Ironhill Pty Limited v Transgrid Ironhill Management Pty Limited v Transgrid

LEGAL REPRESENTATIVES: S D Rares SC/M S Henry (Resp) Malleson Stephen Jacques (Resp)

JUDGMENT: IN THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

30088/02 IRONHILL PTY LIMITED v TRANSGRID 30062/03 IRONHILL MANAGEMENT PTY LTD v TRANSGRID

JUDGMENT Introductory matters 1 HIS HONOUR: Bonville International Golf Course ("Bonville") has a challenging and beautiful layout which has been constructed on land planted as a native hardwood forest some years ago. The golf course is on the western side of the Pacific Highway in undulating country approximately 12 kilometres south of Coffs Harbour. It is 550 kilometres by road from Sydney. The development which surrounds the golf course is predominantly rural, with some residential properties. 2 The formal description of the property is Lots 1, 2 and 3 in DP 802412, Lots 101 and 102 in DP 881242 and Lot 21 in DP 776103 situated in the Parish of Bonville, County of Raleigh and Local Government Area of the City of Coffs Harbour. 3 The land on which the golf course was originally developed has a total area of approximately 183.7 hectares. However, on 7 December 2001, the date on which the easements the subject of the present proceedings were acquired, there were options to purchase additional land being Lot 212 which had an area of 41.94 hectares and Lot 3 in DP 532900 which had an area of 22.06 hectares. Accordingly, the golf course site ("the land") could be considered to have a total area of approximately 247.7 hectares. 4 At the date of acquisition, and this position has not changed since, the site had been developed with a golf course, a substantial two storey club house which includes restaurant facilities, a golf professional shop, a golf cart garage, and accommodation comprising 30 motel style rooms with modest facilities in a modest setting, a kiosk, a disused equestrian centre, maintenance buildings, recreational facilities including tennis courts, and a constructed car park. The majority of the improvements were constructed in the early 1990s. The golf course first opened in 1992. 5 The land the subject of the acquisition comprises easements for an electricity transmission line and access shown within part of DP 1008561 and DP 1027673 affecting Lots 101 and 102 in DP 881242, Lot 3 in DP 802412 and Lot 21 in DP 776103. More particularly, the easement is described as an easement 30 metres wide being within Lot 3 DP 802412 and Lots 101 and 102 in DP 881242. 6 In addition, two easements for access were acquired in separate locations which are described as:

A. The easement for access set out in DP 1027673 passing through Lot 102 in DP 881242. It is situated close to a watercourse (which is a tributary of Bonville Creek) and provides access across that watercourse.

B. The easement for access being 5 metres wide as set out in DP 1008561. This easement is predominantly located over existing rights of way that are 5 metres and 6.09 metres wide. 7 The total area of the easement for the transmission line is in the order of 4.61 hectares. It traverses the land for a distance of 1,536.89 metres. 8 The land is controlled by Coffs Harbour Local Environmental Plan 2000. Under that Plan, the land is zoned partly Open Space 6(c) Private Recreation Zone, partly Rural 1(a) Agricultural Zone and partly Environmental Protection 7(a) Habitat and Catchment Zone. The predominant zoning is Open Space 6(c) Private Recreation Zone, which allows tourist facilities with the consent of the Council. Dwelling-house and multi unit housing are prohibited and accordingly, the only accommodation which can be provided on the site is for short-term stay users. This is of considerable significance to the value of the golf club land and the appropriate compensation for the interests taken by the respondent. The lands which were under option (which have subsequently been acquired) are zoned Rural 1(a) such that tourist facilities (and dwelling-houses) are permissible with consent. However, under the Rural 1(a) zoning, the minimum size of an allotment is 40 hectares, thus effectively defining a rural residential use for that land. 9 The golf course contains both primary and secondary koala habitat and contains a locally significant koala habitat link. Coffs Harbour City Council has adopted a Koala Plan of Management which must be considered before any approval can be granted for development of the land. Being set in bushland, the golf course is also subject to a bushfire risk which would have to be provided for in any development of the site. 10 The land does not presently have access to a reticulated water and sewerage system. Before it could be further developed, these facilities would have to be provided to the site. 11 On 2 March 2001 development application No. 878/01 was lodged with Coffs Harbour Council. Described as a Master Plan, it provided for the development of a total of 979 accommodation units in two distinct components. Stage 1 of the proposal provided for the erection of ten additional residential cabins in addition to ten cabins which had previously been approved but not yet constructed. These cabins would have adjoined the thirty existing accommodation units on the site and are proposed to be of a similar style. 12 Stage 2 of the development proposal comprises 280 retreats (each retreat presently presumed to have three bedrooms), 45 hotel/motel rooms, 63 lodges (each containing 8 bedrooms equivalent to 4 x 2 bedroom units), associated convenience stores, hairdresser, spa and ancillary services, 9 hole par 3 golf course, driving range/practice area and, a golf and tennis academy. 13 In addition to the proposal indicated in the development application, at the date of acquisition there was an existing approval for the development of 100 retreats plus a further ten accommodation units. However, this consent has not been taken up and has now lapsed. 14 The Master Plan breaks the site up into many areas, each identified with an alphabetical letter. Site A has an area of 44,000 sqm, was undeveloped open space at the date of acquisition, and was the subject of the approval for the 100 retreats. 15 In areas described as B1 and B2 there are presently golf practice facilities and it is in these areas that the easement has been obtained. Site B1 is closest to the existing facilities. Under the Master Plan, 45 retreats were proposed for Site B1 and 68 for Site B2. It is submitted by the applicant that the potential for the development of these retreats has been entirely lost by reason of the transmission line. 16 At the time when the golf course was developed, there already existed an electricity distribution line through the site which was maintained by the County Council. This meant that when the golf course was designed, it was done in a way which avoided utilising land which has now been taken for the easement by Transgrid. Although in some locations the transmission line facilities can be viewed from parts of the golf course, the single steel towers on which the lines are hung do not rise above the level of the tall and mature hardwood trees on the property. Accordingly, when the transmission line facilities are capable of being seen, it is generally a filtered view through trees which is available. Although a golfer would be aware of the existence of the transmission line, it is not intrusive and does not affect the playability of the golf course. 17 The limited intrusion of the transmission line is made plain by the fact that the course has received numerous awards and accolades. The Golf Course Guide has named it No 1 Public Access Golf Course in NSW (2002, 2003, 2004, 2005), No 1 Public Access Golf Course in Australia (2004) and Best Aesthetics for a Golf Course in Australia (2002, 2003, 2004, 2005). It was also voted a "Top 50 Golf Course in Australia" in 2004 by both Golf Australia Magazine and the Australian Golf Digest. Two separate claims 18 There are two proceedings for compensation before the Court. This is made necessary by the corporate structure under which the property is held. Ironhill Pty Limited ("Ironhill") is the owner of the land and has claimed compensation which, in its Amended Points of Claim, was identified as $13.560 million comprising $6.765 million with respect to market value, $2.520 million relating to special value and $4.225 million with respect to the reduction in the value of adjoining land. The claim has been differently expressed at other times. 19 Under an arrangement between Ironhill and Ironhill Management Pty Limited ("Ironhill Management"), the latter company has the right to manage the golf course and other tourist facilities. The arrangement is made pursuant to a lease for a term of five years, at a rental of $30,000 per annum, subject to various adjustments. A separate claim has been made by Ironhill Management which seeks compensation in the sum of $13 million. This is said to be the value of the management rights of the 185 units lost because of the transmission line having regard to the capitalised value of the potential net profits. But for the conclusion I have come to as to the appropriate question of compensation payable, difficult questions as to the nature of the management company's interest in the land entitling it to compensation may have required resolution. Because its present entitlement to income from the management of the property continued notwithstanding the acquisition of the easements, Ironhill Management was confined to claiming that it had lost a prospective increased return from the land. However, I have found that increased return to be illusory and accordingly it is unnecessary to resolve any question as to whether the management company has an interest in the land which entitles it to compensation. The Basis for Compensation 20 These proceedings have been conducted by requiring the pre-trial joint conferencing by experts and, in relevant disciplines, receiving the oral evidence of the experts concurrently. I have also had a view of the property with the parties and various witnesses. 21 Compensation must be awarded in accordance with the provisions of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW). Section 55 provides as follows: "Relevant matters to be considered in determining amount of compensation

