Council of the City of Ryde v Azizi

1. [1]

   PAYNE J: On 24 August 2018, the plaintiff, the Council of the City of Ryde, (“the Council”) compulsorily acquired three contiguous parcels of land adjacent to Blenheim Park at North Ryde. The acquisition was for a public purpose, namely the provision of public open space through the expansion of Blenheim Park.

2. [2]

   The first and second defendants are the former owners of the acquired land (“the former owners”). One lot was owned by Mr Raymond Boutros Azizi and two lots were owned by Alnox Pty Ltd (“Alnox”), a property development company owned and operated by Mr Raymond Boutros Azizi’s two sons. Mr Raymond Azizi (one of Mr Raymond Boutros Azizi’s sons) is Alnox’s sole shareholder and Mr Patrick Azizi, another son, is Alnox’s sole director.

3. [3]

   On 21 December 2018, the third defendant, the Valuer-General, appointed under s 8 of the Valuation of Land Act 1916 (NSW), determined the amount of compensation to be offered to each of the first and second defendants (“the Determinations”) [1] under s 41 of Land Acquisition (Just Terms Compensation) Act 1991 (NSW) (“Just Terms Act”) and provided copies of the Determinations to the Council and Mr Azizi and Alnox. The Council did not give the first and second defendants a compensation notice together with the Determinations within 45 days as required by s 42 of the Just Terms Act.

4. [4]

   Instead, the Council sought judicial review of the Determinations issued by the Valuer-General. In circumstances I will return to, a judge of this Court granted a “stay”, effectively, of the further operation of the Just Terms Act including the obligations under s 42 of that Act, pending the outcome of these proceedings. As a result, in respect of the property acquired by the Council on 24 August 2018, there still has not been any compensation notice served on the first and second defendants. A further result of the “stay” is that, unlike an interlocutory injunction, assuming one were addressed to the first and second defendants, the Council has not been required to, and has not given, the first and second defendants an undertaking as to damages.

Findings of fact

1. [5]

   This case is an administrative law challenge based on alleged jurisdictional error(s) in making the Determinations, brought under s 69 of the Supreme Court Act 1970 (NSW). In addressing the issues raised by this administrative law challenge I propose only to apply standards of administrative review and not undertake any review of the merits. The findings of fact made here are intended as a basis for addressing the Council’s case which raised only the existence of alleged jurisdictional error(s). In this regard, I will restrict any observations about the factual matters to the question of whether the conclusions reached by the Valuer-General were open to him on the material before him.

2. [6]

   In making the Determinations, the Valuer-General had before him a large volume of material including expert reports dealing with town planning issues and valuation issues. Before descending into the detail of that material it is convenient to first identify those expert reports and the party who commissioned each report:

3. [7]

   As an initial observation, in the context of a case which asserts jurisdictional error on the basis there was “no evidence” of critical matters about town planning before the Valuer-General, it is to be observed that the Council put before the Valuer-General an expert town planning report together with two separate expert valuation reports. Those reports were plainly taken into account in making the Determinations. The former owners put before the Valuer-General two expert town planning reports and three separate expert valuation reports. Those reports were also taken into account in making the Determinations. The Valuer-General commissioned and had before him two expert town planning reports and an expert valuation report. Those reports were taken into account in making the Determinations. Following distribution to the parties of the draft Determinations, and following complaints made by the Council supported by an opinion from Mr Tomasetti SC, the Valuer-General commissioned another expert town planning report as a peer review of all of the town planning material before the Valuer-General. This report, which considered in detail the complaints made by the Council about the earlier reports which had been obtained, was the Ethos Urban peer review dated 20 December 2018. That report and the subsequent expert valuation report commissioned by the Valuer-General were plainly taken into account in making the Determinations.

4. [8]

   The essence of the debate between the town planners relates to the correct assumptions to be made in the case of a compulsory acquisition under the Just Terms Act. That question, in turn, was affected by the assumptions made by each town planner about the test to be applied. The issue was framed in this way by Mr Le Bas of Turnbull Planning in his report (commissioned by the Valuer-General) dated August 2018:

5. [9]

   Although no complaint was made by the Council about this issue, Mr Hemmings SC, for the former owners, accepted that the use of language by Mr Le Bas was not the language of s 56 of the Just Terms Act. It is to be noted that in Sydney Harbour Foreshore Authority v Walker Corporation Pty Ltd [2005] NSWCA 251 at [41] Basten JA said:

6. [10]

   What was hotly in dispute was the quality and nature of evidence required before any town planning opinion could be formed. This was, at least implicitly, a debate which played out over many pages before the Valuer-General between non-legally qualified experts about legal concepts and mixed questions of fact and law. In this mix of material before the Valuer-General, the opinion of Mr Tomasetti SC must also be considered. That opinion, which was more in the nature of a submission, essentially entered the debate about factual matters and their relevance to the Valuer-General’s task. As I have said, having regard to threats of legal action which accompanied Mr Tomasetti’s advice, the Valuer-General sought and obtained a further expert town planning report to obtain a peer review of all of the town planning material before him.

7. [11]

   The question was, in the absence of the proposal to carry out the public purpose effected by the acquisition, the restrictions which would likely have been imposed on any plan for development of the acquired properties. That is, what assumptions should be made in assessing the value of the land at its highest and best use at the date of acquisition?

8. [12]

   The background to the debate between the town planners is that prior to 8 March 2016, the acquired land was zoned under the Ryde Local Environmental Plan 2014 (NSW) (“Ryde LEP”) R2 Low Density Residential (“R2”) with a maximum floor space ratio of 0.5:1 and a maximum building height of 9.5 metres. Looking ahead, each of those integers is critical to the value of the acquired land – the relevant zoning, the maximum floor space ratio and the maximum building height.

9. [13]

   The relevant land is next to a major traffic corridor to the north-west of Sydney, Epping Road, and forms part of the precinct known as the Macquarie Park Corridor. This, in turn, refers to the very substantial development which has occurred around Macquarie University and nearby Macquarie Park where various public transport options converge. In relation to land adjacent to Epping Road, on the side of the road where Delhi Road joins Epping Road, there was, during the relevant period, a very substantial amount of high-rise residential and office development. The acquired land, however, is on the opposite side of Epping Road from the high-rise development that occurred then. The relevance of this was a matter debated at length between the town planning experts before the Valuer-General.

10. [14]

    The first series of interactions between the Council and the first and second defendants which form relevant background occurred in 2012:

    1. (1)

       on 22 February 2012, Alnox wrote to the Council to enquire about a proposed application to rezone the land which was ultimately acquired. That proposed application was to rezone the land, under the Ryde LEP, R4 High Density Residential (“R4”), to increase the maximum floor space ratio to 2.8:1 and to increase the maximum building height to 25 metres. This proposal was made prior to any formal planning proposal being lodged;

    2. (2)

       on 5 March 2012, the Council wrote to Alnox, stating that Alnox could lodge a formal planning proposal but noting that Council staff had indicated to Alnox at various meetings that a planning proposal in those terms was “unlikely to be supported”;

    3. (3)

       around 22 May 2012, the Council wrote to Alnox, stating that Alnox’s rezoning request “would not be supported due to the context of the site and the nature of the surrounding low scale residential area” and was contrary to the Council’s strategy for the site. The Council suggested that any development of the site should be a development that complied with the land use and planning controls of the R2 zone;

    4. (4)

       on 24 July 2012, Alnox’s rezoning request was considered at a Council meeting. The Council considered a report prepared by the Council’s strategic planner, which stated that “a high density residential development may have adverse impact on Blenheim Park” and recommended that “the R2 zone associated planning controls are retained”.

11. [15]

    It is apparent that from at least 2014 the Department of Planning and Environment promoted “A Plan for Growing Sydney” which identified the land which was acquired as part of the Macquarie Park Corridor. The acquired land was also located within the “Global Economic Corridor” which was identified by the Department as suitable for development that supported concentrated employment, economic activity and other uses in centres, transport gateways and industrial zoned land extending from Port Botany and Sydney Airport, through Sydney CBD, north-west through Macquarie Park, and towards Norwest, Parramatta and Sydney Olympic Park.

12. [16]

    A matter of some significance to the town planning issues before the Valuer-General was that despite the Council’s decision in 2012 about the proposal described above, on 12 March 2013, the Council resolved to invite the submission of a planning proposal by the former owners. The (unanimous) resolution said that the planning proposal “be accepted for consideration”. This is in the context of the evidence in the Department’s Pre-Gateway Review that during the preparation of the 2014 Ryde LEP the “Council provided a willingness to consider greater development opportunities on the site, including residential development up to 7 storeys” (page 6) and the evidence about “Council’s invitation to the [first and second defendants] to submit a 7 storey redevelopment proposal” (page 9). It is clear that despite what the Council (although inadmissibly) through Mr Mead now seeks to assert as the relevant “fact”, it was open to the Valuer-General to conclude that in 2013 the Council actively solicited a proposal from the former owners of the acquired properties for a 7 storey redevelopment on the site.

13. [17]

    In July 2015, the former owners submitted a planning proposal with the Council addressing each of those critical matters – rezoning the land to R4, increasing the maximum floor space ratio to 4.3:1 and increasing the maximum building height to 45 metres.

14. [18]

    On 21 September 2015, the Council wrote to Alnox, advising that a planning proposal seeking such a scale of redevelopment in the intended location was premature. Again, this is an issue of some significance. A rezoning of the land to R4 combined with such a dramatic increase in maximum floor space ratio to 4.3:1 and maximum building height to 45 metres was opposed by the Council. On all of the material before the Valuer-General, however, it is clear that in the absence of giving effect to the public purpose of rezoning the acquired property for an increase in the size and amenity of Blenheim Park, it was open to the Valuer-General to conclude that a planning proposal involving a change in zoning of the land and an increase in maximum floor space and maximum building height would have been achieved.

15. [19]

    On 8 March 2016, the Council’s Planning and Environment Committee recommended that the Council not support the former owners’ planning proposal proceeding to a Gateway Determination. Basten JA and I described a number of the aspects of a Gateway Determination during the relevant period in Moorebank Recyclers Pty Ltd v Tanlane Pty Ltd [2018] NSWCA 304. I will not repeat that discussion here.

16. [20]

    On 22 March 2016, the Council resolved not to support the former owners’ planning proposal. The Council also resolved to investigate and action the acquisition of the subject land for open space to be incorporated into Blenheim Park. The date 22 March 2016 thus became the first in a series of possible dates in the consideration of the issues by the town planning experts, leading to a lively debate about whether the resolution should properly be regarded as the first manifestation of the proposal to carry out the public purpose within the meaning of s 56(1) of the Just Terms Act.

17. [21]

    On 26 April 2016, the Council resolved to prepare and submit to the Department of Planning and Environment a planning proposal to rezone the subject land from R2 to RE1 Public Recreation (“RE1”).

18. [22]

    On 28 April 2016, the former owners applied to the Department of Planning and Environment for a Pre-Gateway Review of the Council’s decision not to support their planning proposal. As explained in Tanlane, development proposals via the Gateway procedure did not necessarily involve support for the proposal by the Council.

