, any complaint of [NAME_115]'s analysis of [NAME_156] on the basis of some vague notion that some ecological communities are more scarce than others has no rational basis in a market analysis given that [NAME_91] carried out no analysis of this issue. 3. [NAME_91]'s PD1 is of an elongated parcel immediately adjacent to a major highway (see exhibit Q). It is inappropriate to apply that sale to the subject land in the before scenario (though the sale does corroborate [NAME_115]'s analysis of the sale for the after scenario (exhibit 5 tab 29 par 87)). In cross-examination [NAME_91] accepted the difference between PD1 and the subject land in the before scenario (T 1194-1195 l 35). [NAME_91] did not consider what PD1 showed in terms of amenity to any rural or residential use. [NAME_91] only considered what it might show to land held as part of a quarry operation, so he was asking himself the wrong question. Relying on T 1197 [NAME_40] submitted that if [NAME_91] had been engaged in the correct comparison he would not have chosen PD1, or if he had chosen PD1 it would have been at a substantially higher price. [NAME_91] accepted it would be a higher price if cleared (T 1524). (That can be accepted but it is unclear that has any consequence for [NAME_91]'s selection of that sale.) 4. [NAME_91]'s PD2 is located at Maitland Vale, approximately 20km from the subject land and in a qualitatively different location. [NAME_91] has failed to apportion value in this sale between the land useful for the purchaser and that steep and timbered land that would not be useful. This is despite accepting that this was a proper means of analysing sales (T 1179-1180, 1197 l 41 – 1199 l 34, 1204). There are also doubts as to the arms-length nature of this sale and its marketing campaign that [NAME_91] has not taken proper steps to dispel.

[NAME_39]'s submissions 1. [NAME_91]'s sales are predominately larger holdings although there is some analysis and adjustment of smaller holdings. The analysed land value before adjustment to the subject land ranges from $4,513 to $7,907. [NAME_91] then applies three adjustments to each of the sales, for time, location and size. [NAME_91] transparently discloses his adjustments including the quantum of adjustment for each sale. Having applied those three adjustments to each of the sales his range is between $3,809 to $4,936 ($4,062 in table in par 363). He then says this supports a value of $3,900 per hectare to be attributed to the land not directly requiring remediation at the end of the life of the quarry (522.94ha) and $3,000 per hectare on the land which would require remediation upon which the quarry presently sits on the assumption that the land was remediated (and that cost not being factored into the price) (exhibit 5 tab 25 p 1240).

2. The sales selected by [NAME_115] are not comparable and not properly capable of reliable adjustment in order to be rendered comparable to the subject land. 3. [NAME_197] the extent and nature of each of the adjustments made is not disclosed. Those matters identified by [NAME_115] are not the only matters which would require adjustment. There are many other matters with this sale that are not capable of adjustment and it cannot form any probative evidence of value in this case. [NAME_197] is not comparable because:

1. The purchase of this land was by a different class of purchaser (exhibit O p 13 2(b)). It was bought by a high net worth individual when mining was booming. It had elements of high agricultural use (for equestrian type activities) as well as privacy on the basis of its location in a valley and the purchase was over three properties;

2. It is in a significantly superior location in traditional wine country areas (exhibit O p 13 2(d)) and also superior because of privacy;

3. There were 60ha of underground irrigation pipes, a 243mL irrigation licence and second 30mL irrigation licence;

4. It had a timbered area [NAME_115] valued at $1,000 per hectare on the sale, which he conceded could have had EECs but he did not know (T 1064), but on the subject land has allowed a price of $12,500 per hectare because of the value in the EEC - a position which is contradictory and not supported by the evidence; and 5. The manner in which [NAME_115] has adjusted these sales is extraordinarily opaque and without readily understandable reasoning. 1. [NAME_156] is not comparable because:

1. It is a sale to a public authority who needed to purchase the land for compensatory offset purposes as a condition of the approval to carry out a major public work (T 1073 l 13);

2. It was not a sale in the market place, but rather a private transaction under which the purchaser was anxious (a proposition accepted by [NAME_115] (T 1073 l 10-25));

3. As a consequence of that evidence, even on [NAME_40]'s case, it must be regarded as a sale that does not fit the description of what is required by s 56 of the Just Terms Act; and 4. While there are other reasons listed in exhibit O that [NAME_91] has said render the sale unreliable and requiring significant adjustment, the failure of it to fit within s 56 means it must be disregarded. 1. [NAME_197] and [NAME_156] are the only two large parcels of land that [NAME_115] has brought forward as central evidence of the value of the subject land. The balance of his sales are either used for the purposes of assessing (by "paired" sales) the quantum of injurious affection caused by a road, or sales of significantly smaller lots which might demonstrate value of a 40ha rural residential parcel but not of a large quarry holding.

