North Sydney Council v Transport for New South Wales [2024] NSWLEC 100
Background
On 26 March 2021, Transport for New South Wales compulsorily acquired a leasehold interest for nearly five years in portions of Cammeray Park, ANZAC Park and St Leonards Park.
The land is owned by the State of NSW and managed by the North Sydney Council (the Council) under the Crown Land Management Act 2016 (NSW). The acquisition supports the Warringah Freeway Upgrade and Western Harbour Tunnel project, approved as critical state infrastructure.
Zoned RE1 public recreation, the land's objectives include providing public open space and preserving the natural environment. On 9 March 2022, the Valuer-General determined compensation at $35,003—$3 for market value and $35,000 for disturbance. On 3 June 2022, the Council objected to this compensation, initiating legal proceedings for review.
Expert evidence
The Council adduced expert evidence from an economist, Dr F, who is experienced in conducting cost-benefit analyses for major projects. The respondent did not adduce expert economic evidence.
The evidence of Dr F is based on applying the NSW Framework for Valuing Green Infrastructure and Public Spaces to the specifics of this case. He did not conduct an independent economic assessment of the losses but made some adjustments to the Framework's calculations to better align with the case's facts.
The respondent challenged the appropriateness of using the Framework to identify and quantify the losses. Although the respondent did not present a counter-expert, it said that Dr F's evidence should not be accepted without scrutiny. The Council argued that while the court was not obligated to accept Dr F's conclusions solely because he was the only expert on the matter, it should be cautious in rejecting an expert's methodology that can yield reasonable results.
While a cautious approach will be taken, the court said that it is under no obligation to accept Dr F's conclusions simply because he is the sole expert or because he employed a common methodology used by economists.[44]
Although Dr F acknowledged that the Framework was not specifically designed for his analysis, the court found that his justification for using it is brief and lacks a clear rationale explaining why applying it to these facts would not present "conceptual difficulties". The court held that expert evidence must be robust enough for it to evaluate the validity and foundation of the expert's opinions, as established in Makita (Australia) Pty Ltd v. Sprowles (2001) 52 NSWLR 705, where it was emphasised that even when no counter-expert is presented, the court must assess whether an expert's report is merely a collection of pronouncements or if it serves a greater purpose.[47]
In Makita, it was also held that the court must determine whether the expert's report provides necessary scientific criteria for assessing its conclusions. It should enable the judge to make an independent judgment based on the evidence, ensuring that the report is clear, persuasive and has been rigorously tested. Additionally, the report should include materials that convince the judge of its fundamental validity, rather than relying on mere assertions.[47]
The court found that Dr F did not provide a substantial rationale for his claim that the Framework should be used for the analysis required by s 2.24(3)(b) of the Crown Land Management Act 2016 (NSW) (CLM Act). This lack of a meaningful basis made it difficult to assess the validity of his assertion and undermines the ability to evaluate its soundness. Consequently, the court held that it would give little, if any, weight to Dr F's evidence.[48]
Ultimately, the court held that the Council is entitled to compensation of $481,813 (under s 2.24(3)(b) of the CLM Act and s 54 of the Just Terms Act) and $140,352.40 (under s 2.24(3)(e) of the CLM Act and s 59(1)(a) and (b) of the Just Terms Act).
Key Takeaways:
- Experts must provide a thorough and clear rationale for their methodologies, especially when using frameworks or models not specifically designed for the case at hand.
- Experts should acknowledge and address the limitations of their methodologies, which demonstrates awareness of potential shortcomings and enhances the overall reliability of their conclusions.
- Expert reports should be comprehensive and clear, presenting findings in a manner that allows the court to understand and assess the conclusions easily.
Read the full decision here.
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