19. [23]

    On 26 May 2016, the Council made submissions to the Department of Planning and Environment in opposition to the former owners’ Pre-Gateway Review. The Council’s primary concerns with the former owners’ planning proposal were summarised as follows:

20. [24]

    On 19 July 2016, the Department of Planning and Environment completed its report for the Pre-Gateway Review and referred the matter to the Sydney East Joint Regional Planning Panel. Upon a fair reading of that Pre-Gateway Review it was open to the Valuer-General to conclude that, absent the proposal to carry out the public purpose, a planning proposal rezoning the acquired land to R3 Medium Density Residential (“R3”) and increasing the maximum floor space ratio and maximum height would have been approved. This is because of the “strategic merit assessment” of the Panel, which it was open to the Valuer-General to conclude was an important contemporaneous indication of the likely course of events absent the proposal to carry out the public purpose.

21. [25]

    That Pre-Gateway Review – Information Assessment and Recommendation Report stated:

22. [26]

    The critical conclusion of the Pre-Gateway Review for present purposes was that the first and second defendants’ proposal demonstrated “broad strategic merit” and was consistent with objectives and directives under “A Plan for Growing Sydney”, relevant State environmental planning policies, Section 117 Directions and local policies. It is clear, however, that the Pre-Gateway Review also concluded that the “proposed bulk and scale of development is considered excessive and out of character”. It was open to the Valuer-General to conclude that it was unlikely that, in the absence of the acquisition here, the first and second defendants’ proposal would have been successful, and that it was likely, having regard to the matters referred to in the Pre-Gateway Review, and in particular the contemporaneous, very substantial development occurring in the immediate vicinity of the acquired properties, that a less aggressive development application would have been successful. I will return to the details of this finding when addressing the expert town planning evidence which was before the Valuer-General for the purposes of making his Determinations.

23. [27]

    On 31 August 2016, the Sydney East Joint Regional Planning Panel recommended that the former owners’ planning proposal should not be submitted for a Gateway Determination. On 10 October 2016, the Deputy Secretary of the Department of Planning and Environment wrote to the former owners, stating that their planning proposal would not be proceeding to a Gateway Determination.

24. [28]

    On 25 July 2017, the Council resolved to proceed with the compulsory acquisition of the former owners’ land. On 22 August 2017, the Council resolved that the Ryde LEP be amended to rezone the acquired land to RE1 and remove the planning controls. On 24 November 2017, the Ryde Local Environmental Plan 2014 (NSW) (Amendment No 15) commenced, rezoning the subject land to RE1 and identifying it as reserved for acquisition by the Council.

25. [29]

    On 9 February 2018, the former owners each submitted hardship applications to the Council pursuant to s 23(1) of the Just Terms Act. On 27 March 2018, the Council resolved to proceed with the compulsory acquisition. On the same day, the Council resolved to accept the former owners’ hardship applications.

26. [30]

    On 14 May 2018, the Minister for Planning wrote to the Council, proposing that it consider initiating a moratorium on new planning proposals for residential developments in the Ryde Local Government Area (“Ryde LGA”). On 26 June 2018, the Council unanimously resolved to initiate a moratorium on new planning proposals for residential developments.

27. [31]

    On 25 July 2018, the former owners’ solicitors wrote to Mr Goldsmith of Property NSW Valuation Services, enclosing Section 39 Claim for Compensation forms, a planning report prepared by Think Planners dated March 2017 and a valuation report prepared by Dempsey Valuation and Advisory dated 19 July 2018. The Think Planners report dated March 2017 noted the “documented history of discussions, submissions and reviews of the future planning potential of the site by both Ryde City Council and the Department of Planning and Environment” as being relevant to “the most likely future development outcome”. The report concluded that the site would have been rezoned to “R4 – High Density, with a Height of Building of 25m (7 storeys) and Floor Space Ratio of approximately 2.5-2.8:1”. The Dempsey Valuation report adopted the Think Planners parameters of the three critical variables, zoning, maximum floor space ratio and maximum height, and opined that the correct value of the properties was $20,000,000.

28. [32]

    On 1 August 2018, the Minister wrote to the Council, agreeing to amend the State policy for rezoning reviews to exclude its application to the Ryde LGA from 26 June 2018 to 1 July 2020 and stating that the Department of Planning and Environment would not accept any rezoning reviews for residential developments in the Ryde LGA until 1 July 2020.

29. [33]

    The existence of the moratorium on new planning proposals was a principal plank of at least part of the Council’s case in this Court. To the extent that in the present case it is necessary to make any finding about this issue, I find that it is likely that, absent the proposal to carry out the public purpose here, it was open on the evidence for the Valuer-General to conclude that it was likely that the first and second defendants would have made an amended development application before the moratorium came into effect.

30. [34]

    On 24 August 2018, the subject land was acquired. The acquisition notice in the NSW Government Gazette (No 82) stated that the land was to be acquired “for Public Recreation purposes for the extension of Blenheim Park, North Ryde”.

31. [35]

    On 14 September 2018, Property NSW Valuation Services wrote to the former owners and the Council, enclosing an independent town planning report prepared by Turnbull Planning dated August 2018. Mr Le Bas of Turnbull Planning was instructed by Property NSW Valuation Services to determine the development potential of the subject land and review the Think Planners report dated March 2017. I have earlier set out at [8] how Mr Le Bas framed the way he approached that task. Mr Le Bas addressed the surrounding lands and the proximity of various infrastructure including transport, retail and open space, considered the absence of environmental impact that a higher density residential use would have, as regards other adjoining and nearby properties and considered comments that the Department of Planning and Environment had made regarding “broad strategic merit”. Mr Le Bas concluded that it was highly likely that absent the proposal to carry out the public purpose, the acquired land would have been rezoned to R4 with a floor space ratio of around 2.5:1 and a maximum height of 25 metres. In so concluding Mr Le Bas said that “the current RE1 Public Recreation zoning of the various sites the subject of this report can only reasonably be seen to be a ‘step in the process’ of resumption”. Mr Le Bas also reviewed the Think Planners report and was critical of a number of aspects of that report. My conclusion, having read the reports, is that it was well open to the Valuer-General to accept Mr Le Bas’ conclusions. Those conclusions, at the very least, were intelligible and well-reasoned.

32. [36]

    On 23 October 2018, Property NSW Valuation Services wrote to the Council and the former owners, enclosing a preliminary determination of compensation report prepared by Mr Hurst of Kenny & Good dated 19 October 2018 and inviting submissions from the parties in response to the preliminary report. Mr Hurst concluded that given the existing RE1 zoning is a step in the process of acquisition, he set such a zoning aside and identified the most likely zoning and land use potential had the public purpose not been effected. After discussing the strengths and weaknesses of the various town planning reports he had been provided with, Mr Hurst concluded that the floor space ratio adopted by Mr Le Bas of 2.5:1 was both practically and financially achievable upon the land. After considering the maximum number of units that could have been built on the site using that maximum floor space ratio, he turned to consider comparable sales evidence. Despite including some information about disturbance costs under s 59 of the Just Terms Act, Mr Hurst noted that the Section 39 Claim for Compensation forms submitted by the former owners had not included disturbance costs and they were yet “to be assessed”. Mr Hurst concluded on a preliminary basis that the current market value was $14,400,000, apportioned as $5,678,388 for 86 Blenheim Road and $8,721,612 for 12A and 14 Epping Road. It was well open to the Valuer-General to accept Mr Hurst’s conclusions. Those conclusions, at the very least, were intelligible and well-reasoned.

33. [37]

    On 15 November 2018, the former owners lodged their submissions with Property NSW Valuation Services in response to the preliminary determination of compensation report. The former owners enclosed a valuation review prepared by Cushman & Wakefield dated 12 November 2018, a review of the preliminary determination of compensation report prepared by Dempsey Valuation and Advisory dated 8 November 2018 and a planning peer review prepared by Ingham Planning dated 7 November 2018. Mr Dyson of Cushman & Wakefield concluded, relevantly, that a valuation based on a floor space ratio of 2.5:1 and a floor space ratio of 2.8:1 would be more appropriate. Whatever the merits of that conclusion, it was both intelligible and well-reasoned. Mr Dempsey was instructed by the former owners to review the preliminary determination of compensation report. Mr Dempsey concluded that a floor space ratio of 2.8:1 was more appropriate and on that basis the total market value of the properties was $16,100,000. Ingham Planning reviewed the Think Planners report dated March 2017 and the Turnbull Planning report dated August 2018. The author, Mr Juradowitch, concluded that the correct use for valuation purposes was “around 2.8:1”. He opined that, absent the proposal to carry out the public purpose, the subject land would have been zoned R4, with a maximum building height of 25m and a maximum floor space ratio of 2.8:1.

34. [38]

    On 16 November 2018, the Council lodged its submissions with Property NSW Valuation Services in response to the preliminary determination of compensation report. The Council enclosed legal advice from Mr Tomasetti SC dated 15 November 2018, a valuation report prepared by Lunney Watt and Associates dated 14 November 2018 and a town planning report prepared by Mr Mead of Planning Ingenuity dated 31 October 2018. Mr Tomasetti’s advice was more in the nature of a submission. He asserted that “a failure to consider Mr Mead’s planning report and the matters of fact set out therein with due care and consideration will inevitably lead to a major legal controversy and overpayment of compensation of approximately $9 million”. It was well open to the Valuer-General to regard Mr Tomasetti’s advice as providing additional submissions about factual matters and debating the merits of the decision rather than addressing any question of legal principle.

35. [39]

    Mr Mead’s report, the subject of Mr Tomasetti’s assertion, concluded that disregarding the carrying out of, or the proposal to carry out, the public purpose for which the properties were acquired, the properties would have been zoned R2 pursuant to the Ryde LEP. Based on a variety of matters, including enquiries he made with the Council, Mr Mead opined that the Turnbull Planning report was “wrong” and that any valuation based on the Turnbull Planning report was “wrong”. Mr Mead gave numerous reasons for reaching this conclusion. He also asserted, which assertion he repeated in the evidence filed for the purposes of these proceedings, that the moratorium I have described above at [30] would have precluded the submission of any planning proposal until the earlier of 1 July 2020 or the completion of the new city-wide housing and infrastructure strategy through the LEP review process.

36. [40]

    It is clear that the Valuer-General took into account Mr Mead’s report dated 31 October 2018 and considered the claims made therein. Whatever the merits of Mr Mead’s claims, the Valuer-General was not bound to accept as “facts” matters that Mr Mead asserted in that report. That is, he was not bound to accept that the matters asserted by Mr Mead were established. Much less was the Valuer-General obliged to conclude that the opinions expressed in the other town planning reports were “wrong” for any of the reasons asserted by Mr Mead.