Consideration of valuation evidence 1. As already identified above in relation to highest and best use and consistent with various experts' views that the hypothetical purchaser would be a quarry operator, rather than an investor or a residential sub-divider, I would characterise the subject land as an operating quarry surrounded by buffer land used for rural (grazing) purposes as informing the selection of comparable sales. This was [NAME_91]'s approach to the selection of sales.

2. Consistent with principles usefully summarised in Marroun v Roads and Maritime Services [2012] NSWLEC 199 at [196]-[206], an assessment of value based on evidence cited in an explicit and transparent manner is to be preferred over a valuation which is implicit or is lacking in transparency. [NAME_91]'s reasoning in relation to analysis and adjustment is readily understood from his written and oral evidence.

Accumulation/analysis of potentially comparable sales 1. In relation to the accumulation of sales, [NAME_115] had two principal sales [NAME_197] and [NAME_156]. I agree with [NAME_39]'s submissions criticising the selection of sale [NAME_197] relied on by [NAME_115] for the reasons provided above in par 374. My further reasoning follows. 2. [NAME_197] comprises three adjacent farms of approximately 630ha plus approximately 335ha of steep timbered land, located at the end of a valley with river frontage in Broke, approximately 30km west of the subject land, which transacted in April 2008, almost two years before the acquisition date. The property is a premium large rural holding in the Broke valley with superior surrounding development including high quality houses and vineyards. It has extensive river frontage. The property has good access but is also isolated and private with no properties to the west that need to share access (exhibit 5 tab 29 p 12). It is substantially improved compared to the subject land, as [NAME_39] identifies.

3. According to the table in par 330 the sale is relied on for a cleared land rate (rather than a rate for timbered land as also referred to in [NAME_115]'s report). Relative to the subject land, the property is superior in terms of location being at the end of a valley and having a greater proportion of cleared land but less comparable in terms of size and was transacted closer to the GFC (September – December 2007 into early 2008). Having regard to the substantial differences between this sale and the subject land, I do not consider it can be relied on whether for a timbered or cleared land rate. A very large adjustment was made to apply the sale to the subject land. Further I consider it is superior in several respects so that any adjustment must be down not up. This sale is not comparable. 4. [NAME_115]'s approach of applying sale [NAME_156] to support the value of timbered lot 76 as a biodiversity offset is an approach supported by the evidence of the ecologists who stated that this area can be used for such a purpose. That is a potentially valuable use. [ADDRESS] is therefore prepared to accept such an approach in theory. [ADDRESS] has difficulty however in understanding how this sale can usefully be applied given its consideration by [NAME_115] in relation to the issue of injurious affection, particularly as the sale appears in the table in par 330. Firstly it is unclear how the value of $12,500 per hectare for lot 76 in the before scenario as appears in the table in par 330 can be derived from this sale. [NAME_115]'s report is too [NAME_44] in identifying adjustments for the Court to understand and assess. The unadjusted rate of [NAME_156] of $8,180 per hectare appears in the table in the after scenario for timbered land affected by the HEX. Logic suggests that land used for biodiversity offsets does not suffer amenity impacts from a freeway and there is consequently no basis for loss of value for this land because of the HEX.

5. As already stated in the previous paragraph, the Court is prepared to accept that there is value in timbered lot 76 as biodiversity habitat. However, as the rate referred to in the table of $8,180 per hectare in the after scenario is unadjusted it cannot simply be applied to lot 76. Further, the rate reflects a single sale to an acquiring authority. The sale does suffer from the problems identified by the [NAME_39] in its submissions in par 375 above as a result. Given the state of the evidence the Court is unable to apply this sale in the manner contended for in the table in par 330. No added value for lot 76 as habitat land can be applied in these circumstances. The issue of loss of value due to uncertainty of access to lot 76 at the date of acquisition is considered separately. It is unnecessary to further consider sale [NAME_156]. 6. [NAME_91]'s approach to accumulation was to select sales of rural properties of various sizes in light of my findings on highest and best use adopting [NAME_91]'s approach, several of which sales are broadly comparable to the subject land. I do not accept [NAME_40]'s criticism that [NAME_91]'s sales were not comparable because he considered unlawful quarry activity had occurred and his approach of an upfront rehabilitation amount in any sale. His evidence does not suggest that any downward effect occurred in his selection of comparable sales because of these matters. In his analysis of sales [NAME_91] deducted an amount for improvements from the purchase price followed by division by the land area to derive a rate per hectare, which I consider to be an explicit and transparent approach to analysis (tab 26, page 47). At the adjustment phase he distinguished between cleared and timbered portions on mixed blocks where this was relevant to his sales evidence. I will now consider the adjustment and application of [NAME_91]'s sales.

Adjustment of potentially comparable sales 1. The subject land comprised 630.8959ha, being 219.145ha of quarry land and 411.7509ha of surrounding land. Of the surrounding land, for the purposes of adjustment, the table in par 330 indicates 174.45ha cleared land (being approximately 42%) and 237.3ha timbered land (being approximately 58%) (exhibit 5 tab 23 p 946). The acquired land of 54.6892ha was approximately one third cleared and approximately two thirds timbered.