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

(a) the market value of the land on the date of its acquisition, (b) any special value of the land to the person on the date of its acquisition, (c) any loss attributable to severance, (d) any loss attributable to disturbance, (e) solatium, (f) any increase or decrease in the value of any other land of the person at the date of acquisition which adjoins or is severed from the acquired land by reason of the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired." 22 Relevant concepts are defined by the statute and include: " 56 Market value (1) In this Act: market value of land at any time means the amount that would have been paid for the land if it had been sold at that time by a willing but not anxious seller to a willing but not anxious buyer, disregarding (for the purpose of determining the amount that would have been paid): (a) any increase or decrease in the value of the land caused by the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired, and (b) any increase in the value of the land caused by the carrying out by the authority of the State, before the land is acquired, of improvements for the public purpose for which the land is to be acquired, and (c) any increase in the value of the land caused by its use in a manner or for a purpose contrary to law. (2) When assessing the market value of land for the purpose of paying compensation to a number of former owners of the land, the sum of the market values of each interest in the land must not (except with the approval of the Minister responsible for the authority of the State) exceed the market value of the land at the date of acquisition. 57 Special value

In this Act: special value of land means the financial value of any advantage, in addition to market value, to the person entitled to compensation which is incidental to the person's use of the land. 58 Loss attributable to severance

In this Act: loss attributable to severance of land means the amount of any reduction in the market value of any other land of the person entitled to compensation which is 59 Loss attributable to disturbance

In this Act: loss attributable to disturbance of land means any of the following: (a) legal costs reasonably incurred by the persons entitled to compensation in connection with the compulsory acquisition of the land, (b) valuation fees reasonably incurred by those persons in connection with the compulsory acquisition of the land, (c) financial costs reasonably incurred in connection with the relocation of those persons (including legal costs but not including stamp duty or mortgage costs), (d) stamp duty costs reasonably incurred (or that might reasonably be incurred) by those persons in connection with the purchase of land for relocation (but not exceeding the amount that would be incurred for the purchase of land of equivalent value to the land compulsorily acquired), (e) financial costs reasonably incurred (or that might reasonably be incurred) by those persons in connection with the discharge of a mortgage and the execution of a new mortgage resulting from the relocation (but not exceeding the amount that would be incurred if the new mortgage secured the repayment of the balance owing in respect of the discharged mortgage), (f) any other financial costs reasonably incurred (or that might reasonably be incurred), relating to the actual use of the land, as a direct and natural consequence of the acquisition.

(1) In this Act: solatium means compensation to a person for non-financial disadvantage resulting from the necessity of the person to relocate his or her principal place of residence as a result of the acquisition.

(2) The maximum amount of compensation in respect of solatium is: (a) except as provided by paragraph (b) - $15,000, or (b) such higher amount as may be notified by the Minister by notice published in the Gazette.

(3) In assessing the amount of compensation in respect of solatium, all relevant circumstances are to be taken into account, including: (a) the interest in the land of the person entitled to compensation, and (b) the length of time the person has resided on the land (and in particular whether the person is residing on the land temporarily or indefinitely), and (c) the inconvenience likely to be suffered by the person because of his or her removal from the land, and (d) the period after the acquisition of the land during which the person has been (or will be) allowed to remain in possession of the land.

(4) Compensation is payable in respect of solatium if the whole of the land is acquired or if any part of the land on which the residence is situated is acquired.

(5) Only one payment of compensation in respect of solatium is payable for land in separate occupation.

(6) However, if more than one family resides on the same land, a separate payment may be made in respect of each family if: (a) the family resides in a separate dwelling-house, or (b) the Minister responsible for the authority of the State approves of the payment.