37. [41]

    Mr Hollinshead of Lunney Watt and Associates provided a report based on Mr Mead’s conclusions and opined that the market value of the acquired land, on the basis of a zoning of R2, was $5,000,000. In the alternative, if a zoning of R4 were adopted he concluded that a maximum value of $13,530,000 was appropriate. I observe in passing that the focus upon the zoning of the land was only one of the three principal drivers of the value, maximum floor space ratio and maximum height being the others. Whilst of course there is a relationship between those matters it was open to the Valuer-General to conclude that the report prepared by Mr Hurst was a more nuanced and well-reasoned report than the Lunney Watt report.

38. [42]

    On 5 December 2018, the Council’s solicitors wrote directly to Mr Le Bas of Turnbull Planning, stating that the “Council finds your Report misleading in at least two fundamental respects” and concluded “we are instructed to remind you of the duty of care that the law imposes upon an expert advisor in these circumstances. If compensation is ultimately awarded in excess of the proper amount based upon some acceptance that this land would have been zoned R4 High Density, Council will look to your firm for damages”. The Council’s letter of 5 December 2018 was subsequently withdrawn by the Council. I was informed from the bar table that the Council’s solicitors have apologised to Mr Le Bas. In those circumstances I do not propose to take the matter any further save to observe that such a letter should never have been written directly by a solicitor for the Council to Mr Le Bas.

39. [43]

    This correspondence, however, explains why on 12 December 2018, Mr Le Bas provided the Valuer-General with a further submission, wherein he said that, having regard to all of the material relied upon by the Council, “I remain very much of the opinion that it is likely that, absent the public purpose, … the land would have been rezoned to R4 High Density Residential with a residential development of 7 storeys and a [floor space ratio] of around 2.5:1, but for the acquisition and change to a [RE1 zoning]”.

40. [44]

    On 17 December 2018, Ms Chandler of the Department of Finance, Services and Innovation wrote to the Council’s solicitors, pointing out that the office of the Valuer-General “takes all submissions on its draft determinations seriously” and stating that “[g]iven the views expressed by the parties and their advisors in this matter” the following course of action would be taken: the Valuer-General would engage an independent expert town planner of its own choosing to review each of the town planning reports and the relevant opinions expressed by the parties, provide that advice to the valuer engaged to advise the office of the Valuer-General on the matter and review and consider the final valuation opinion and finalise the statutory determination. The inferences I draw from this exchange (and the subsequent relevant events narrated below) are:

    1. (1)

       the Valuer-General had regard to all of the town planning expert evidence (including the town planning reports enclosed in the parties’ submissions) and would have regard in particular to the report of the independent expert town planner who would be retained to review all of the town planning reports;

    2. (2)

       the independent expert town planning report would be given to the Valuer-General’s appointed valuer;

    3. (3)

       the Valuer-General promised the parties that he would review and consider the final valuation opinion and thereafter finalise the statutory determination; and

    4. (4)

       the Valuer-General in fact reviewed and considered all of the material before him, including the independent expert town planning report and final valuation opinion and thereafter made the Determinations of Compensation.

41. [45]

    On 20 December 2018, Ethos Urban provided the peer review of planning advice referred to immediately above. Ethos Urban was provided with all of the town planning material I have described above. The brief to Ethos Urban was comprehensive:

42. [46]

    Ethos Urban concluded that all planning actions by Ryde Council relevant to the acquired land after 22 March 2016 when the recommendation (see [20] above) was endorsed and adopted by the Council should be considered to be influenced by the proposal to carry out the public purpose and should be disregarded when considering the relevant underlying planning controls.

43. [47]

    Ethos Urban concluded that as at the date of acquisition, but for the proposal to carry out the public purpose, the acquired land would have been zoned R3, with an additional permitted use to permit a cafe or restaurant with development consent. The maximum building height would have been 23 metres (maximum 6 storeys, allowing for a ground floor cafe/restaurant and roof-top plant) and the maximum floor space ratio would have been 1.7:1.

44. [48]

    All of the other town planning reports were reviewed at some length. Ethos Urban generally agreed with Mr Le Bas’ conclusion that the site was likely to be rezoned to achieve a higher intensity of residential development than was permitted under the former R2 zoning but concluded that Mr Le Bas had overstated the likely development potential.

45. [49]

    Ethos Urban also considered the Planning Ingenuity report dated 31 October 2018. Mr Mead’s interpretation and assessment of the planning history briefly described above at [39] was discussed. Ethos Urban disagreed with Mr Mead’s views and provided compelling reasons for that disagreement. Certainly, the Valuer-General was entitled to accept Ethos Urban’s criticisms of Mr Mead’s report. The Ethos Urban report made the point that the Pre-Gateway Review I have described above at [24]-[26] occurred in the context of a planning proposal for a R4 zoning, a maximum building height of 45 metres and a maximum floor space ratio of 4.3:1. The Valuer-General was entitled to accept Ethos Urban’s conclusion that the controls that Mr Le Bas nominated as being appropriate involve a development intensity that is approximately half of that considered in the former owners’ planning proposal and that it is not reasonable to suggest that comments made by the Department of Planning and Environment or the Sydney East Joint Regional Planning Panel about the former owners’ planning proposal would equally apply to a separate planning proposal for either the controls suggested by Mr Le Bas or another planning proposal for an increase in density above the prior R2 zone. This was at the heart of the dispute on the town planning evidence. Whatever the merits of the claim, to describe the acceptance by the Valuer-General of the well-reasoned Ethos Urban report as unreasonable is unwarranted. Further, as will become apparent, there was abundant evidence contained in the Ethos Urban report, which was open to be accepted by the Valuer-General.

46. [50]

    Ethos Urban’s report went further, and relied upon the Pre-Gateway Review – Information Assessment and Recommendation Report I have described above as providing strong support for the conclusion that an increase above the existing R2 zoning and accompanying development standards was likely, absent the proposal to carry out the public purpose. Detailed and cogent reasons were given by Ethos Urban for their conclusions and their rejection of Mr Mead’s version of the relevant history. It was open to the Valuer-General to prefer Ethos Urban’s conclusions to those of Mr Mead.

47. [51]

    Ethos Urban also addressed the moratorium. All of the information about that moratorium said by the Council to have been overlooked was set out at length. The critical difference between the view Mr Mead took of the situation and that taken by Ethos Urban is set out in the following passages:

48. [52]

    It was open to the Valuer-General to consider that the conclusions reached by Ethos Urban were soundly based. Ethos Urban’s conclusions may be summarised thus:

    1. (1)

       Absent the public purpose (or the proposal to carry out the public purpose), there would be good prospects of achieving a rezoning of the acquired land. The primary reasons for this conclusion were:

    2. (2)

       Absent the public purpose, Ethos Urban concluded (having examined in some detail the chronology of events described above) that the former owners would have commenced preparation of an amended planning proposal shortly after the decision by the Sydney East Joint Regional Planning Panel on 31 August 2016. Ethos Urban concluded that the likely timeframe from lodgement of a planning proposal to gazettal would be in the order of 18 to 24 months. Given that substantive work had already been undertaken, Ethos Urban opined that a revised planning proposal could have been submitted prior to the end of 2016. Based on this timeframe, at the date of acquisition either amended controls would have been gazetted and in force under the Ryde LEP or gazettal of these provisions would have been imminent. The acquired land would have been zoned R3, with an additional permitted use to permit a cafe or restaurant with development consent. The Valuer-General was entitled to accept the report’s conclusion on this issue.

    3. (3)

       Having specific regard to the heights and floor space ratios obtained on the broadly comparable sites outlined in its report and taking into account the need to minimise overshadowing to Blenheim Park, Ethos Urban opined that the principal development standards which would have applied would have been as follows:

49. [53]

    The Ethos Urban report contained evident, rational and intelligible justifications for its conclusions. The Valuer-General was entitled to accept the report’s conclusions on these issues.

50. [54]

    On 21 December 2018, Mr Goldsmith of Property NSW Valuation Services, on behalf of the Valuer-General, issued Determinations of Compensation to the former owners. The covering letter to the Determinations stated:

51. [55]

    The Determination of Compensation dated 21 December 2018 issued to the first defendant stated:

52. [56]

    The Determination of Compensation dated 21 December 2018 issued to the second defendant stated:

53. [57]

    Enclosed as Tab B was a final determination of compensation report prepared by Mr Hurst of Kenny & Good dated 21 December 2018. Mr Hurst proceeded by setting out all of the town planning advice with which he had been provided. Mr Hurst adopted the Ethos Urban peer review for the purposes of his determination of compensation and assumed that the acquired land would have been subject to the following planning provisions or that the implementation of these controls would have been certain and imminent at the date of acquisition:

    1. (1)

       R3 Medium Density Residential zone with an additional permitted use to permit a cafe or restaurant with development consent;

    2. (2)

       maximum building height of 23 metres (maximum 6 storeys, allowing for a ground floor cafe/restaurant and rooftop plant);

    3. (3)

       maximum floor space ratio of 1.7:1;

    4. (4)

       1 unit per 75 square metres of floor space giving a total of 45 units.

54. [58]

    Mr Hurst set out his methodology, which he described as “the sales comparison method of valuation on an analysis of and comparison with available sales evidence” and applied that method in identifying value. This was a lengthy process in which the similarities and differences of a number of potentially comparable properties were analysed. Ultimately Mr Hurst adopted values of $2,875/square metre of permissible floor space and $210,000/unit site for his assessment of current market value for the determination of compensation. Mr Hurst concluded:

55. [59]

    Mr Hurst considered in painstaking detail all of the material provided to him on behalf of the Council, including Mr Tomasetti’s advice. The Valuer-General was entitled to accept Mr Hurst’s report, including the reasons for rejecting the assertions made in the material provided by the Council.

56. [60]

    Somewhat unusually in a challenge in the Court’s supervisory jurisdiction the Council read evidence going to the substantive issues. The Council read the affidavits of Alexina Janet MacDonald sworn on 12 September 2019, Peter John McSwiggan sworn on 12 September 2019 to which the Preston Rowe Paterson report dated 6 September 2019 was annexed and Jeff Mead sworn on 12 September 2019 to which the Planning Ingenuity report dated 23 July 2019 was annexed.