2. The acquired land and some of the potentially comparable sales include cleared/grazing land and timbered land. [NAME_115] asserted that, in principle, cleared/grazing land was of greater value per hectare than timbered land and that can be accepted as acceptable valuation practice. In the absence of supporting sales evidence to derive differential rates for timbered and cleared land, I prefer regard to this consideration in the adjustment step whereby the proportion that is cleared/grazing land and the proportion that is timbered land is considered.

Accordingly, if a potentially comparable sale was otherwise similar but had a smaller cleared/grazing proportion than the subject land, I would anticipate an upward adjustment to be required to the potentially comparable sale.

3. I consider that adjustment should be made for size, location and date of sale. Concerning date of sale, I note that [NAME_91] gave evidence, which was not contested, that the local market was "buoyant" in 2009 "followed by a decline that continued to 2013" (tab 26 p 1224).

4. Given the significant size of the subject land, being 630.8959ha, I consider potentially comparable sales of small blocks of land of less than 100ha require such a high level of adjustment that they are not reliable. I do not propose to consider the properties at [ADDRESS], Lower Belford (2) (PD5) and [ADDRESS], Lower Belford (3) (PD6). I will consider the balance of [NAME_91]'s potentially comparable sales in relation to the subject land.

[ADDRESS], Greta (PD1)

1. This property comprises a heavily timbered bush block of 154ha, adjoining the HEX at Greta, approximately 5km north-west of the subject land, which transacted in March 2014, approximately four years after the acquisition date and subject to any adverse effects of any freeway. While of an unusual shape, I do not consider this to be a significantly disadvantageous feature for a bush block, contrary to [NAME_40]'s submission.

2. Relative to the subject land, the property is comparable in terms of location, superior in terms of size being considerably smaller than the subject land but inferior in terms of transaction date, highway proximity and being heavily timbered. Having regard to the differences between this sale and the subject land, I consider this sale to be of indirect relevance.

[ADDRESS], Maitland Vale (PD2)

1. This property comprises a large, well developed grazing property of 1175.38ha located close to Maitland, approximately 15km north-east of the subject land, which transacted in March 2014, approximately four years after the acquisition date. Relative to the subject land, the property is in a qualitatively different location, being superior in terms of proximity to Maitland and in terms of the proportion of cleared grazing land but less comparable in terms of transaction date (too distant) and size, being significantly larger.

2. Issues were raised by [NAME_40] in cross-examination of [NAME_91] concerning whether or not this was an arms-length transaction and the inadequacy of the marketing campaign. [NAME_91] maintained the sale was relevant despite this criticism. Having regard to the differences between this sale and the subject land, as also highlighted in [NAME_40]'s submissions, I consider this sale to be of limited relevance and do not rely on it.

[ADDRESS], Lower Belford (PD3)

1. This property comprises grazing land with river frontage of 101.18ha located in Lower Belford, approximately 15km north-west of the subject land. This property sold in June 2009 approximately eight months before the acquisition date. Relative to the subject land, the property is comparable in terms of transaction date but superior in terms of location being closer to Singleton with river frontage, large proportion of cleared grazing land and size, being significantly smaller than the subject land. Having regard to the differences between this sale and the subject land, I consider this sale to be of indirect relevance.

[ADDRESS], Whittingham (PD4)

1. This property comprises approximately 65% cleared grazing land with limited river frontage of 141.3ha located in Whittingham, approximately 15km north-west of the subject land, which transacted in March 2010, approximately one month after the acquisition date. Relative to the subject land, the property is comparable in terms of transaction date and proportion of cleared land but superior in terms of location, being closer to Singleton with river frontage, and size, being considerably smaller than the subject land. Having regard to the differences between this sale and the subject land, I consider this sale to be of indirect relevance.

Application of potentially comparable sales to subject land 1. While I consider none of the comparable sales to be of direct relevance, I have found some to be indirectly relevant comparable sales to which greater weight should be attached for application to the subject land. 2. [ADDRESS], Greta (PD1) can be analysed to reflect an overall rate of $4,513 per hectare. Downward adjustment is then required for size with upward adjustment required for highway proximity at date of sale, extent of timbering and transaction date, which I consider will result in an adjusted sale price approximating $4,900 per hectare for application to the subject land ([NAME_91] applied a rate of $4,062 per hectare). 3. [ADDRESS], Lower Belford (PD3) was analysed to reflect an overall rate of $7,907 per hectare. Downward adjustment is then required for location, reduced proportion of non-timbered land and size, which I consider will result in an adjusted sale price approximating $4,200 per hectare for application to the subject land ([NAME_91] applied a rate of $3,953 per hectare). 4. [ADDRESS], Whittingham (PD4) was analysed to reflect an overall rate of $4,246 per hectare. Downward adjustment is then required for location and size, which I consider will result in an adjusted sale price approximating $3,600 per hectare for application to the subject land ([NAME_91] applied a rate of $3,822 per hectare).