(7) If separate payments of compensation are made, the maximum amount under subsection (2) applies to each payment, and not to the total payments." 23 The golf course was initially developed by Messrs Johnson and Yokotsuk and, as I mentioned earlier, was opened as a golf course in 1992. Ironhill entered into a contract to acquire the golf course on 19 December 1998, with the contract being completed on 6 August 1999. The price paid by Ironhill was $6.15 million. 24 The interest acquired by Transgrid provides for an easement for 132 kV transmission lines. These facilities have been constructed and are comprised of a single tall steel pole from which are hung a number of electricity transmission lines. The facilities are markedly more elegant than the larger steel stanchions which carry transmission lines of significantly higher voltage. Although it is conceivable that at some future date a larger facility may be required, a further easement would have to be obtained before this could occur. This would of course carry with it further rights to compensation. 25 The proper basis for compensation has been complicated by the history of electricity transmission lines through the property. The public purpose for which easements were acquired was to enable the upgrading of the existing 66kV line to a 132kV line. The 66kV line was constructed in the 1950s by Northern Rivers County Council. There was also present and existing independently an 11kV transmission line which traverses the same path as the easement. This line does not represent a significant burden on the development potential of the site as it can, for an acceptable cost, be relocated underground. 26 Accordingly, it was submitted by Transgrid that for the purpose of determining the market value of the land as provided by the definition in s 56(1) of the Act, it is only necessary to set aside the effect of the provision of the 132kV line, the 66kV line predating the acquisition and having no connection with it (see Housing Commission of New South Wales v San Sebastian Pty Ltd (1978) 140 CLR 196). In reality this would mean that the compensation payable would be nominal as the impacts from the 132kV line are likely to be the same as those from the 66kV line - development along the line of the easement would be precluded. 27 Notwithstanding this submission, the parties have agreed that compensation should be determined on the basis that the 66kV transmission line had never been constructed and did not exist at the date of acquisition. The agreement has been acknowledged by Transgrid in the pleadings. Accordingly, there is a potential conflict between the entitlement of Ironhill pursuant to the statute and the entitlement pursuant to the agreement. 28 Although I tentatively held a different view, on reflection I have come to the conclusion that the agreement of the parties should be accepted and used as the basis for compensation in this case. If it was otherwise it would be necessary in every case where the parties have agreed the compensation after the commencement of proceedings for the Court to scrutinise and approve the settlement or at the very least be satisfied that the settlement reflected the application of the correct factual and legal principles. This has never been the approach adopted by this Court or its predecessor, the Land and Valuation Court, and would be inconsistent with the prevailing philosophy which encourages parties to resolve their disputes without the intervention of the Court. 29 There is a proper reluctance for a court to determine the rights of a party on a basis which is contrary to law. Compensation following compulsory acquisition is only available pursuant to the statute, there being no entitlement at common law: Re Wakim; ex parte McNally (1999) 198 CLR 511 at 573. With respect to admissions made by a party, it is plain that admissions of fact may be made which are binding (Dovuro Pty Ltd v Wilkins (2003) 201 ALR 139) and it would seem that a point of law may be admitted (Dovuro at ALR 155-156). However, there appears to be a diversity of opinion as to the correct approach in constitutional and public law cases (Coleman v Power (2004) 209 ALR 182 at 203 per McHugh J and at 239 per Kirby J). 30 There is no case that considers the legal efficacy of an admission in the context of the Act. However, in Leppington Pastoral Co Pty Ltd v Commonwealth of Australia (1997) 76 FCR 318 the Full Court of the Federal Court held that a pre-resumption agreement that provided for the consideration of certain matters in the assessment of compensation for compulsory acquisition under the Lands Acquisition Act 1989 (Cth) should be implemented because it was not repugnant to the compensation assessment regime prescribed by that Act (at FCR 320A-B, 349G-353A and 362G-363GB). The Lands Acquisition Act establishes a different scheme for the assessment of compensation than that established by Part 3 of the Land Acquisition (Just Terms Compensation) Act 1991, but nothing turns on that difference for present purposes. 31 In Leppington, the Court adopted observations made obiter by Gobbo J in King v Minister for Planning & Housing [1993] 1 VR 159. Relevantly, Gobbo J made the following remarks (at VR 167-168): "… I am by no means persuaded that a public authority cannot bind itself in advance as to an item of compensation. Looking first at the time after dispute is joined, I see no reason why the authority through its agents, cannot resolve part of a dispute whether by concession or by a compromise that involves making one concession in exchange for another. There can be no doubt that it has the power to resolve claims whether before or after a dispute. The implied power to resolve a dispute must carry with it the power to resolve part of a dispute. It was argued, however, that the authority could not so settle an issue so as to run counter to the method of assessment laid down in the statute or so as to limit the discretion of the board or court that had to resolve the dispute. A concession of law that runs counter to the express provisions of the statute that gives an entitlement to compensation would almost certainly be beyond power. Thus an express agreement to pay solatium in the sum of 20 per cent of market value when the statute provides for a maximum of 10 per cent of market value would clearly be beyond power. The matter becomes more difficult, however, where the matter is dependent on the weight of evidence and where the issue is one of fact - or at best - one of mixed law and fact. Thus a dispute about value where there are conflicting valuations founded on different uses of sales evidence is one that lends itself to reasonable compromise or concession even if this involves a concession of a figure not directly supported by the authority's own valuer's opinion. The same would in my opinion be true of a concession about highest and best use or what is sometimes described as the notional or underlying zoning of land reserved for a public purpose. The position may be otherwise, however, where it is not so much a concession on a category of entitlement but is rather an acknowledgement of a category of compensation that is neither provided by the statute nor by judge-made law." 32 In my opinion, a similar approach to that suggested by Gibbs J should be followed in New South Wales. 33 In the present case, in order to determine the market value of the land it is necessary to identify the public purpose which is being carried out and for which the easement was acquired. This will enable the market value of the relevant land to be determined as required by s 56(1) of the Act. To my mind, that is a question of fact which can only be answered after an investigation of the complex of arrangements which have resulted in the acquisition of the present easements. I see no reason why that investigation should not be avoided and the parties agree the facts which the Court should accept for the purpose of determining compensation. Accordingly, I will determine compensation having regard to the admission made by Transgrid. The quality of the existing facilities 34 The evidence indicates that when the property was acquired by Ironhill, it was in a run down state. No doubt this was a product of the fact that the previous owner was unable to run the facilities at a profit. Notwithstanding the efforts of Ironhill, the property is still not realising a profit. It is being marketed as a beautiful golf course, with the suggestion that it is the equivalent of the Augusta National Golf Club in Augusta Georgia, USA, which is the permanent location of the US Masters Golf Championship. 35 Since acquiring the property, Ironhill has been able to improve the quality of the course and upgrade the existing accommodation. Equipment has been replaced and the golf course has achieved awards for excellence, as have the restaurant facilities. In particular, the golf course has achieved awards as a high quality public access golf course and further awards for the high quality of its aesthetic environment, as I mentioned earlier. The Master Plan 36 The Master Plan was prepared by Mr Southwell, who is an architect. When the Master Plan was submitted to Coffs Harbour Council, Transgrid made a submission in which it indicated that it proposed to acquire easements on the land which would prevent development within the easement areas. As a consequence of that submission, the Council was advised that although the Master Plan proposed 113 retreats in the area of the transmission easements, it would not be in the public interest to approve development in the area affected. The Council was advised to exclude that part of the development affected by the proposed Transgrid easement. 37 It is submitted by Ironhill that accordingly, it should be concluded that but for the easement, development in the location shown on the Master Plan as Sites B1 and B2 would have been approved by the Council. I do not think this is the case. The intensive development proposed in this location was significant and would have required detailed consideration of many matters including whether or not it would unreasonably interfere with the habit of koalas. Furthermore, the intensity of development proposed in a single line along the path of the transmission line would have provided a significant visual intrusion into the golf course. Although this may not have been of concern to the Council, I am satisfied that it would not have been commercially prudent to provide development of this intensity in this location. 38 By Notice of Determination dated 21 August 2001, the Master Plan was approved as a staged development (see s 84 of the Environmental Planning & Assessment Act 1979). Relevant elements of the approval were: (a) the construction of Stage One, which comprised an additional twenty cabins subject to conditions; (b) grant of land use approval in principle for the balance of the Master Plan, subject to further development consents; (c) excluded from the approval was the development of any land the subject of what was then described as "proposed easement for transmission line 30 metres wide" and "site of proposed easement for access over existing track". 39 As I have previously related, at the date of acquisition, the applicant also held a valid development consent for the construction of 100 accommodation units on the land known as the Reed land (Site A). Development consent for this proposal was granted by the Council on 18 May 1998 but was not taken up and has now lapsed. Nature of the claim 40 Ironhill claims that at the date of acquisition, the land had potential for development as reflected in the Master Plan. It is submitted that the acquisition of the easement has impacted upon the land in the following manner:

(a) reduced the development potential of the acquired land by removing the land within the easement and within the access easements in so far as the easement prevents development of any structure within the easement land;

(b) imposed a visual blight on the current use of the easement land and adjoining land as a high quality golf course with outstanding aesthetics;

(c) reduced the development potential of land adjoining the easement land for accommodation purposes due to the:

(i) visual impact of the transmission line; (ii) market perception of impacts from the transmission lines. 41 It is submitted that the cumulative impact of the transmission line has been to reduce the development potential in the Master Plan by the order of between 138 and 185 accommodation units. However, it is submitted that the loss of this development potential sounds in losses to Ironhill expressed as:

(a) the market value of the land having regard to the development potential of the land affected by the easement;

(b) actual losses in respect to: (i) usual legal and valuation fees and GST and CGT (if applicable); (ii) costs incurred in supervising the construction period to minimise business disruption;

(c) losses either characterised as market value (which would increase the amount determined in (a) or disturbance (s 59(f)) in addition to the amounts in (b) derived from the income generating features of the land including; (i) the ability to generate income from managing the accommodation units on behalf of the owners of such accommodation units;

(ii) income from the golf club, pro shop and other facilities;

(iv) income from club memberships. 42 It is further submitted that this loss of development potential sounds in losses to Ironhill Management comprised of:

(a) the decreased value of its interest in the acquired land having regard to the development potential of the acquired land and the income generating potential that accompanies that development potential. Income generating potential said to be diminished by the acquisition comprised: (i) the ability to generate income from managing the accommodation units on behalf of the owners of such accommodation units;

(ii) income from golf club, pro shop and other facilities;