57. [61]

    Objection was taken by the former owners that the attached reports were each irrelevant. I admitted the evidence provisionally under s 57 of the Evidence Act 1995 (NSW). I propose to admit the affidavits and reports of Mr Mead and Mr McSwiggan, subject only to the rulings on specific paragraphs which I made at the hearing. In particular I rejected Mr Mead’s assertion (paragraph 13) that there was “no evidence” to support Ethos Urban’s conclusion. I have decided to admit the remaining evidence as relevant only on the basis that some of the references in the reports touch upon expert methodology which has a limited and tangential bearing on the issues I have to decide. In general, each of those reports was of very little use and I have afforded them very little weight. The same cannot be said of the affidavit of Ms Macdonald which I reject in whole as irrelevant to the issues before me. I make the following specific findings about the evidence:

    1. (1)

       the Planning Ingenuity report dated 23 July 2019 prepared by Mr Mead was argumentative and contained an increasingly strident series of what were in effect submissions. It addressed the same complaints as were made earlier by Mr Mead and which were comprehensively dealt with in the Ethos Urban peer review. The report reiterated in strident terms the same series of complaints that he had earlier made to the Valuer-General about views which differed from his own. He asserted that there are “no R3 zones in the Ryde LGA that have the same site characteristics as the acquired land”. He criticised the comparability of a number of sites with the acquired land. He expressed views about whether there was “any evidence” to support various conclusions. He purported to lay out the steps in the “test” of an examination of the prospects for a rezoning or land-use capability. The report was plainly an attempt at impermissible review of the merits. In fairness to Mr Mead, the fact that these were judicial review proceedings was not grappled with by those instructing him. The critical question posed to Mr Mead was “whether there was any evidence to support the conclusion that the underlying zoning of the acquired land, absent the public purpose …, should have been [zoned] R3 Medium Density Residential … [with a] FSR of 1.7:1 and … [a] height of 23 metres”. In effect, Mr Mead was invited to write a report addressing the merits of the Valuer-General’s Determinations. He did so. This is the very thing the Court cannot consider;

    2. (2)

       Ms Macdonald’s affidavit, as sworn, was replete with assertions of mixed fact and law and was of no assistance. She was at the relevant time the “coordinator of strategic planning” and responsible for “undertaking strategic planning functions”. There is no evidence that Ms MacDonald was ever a decision-maker about any issue of possible relevance in these proceedings. I had already limited under s 136 the inadmissible assertions made in paragraphs 10, 11, 14, 15, 16 and 18 to Ms Macdonald’s state of mind. Upon reflection, her state of mind is not relevant to any issue before me so those paragraphs must be rejected. Much of the remainder of the affidavit was not read. What remained was a summary of documents already in evidence and an assertion in paragraph 19 that the R3 zoning has not been “regularly applied” in the Ryde LGA. All of her evidence is of no assistance in determining any relevant issue. I reject it. The extent to which Ms Macdonald addressed issues which would lead the Court to engage in impermissible merits review is reflective of much of the Council’s case before me. I will return to that topic when addressing the costs of the proceedings;

    3. (3)

       Mr McSwiggan’s report essentially addressed the merits. It was of some assistance in that he opined that the comparable sales method, which he described, was “broadly applied appropriately” by Mr Hurst. Like Mr Mead, however, Mr McSwiggan was instructed by the Council to address the merits. He was asked to provide “a critique of the Kenny & Good final determination of compensation report”. This he did, largely by an appeal to the merits of Mr Hurst’s conclusions and the Valuer-General’s Determinations.

The present proceedings

1. [62]

   On 5 December 2018, the Council commenced proceedings in this Court seeking judicial review of the Determinations of Compensation.

2. [63]

   On 5 February 2019, the Council filed a notice of motion seeking an order that “the requirement for the issue of a compensation notice under s 42 of the Just Terms Act” in respect of the plaintiff’s compulsory acquisition of the land “is stayed until the final disposition of these proceedings”.

3. [64]

   On 15 March 2019, Walton J made orders by consent “staying” the effect of the Valuer-General’s Determinations of Compensation as follows:

The pleadings

1. [65]

   By amended summons filed on 6 September 2019, the Council raised a number of grounds of review. These crystallised in written submissions as follows:

   1. (1)

      The Determinations failed to undertake the necessary statutory task with respect to the underlying zoning of the acquired land, because:

   2. (2)

      The Determinations were infected by an error of valuation principle in the manner in which the comparable sales valuation was undertaken, rendering them void.

   3. (3)

      There was no power to award certain disturbance compensation. Namely, the sum of $228,463 for legal costs incurred in connection with the acquisition was awarded, when a substantial part of those costs were not recoverable in accordance with Hoy v Coffs Harbour City Council [2016] NSWCA 257 at [59]-[60].

2. [66]

   The plaintiff did not press ground 1(d) of the amended summons relating to contamination.

3. [67]

   As noted at the outset, alleged jurisdictional error in making the Determinations was the basis of each of the Council’s claims.

Submissions of the parties

1. [68]

   The Council submitted that where an exercise of statutory power by a body is dependent on the existence of a fact or holding of a particular opinion, the absence of probative evidence to support that finding of fact can vitiate a decision: Marrickville Metro Shopping Centre Pty Ltd v Marrickville Council [2010] NSWCA 145 at [97]. It was submitted to be uncontroversial that, in order to assess the market value of the acquired land under s 55(a) of the Just Terms Act, it was necessary under s 56(1)(a) to disregard the RE1 zone under the Ryde LEP because that zone had been imposed to facilitate the carrying out of the public purpose. This was said to involve a three-step process in applying s 56(1)(a), as follows (drawing on Maloney v Minister Administering the Environmental Planning and Assessment Act 1979 [2011] NSWLEC 121 at [90]-[91] per Biscoe J, referring in turn to earlier authority):

   1. (1)

      identify the zoning of the land at the date of acquisition;

   2. (2)

      determine whether the imposition or retention of that zoning was part of the carrying out of the public purpose or part of the proposal to carry out the public purpose for which the land was acquired;

   3. (3)

      if the answer to Step 2 is “yes”, that zoning is notionally set aside, and the potential of the land and ultimately its market value is assessed by determining how the land would have been zoned, at the date of acquisition, but for the proposal to carry out the public purpose.

2. [69]

   The Council submitted that the determination of how the land “would have been zoned” is a “classical example of a hypothetical fact”. It was submitted that this fact was a “critical step” in making the decision. Accordingly, the absence of probative evidence in relation to how the land would have been zoned amounted to jurisdictional error.

3. [70]

   The Council submitted that the standard of reasonableness must be assessed as part of the statutory scheme: Minister for Immigration and Citizenship v Li (2013) 249 CLR 332; [2013] HCA 18 at [67]. It was submitted that unreasonableness is not limited to a decision that is so unreasonable that no reasonable person could have arrived at it: Li at [68]. The Council submitted that “[u]nreasonableness is a conclusion which may be applied to a decision which lacks an evident and intelligible justification”: Li at [76]. The Council also pointed to the High Court’s further consideration of the notion of unreasonableness in Minister for Immigration and Border Protection v SZFW [2018] HCA 30; 92 ALJR 713. Mr Kirk SC submitted orally that:

4. [71]

   Mr Kirk SC drew attention to the statement by the plurality in Li at [72]: “The more specific errors in decision-making, to which the courts often refer, may also be seen as encompassed by unreasonableness”. It was submitted: “In other words, the other grounds can feed into reasonableness.”

5. [72]

   The Council submitted that the Valuer-General was required to make a decision based on probative evidence, reasonably and with an evident, rational and intelligible justification. Specifically, such a basis was needed to demonstrate that in lieu of the RE1 zoning – or the R2 zoning that applied prior to the acquisition date – the value of the acquired land should be assessed on the basis of the factual assumptions that the acquired land was zoned R3 with a maximum building height of 23 metres and maximum floor space ratio of 1.7:1. It was submitted that such a demonstrated basis was lacking in the Determinations.

6. [73]

   The Council submitted that although the Valuer-General was the decision-maker, there were actually three levels of decision-makers in effect: the Valuer-General (through his delegate, Mr Goldsmith), Mr Hurst and Ethos Urban. It was submitted that Mr Goldsmith solely relied on the conclusions of Mr Hurst in his final report for the purposes of issuing the Determinations of Compensation. There was no suggestion that the Valuer-General made inquiries or independent findings of fact on which to issue the Determinations. The Council submitted that “the natural inference actually is that [Mr Goldsmith] read the report and that’s it, not the hundreds of pages of other material”. Accordingly, it was submitted that it is necessary to have regard to the Hurst report to understand the basis on which the Valuer-General purported to discharge his statutory obligations and duties under the Just Terms Act. It was submitted that, in turn, it is necessary to have regard to the Ethos Urban peer review because it is apparent from the express terms of the Hurst report that it had been informed by and based on advice provided by Ethos Urban. As a result, the attack on these grounds centred on an analysis of those reports, in particular their determinations of the underlying zoning and development standards.

7. [74]

   The Council submitted that there were three strands of argument within this ground:

   1. (1)

      First, Ethos Urban made an unsupported conclusion of fact that the acquired land would have had an R3 zone with a maximum building height of 23 metres and maximum floor space ratio of 1.7:1. Mr Kirk SC submitted:

   2. (2)

      Secondly, Ethos Urban failed to engage with the necessary relevant material, namely the Council’s view as to any likely rezoning and development standards, the characteristics of Blenheim Park which imposed an inherent constraint on any likely rezoning and development standards, and the fact that none of the other R3 zones in the Ryde LGA was comparable.

   3. (3)

      Thirdly, Mr Hurst abdicated his judgment by adopting the Ethos Urban report without further decision or explanation. Mr Hurst did not attempt to resolve the differences in the planning materials before him and it was beyond his apparent expertise to do so. Mr Kirk SC submitted:

8. [75]

   Taking these three strands together, it was submitted there was no evident or intelligible basis for the conclusions on which the Valuer-General ultimately relied. The Determinations were thus invalid.

9. [76]

   The former owners submitted that it cannot be accepted that the Valuer-General “solely relied” on the Hurst report. Rather, the Valuer-General’s decision to accept the conclusions reached in the Hurst report regarding the market value of the acquired land must be understood in the context of the various other valuation and town planning reports provided to him when making the Determinations.

10. [77]

    The former owners submitted that the Council’s submission that the Valuer-General had no evidence to reach his findings does not stand up to scrutiny. It was clearly reasonably open to the Valuer-General to accept the opinions of experts regarding town planning and market value in making the Determinations. It was submitted that to the extent the Council seeks to criticise the basis of the opinion reached in the Ethos Urban report, this requires the Court to engage in impermissible merits review.

11. [78]

    The former owners submitted that the Valuer-General was not legally unreasonable in relying on either the conclusions expressed in the Hurst report or, to the extent it even constituted a finding of the Valuer-General, the conclusions expressed in the Ethos Urban report. It was submitted that there was nothing in the Ethos Urban report which made reliance upon its conclusions unintelligible, arbitrary or without common sense. The Ethos Urban report was a peer review of a range of town planning reports which expressed varied opinions, critically analysed those reports and made conclusions which were a “middle ground” between the town planners engaged by the Council, the former owners and Property NSW Valuation Services.

12. [79]

    The former owners submitted that, whereas the Council alleges the Valuer-General failed to take a necessary first step in the process of assessing underlying zoning as he did not make inquiries of the Council, the Just Terms Act does not prescribe any methodology for determining market value. In any event, the Ethos Urban report considered the Planning Ingenuity report dated 31 October 2018 commissioned by the Council, and the Hurst report considered submissions made on behalf of the Council.

13. [80]

    In accordance with the principles in R v Hardiman; Ex parte Australian Broadcasting Tribunal (1980) 144 CLR 13; [1980] HCA 13 the Valuer-General made submissions limited to the interpretation of the relevant powers of the Valuer-General under the Valuation of Land Act and the Just Terms Act.

14. [81]

    The Valuer-General submitted that the test for legal unreasonableness is “necessarily stringent”, “extremely confined” and a conclusion of unreasonableness will be “rare” where the reasons for the decision demonstrate a justification for the particular exercise of the power.