5. Having regard to the evidence tendered and doing the best I can, I consider the appropriate rate to be within the range of $3,600 per hectare to $4,900 per hectare, a broader range than found by [NAME_91]. I adopt $5,000 per hectare based on adjusted comparable sales evidence supporting up to $4,900 per hectare and rounding up in favour of [NAME_40] the dispossessed owner.

Compensation for non-quarry land acquired 1. The rate of $5000 per hectare determined above should be applied to the area of 54.6892ha acquired as part of the compensation payable to [NAME_40].

Value of additional lot in before and after scenario 1. I accept below [NAME_40]'s submission that in the before scenario there was potential for an area of surplus land in the north-west to be subdivided as [NAME_115] identified in his evidence. As that lot can be used for rural residential purposes I consider that it should be valued at a higher rate than the quarry buffer land in the before scenario. It is necessary to find an appropriate comparable sale or sales. None of [NAME_91]'s sales address such a use.

2. Support for $15,000 per hectare adopted by [NAME_115] for the potential 40 ha lot on former lot 162 which became a 32.96ha severed parcel (now lot 201 to north of the HEX) in the after scenario was derived from sale OA3. Details of sale OA3 are set out in par 351 above. [NAME_115]'s reasoning in his report at p 967 note k was as follows: I use sale 3's rate per ha of $21,897/ha then adopt a 20% "discount" per ha (to adjust for size). This shows the subject property has a value of $17,500/ha before further considering other issues of difference between the sale and the subject property. This sale shows the subject property has a value (for the cleared land) of $15,000/ha (for cleared and timbered land).

1. This scale of adjustment is too unclear to be reliable. [NAME_115] cited two sales of smaller rural residential parcels. Sale OA8 (Lot 121, [ADDRESS], Belford) size 41.00ha, sold in November 2012 showed $10,975 per hectare. Sale OA9 ([ADDRESS], Maitland Vale), size 39.95ha, sold in July 2010 showed $14,392 per hectare.

2. Doing the best I can on the available evidence and ruling in favour of the dispossessed owner I will adopt $15,000 per hectare based on sale OA9 given its similarity in size and closeness in time of sale to the subject land.

3. In relation to value of the severed lot in the after scenario, there is no sales evidence to support a rate of 45% for injurious affection for the loss of subdivision potential identified in the table in par 330, as already identified above in par 410-412. I consider that the loss of subdivision potential does give rise to injurious affection for which [NAME_40] should be compensated. A 45% adjustment is very large (nearly half the value of the lot) particularly as this is unsupported by any evidence. I consider a 30% loss of value is reasonable, doing the best I can to be fair to the dispossessed owner in these circumstances.

Highest and best use - surplus lot in before scenario 1. [NAME_40] submitted that the hypothetical purchaser and vendor would also be aware that the parent parcel includes land located well away from the quarrying operations that is capable of subdivision and immediate sale (part lot 162). 2. [NAME_128] gave evidence that quarry operators such as [NAME_137] do sell off parts of their land which they consider to be excess to their quarrying operations. [NAME_171] in oral evidence stated he was aware through his experience of this occurring towards the end of a quarry's life. [NAME_87] gave oral evidence that land beyond lots 177 and 198 was surplus to quarry requirements and indicated this area on a plan as including part of lots 162, 165, 166 and 167 (exhibit G). The only reason an extra lot had not been subdivided and sold already was neglect in paying attention to that possibility. 3. [NAME_115] gave evidence and provided a plan (p 23 of the attachment to a joint report of the valuers at exhibit 5 tab 29) showing an irregularly shaped lot in the north-west corner facing [ADDRESS] which he considered could have been subdivided from the parent parcel in the before scenario. [NAME_115] did not adopt [NAME_75]'s view of subdivision potential in the before scenario of five to seven lots being potentially available. 4. [NAME_198] this approach because the highest and best use is for a quarry and there is no market evidence to support [NAME_115]'s approach. [NAME_75] did not consider the additional lot identified by [NAME_115] in his evidence. The lot would be in very close proximity to where the quarry trucks would be entering [ADDRESS], truck movements may peak at 800 per day with consequential increase in land use conflict resulting in complaints. No purchaser would be looking to subdivide this land as it had potential to affect quarry operations as it would. That it has never occurred is good evidence that there is not the value in that area contended for by [NAME_115]. [NAME_91] did not agree that the hypothetical quarry operator purchaser would consider selling off such land given the potential for conflict with the quarry use including the access road.

Surplus lot part of highest and best use in before scenario 1. I accept [NAME_40]'s submission that the prudent hypothetical purchaser would presume that an extra lot in the north-west corner should be "harvested" and pay an additional amount on that basis. Contrary to [NAME_39]'s submissions the lot is well outside any likely buffer, including of 1,000m identified by [NAME_79], from the quarry land. The lot is also several hundred metres away from the access point of the quarry road onto [ADDRESS] so that conflict with traffic would not be considered a prohibitive issue. [NAME_40]'s claim is supported by the evidence identified above in [NAME_40]'s submissions. It is irrelevant that it has never occurred in actuality as the Court is considering a hypothetical purchaser and vendor receiving advice about the potential of the land.