(b) actual losses in respect to the usual legal and valuation fees and GST and CGT (if applicable). The importance of the Master Plan when assessing compensation 43 Ironhill called two valuers in the proceedings, Mr Robertson and Mr Nicholson. Both of them accepted the Master Plan as reflecting the highest and best use of the golf course site and believed it to be commercially viable. Both of them assessed compensation on the basis that a significant proportion of the development potential of the site would be lost because of the transmission line. If they are wrong in this assessment, both of their valuations are of little value in determining the appropriate compensation. 44 Accordingly, the fundamental issue to be determined in the proceedings is whether, at the date of acquisition, there was the development potential as reflected in the Master Plan. The evidence in relation to those matters was given by a number of persons with particular expertise and experience in golf course and tourist related developments and town planning, as well as the individual valuers. 45 It is submitted by Ironhill that not only would development in accordance with the Master Plan ultimately have been approved but that it would also have been viable to construct development at the level of intensity shown in the Plan. This is disputed by Transgrid, which submits that although there may be potential for some further development on the land, it would be modest and not affected by the easements. 46 Transgrid further submits that although described as a development consent, the consent of the Council to the Master Plan is legally flawed. I do not think this argument requires resolution. However, it is plain that before any development in accordance with the Master Plan could have been implemented, further development consents complying with the requirements of the planning legislation would be required. The Master Plan is clearly conceptual and significant further evaluation would be necessary before any development in accordance with it could be undertaken. There are many issues which would need to be resolved before development in accordance with the Master Plan could be implemented. However, it is also plain and this is apparent from the evidence of Mr Neil Ingham, a town planner called by Transgrid, that if it was commercially viable, the presence of the transmission line is a significant impediment to development in accordance with the total Master Plan. The potential of Bonville The evidence of Mr Askew 47 Mr Askew was called by the applicant. He has been involved in a commercial real estate agency in Queensland and New South Wales with extensive experience in tourism, motel and hotel management rights sales. In recent years he has been responsible for the development of Resort Brokers Australia's Management Rights Division as well as working closely with developers of strata schemes to maximise their investments from land acquisition through to management and unit settlement. 48 Mr Askew has analysed the subject property. He has the view that the Bonville golf course is a highly acclaimed 18-hole championship golf course, which includes a high quality clubhouse with restaurant, pro shop and storage area. 49 He believes the existing improvements provide a high quality tourist and recreational facility and will form the hub of facilities available to potential purchasers of the real estate currently in the process of development. He believes that the completion of the existing Master Plan will provide the site with facilities making it "one of the largest and most attractive tourist facilities in Australia." 50 Mr Askew believes that the Bonville facility, if developed in the manner provided by the Master Plan, will be comparable with golf course resort accommodation elsewhere in New South Wales and Queensland because this will be a purpose built golf resort from which he believes there will be considerable ancillary income generated. He was asked to prepare likely future cash flow propositions if the easement land had been able to be developed. He says that he has adopted conservative values in relation to occupancy, usage and rates in order to arrive at a realistic future gross trading income and net profit from each category of income. 51 He provided a detailed analysis of the financial conclusions. The room rates which he assumed were drawn from the advertised rates for various resorts both in Coffs Harbour and elsewhere. A summary of his conclusions is that the 185 villas which he was asked to assume will generate a net total annual income of $5,805,194. He believed that the golf course expenses would total $796,724, giving an annual net profit from the conduct of each villa of $31,378.70. 52 Mr Askew was not an impressive witness. Apart from the fact that assumptions which were fundamental to his opinion were not verified and no detail was provided, I formed the view that he had no informed basis from which to assess the likely viability of a project at Coffs Harbour. The contrast between the level of knowledge and detailed assessment of Mr Askew and that of Mr Blunden, who was called by the respondent, was significant. I prefer the evidence of Mr Blunden. 53 I do not accept Mr Askew as providing a realistic assessment of the potential of the Bonville golf course site. Although he has assumed a 185 3-bedroom villa facility has been lost because of the easement, he does not place this into the context of the proposed Master Plan and attempt to identify whether the Master Plan would be viable. His assumptions as to length of stay, number of rounds per guest and average room density are those provided to him by the applicant, he has undertaken no independent value of these assumptions, and there is no basis for his assumption of an average spend of $200 per day on food and beverage. The evidence of Mr Smith 54 Mr John Smith was also called by the applicant. He is the Managing Director of Sonnenblick-Goldman (Australia) Pty Ltd, which is a global real estate investment banking firm that specialises in the hotel and resort industry. He is also a director of Horwath Asia Pacific Pty Ltd, which is apparently the largest hotel consultancy firm in the Asia Pacific region. He is also a chartered accountant. 55 Mr Smith has considered the Master Plan proposal for Bonville and is of the view that if developed as a single project, it would be both commercially and logistically unrealistic. In his opinion, no developer would contemplate a single phase development. He believes that if there was a development, it would be a project staged over several years or longer. He is of the opinion that Bonville could be developed as an "upscale golf resort" in a highly attractive quiet rural setting which would "provide a totally different guest experience to that sought by 'sun and surf' users of the beach based resorts that Mr Blunden refers to." 56 He believes that guests likely to be attracted to Bonville would come from the higher yielding corporate and small conference market, with a lesser reliance on family based, price sensitive leisure demand. He believes that higher prices could be achieved than those which are presently available from the existing high density beach side resort developments in Coffs Harbour. 57 Mr Smith also believes that it is appropriate to consider the potential viability of a Bonville development using contemporary ownership and financing options. He believes that the current zoning restriction may not provide such a risk to the raising of capital as Mr Blunden assumes. Mr Smith believes that there may be a market for people who do not require permanent owner occupation, but are prepared to invest and use the facility occasionally. He evidences the development by Mirvac of a significant resort at Bunker Bay in the Margaret River region of Western Australia. He says the evidence of this project's success illustrates that there may be a market for accommodation which cannot be permanently occupied by its owner. 58 Mr Smith also believes that there may be a capacity for syndication of the resort or the use of time share arrangements to finance the project. 59 Apart from the opportunity for alternative funding arrangements, Mr Smith also believes that the viability of Bonville is significantly enhanced by the present existence of the golf course. Any further development would not have to fund a golf course which was secured with the acquisition in 1998. As a consequence, the existing facilities are already functioning and have a market presence which could be built upon by residential development. He believes that trading performance would be enhanced by reason of the existing facilities. 60 Mr Smith is of the opinion that Coffs Harbour has potential to grow as a tourist destination having regard to an increase in airline flights to the city. Although it is remote from major population centres, he says this is not unusual in other resort locations in Australia such as Far North Queensland, Broome, Ayres Rock and the Whitsundays, which present even greater drive market challenges. 61 Mr Smith also believes that Mr Blunden, who was called by the respondent, may have under-estimated the potential for development in Coffs Harbour having regard to the potential growth of the golf industry throughout Australia. He draws attention to the fact that golf is Australia's most popular participant sport and that demographic changes are leading to an increasing number of the population playing golf. He also believes that Coffs Harbour has a potential for population growth and a growth in the number of retirees who will be attracted to high quality golfing facilities. 62 The matters raised by Mr Smith require serious consideration. However, I do not believe his opinion that there may be a market for a major tourist resort facility based on a golf course with no other attraction in the Coffs Harbour region is soundly based. Margaret River provides its own attractions - beaches, wineries and great natural beauty - as do the other destination resort locations referred to by Mr Smith. I am not persuaded that Bonville would have a similar attraction for tourists, notwithstanding the quality of its golf course. If the golf course had been located on a beach location or was associated with other similar high quality facilities, the position might be different. The known history of tourism in Coffs Harbour and the distance of Bonville from all other attractions leads to the conclusion that Mr Smith's views are overly optimistic and cannot be accepted. 63 Mr Smith's opinion is not based on a feasibility study or any detailed analysis of the likely market for a golf course in bushland areas at Coffs Harbour. I accept that the history of failed resort developments in Coffs Harbour may not necessarily mean that a golf course based facility must fail, but it is a matter of concern. The failure of the existing facilities points to the fact that Coffs Harbour has not been able to attract tourists on a scale sufficient to justify the major capital works which have previously been constructed. Although Mr Smith assumes that the increasing frequency of flights will provide greater tourist numbers through Coffs Harbour, Mr Blunden's analysis suggests that this may not be the case. The increased airline journeys may be a reflection of an increasing permanent population and not an increased tourist market. 