15. [82]

    The Valuer-General submitted that the legal standard of reasonableness is not fixed but is that indicated by the construction of the legislation conferring the power in question including its scope, purpose and real object. It was submitted:

    1. (1)

       First, the valuation of land is central to the making of a Determination. Of its nature, the valuation of land involves the making of evaluative conclusions that admit a range of legally permissible outcomes. This supports an inference that Parliament intended the Valuer-General to have a broad scope to give effect to his or her judgment of the value of the particular land when making a Determination without interference by the courts for unreasonableness. In other words, given the nature of the task to be undertaken by the decision-maker under the Just Terms Act, there is a large “area of decisional freedom” within which reasonable minds may reach different conclusions about the preferable amount.

    2. (2)

       Secondly, the power to make a Determination is substantive and not procedural in nature. Generally, the intensity of the legal standard of reasonableness is likely to be higher in the case of a procedural power.

    3. (3)

       Thirdly, a Determination must be made within a relatively short prescribed timeframe.

16. [83]

    The Council submitted that there was an “error of valuation principle” in Mr Hurst adopting the comparable sales method of valuation in order to assess the market value of the acquired land under s 55(a) of the Just Terms Act. In oral submissions this was referred to as being “the other probative evidence/unreasonable ground”.

17. [84]

    The Council submitted that the comparable sales relied on in the Hurst report were not “truly comparable”, with the consequence that the Valuer-General did not perform his statutory duty under the Just Terms Act.

18. [85]

    The Council referred to Robson J’s decision in New South Wales Cremation Company Pty Ltd v Valuer General [2016] NSWLEC 135 at [99]-[104] where his Honour explained the comparable valuation method, referring to four stages:

    1. (1)

       first, identifying “truly comparable sales”;

    2. (2)

       secondly, analysing those sales by converting the value of those sales into another measurement that can be easily compared;

    3. (3)

       thirdly, adjusting those sales to “create equivalence” with the land being valued; and

    4. (4)

       fourthly, applying the comparable sales to determine a value of the subject land based on the adjusted values of the comparable properties.

19. [86]

    The Council submitted that it is apparent from the Hurst report that these four steps were not undertaken. Mr Kirk SC submitted that:

20. [87]

    The Council submitted that for sales to be treated as comparable sales, they need to be “truly comparable” in that they must be a “reasonably representative group of comparable sales”, and that a valuing authority would not be performing its “statutory duty” if it made other than a fair estimate of the value of the relevant land based on truly comparable sales: Maurici v Chief Commissioner of State Revenue (2003) 212 CLR 111; [2003] HCA 8 at [18]. The Council referred to Mr McSwiggan’s report and his conclusion at paragraphs 42-59 that the purported comparable sales relied on in the Hurst report could not be considered “comparable” and that necessary adjustments had not been made. It was submitted that Mr McSwiggan concludes that “it’s the right broad approach, but the wrong data. The data is insufficient.” Mr Kirk SC criticised Mr Hurst’s approach to adjustments, submitting:

21. [88]

    The Council submitted that the Determinations are thus void because in material respects the selected valuation method was not available as the sales on which it relied were not truly comparable.

22. [89]

    The former owners submitted that this ground is no more than an attempt to draw the Court into impermissible merits review and must fail. In that regard, the Council’s own expert, Mr McSwiggan, acknowledged that the comparable sales method in the Hurst report was “broadly applied appropriately”.

23. [90]

    The former owners submitted that the alleged failure by Mr Hurst to apply the comparable sales approach in the manner prescribed by Robson J in New South Wales Cremation Company Pty Ltd v Valuer General does not amount to a failure by the Valuer-General to perform his statutory duty. It was submitted that the Just Terms Act does not prescribe the use of any specific valuation methods, let alone the comparable sales approach or the particular method of conducting the comparable sales approach.

24. [91]

    The former owners submitted that it is clear that the Valuer-General’s Determinations relied on (among other things) the Hurst report, which constituted evidence of other material that permitted the Valuer-General to make the Determinations and, accordingly, no error of law is demonstrated. It was submitted that when the comparable sales method is used, the question of whether sales are comparable is a question of fact that involves matters of degree and judgment. Even if that judgment was erroneous (which it was not), it does not constitute a finding with “no evidence”.

25. [92]

    The former owners submitted that, in any event, conclusions reached about whether comparable sales were “truly comparable” are neither a pre-condition to the exercise of the Valuer-General’s jurisdiction nor even a “critical step” in making the decision. Accordingly, even if there were no evidence to reach those conclusions, this would not amount to a jurisdictional error invalidating the Determinations.

26. [93]

    The former owners submitted that the Council’s criticisms of the Hurst report in relation to the comparable sales method do not reach the threshold of legal unreasonableness. It was submitted that Mr Hurst’s justifications for his conclusions were evident and intelligible.

27. [94]

    The Council submitted that in Hoy v Coffs Harbour City Council [2016] NSWCA 257, the Court of Appeal held at [59]-[60] that a person is only entitled to compensation for disturbance once the authority becomes bound to acquire the land, that is, in the case of a hardship application, once the pre-conditions in s 24(2) of the Just Terms Act are established to the satisfaction of the relevant authority referred to in s 24(1). It was submitted that legal costs incurred in establishing hardship are incurred prior to an entitlement to compensation arising and thus do not fall within s 59(1)(a).

28. [95]

    The Council submitted that the Determinations are infected by jurisdictional error and should be set aside because the Valuer-General misdirected himself as to the date from which disturbance costs were claimable under the Just Terms Act. It was submitted that in his final report Mr Hurst adopted 22 March 2016, when the Council resolved to investigate and action the acquisition of the subject land for open space, as the relevant date from which the former owners incurred legal costs as a consequence of the acquisition. The Council submitted that, in accordance with Hoy, 27 March 2018, when the Council resolved to accept the former owners’ hardship applications, was the earliest date from which a claim for legal costs associated with disturbance may be sustained. It was submitted that so much is admitted in letters sent to the Valuer-General on behalf of the former owners on 10 September 2019 and 20 September 2019, which I will address below.

29. [96]

    The Council submitted that it had not been in a position to raise the error until the final Hurst report and final Determinations were issued because the preliminary Hurst report had not yet assessed the disturbance losses. It was submitted that since the Valuer-General adopted the final Hurst report, an inference should be drawn that the error by Mr Hurst is an error by the Valuer-General. The Valuer-General therefore did not determine compensation in accordance with s 55 of the Just Terms Act.

30. [97]

    The Council submitted that the error in question is a legal error of statutory construction because it proceeds upon a construction of 59(1)(a) of the Just Terms Act which was rejected in Hoy. It was submitted that there is no clear language in the Just Terms Act which authorises the Valuer-General to determine questions of law or to make an order or decision otherwise than in accordance with law. He has no power to make definitive or quasi‑definitive constructions of the Just Terms Act and to make an error of law. Rather, he must act within the limits of his discretion properly understood.

31. [98]

    The former owners accepted that the Determinations included an error in relation to disturbance losses, insofar as the Determinations included legal costs that were not incurred in connection with the compulsory acquisition of the acquired land. It was submitted, however, that the Court is not required to make orders invalidating the Determinations due to this error because the error does not amount to a jurisdictional error.

32. [99]

    The former owners submitted that the proper construction of Part 3 of the Just Terms Act indicates that the Valuer-General is not functus officio upon making a Determination under s 47. Section 48(1) of the Interpretation Act 1987 (NSW) provides: “If an Act or instrument confers or imposes a function on any person or body, the function may be exercised (or, in the case of a duty, shall be performed) from time to time as occasion requires”. It was submitted that there is nothing in the Just Terms Act to displace this presumption against the function under s 47 being spent once exercised.

33. [100]

    The former owners submitted that s 43A(2) of the Just Terms Act impliedly confers a power on the Valuer-General to vary or reconsider his or her Determination. In order for s 43A(2) to have any work to do, that provision must be construed as conferring a power on the Valuer-General to change his or her determination of the amount of compensation offered under s 47. This is subject to the limitation within the statutory scheme that the Valuer-General cannot amend a Determination once the dispossessed owner has accepted an offer of compensation. It was submitted that, accordingly, the Valuer-General can validly vary the Determinations and cure any relevant error.

34. [101]

    The Valuer-General submitted that not all errors of law that may attend a Determination are jurisdictional and give rise to its invalidity for the following reasons:

    1. (1)

       First, the making of a Determination is expressly conditioned by the requirement in s 55 of the Act which is expressed in terms no higher than that “regard must be had” to the specified matters. A failure to comply with this requirement may invalidate a Determination, however, the requirement does not apply to the matter in ss 55(d)/59(1)(a) because, by operation of s 26 of the Just Terms Act, the consideration of this matter is discretionary. In any event, the very existence of this express requirement in these particular terms is inconsistent with the imposition of an additional implied condition that every mistake of law pertaining to the matters to which regard must be had also invalidates a Determination. In this respect, the position of the Valuer-General is analogous to that of an adjudicator under s 22(2) of the Building and Construction Industry Security of Payment Act 1999 (NSW) (“Security of Payment Act”) who is “to consider” only specified matters in determining an adjudication application including “the provisions of this Act” and “the provisions of the construction contract from which the application arose”. It is now well established by Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd (2018) 264 CLR 1; [2018] HCA 4 at [79]-[80] that an error of law made in interpreting the provisions of the contract is not jurisdictional. By analogy with the adjudicator under the Security of Payment Act, the Just Terms Act implicitly confers on the Valuer-General the authority to form an opinion on the interpretation of those provisions of the Act that amplify the matters specified in s 55 to which regard must be had and to act on that interpretation in determining the amount of compensation under a Determination. Thus, even if a Court considers that interpretation to be erroneous, it would not constitute a jurisdictional error for the Valuer-General to act on that understanding.

    2. (2)

       Secondly, that an error of law of this kind is not a jurisdictional error vitiating the Determinations, is consistent with the nature of the valuation task which underpins the making of a Determination. A valuation of land ordinarily involves the consideration and application of legal principles to a far greater extent than would be the case in other fields, with the result that questions of law, fact and opinion are often intertwined in valuation practice. Accordingly, in authorising and requiring the Valuer-General to undertake the function of making the Determinations and the valuations of land that underpin them, Parliament can be taken to have authorised the Valuer-General to determine those intertwined questions of law that naturally arise in discharging that function.

    3. (3)

       Thirdly, the Just Terms Act provides a right of appeal to the Land and Environment Court for a former owner if he or she is dissatisfied with a Determination, including where it is attended by any error of law. Any such errors can thereby be rectified through this appeals process. They are not entrenched for all time and this is inconsistent with any error of law being jurisdictional.