2. Clause 11A(2) of the Cessnock LEP provides a housing entitlement where the Council builds a road so as to reduce the lot size below the minimum 40ha required for subdivision. The wording of the clause does not include a freeway such as the HEX. Nor does the clause provide a subdivision entitlement being solely directed to the creation of a housing entitlement, a less valuable right. It has no application in this case, contrary to [NAME_39]'s submissions.

3. It follows that there will be injurious affection to this lot in the after scenario as the HEX means a reduction of land size such that an additional lot cannot be subdivided and sold in the after scenario. I have found above that the rate of 30% reduction in value for injurious affection is reasonable.

Value of remediated quarry land once quarry has ceased (whether injurious affection) 1. [NAME_40] also claims injurious affection to the value of the remediated quarry land (lots 177, 198) after quarrying ceases in 14 years in the before scenario and as it is injuriously affected in the after scenario. This is a claim of some $600,000 based on [NAME_115]'s evidence as summarised in the table in par 330.

2. None of the quarry land was acquired for the HEX. The surface area of the land in the before and after scenarios, assuming remediated land is created after quarrying ceases, remains the same. [ADDRESS] has accepted [NAME_91]'s opinion of the highest and best use of the buffer land around the quarry as for grazing use at best and this has been valued on that basis. By analogy the same value should be applied to the remediated quarry land. I do not consider there is sales evidence to support [NAME_115]'s opinion about a higher value rural residential use and do not consider there is any basis established for adopting that higher use given the somewhat remote development potential of land once quarrying ceases after 14.6 years in the before scenario and 12.9 in the after scenario.

3. I do not attribute a different higher value to this land in the before or after scenario based on a rural residential use. No claim for injurious affection in the after scenario can therefore arise as the likely rural use considered by a hypothetical purchaser is not adversely impacted by the HEX.

Access to lot 76 in after scenario (whether injurious affection)

1. The parties do not agree that there is guaranteed legal access to lot 76 in the after scenario and therefore whether there is injurious affection to this lot as a result. 2. [NAME_39] tendered the statement of evidence of [NAME_116], Principal Delivery Manager Hunter and North, Infrastructure Development Division with [NAME_39], dated 17 October 2014 (exhibit 22). His various roles have related to the construction of the F3 Freeway to Branxton Link (par 5) including liaising with local landowners regarding local access issues (par 6). 3. [NAME_116] states that an environmental impact statement for the HEX was prepared and exhibited, in response to which submissions were received, including from [NAME_50]. A representation report was prepared in response to those submissions (par 10). The Minister for Urban Affairs and Planning gave approval for the construction of the HEX on 7 November 2001 (the approval). The approval provides that the project shall be carried out in accordance with the representation report (par 11). The representation report addresses severed portions of [NAME_40]'s land (par 12). The representation report states that "access to the severed portions of the property [[NAME_149]] would be provided under the bridge at [NAME_2]" (annexure B p 9) and "access to the severed portions of [NAME_149] would be provided under the bridge at [NAME_2]" (annexure B p 10) 4. [NAME_116] understands that it is the [NAME_162]'s obligation under the conditions of approval to ensure access is maintained to the severed portions of [NAME_40]'s land during construction and the operation of the HEX (par 15). Before the contract for construction was awarded in 2010 the [NAME_162] corresponded with [NAME_40] regarding property adjustment works including the underpass to the severed portion of lot 76 (par 16). The underpass was completed on 18 February 2013 (par 22) costing approximately $2.14 million excluding GST (par 23). [NAME_116] understands that [NAME_40] has been able to use the underpass without restriction since its completion and [NAME_40] is in possession of the key to the gate to enter the underpass (par 24). It is the intention of the [NAME_39] that the owners of lot 76 should be able to continue to use the underpass on a permanent basis (par 26). In the near future (par 28): 1. the HEX will be dedicated as a public road under s 10 of the [NAME_5] Act 1993; 2. the HEX will be declared a main road under s 46 of the [NAME_5] Act; 3. the HEX will be declared a controlled access road under s 49 of the [NAME_5] Act; and 4. [NAME_39] will consent to [NAME_40] and its successors in title using the underpass in perpetuity for a purpose that is consistent with the authorised use of the land and will facilitate registration of this consent on the title to the residue of the relevant [NAME_40] land (being lot 76) by lodging a s 88E instrument executed by [NAME_39] and [NAME_40] recording the terms of restriction of access to and from the HEX and the terms of consent to access and use the underpass.