64 Although Mr Smith expresses optimism as to the future likely growth of the population playing golf, Mr Blunden is less optimistic. Mr Blunden points to the fact that although the older population is playing golf, the middle-aged brackets are declining. In this respect I accept the evidence of Mr Blunden. He has carried out a detailed analysis of the situation compared with Mr Smith who is relying on some generalised assumptions. The evidence of Mr McIntosh 65 Mr McIntosh is the National Director of Hotels of Colliers International Consultancy and Valuation Pty Ltd. Colliers is an international real estate agency, valuation and consultancy company. He is the National Director responsible for the purchase, sale, valuation and associated consultancy work for hotel and leisure property including resorts and golf clubs in Australia. 66 Mr McIntosh gave evidence of a strong demand for both residential and investment units at December 2001. Although there has been considerable negative publicity in relation to the overbuilding and overpricing of these units since that time, he says this has occurred where there has been significant additional construction. He says there has been a strong level of demand for people seeking investments in leisure locations, particularly close to facilities such as beaches and resorts. 67 He is also of the view that there is a demand led by investors rather than occupiers. This has resulted in a construction of various properties which are then purchased by investors where there is insufficient demand from the end users. He believes that developers often acquire properties on the basis that they will be able to on-sell to investors rather than be concerned with whether or not there is a long-term demand for the facilities. 68 Mr McIntosh has experience valuing tourist accommodation within the Coffs Harbour area and agrees with Mr Blunden that the general market in Coffs Harbour has been relatively flat. However, he says that although "demand is not strong in Coffs Harbour relative to some other markets, there has still been good investor interest for the right type and style of product." 69 Mr McIntosh believes that one of the factors affecting the viability of a resort proposal that includes a golf course is the cost of the golf course itself. Accordingly, the Bonville site has the benefit of the existing golf course having already been developed and paid for and accordingly, the risk of the resort failing in the future have been minimised. Although he recognises that resorts have failed in Coffs Harbour, Mr McIntosh does not believe that it is appropriate to compare the prospects of Bonville with the outcome of the other facilities. 70 In my opinion Mr McIntosh's evidence is significant in confirming the evidence of witnesses called by the respondent as to the true nature of the Coffs Harbour market. Mr McIntosh makes plain that it has not been a strong market where there is a strong demand for real estate. No doubt this is due to the fact that it trades from a local and motor vehicle driven tourist base rather than providing a high quality destination with concentrated desirable facilities. I see no support in Mr McIntosh's evidence for a conclusion that a golf course resort with no other significant attributes would achieve any greater financial success than the other resort facilities in Coffs Harbour have achieved in the past. The evidence of Mr Blunden 71 Mr Jeffrey Blunden is a Senior Manager and the senior member of the Hospitality, Tourism & Leisure specialisation within the Real Estate Advisory Services Group of Ernst & Young. He has ten years of experience in international hotel and resort operations and more recent experience in the golf industry. He specialises in the analysis of golf related facilities within Ernst & Young. 72 There is no doubt that Mr Blunden has a detailed knowledge of this area of the market which is reflected by the fact that he is author of the report "The Australia Golf Industry - 2002", a report co-published with the Australian Golf Union. He is well placed to give evidence in relation to the likely viability of golf course related development. 73 Mr Blunden assessed the existing Bonville golf facilities and examined the potential for further development having regard to the Master Plan. He identified the following facts: · No existing resort product in Australia or golf resort product is within 60% or 70% of the proposed size of the development demonstrated in the Master Plan. · The development would be four times the size of the largest resort that already exists in Coffs Harbour, which is the 226-room Pacific Bay Resort. · The development is geographically remote from major population centres, unlike approximately 75% of all existing golf resorts, which are within a three hour drive time of a major capital city. · The development, being unbranded, would be unlike approximately 65% of existing golf resorts. · When compared to resorts currently in planning or under construction, the proposed development is like only two of thirty-six of the known forty-two developments identified. Bonville does not contain any permanent residential development, one of the key requirements of finance lenders for new golf courses. The existing zoning does not permit residential development. 74 Mr Blunden concluded: "In summary, the project as proposed would be the largest of its kind ever proposed in Australia and to my knowledge the Southern Hemisphere. Based on the known difficulties faced by regional resort operators, being largely continual demand and recognition/distribution, I am of the opinion that the proposed concept as set out in the Masterplan has no reasonable probability of being economically viable. The tourist demand characteristics of Coffs Harbour have failed to support major resort developments evidenced by the sales of Pacific Bay, Opal Cove, and Pelican Beach resorts for considerably less than their development cost. These resorts are significantly more modest in size compared to the BIG Masterplan concept. The 100-room development approval on the 4.4-hectare site fronting Cassidy's Road is a good site overlooking a fairway and having a good road access. In my opinion, given the marginal potential for more rooms, there is no valid reason why the land required for the easement would be preferred for development over the land that already has a development approval at the date of resumption. This site known as the Reed land, is likely to meet all foreseeable long term demand for tourist accommodation units within the BIG Country Club." 75 Although Mr Blunden is prepared to concede that there may be a potential for a modest addition to the number of rooms at Bonville, he believes this would be a most optimistic outcome in the foreseeable future. He is of the opinion that any suggestion of an addition to the available accommodation presents a high development risk given the current trading position and is likely to be difficult to justify in terms of debt funding. 76 Mr Blunden stated that he found no indicators that the proposed development concept is based on existing demand fundamentals or is desired by the market. He believes that having regard to the information reviewed, the proposal as set out in the Master Plan has no foreseeable chance of becoming a reality and does not add value to the land assuming the easement had never been contemplated. 77 Mr Blunden's evidence is supported by the local knowledge and experience of Mr Dempsey, a valuer called by the respondent, and the evidence of the failure of tourist development in Coffs Harbour. The current unsuccessful operation of the golf course is a further indication that the Master Plan is an ambitious but unrealistic proposal. 78 I accept Mr Blunden's evidence, which leads inevitably to the conclusion that the evidence of both valuers called by the applicants, Mr Robertson and Mr Nicholson, cannot be relied upon to determine compensation. I have no doubt that the development potential which they assume and, which must exist to justify their conclusions, is not available. The koala problem and vegetation issues 79 It was common ground between the parties that making adequate provision for koalas would be an issue with respect to any proposed development on any part of the golf course site. The site is known to contain a significant koala habitat and to provide a natural corridor through which koalas pass in the ordinary course. The development proposed in sites B1 and B2 of the Master Plan provide a continuous line of buildings along the north/south corridor of the easement and could interfere significantly with the koala habitat. 80 Mr Dominic Fanning of Gunninah Environmental Consultants gave evidence on behalf of the applicant. He asserted that the koalas would not present a significant issue with respect to development included in the Master Plan. His view was shared by Mr Neil Ingham, although Mr Ingham accepted that it may be necessary to modify part of the development proposal to accommodate a wild life corridor. 81 Mr James Warren was called by Transgrid. He is the Managing Director and Principal Environmental Scientist of James Warren & Associates. He holds a Bachelor of Science Degree and a Master of Applied Science Degree. His expertise includes flora and fauna studies, environmental management, and estuarine management/forest ecology. He has been responsible for the management of the GIS Koala habitat mapping project for the east coast of Australia. 82 Mr Warren recognised that the Council had approved Stage 1 of the Master Plan in 2001 but noted the development areas for Stage 1 were to be very small and require only minor loss of recognised Koala food trees. Mr Warren expressed the opinion that in the event of any further development application, it was likely that the council would require a Species Impact Statement to be prepared for which the main trigger would be potential impacts on koalas. He expressed the following conclusion in relation to the presence of koalas on the site: "Regardless of whether Council request an SIS, I consider that significant constraints to development of this site exist. In my opinion, if Council was to grant consent to further development of the site, having regard to these constraints, such further development would only be very limited. . . . movements of Koalas through the Golf Course may be significantly altered/affected by such a large development. . . . It is my opinion that approvals are likely to be excluded from: s within 10-50 metres of any threatened plant species, s riparian zones (50 metre buffers from the banks of these zones), s the Very High and High Ecological Value areas on the site, s the Flooded gum forests where enclosed (partly or fully) by high ecological value areas, and s from Primary Koala habitat areas. It is also considered likely that a reduced scale of development will be approved for the Secondary Koala habitat areas on the site."