    4. (4)

       Fourthly (and relatedly), the fact that there is no right of appeal to the Land and Environment Court for an acquiring authority is not an omission but a deliberate endorsement of the position that acquiring authorities (being State actors) are to be bound by the Valuer-General’s independent determination of the amount of compensation. The deliberate absence of an appeal right for an acquiring authority is inconsistent with any error of law being able to ground the invalidity of a Determination at the suit of the authority. In assigning the function of making a Determination to the Valuer-General, the Just Terms Act (consistent with s 68 of the Valuation of Land Act) addresses one of the problems identified with the previous compulsory acquisition regimes wherein dispossessed owners received different treatment depending on which authority had acquired their land. The clear legislative intention underlying the Just Terms Act is to ensure that a valuation is made by the Valuer-General independently of the acquiring authorities (and former owners). To achieve this purpose, the Act contemplates that such a valuation is given immediate effect by those acquiring authorities through the offer of the amount determined. It would be inconsistent with this regime if any error of law made in the course of making a Determination rendered it liable to be declared invalid at the instigation of an acquiring authority.

    5. (5)

       Fifthly, Determinations (and the resulting offers of compensation) must be made within short timeframes, which are not conducive to lengthy deliberation of all questions of law that will inevitably be intertwined with a particular valuation. Rather, within these timeframes, the Just Terms Act only requires that “regard be had” to the matters in s 55. This is another indication that Parliament intended to authorise the Valuer-General to give effect to his or her understanding of the interpretation of the Act in making a Determination.

35. [102]

    The Valuer-General submitted that only a material non-compliance with a pre-condition to, or an express or implied condition of, the exercise of power will result in a jurisdictional error. It was submitted that non-compliance will not usually be material if compliance could have made no difference to the decision that was made (or, in other words, there is no possibility that the error could have changed the result). Thus, this threshold will not be met where a decision is made for two independent reasons, one of which involves what would otherwise be a jurisdictional error and one which does not.

Consideration

1. [103]

   For present purposes the relevant provisions of the Just Terms Act provide:

2. [104]

   There are two aspects of ground 1 each providing separate but overlapping routes to alleged jurisdictional error, being unreasonableness and no evidence. Each, if established, would amount to jurisdictional error.

3. [105]

   The unreasonableness ground of judicial review is no longer limited to what is in effect an irrational, if not bizarre, decision – which is to say one that is so unreasonable no reasonable person could have arrived at: Minister for Immigration and Citizenship v Li (2013) 249 CLR 332; [2013] HCA 18 at [68] (Hayne, Kiefel and Bell JJ). In Judicial Review of Administrative Action and Government Liability by M Aronson, M Groves and G Weeks (Thomson Reuters, 6th ed, 2017) it is suggested at [6.450], in my view correctly, that Li “invites a qualitative assessment of the impugned discretionary decision, but it does not allow an appeal to the judicial review judge’s subjective sense of reasonableness”.

4. [106]

   In Li French CJ said:

5. [107]

   The plurality, Hayne, Kiefel and Bell JJ, at [63] held that the legislature is taken to intend that a discretionary power, statutorily conferred, will be exercised reasonably: Attorney-General for the States of New South Wales v Quin (1990) 170 CLR 1 at 36; [1990] HCA 21; Kruger v The Commonwealth (1997) 190 CLR 1 at 36; [1997] HCA 27; Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611; [1999] HCA 21 at [126]; Minister for Immigration and Citizenship v SZIAI [2009] HCA 39; 83 ALJR 1123 at [15]. Their Honours went on:

6. [108]

   Gageler J at [90] said:

7. [109]

   The complaint of unreasonableness was closely allied with the submission that what was concluded in relation to town planning issues was based on “no evidence at all”. The relevant question under this ground is whether there was evidence available from which the Valuer-General could reach the conclusions in the Determinations.

8. [110]

   In Amaba Pty Ltd (Under NSW Administered Winding Up) v Booth; Amaca Pty Ltd (Under NSW Administered Winding Up) v Booth [2010] NSWCA 344 (in a passage referred to more recently with approval in Ballina Shire Council v Knapp [2019] NSWCA 146), Basten JA explained the “no evidence” ground thus:

9. [111]

   The Council’s complaint of unreasonableness must be dismissed. This is for the following reasons.

10. [112]

    First, I have found above that on all of the material before me the Valuer-General in making the Determinations took into account all the evidence before him. I do not accept that the Valuer-General uncritically accepted all that Mr Hurst or Ethos Urban or anybody else found. It was open to the Valuer-General to accept the conclusions reached in the Ethos Urban report and by Mr Hurst. That is, there was an evident and intelligible justification for concluding that the applicable planning controls for the acquired land, absent the proposal to carry out the public purpose, would have been R3 Medium Density Residential zone (with an additional permitted use to permit a cafe or restaurant with development consent), maximum building height of 23 metres (maximum 6 storeys, allowing for a ground floor cafe/restaurant and roof-top plant) and maximum floor space ratio of 1.7:1.

11. [113]

    Secondly, the subject matter, scope and real object of the legislation conferring the power in this case tends strongly against a conclusion that the Determinations were affected by legal unreasonableness. There was abundant material before the Valuer-General that he could decide to accept. The structure of the Just Terms Act reposed in the Valuer-General the responsibility for making the Determinations. The authorities, to which I will turn in detail in dealing with ground 2, make clear that decisions by the Valuer-General about the utility or weight of material before him or her will generally be a question of fact in the evaluative process. The Valuer-General is not bound by the rules of evidence. A “rejection” of material by the Valuer-General, particularly material of the kind propounded by the Council here which I have described at [38]-[40] above, should be understood to be a judgment by him or her that a body of material is unlikely to be of utility. It is, as such, a factual, rather than legal, conclusion. Acceptance of material before him or her, which material has an evident and intelligible basis, is not unreasonable.

12. [114]

    Thirdly, the complaint that Ethos Urban made an unsupported conclusion of fact that the acquired land would have been an R3 zone with a maximum building height of 23 metres and maximum floor space ratio of 1.7:1 must be rejected. As I have found, there was abundant evidence contained in the Ethos Urban report. Ethos Urban relied upon the Pre-Gateway Review – Information Assessment and Recommendation Report, which provided strong support for the conclusion that an increase above the existing R2 zoning and accompanying development standards could be supported. Ethos Urban relied upon the Council’s resolution of 12 March 2013 as contemporaneous evidence of its position that higher intensity development of the site would be likely to have strategic merit. Ethos Urban relied upon the statements made by the Department of Planning and Environment which indicated the Department’s view that the acquired land was likely capable of a medium-scale residential apartment development of up to 5-7 storeys in height. Ethos Urban relied upon the number and comparability of sites with comparable strategic and local attributes that have been rezoned or otherwise approved for a higher scale of development. Ethos Urban also provided detailed and cogent reasons to disagree with Mr Mead’s interpretation and assessment of the planning history, particularly regarding the implications drawn from the views of the Department of Planning Environment and the Sydney East Joint Regional Planning Panel. On all of the evidence it was open to Ethos Urban to conclude that the former owners would have made an amended development application shortly after 31 August 2016 which could have been well progressed or even completed before the moratorium came into effect almost two years later on 26 June 2018. The Ethos Urban report was not an “unsupported statement of belief”.

13. [115]

    Fourthly, Ethos Urban engaged in a detailed and intelligible way with all of the material. Ethos Urban examined the chronology of events in the matter and reviewed each of the town planning reports at some length. In particular, Ethos Urban engaged in a detailed and intelligible way with what was asserted to be the Council’s view (as amplified by Mr Mead in his various reports) as to any likely rezoning and development standards, the characteristics of Blenheim Park and the Council’s assertion (which it described as a “fact”) that none of the other R3 zones in the Ryde LGA was “comparable”.

14. [116]

    Fifthly, I reject the submission that the Determinations were legally unreasonable on the basis that “Mr Hurst abdicated his judgment by adopting the Ethos Urban report without further decision or explanation”. It was not Mr Hurst’s decision which must be shown to the legally unreasonable. It has not been demonstrated that the Valuer-General uncritically adopted any of the material before him in making the Determinations. In any event, even if it were Mr Hurst’s judgment which was relevant, he did not “‘abdicate his judgment” in relation to the Ethos Urban report. In preparing his report it was open to Mr Hurst to take into account the conclusions in the Ethos Urban report as he determined appropriate. As I have said, the Valuer-General considered Mr Hurst’s final valuation opinion and thereafter made the Determinations. The making of the Determinations has not been shown to be legally unreasonable.

15. [117]

    I also reject the “no evidence” submission. It is true, as Mr Kirk SC submitted, that where an exercise of statutory power by a body is dependent on the existence of a fact or holding of a particular opinion, the absence of probative evidence to support that finding of fact can vitiate a decision: Marrickville Metro Shopping Centre Pty Ltd v Marrickville Council at [97].

16. [118]

    Although nothing turns on it in this case, I reject the attempt by the Council to elevate what was said by Biscoe J in Maloney v Minister Administering the Environmental Planning and Assessment Act 1979 [2011] NSWLEC 121 at [90]-[91] about the three steps to be followed into a legal test relevant in this case to establish “no evidence”.

17. [119]

    It may be accepted, as the Council submitted, that the determination of how the land “would have been zoned” was a “hypothetical fact” and “critical step” in making the decision. I reject the submission that there was absent here probative evidence in relation to that question.

18. [120]

    As I have earlier found, it was open to the Valuer-General to take into account Ethos Urban’s conclusion in its report that the applicable planning controls absent the public purpose would have been R3 Medium Density Residential zone (with an additional permitted use to permit a cafe or restaurant with development consent), maximum building height of 23 metres (maximum 6 storeys, allowing for a ground floor cafe/restaurant and roof-top plant) and maximum floor space ratio of 1.7:1. The Ethos Urban report provided detailed and cogent reasons for this conclusion. As I have said, it was also open to the Valuer-General to take into account Mr Hurst’s conclusions in his final report.

19. [121]

    The Council’s criticisms of the opinion reached by the Valuer-General and in the Ethos Urban report are in truth an appeal to impermissible merits review. By reference to the test as explained in Amaba, in exercising the Court’s supervisory jurisdiction I am satisfied that the Valuer-General had before him material which it was reasonably open to take into account in performing his statutory task.

20. [122]

    There was probative evidence about town planning and valuation issues before the Valuer-General which was available to be used in making the Determinations.

21. [123]

    Ground 1 should be dismissed.

22. [124]

    In Turner v Minister of Public Instruction (1956) 95 CLR 245 at 268; [1956] HCA 7, Dixon CJ observed that “valuation cannot be made to depend entirely on a logical process or formula and that in a valuation case questions of reasoning about matters of fact are not to be confused with questions of law”.

23. [125]

    Stephen J in River Bank Pty Ltd v Commonwealth (1974) 48 ALJR 483 at 484 said:

24. [126]

    In Electricity Commission of New South Wales (trading as Pacific Power) v Arrow (1994) 85 LGERA 418 at 419, Kirby P held (in the context of a challenge to a decision of the Land and Environment Court) that:

25. [127]

    In ISPT Pty Ltd v Valuer General [2009] NSWCA 31 Allsop P said:

26. [128]

    In the same case Giles JA (with whom Campbell JA agreed) said:

27. [129]

    The same conclusion is appropriate here. I have concluded that this ground involves an impermissible attempt to have the Court engage in merits review and must fail. In that regard, the Council’s own expert, Mr McSwiggan, acknowledged that the comparable sales method in the Hurst report was “broadly applied appropriately”.