Minimal injurious affection resulting from change in access to residue lot 76 in after scenario 1. [NAME_40] submitted guaranteed legal access was not available to that part of lot 76 separated from the parent parcel by the HEX at the date of acquisition. [NAME_39] submitted to the contrary given the arrangements identified in [NAME_116]'s statement summarised above. At the date of acquisition in 2010 [NAME_40] was to be provided with physical access to lot 76 during the subsequent construction of the HEX according to [NAME_116]'s statement. This is not disputed by [NAME_40] through the [NAME_199]' evidence. Since that date access has been provided through the underpass under the HEX which was completed in 2013 according to [NAME_116]'s statement referring to the representation report which was part of the conditions of consent. Theoretically this access could be prevented by [NAME_39] not providing a key for the locked gate.

2. The date of acquisition is the point in time at which any loss must be assessed so that the fact that the underpass has since been completed is on one view immaterial. The most obvious legal right available to [NAME_40] at the date of acquisition were access to be denied by [NAME_39] was a civil action to enforce the conditions of approval for the HEX. These impose a legal responsibility on [NAME_39] to provide that access. This is not ironclad, enforceable legal access but it is fairly close. The type of arrangement intended to be provided in the near future according to [NAME_116] detailed in par 419 will provide necessary legal certainty to [NAME_40]. This was not in place at the date of acquisition.

3. While there could be some uncertainty in the mind of a hypothetical purchaser in these circumstances the risk is relatively small given the express responsibility in the conditions of development consent at the date of acquisition to provide access. There is some injurious affection to lot 76 in these circumstances. According to the table in par 330 the amount of 15% reduction in value for lack of access is claimed by [NAME_40]. That appears to be an acceptable figure and I adopt it.

Improvements (whether injurious affection) 1. [NAME_40] claims injurious affection to the existing [NAME_124] of $45,000. Given the adverse noise impact identified in [NAME_115]'s evidence and the evident visual impact of the HEX which could be seen on the view this should be awarded.

Disturbance (s 55(d)) 1. [NAME_40]'s claim includes disturbance under s 55(d)/59(f) of $319,000 for new cattleyards at $39,000 and a new [NAME_124] at $280,000. According to [NAME_87]'s evidence the parent parcel benefitted from having an occupant resident on the site who could attend to security matters on behalf of [NAME_40] and [NAME_50] in relation to [ADDRESS] and the site generally ([NAME_87] affidavit exhibit 6 tab 31 par 27 p 1382-1384, T 167-170, 174-181). [NAME_87]'s oral evidence is summarised above in par 30 to the effect that a [NAME_125] occupies the [NAME_124]. The employee also oversees the cattle grazing. Before acquisition existing cattleyards on the parent parcel on lot 162 could have continued to be used ([NAME_87] affidavit exhibit 6 tab 31 p 1384 see par 29). However, as a result of the acquisition, these structures (caretaker's [NAME_124] and cattleyards) need to be replaced elsewhere on [NAME_40]'s land.

2. Invoices for the construction costs of the new cattleyards were tendered (exhibit H) which show 34 hours were logged for a D6 dozer, for work on the cattleyards and an adjacent drain (par 31).

[NAME_39]'s submissions 1. 426 [NAME_39] accepted that disturbance of $20,000 is payable for replacement cattleyards being for a lesser amount than claimed by [NAME_40]. [NAME_87] attached a quote to his affidavit which shows 34 hours of operation by a D6 bulldozer. In his oral evidence (T 193, 180 l 31-34), [NAME_87] indicated that part of the work was for the construction of a dam (which is not included in the disturbance claim).

2. The claim for the replacement [NAME_124] is not a proper claim under s 59(f) for four main reasons. Firstly, it does not arise out of [NAME_40]'s actual use of the land, it arises from [NAME_50]'s use of the land (T 167 l 33 - 170 l 10). The second reason is that there is no "cost" or loss. [NAME_87]'s evidence indicated that [NAME_40] obtained a rent for the [NAME_124]. If that rent remains the same in the before and after scenarios (and there is no evidence that it has not), then [NAME_40] has suffered no loss.

3. The third reason is that there is no evidence of the reasonableness of incurring the costs. The ability to survey the quarry from, presumably, the internal part of the house, neither appeared on the oral evidence to form part of the job of the [NAME_125] nor would it seem reasonable to relocate the [NAME_124] on that basis.

4. The fourth reason is that the evidence proffered is wholly insufficient to prove the loss. A simple assertion of a quote for $250,000 without any proper breakdown or analysis of that simply cannot satisfy the Court. It is incumbent on [NAME_40] to lead logical probative evidence to support the assertions it makes. That is absent. The fact that there is a quote which has been obtained but which has not been produced compounds this deficiency. This also creates a difficulty about the appropriateness of new for old, as was an issue in McBaron v Roads and Traffic Authority (NSW) (1995) 87 LGERA 238 where Talbot J looked at the authorities on replacement of new for old. Without a proper analysis of how the $250,000 is made up, that aspect of the claim cannot be analysed.