28. [130]

    The alleged failure by Mr Hurst to apply the comparable sales approach in the manner prescribed by Robson J in New South Wales Cremation Company Pty Ltd v Valuer General does not amount to a failure by the Valuer-General to perform his statutory duty. The Just Terms Act does not prescribe the use of any specific valuation methods, let alone the comparable sales approach or the particular method of conducting the comparable sales approach.

29. [131]

    The Valuer-General’s Determinations relied on (among other things) the Hurst report, which constituted evidence of other material that permitted the Valuer-General to make the Determinations. Accordingly, no error of law is demonstrated.

30. [132]

    When the comparable sales method is used, the question of whether sales are comparable is a question of fact that involves matters of degree and judgment. The Council’s criticisms of the Hurst report in relation to the comparable sales method do not reach the threshold of legal unreasonableness but rather invite the Court to engage in impermissible merits review. Mr Hurst identified properties which, in his judgment, were comparable, explained why he identified each property used in the valuation method and noted differentiating factors warranting adjustment in the final valuation.

31. [133]

    In this case, Mr Hurst described his methodology as “the sales comparison method of valuation on an analysis of and comparison with available sales evidence” and applied that method in identifying value. As I have earlier found, this was a lengthy process in which the similarities and differences of a number of potentially comparable properties were analysed. Ultimately Mr Hurst adopted values of $2,875/square metre of permissible floor space and $210,000/unit site for his assessment of current market value for the determination of compensation. It was open to him to reach this conclusion.

32. [134]

    Conclusions reached about whether comparable sales are “truly comparable” are neither a pre-condition to the exercise of the Valuer-General’s jurisdiction nor even a “critical step” in making the decision. Accordingly, even if there were no evidence to reach those conclusions, this would not amount to a jurisdictional error invalidating the Determinations.

33. [135]

    Ground 2 should be rejected.

34. [136]

    It will be recalled that this case involved the finding of hardship within the meaning of s 24 of the Just Terms Act. Accordingly the Valuer-General had a discretion whether or not to make a determination of, relevantly, compensation for disturbance within the meaning of s 55(d) of the Act.

35. [137]

    The components of compensation for disturbance are identified in s 59 of the Just Terms Act. There have been a number of recent Court of Appeal decisions where the ambit of a claim for disturbance has been considered: Melino v Roads and Maritime Services (2018) 98 NSWLR 625; [2018] NSWCA 251; Moloney v Roads and Maritime Services (2018) 98 NSWLR 651; [2018] NSWCA 252; Roads and Maritime Services v United Petroleum Pty Ltd [2019] NSWCA 41.

36. [138]

    Broadly speaking, the effect of those decisions has been to restrict the breadth of claims for compensation for disturbance. In United Petroleum, a bench of five overturned one aspect of Health Administration Corporation v George D Angus Pty Ltd (2014) 88 NSWLR 752; [2014] NSWCA 352 and at least three members of the Court of Appeal cast doubt on the continued utility of aspects of the reasoning in El Boustani v Minister for Administering the Environmental Planning and Assessment Act 1979 [2014] NSWCA 33.

37. [139]

    Another case demonstrating this confinement of compensation recoverable as disturbance was Hoy v Coffs Harbour City Council [2016] NSWCA 257 where Bathurst CJ (with whom Simpson JA and I agreed) said:

38. [140]

    It will be recalled that compensation payable for disturbance in the Determinations was $90,090 for Mr Azizi and $138,373 for Alnox. On their face, the Determinations did not identify the component, if any, comprising a separate s 59(1)(a) amount of the compensation payable for disturbance.

39. [141]

    If that were all the evidence I would not conclude that the Determinations were affected by legal error as alleged.

40. [142]

    The evidence, however, here goes further. Mr Hurst’s report, which identifies the same figures for compensation for disturbance as the Determinations, identifies a severable portion of compensation payable for disturbance referable to s 59(1)(a) as being “legal costs” relating to the acquisition including the former owners’ solicitors’ fees “up to 14 November 2018” of $153,782 and “to settlement” of $16,500. It will be recalled that the determination of hardship was made on 27 March 2018. It is not apparent to me on the basis of this material, even assuming that the amount of compensation for disturbance the subject of the Determinations should be understood by reference to the Hurst report, that there has been any legal error made in determining the compensation payable for disturbance.

41. [143]

    If that were where the evidence ended I would not infer that the Council had proven that the Determinations included an amount for legal costs incurred in establishing hardship. There is, however, additional evidence before me put forward by the former owners.

42. [144]

    On 10 September 2019, the former owners’ solicitors wrote to Property NSW Valuation Services in relation to each of the Determinations of Compensation, requesting redeterminations of compensation:

43. [145]

    On 20 September 2019, the former owners’ solicitors wrote to Property NSW Valuation Services, again requesting redeterminations of compensation:

44. [146]

    It is common ground between the Council and the former owners that each of the Determinations awarded an amount which was beyond the power in s 59(1)(a) to award “legal costs reasonably incurred by the persons entitled to compensation in connection with the compulsory acquisition of the land”, being an amount of $18,540 in total. I acknowledge that the Council asserts that a larger sum than $18,540 in total was awarded for compensation for disturbance beyond the power in s 59(1), but for present purposes I do not need to determine that question.

45. [147]

    On the basis of this evidence, I accept the critical first step in the Council’s argument is that there is legal error made in the Determinations in that an award of compensation for disturbance was made under s 59(1)(a) in respect of legal costs incurred prior to the pre-conditions in s 24(2) being established to the satisfaction of the relevant authority referred to in s 24(1) and thus outside the power to make an award as compensation for disturbance.

46. [148]

    I am bound by Hoy to conclude that including at least this amount incurred in establishing the claim to hardship in the Determinations was a legal error. It will be recalled that no claim of error of law on the face of the record was made by the Council in this case. The only claim was jurisdictional error.

47. [149]

    I reject the submission that the legal error is not a jurisdictional error on the basis that s 55 requires only that “regard must be had” to the specified matters. The Just Terms Act is quite different from a statutory provision stating a decision-maker must have regard to a list of things, amongst other things, as he, she or it makes an evaluative judgment. Section 55 provides a mandatory direction to “assess in accordance with this Division”. Sections 55(d) and 59(1)(a) are mandatory relevant considerations in the exercise of the power: Hossain v Minister for Immigration and Border Protection [2018] HCA 34; 92 ALJR 780. Hoy, relevantly, held that the power to award legal costs, contained in s 59(1)(a), only arose after the hardship application had been determined. I am bound by that decision here.

48. [150]

    It is correct that, by operation of s 26 of the Just Terms Act, the consideration of disturbance by the Valuer-General is discretionary. It does not follow, however, that the breadth of the power undoubtedly conferred on the Valuer-General to determine that compensation for disturbance should be allowed permits an award for disturbance under s 59(1)(a) outside the power conferred by that section.

49. [151]

    There is no privative clause in the Just Terms Act which protects the Determinations. This is to be contrasted with s 33 of the Act which protects the validity of the acquisition by an authority of the State: see Roads and Maritime Services v Desane Properties Pty Ltd (2018) 98 NSWLR 820; [2018] NSWCA 196.

50. [152]

    The real question is whether the subject matter, scope and purpose of the Just Terms Act has the consequence that the legal error made by the Valuer-General in making the Determinations does not have the consequence that the Determinations are liable to be quashed by an order in the nature of certiorari as being affected by jurisdictional error. Put another way, was the error of law made by the Valuer-General an error within jurisdiction of the kind described in, for example, Commissioner of Taxation v Futuris Corporation Ltd (2008) 237 CLR 146; [2008] HCA 2.

51. [153]

    The Valuer-General submitted that the answer to that question is identified in the decision of Shade Systems. There the plurality said:

52. [154]

    What was actually decided in Shade Systems was that the Court of Appeal was correct to conclude that the Security of Payment Act has the effect that the Supreme Court does not have jurisdiction enabling it to make an order in the nature of certiorari for error of law on the face of the record:

53. [155]

    There were five critical matters identified in the plurality’s determination:

    1. (1)

       the scheme is a “unique form of adjudication of disputes over the amount due for payment”, which is, as Basten JA observed in the Court of Appeal, “coherent, expeditious and self-contained”: Shade Systems Pty Ltd v Probuild Constructions (Aust) Pty Ltd (No 2) (2016) 95 NSWLR 157; [2016] NSWCA 379 at [59]. The intended result is that “each party knows precisely where they stand at any point of time” (at [36]);

    2. (2)

       the Act is not concerned with finally and conclusively determining the entitlements of parties to a construction contract. The statutory entitlement to a progress payment and the procedure for recovery of a progress payment are separate from, and in addition to, a contractor’s entitlement under a construction contract to receive payment for completed work (at [37]-[38]);

    3. (3)

       underpinning the “interim” statutory entitlement is an understanding that “[c]ash flow is the lifeblood of the construction industry”. Put another way, any interruption to the cash flow of a person carrying out construction work is apt to create the risk of financial failure. Consistent with that understanding, the procedure in Part 3 of the Act is designed to operate quickly (at [40]);

    4. (4)

       the Act permits informal procedures in the conduct of any proceedings to determine an adjudication application. An adjudicator may, for example, call a conference of the parties, which is to be conducted informally and without any entitlement to legal representation (at [42]); and

    5. (5)

       the adjudicator is not subject to judicial review for non‑jurisdictional error of law. There is no right of appeal from the determination of an adjudicator under the Act. That omission is deliberate. The Act provides that an adjudication certificate may be filed by the claimant as a judgment for a debt in a court of competent jurisdiction. If the respondent commences proceedings to have the judgment set aside, the respondent is not entitled to bring any cross‑claim against the claimant, to raise any defence in relation to matters arising under the construction contract or to challenge the adjudicator’s determination. In addition, the respondent must pay into court as security the unpaid portion of the adjudicated amount pending the final determination of those proceedings (at [43]).

54. [156]

    Gageler J explained the concession made in Shade Systems for the purposes of the Security of Payment Act. That concession was that an error of law made in interpreting the provisions of the contract was not a jurisdictional error:

55. [157]

    The strength of the analogy between the Just Terms Act and the Act considered in Shade Systems is that Parliament has deliberately chosen to permit full merits review challenges to the Valuer-General’s Determination, but only at the suit of the former owner: Division 5 of the Just Terms Act. Additional support for the analogy is provided by the fact that the Just Terms Act provides a series of time limits which are designed to ensure that a compensation notice is given promptly to all former owners (s 42), that payment is made promptly after acceptance of the amount of compensation offered (s 44) and any appeal to the Land and Environment Court must be lodged within 90 days after receiving a compensation notice (s 66).