[NAME_40]'s reply submissions 1. As to the cattleyards, [NAME_39] has conceded $20,000 is payable for replacement cattleyards. However, the cost of replacing the cattleyards is the compensable loss. If the Court accepts [NAME_40]'s evidence about cost (exhibit H), the Court does not have a [NAME_44] discretion to award some lesser figure: Roads and Traffic Authority (NSW) v McDonald [2010] NSWCA 236; (2010) 79 NSWLR 155 at [131] and [143(a)] per Tobias JA. The criticism about the use of a bulldozer for an extended period to construct a dam is misplaced. The dam is associated with the cattleyards and was constructed to be able to appropriately water stock held in the cattleyards. The criticism should be rejected and the full amount claimed of $39,200 for the cattleyards allowed.

2. Similarly, the Court should find that the claim for the costs of a replacement caretaker's [NAME_124] on the main area of the [NAME_40] land is not exorbitant or unreasonable: [NAME_163] at [70]. As it is a loss that [NAME_40] will incur in replacing a dwelling to be of actual use to it, the claim falls squarely under s 59(f) and is compensable. [ADDRESS] may rely on evidence of quotes to determine the "likely" loss since it has not actually been incurred at the present time: McDonald v Roads and Traffic Authority (NSW) [2009] NSWLEC 105 at [102].

Finding on disturbance 1. Section 59(f) states that a financial cost incurred or likely to be incurred which relates to the actual use of the land as a direct and natural consequence of the acquisition is claimable. "The land" is not defined in the subsection or elsewhere. [NAME_40]'s claim relates directly to the use of the residue land not the acquired land. In Jameson v Rail Corporation New South Wales [2014] NSWLEC 83 I held at [133] that where a partial acquisition of land has occurred and the use of the residue land is closely connected with the acquired land so that one use is dependent on the other is sufficient to bring the actual use of the residue land within s 59(f), citing Roads and Traffic Authority v Peak [2007] NSWCA 66 at [71] and George D Angus Pty Ltd v Health Administration Corporation [2013] NSWLEC 212 at [104]. Health Administration Corporation v George D Angus Pty Ltd [2014] NSWCA 352 was handed down after Jameson upholding the first instance decision in relation to disturbance. That case focussed on what was encompassed by financial costs in s 59(f). At [127] in Jameson I referred to [COMPANY_10] v [NAME_5] Authority of [NAME_1] [2008] NSWLEC 112; (2008) 160 LGERA 375, in which a claim for loss of profit from income foregone from carparking was rejected because the works related to the carrying out of the public purpose and not the actual use of the acquired land. The taking of the acquired land had no effect on the functioning of the residue land other than that the land was taken.

2. The facts of this case satisfy the threshold identified in Peak and applied in Jameson as the use of the residue land the subject of the claim is closely connected with the acquired land, unlike the facts in Almona. I further note that [NAME_163] in the Court of Appeal confirms that financial costs has a wide meaning. That is not really in dispute in this part of the case.

3. According to [NAME_87]'s affidavit dated 3 June 2011 at pars 1.7-1.11, the [NAME_124] intended to be replaced on the larger parcel of [NAME_40]'s residue land now separated from the [NAME_124] by the HEX is rented by a [NAME_125]. That employee is a caretaker oversighting both the [NAME_50] quarry business and the [NAME_40] grazing business. The location of the [NAME_124] is important as the occupant of the [NAME_124] must be able to see the entrance to the quarry for security purposes. Given that the quarry is operated by [NAME_50] and that loss of caretaker oversight is not a loss to [NAME_40]'s business that aspect of this claim is not claimable by [NAME_40] as that is not [NAME_40]'s loss. The separation of the [NAME_124] from the main parcel of [NAME_40] land by the HEX has been established as having a negative impact on oversight of the grazing business conducted by [NAME_40]. Such an impact was obvious from the view and is also attested to in [NAME_87]'s written and oral evidence.

4. Contrary to [NAME_39]'s submission that no loss has been suffered by [NAME_40] because it still receives rent from the [NAME_124], the loss suffered by [NAME_40] is the financial cost of building a new [NAME_124] in an operationally useful location. A loss giving rise to a financial cost is suffered by [NAME_40] in these circumstances as the use of the original [NAME_124] can no longer serve the purpose it had before the acquisition. That loss arises directly from the actual use of the residue land which use was closely related to the use of the acquired land.

5. A quote for the construction of the [NAME_124] has been obtained by [NAME_87] in the amount of $250,000 plus GST according to par 1.9 of his affidavit and he estimates a further cost for noise attenuation measures of $30,000 plus GST in par 1.10. This is sufficient to demonstrate the likely cost to be incurred by [NAME_40] in the future. This evidence is criticised essentially because no quote was attached to the affidavit. The sworn affidavit of [NAME_132] is sufficient to support a finding that a reasonable future cost is likely to be incurred. [NAME_40]'s claim for disturbance is accepted in part as it comes within the requirements of s 59(f) of the Just Terms Act being financial costs that might reasonably be incurred, in the case of building the new [NAME_124], which relate to the actual use of the residue parcel (and previously the acquired land) for grazing. In the absence of any evidence by which to apportion the caretaker's use of the [NAME_124] as between [NAME_50] and [NAME_40] I will allow [NAME_40]'s claim for half of the amount claimed for the [NAME_124] in pars 1.9 and 1.10 of [NAME_132]'s affidavit.

6. A claim for the cost of building replacement cattleyards on the larger part of the residue land is also made by [NAME_40]. The cattleyards relate directly to [NAME_40]'s grazing use of much of its land outside the quarry operation and can be claimed under s 59(f), as appeared to be accepted by [NAME_39]. This part of [NAME_40]'s claim for disturbance is accepted as it comes within the requirements of s 59(f) of the Just Terms Act being financial costs reasonably incurred relating to the actual use of the residue land as a direct and natural consequence of the acquisition. The issue in dispute is the amount of the claim and whether this should include the costs of building a drain. I consider that sufficient evidence of expenditure by [NAME_40] has been provided in relation to the construction of the yards, which were seen on the view, and the cost of the related drain required in order for the yards to be operated efficiently. I accept [NAME_40]'s submissions in reply in par 430 in this regard. The whole of the costs claimed for the cattleyards is claimable as disturbance. This finding is supported by [NAME_162] v [NAME_200] in the Court of Appeal where Tobias JA at [131] identified that once established that the basis for a claimed disturbance cost under s 59(f) is reasonable no further requirements arose, such as that the cost must be reasonable, if actual costs are able to be established.

7. For completeness I note that [NAME_39] referred to [NAME_201] as supporting a submission that reinstatement or replacement was not permissible under s 59(f). That case was not considering s 59(f) and provides no assistance on the issue before me. 8. [NAME_39] submitted that there could be no disturbance as claimed as the surplus lot I have found to be theoretically in the mind of a prudent hypothetical purchaser would mean that the area where the [NAME_124] and cattleyards are located was sold in the before scenario. The surplus lot as drawn by [NAME_115] excludes the area of land on which the cattleyards and [NAME_124] are located so that disturbance in relation to these can be claimed.

Summary of findings 1. A number of issues have required determination in order to reach some conclusions in this matter. A summary of findings follows which will enable the parties to provide the Court with further compensation figures applying the agreed DCF model for the resource part of [NAME_40]'s claim and the value of the non-quarry land acquired on a piecemeal basis. According to par 22 of the joint report the business valuers have agreed a spread sheet which the parties' experts will need to apply based on my findings.

2. If the Court needs to determine additional issues in order for the parties to provide final compensation figures the parties must advise the Court. One matter the Court was unable to determine is that part of [NAME_40]'s claim relating to plant and equipment. It is likely this is accounted for in the agreed DCF model but precisely how was not clear and the parties did not make any submissions about this apart from [NAME_40] articulating it at the outset as part of its claim.

Resource valuation 1. The agreed DCF model can be used to value the resource. There is a potential risk in the mind of a prudent hypothetical purchaser about the grant of approval for a quarry extension, which is less risky than no likelihood of approval being granted. Inputs to be used in the DCF model are:

1. Probability factor for approval of expansion of quarry of 90%;

2. Limit on expansion of quarry by buffer from HEX of 300m;

3. Blasting costs in after scenario are additional to the before scenario; and 4. Timing of incurring other costs such as dust monitoring, fencing inter alia is two years after the likely grant of development consent.

Remediated quarry land 1. No injurious affection is caused by the HEX to the remediated quarry land after quarrying is completed. As identified above in par 325, the parties should determine whether the value of the remediated quarry land should be included in the agreed DCF model.

Non-quarry land 1. Payment for the acquired land all of which falls outside the quarry land should be calculated on a piecemeal basis. I have found the rate per hectare of land value for the quarry buffer land is $5,000 per hectare in par 400.

2. Injurious affection is payable for the non-quarry land in the following three circumstances:

1. The value at the rate of $15,000 per hectare of the additional lot in the north-west corner able to be subdivided in the before scenario and sold is identified in par 404. Injurious affection results from the loss of ability to subdivide that surplus lot in the after scenario to be determined at the rate of 30% loss of value (par 405).

2. The uncertainty of access to lot 76 in the after scenario at the date of acquisition should be compensated by a 15% loss of value for the area of lot 76 separated from the residue land by the HEX; and 3. The existing [NAME_124] is adversely affected by noise and visual blight from the HEX and the injurious affection assessed at $45,000 should be paid.

Disturbance 1. Half of [NAME_40]'s claim for the [NAME_124] replacement including noise attenuation costs is accepted as disturbance as identified in par 436. [NAME_40]'s claim for the cattleyards is accepted as identified in par 436.

2. The parties are to provide final figures for the award of compensation to [NAME_40] once they have had the opportunity to review the judgment. Any matters which require further clarification or resolution should be drawn to the Court's attention as soon as possible. A timetable allowing for this to occur will be discussed with the parties.

********** 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: 20 February 2015