56. [158]

    While there are some similarities with the scheme established by the Security of Payment Act, the Just Terms Act contains important differences which are, in my view, decisive of the present question. The most important of these is that under the former Act, the statutory entitlement to a progress payment and the procedure for recovery of a progress payment are separate from, and in addition to, a contractor’s entitlement under a construction contract to receive payment for completed work. It may much more readily be concluded that within a closely defined interim administrative procedure, which is subject to a full hearing at the instance of either affected party on a subsequent occasion, errors of law may be treated as non-jurisdictional.

57. [159]

    Another important difference is that the Council, whilst an “authority of the State” as defined in the Just Terms Act, is not able to challenge the Valuer-General’s Determination made under s 47. If the Just Terms Act applied only to an “authority of the State” which was part of the executive government of New South Wales, the analogy with Shade Systems would be stronger. In that event, a deliberate choice by the New South Wales Parliament to allow only former owners to challenge a Determination by the Valuer-General would be a factor in favour of treating legal errors of the present kind as non-jurisdictional. The Council, however, is not part of the executive government of New South Wales: see Federated Municipal and Shire Council Employees’ Union of Australia v Melbourne Corporation (1919) 26 CLR 508; [1919] HCA 73; Re Lambie (2018) 263 CLR 601; [2018] HCA 6 at [41] per Kiefel CJ, Bell, Gageler, Keane, Nettle and Gordon JJ.

58. [160]

    I do not discern an intention of the legislature that an acquiring authority in the position of the Council is bound by the Valuer-General’s decision about value, including amounts payable for disturbance. That is, I am unable to accept, by analogy with the adjudicator under the Security of Payment Act, that the Just Terms Act implicitly confers on the Valuer-General the authority to form an opinion about the interpretation of provisions of the Act that amplify the matters specified in ss 55 and 59 to which regard must be had and to act on an incorrect interpretation of those provisions in determining the amount of compensation under a Determination.

59. [161]

    Whilst I was initially attracted to the proposition that the power of amendment in s 43A told in favour of legal errors made by the Valuer-General being treated as non-jurisdictional I have concluded that this is a factor which is at best neutral. This is because s 43A(2) encompasses the potential to amend a compensation notice for a range of reasons. Those reasons will not always be jurisdictional.

60. [162]

    The task here is to construe the Act as a whole, and in context, and to give effect to harmonious goals. Unlike the Act the subject of Shade Systems, the Valuer-General’s Determination does not provide a “coherent, expeditious and self-contained” method of making what is essentially an interim decision. In the Just Terms Act, the Parliament has addressed very carefully the rights and responsibilities of acquiring authorities and land owners. The Parliament has not implicitly removed the entrenched right of the Council to challenge the Valuer-General for misinterpreting the statute. I accept, as Mr Kirk SC submitted, that the Act in context does not permit a delegate of the Valuer-General to ignore Court of Appeal decisions about the power granted by ss 55 and 59 of the Just Terms Act or be misinformed about those decisions. The Just Terms Act, properly construed, does not leave a litigant in the position of the Council with no ability to approach the Court to correct a clear legal error as amounting to jurisdictional error.

61. [163]

    For these reasons I have concluded that the Valuer-General is not empowered by the Just Terms Act to make errors of law of the kind identified in this ground.

62. [164]

    It follows that the Determinations are affected by jurisdictional error in this limited way and the Council is entitled to an order in the nature of certiorari to remove the legal consequences, or purported legal consequences, of an exercise or purported exercise of power which has, at the date of the order, a discernible or apparent legal effect upon rights. The Determinations must be set aside. I will make a declaration in the terms sought by the Council.

63. [165]

    To the extent that it may assist the parties in addressing necessary consequences of the orders I will make, I will set out the passage from the submissions of Mr Kirk SC about the consequences of those orders, which submissions I accept:

64. [166]

    Given that the Council made the hardship determination in 2016 and acquired the first and second defendants’ property on 24 August 2018, it is to be hoped that the necessary further consideration of the Valuer-General’s statutory task will occur speedily.

The stay granted in this case

1. [167]

   Before leaving this case there is an important issue of principle raised by the way in which this case came to be heard in this Court many months after the statutory time limits in the Just Terms Act, in particular s 42.

2. [168]

   It will be recalled that a judge of the Court made orders by consent on 15 March 2019 staying the effect of the Valuer-General’s Determinations of Compensation as follows:

3. [169]

   Those orders replicate the orders made by another judge of the Court on 6 July 2018 granting a stay in a case which apparently raises similar issues to the present case: Blacktown City Council v Concato [2018] NSWSC 1039. I was informed from the bar table that the former owners took the view that as a stay was unsuccessfully opposed in Concato, the appropriate course was to consent to orders in the same terms in this case.

4. [170]

   I am persuaded that Mr Kirk SC correctly identified the juridical problems with the Court granting a stay of the operation of a statutory scheme:

5. [171]

   In Elliott v Minister administering Fisheries Management Act 1994 [2018] NSWCA 123 Basten JA (with whom Beazley P and I agreed) said:

6. [172]

   Basten JA explained the position in England and Wales which is arguably different. In R v Secretary of State for Transport, Ex parte Factortame Ltd (No 2) [1991] 1 AC 603, the owners of some 95 Spanish fishing vessels, which had been, but could no longer be, registered in Britain, sought interlocutory relief allowing them to continue to fish in British waters, pending the determination of their challenge under the European Communities Act 1972 (UK) c 68 to the relevant provisions of the Merchant Shipping Act 1988 (UK) c 12. The UK courts initially held that they were unable to grant relief which would in effect suspend the operation of British law. In response to a ruling of the European Court of Justice that such a jurisdiction existed, interim injunctions were granted.

7. [173]

   Basten JA in Elliott explained that it is not necessary to compare the approach adopted in Factortame with that adopted in Castlemaine Tooheys Ltd v State of South Australia (1990) 169 CLR 436; [1990] HCA 1. That was because there is no doubt that the power to grant an interlocutory injunction against the authority responsible for enforcing the law is available in circumstances where regulations are challenged on the basis of inconsistency with the empowering statute. Usually one would expect the application for an interlocutory injunction to be resisted by the body charged with enforcing the public interest underlying the impugned legislation. The public interest is likely, in accordance with the principles stated in Castlemaine Tooheys, to hold sway. Even in Factortame the relief ultimately granted was an interim injunction.

8. [174]

   I am aware of no authority, which permits the grant of a “stay”, in effect, of the operation of an Act of Parliament. In particular I am unable to agree that the decision of Young JA (sitting on his own as referrals judge) in Re Kerry [2010] NSWCA 232 provides any support for the proposition that the Court has jurisdiction to stay the operation of a statute. In Re Kerry, what Young JA actually decided was that the Court had jurisdiction to grant a mandatory interim injunction (in that case permitting access to a child) ancillary to relief sought under s 69 of the Supreme Court Act. Assuming that is so, I do not think that the case supports the existence of a jurisdiction to stay the continuing operation of a statute.

9. [175]

   I accept Mr Kirk’s pithy analysis – “if you can’t injunct an Act, you can’t stay an Act”. The judgments in Castlemaine Tooheys and Elliott, which are inconsistent with the existence of such a jurisdiction, were apparently not brought to the attention of the Court when granting the stay. The stay of the “legal effect of the third defendant’s determination of compensation” granted in this case, in my respectful view, should not have been granted. Whatever the form of injunction, if one had been sought, each of the matters described by Mason ACJ in Castlemaine Tooheys, including the undertaking as to damages and the balance of convenience, would necessarily have been addressed.

Costs

1. [176]

   Section 98 of the Civil Procedure Act 2005 (NSW) confers on the Court a wide discretion with respect to costs. Under r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW), the general rule is that the Court is to order that costs follow the event. The “event” may be characterised in more than one way. Generally the “event” refers to the result of the claim or counterclaim, as the case may be, and may be understood as referring to the practical result of a particular claim: Doppstadt Australia Pty Ltd v Lovick & Son Developments Pty Ltd (No 2) [2014] NSWCA 219 at [15] (Ward, Emmett and Gleeson JJA). Where there has been a mixed outcome in the proceedings, and it is appropriate to entertain the process of apportioning costs as between different issues in the proceedings, in general such an exercise will be carried out on a relatively broad brush basis, and largely as a matter of impression and evaluation by the Court: Doppstadt at [19]; James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [36]; Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 3) (1998) 30 ACSR 20 at 22.

2. [177]

   The relevant principles for the determination of costs on an issue-by-issue basis were stated in Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38] per Beazley, Ipp and Basten JJA:

3. [178]

   The Council has succeeded in obtaining the relief that it sought but the great bulk of the evidence and the written submissions related to issues on which the Council failed. The matters critical to the determination I have made in the Council’s favour were in a short compass. As can be seen from the lengthy recitation of facts, the Council’s case roamed far wider than the matter upon which they have enjoyed success. I have concluded that the issues upon which the Council failed are severable. In this case the Council has succeeded in relation to one aspect of its challenge. Issues related to town planning and valuation, however, occupied by far the larger part of the material before me and the written submissions. As I have said, much of the Council’s evidence on the issues where it failed involved an impermissible appeal to the merits.

4. [179]

   Applying the appropriate broad bush approach based on matters of impression and evaluation, the Council should be assessed as having had 30 per cent success in the case having obtained the relief it sought (only on the basis of the disturbance costs issue), but having failed on the principal issues it litigated. The first and second defendants should be assessed to have been 70 per cent successful on the severable issues in the case. Considering the relevant “event” overall and taking into account the success of both parties on the separable issues in this case, the Council should be ordered to pay 30 per cent of the first and second defendants’ costs to reflect a set-off.

5. [180]

   That is, rather than make an award for one part of the case and a separate award for the other, I have decided that the best course, adopting the appropriate broad brush approach, is to order that the Council pay 30 per cent of the first and second defendants’ costs.

6. [181]

   The third defendant played a limited role in the proceedings in accordance with Hardiman and there should be no order as to costs between the plaintiff and the third defendant.

Conclusion and orders

1. [182]

   For the foregoing reasons I have concluded that grounds 1 and 2 should be dismissed. Ground 3 should be upheld.

2. [183]

   The orders of the Court are:

   1. (1)

      A declaration that the Determinations of Compensation made by the Third Defendant (Valuer General’s reference VVGC.JT02800 dated 21 December 2018 and Valuer General’s reference VVGC.JT02799 dated 21 December 2018) (“the Determinations”) purportedly pursuant to the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) (“the Act”) and in relation to the Plaintiff’s compulsory acquisition of land identified as Lot C in Deposited Plan 410408 (known as 86 Blenheim Street, North Ryde) and Lot D and Lot E in Deposited Plan 410408 (known as 12A and 14 Epping Road, North Ryde) (“the Acquired Land”) from the First and Second Defendants (“the Acquisition”), respectively, are void and of no effect;

   2. (2)

      Order that the Third Defendant determine compensation in relation to the Acquisition in accordance with the Act;

   3. (3)

      Order the Plaintiff to pay 30 per cent of the costs of the First and Second Defendants;

   4. (4)

      No order as to costs between the Plaintiff and the Third Defendant.