83 With respect to the prospective problems for the koala population from the proposed development I favour the view of Mr Warren. In my opinion Mr Fanning was entirely unrealistic when he suggested that there would not have been a significant issue in relation to koalas which required resolution. Mr Fanning has not carried out the detailed study which would be necessary before particular development could be approved. Although I do not conclude that koala matters would preclude development, I believe it would be likely that in site B2 a significant modification of any proposal would be required. 84 However, because of the view I have reached as to the commercial viability of the Master Plan, complete resolution of the koala issue is unnecessary. 85 Evidence was also given by Mr Leonard who has undertaken two studies on various parts of the land. He is critical of Mr Warren's conclusions with respect to some of the vegetation on the site. It is unnecessary to resolve the differences between them. As with the koala issue questions of the value of the vegetation on the site would have to be resolved before further development consents could be granted. The bushfire problem 86 Both parties had available the advice of experts in relation to bushfire matters. There was agreement that before any buildings could be constructed in bushland parts of the site, it would be necessary to assess and provide adequate bushfire protection zones. This would necessitate the removal of some vegetation, although until the precise proposal was defined and an assessment made of the nature and state of the bush canopy in the particular area, the precise impacts could not be determined. However, the removal of bushland would have the possible effect of diminishing the area available for koala habitat and may also significantly disturb the aesthetic quality of the golf course. Instead of being a golf course carved through a native forest it could become a golf course surrounded by obvious and visible dwellings. 87 Transgrid submitted that bushfire issues which would require buildings to be more visible would be a significant impediment to development. However, although the beauty of the golf course is presently enhanced by the natural vegetation through which it passes, there are many golf courses which maintain a beautiful environment even when buildings can be seen from the course as it is played. In my opinion, the problem in the present case is not so much with bushfire protection but with the proposed intensity of development in sites B1 and B2. Because of that intensity, any intrusion into the forest without adequate replanting would, in my opinion, be a significant visual intrusion into the golf course. If it was desired to maintain the beauty of the golf course, irrespective of bushfire matters, development of the intensity shown on the Master Plan would not be desirable. The evidence of Mr Montgomery 88 Mr Peter Montgomery is the sole director of Ironhill Pty Limited. He said that he was "attracted to the property because of the unique beauty of the golf course and the potential for further development. He believes that "development of the property based around the golf course, but preserving the course and its surrounds, would result in a resort as good as any golf resort in Australia." 89 Mr Montgomery was aware in 1995 of a proposal to upgrade the existing transmission line. In relation to events after Ironhill purchased the golf course in August 1999, Mr Montgomery states: "Various discussions occurred between Transgrid officers, myself and our services consultant Geoff Slattery regarding the possibility of undergrounding or relocating the electricity wires. Dr Nicholas Brunton of Henry Davis York, solicitors for Transgrid, confirmed verbally and in writing that compensation for Ironhill Pty Limited for the proposed resumption of easements for the electricity wires would be paid as though the wires did not exist prior to construction of the 132 KV line." 90 Mr Montgomery believes the construction of the existing golf course cost around $30 million. He states that Ironhill was nevertheless able to purchase it for a relatively low price as a result of the following factors:

· vendor's inability to manage Australian staff · vendor's inability to produce high quality turf · vendor's inability to operate a high quality food and beverage operation · vendor's inability to execute a strategy of attracting a large number of Japanese-based visitors/club members · vendor's inability to conceptualise a Master Plan for the property · vendor's inability to maintain a satisfactory banking relationship (the property had been placed in receivership by the ANZ Bank). 91 Mr Montgomery, on Ironhill's behalf, entered into a joint venture with Mr John Dunagan, Ironhill and Mr Dunagan each having a 50/50 shareholding. After protracted negotiations, the golf course was purchased for $6.15 million in August 1999. That purchase price included whatever rights the vendor had to be compensated for any easement over the land for electricity purposes. The Bosshard and Lepherd lands were purchased at a later date. 92 Mr Montgomery highlighted the fact that after purchasing the golf course, Ironhill undertook a significant refurbishment and upgrading of the golf course and its facilities to their present award-winning level. 93 Mr Montgomery testified that prior to the completion of the purchase, he had instructed Mr Southwell to brief him on how he would prepare a Master Plan for the property. A first draft, submitted to the Council in 2000, was withdrawn. Evidence before the Court indicates this withdrawal followed a communication between the Council and Mr Southwell to the effect that the Council was not prepared to consent to the type of subdivision proposed. A revised Master Plan was then submitted to the Council around March 2001. Development consent was eventually forthcoming, subject to numerous conditions. These conditions included a condition that no development could be effected apart from 20 extra cabins approved in Stage 1 without further development consent. Mr Montgomery said he was aware that there would be further hurdles to overcome before any further development would be approved. 94 Mr Montgomery stated that one of the reasons for the failure to have commenced development in accordance with the Master Plan was the result of continuing attempts to persuade Transgrid to underground the transmission line wires. He stated that a further reason was the need to finalise service arrangements with the Council. He gave evidence that Ironhill preferred not to develop the Reed land (Site A) while the wires remained aboveground. 95 In relation to the proposal to develop the lodges on the course, Mr Montgomery stated that they are intended to be modelled on elements of those located at Augusta National in Augusta, Georgia and Kauri Cliffs in Russell, New Zealand. He said they would be "designed to appeal to companies, larger families, associations and investors." 96 Mr Montgomery gave evidence that he was prepared to go ahead with Stage 1 even without having engaged someone to do a feasibility study. He stated that he had experience as a property developer and investor, including experience developing a major resort in Coffs Harbour. 97 Mr Montgomery gave evidence that he did not necessarily think residential units overlooking the sea were preferable to tourist units overlooking a golf course some distance from the sea. He conceded they were different, but indicated that that which was preferable "depends on whether you like living in a golf course environment or you like living close to the beach." 98 I accept that Mr Montgomery has been able to make significant improvements to the golf course and its associated facilities since it was purchased by Ironhill. However, I believe that, having regard to the analysis of both Mr Dempsey and Mr Murphy, the valuers called by Transgrid, Mr Montgomery offered an unrealistic view of the prospects for the development of tourist facilities on the site. Although I accept that there is some potential for further development, it is modest and far less than is shown in the Master Plan. The Master Plan, its viability and alternative uses of the site 99 Although Ironhill advanced the Master Plan as reflecting the highest and best use of each part of the site, I am not persuaded that this is necessarily the case. Evidence was given by Mr Toyota, an architect with considerable experience in resort development, which indicated that it may be possible and indeed more desirable to increase the intensity of development on that part of the site which is adjacent to the existing clubhouse and related facilities. He suggested that an hotel in this location may prove to be more viable than the dispersed form of accommodation proposed in the Master Plan. I am satisfied that these suggestions have considerable merit and would need to be carefully considered before any major development commitment was made. 100 The evidence does not persuade me that the Master Plan could necessarily be implemented either in whole or in relation to any particular component. While it undoubtedly reflects the maximum development potential for the site, I am not persuaded that it is a realistic proposal which has been adequately assessed for its environmental impact. Nor am I persuaded that it would be commercially viable either in whole or in part. 101 It was submitted by Transgrid that the lack of definition in the Master Plan results in it being of very limited utility. For example, the size of the buildings proposed to be constructed in sites B1 and B2 is uncertain. There was disagreement between the evidence of Mr Southwell as to the likely size of the retreats and the assumptions which were made by those involved in calculating the cost of constructing a retreat. Furthermore, most witnesses who gave evidence in relation to the commercial aspects of resorts believed there would need to be a mix of one, two and three bedroom units for a project to be commercially acceptable. The current project provides for 380 uniformly three bedroom retreats, which it is submitted is unrealistic. 102 There is also very significant uncertainty in relation to the staging of the project. Although it was put to Mr Southwell that development could take about twenty years, he was not prepared to hazard a guess as to how many years it may take. In the three yeas since the Master Plan was developed, nothing has been done which would enable assertions as to market, price and timing to be tested. Furthermore, no steps have been taken to implement the Master Plan or any part of it. 103 As I have indicated, the evidence from Mr Montgomery was that the failure to take any steps to develop the site was a result of the necessity to prosecute this compensation claim and uncertainty as to whether the electricity transmission easement would be undergrounded. I accept that considerable effort has been spent in pursuing this claim and that uncertainty would have existed with respect to the ultimate impact of the transmission line. However, I do not believe this wholly explains the fact that no steps have been taken to prepare any part of the site for further development. Visual impact and other matters - the evidence of Dr Lamb, Mr Ingham, Mr Chambers and Mr Lincoln 104 There was significant disagreement between Dr Lamb and Mr Ingham about the extent to which the transmission lines adversely affect the development potential of the site. 105 Dr Richard Lamb has developed a speciality in visual landscape assessment and prepared a report in relation to the visual impact issues. He concluded: ". . . that there would be visual impacts of the transmission wires and poles on the scenic quality and amenity of the Golf Course. If the wires were not present, the scenic quality and amenity would be greater. However, this does not lead to a conclusion that every part of the Master Plan that has a view of a wire or a pole is degraded or likely not to ever be viable as a result of the easement, as seems to be Mr Ingham's general position. In my view, while there are effects of the wires and poles, they are not significant to the overall experience of the place or detrimental to the overall scenic quality of the setting at present. Having said that, they are obviously greater within the easement, than outside of it. . . . [I]t is my opinion that the amount of development that is proposed in the easement and immediately adjacent to it is excessive and would degrade the critical scenic quality of the place and the experience of playing the Course. This is relevant to the question of to what extent do the wires and poles have unique visual impacts and therefore decrease amenity, either further, or in a cumulative way. My opinion is that there would be a significant decrease in visual amenity of the Course and of the easement land and that this in turn decreases the extent to which the wires and poles can be claimed to create impacts." 106 Mr Ingham reviewed the development plans and various documents in relation to the proposed development at Bonville. He concluded that the proposed development would be significantly affected by the impact of the transmission line easement and that this impact could be termed "severe." Mr Ingham stated that the total number of units likely to be lost would be approximately 183 and, of those units, a significant proportion would come from locations in close proximity to the club house, that is, "in an ideal location relative to other early stage development areas on the site." 107 In relation to Sites B1, B2 and P, Mr Ingham was of the opinion that "tourists would not wish to stay in accommodation which is in very close proximity to the transmission line." He gave evidence that, in his opinion, people have a perception that high tension transmission lines pose a health risk and that this would have an impact on whether people bought units proximate to the transmission lines. In respect of Site A, he noted that because the land within that site slopes downward to the east so that any units built there would overlook the transmission line, that this would "result in an undesirable visual impact for these units which will be compounded by the hum of the wires during wet weather." He also expressed the view that there would also be interference with radio and television reception near the transmission lines. 108 Mr Ingham disagreed with Mr Chambers' view (Mr Chambers is a town planner called by Transgrid) that (i) the units lost as a result of the easement can be placed at alternative locations on the site and (ii) Stage 2 will require the environmental impacts of all the development within the Master Plan. 109 In relation to alternative locations for the units, Mr Ingham states: "Even if it were possible to provide other dwellings within the site that is not a ground for suggesting that the units proposed within the transmission line easements are not lost because of the transmission line and the easements associated with it." 110 Dr Lamb was critical of Mr Ingham's "black and white" position, saying that he considered that Mr Ingham's assessment exaggerated the impacts of the wires as well as the extent to which visibility of them could affect the viability of the proposed Master Plan. 111 Dr Lamb, as did Mr Chambers, held the view that there are a variety of alternative locations on the Bonville site where accommodation could be placed without the extent or nature of visual impacts that would ensue were the Master Plan to be implemented as proposed. 112 Evidence was given by Mr Lincoln, an electrical engineer, about the concerns which people have about living near electricity lines. He believes this would limit the potential of this site. I generally accept his evidence although the actual impacts on the development potential of the site except where the lines will actually pass would, in my opinion, be limited. 113 I am satisfied that the transmission line would lead to a significant loss of potential development sites and impact on the desirability of dwellings on Site A. However, that loss of development potential is not, in my opinion, determinative of Ironhill's claims. The sale to Ironhill and other sales 114 As I have indicated, Ironhill purchased the golf course and existing facilities for $6.15 million. The contract was dated 19 December 1998 and included the value of the right to the compensation now claimed. The price represents approximately $36,176.47 per hectare. The contract followed a protracted period of negotiation during which Ironhill had to increase its price to secure the purchase. The valuers who gave evidence agree that by reason of cl 58 of the contract, the price paid by Ironhill represents the price of the land unaffected by the transmission line. 115 The purchase by Ironhill was completed following disputes with the vendor. Those disputes were resolved and a deed was executed. Clause 11 of the Deed provided for apportionment of the purchase and was in the following terms: "The parties agree that the purchase price shall be apportioned as follows: (a) the Cabins - $2.25 million; (b) fixtures, fittings and equipment, plant machinery trucks, cars etc. - $1.65 million; (c) the Clubhouse and golf pro-shop building - $1 million; (d) the Golf Course - balance of the purchase price;" 116 In effect the parties to the transaction attributed a value of $1.25 million to the golf course and other land. By other contracts dated 13 December 2001, Ironhill acquired options earlier granted to purchase land known as the Bosshard land and the Lepherd land for $890,000 and $600,000 respectively. These sales equated to a land value of approximately $21,220.79 and $26,304.25 per hectare respectively. 117 The area comprising the land burdened by the easements is 5.2003 hectares. It is approximately three percent of the land purchased by Ironhill pursuant to the December 1998 contract. If the Bosshard land and the Lepherd land are included, the area comprising the land burdened by the easements represents 2.1 percent of the land presently owned by Ironhill. 118 Three percent of $6.15 million is $184,500. Alternatively, 5.2003 hectares at $36,176.47 per hectare represents $188,120.50. 119 The sale to Ironhill precedes the date of acquisition by approximately three years, but I do not believe it can be disregarded when assessing compensation. Although the vendor may have been required to sell, I am nevertheless satisfied there was genuine competition to acquire the site. The site had the same potential for development when Ironhill acquired it as it has today, although the additional step of preparing a Master Plan has now been taken. However, although that Master Plan has been prepared, no effort has been made to implement it. Furthermore, as I have already related, in my opinion the Master Plan does not reflect the realistic development potential of the site. The evidence of Mr Daymond 120 Mr Bradley Daymond is presently the General Manager of the Bonville International Golf Club. Previously he was the Head Professional, a position he occupied at the club from 1991. 121 Mr Daymond gave evidence of the efforts which have been made in recent years to improve the golf course, with a consequential increase in the number of rounds being played. He gives evidence that the current rate for a week-end round of golf ($99) is lower than many other resort golf courses within Australia and, having regard to the ranking of the course and its aesthetic attraction, he considers the price as presently charged to be reasonable. 122 Mr Daymond is of the view that the power lines presently impact upon the playing experience of the course. Apparently, the committee has requested that a spare hole (presently located under the power line) be built to replace the existing hole. 123 Mr Daymond also gives evidence of significant planting proposals which have been undertaken in recent years. He does not believe that with a program of effective planting, the introduction of residential accommodation would detract significantly from the playing experience of the course. He does not believe that the Master Plan, if implemented, would diminish the aesthetic quality of the golfing experience. Town planning evidence 124 I have already referred to the fact that evidence was given in relation to town planning matters by two qualified and experienced planners. Ironhill called Mr Neil Ingham, and Transgrid called Mr Robert Chambers. There is little in their evidence which needs resolution beyond the matters to which I have already referred. 125 The site is zoned in a manner which facilitates the golf course and tourist accommodation but does not provide for permanent residential accommodation. Having regard to its distance from the main centre of Coffs Harbour and the lack of any necessary support facilities nearby, I am satisfied that it is unlikely that the site would be rezoned for permanent residential accommodation in the foreseeable future. In my opinion, no one would acquire any interest in the site upon the assumption that permanent residential facilities could be provided. 126 With respect to the Master Plan, in my opinion, the approval granted by the Council indicates a preparedness to consider major tourist accommodation on this site in association with the golf course. I am satisfied that this would have extended to the Council facilitating, if the owner wished, tourist accommodation to be provided on the Bosshard land and the Lepherd land. I do not believe the Master Plan defined in any absolute way the parameters for the development of the site, nor that it was an indication that the development described would necessarily be the subject of development consent following detailed consideration of the particular qualities of various parts of the site. Before development consent would be granted for residential accommodation, there would be a need, in particular parts of the site, for further detailed evaluation of any problems in the natural environment and for the provision of adequate water, sewerage and drainage facilities. Apart from these matters, it would be necessary for the owner of the site to consider whether residential accommodation in the configuration shown on the Master Plan was appropriate having regard to the need to ensure that the aesthetic quality of the golf course is maintained and the unique experience which the course offers to tourists could continue to be provided. 127 Because of my opinion as to the commercial viability of the Master Plan, it is unnecessary to resolve some of the other areas of disagreement between Mr Ingham and Mr Chambers. However, I am satisfied that if it was decided to develop the property in accordance with the Master Plan, the opportunity to achieve a financial return in the near and medium term would have been available by the development of parts of the site other than the areas affected by the easement. Whether the full potential of the Master Plan could be realised would depend not only upon detailed planning considerations but, of course, whether or not it was likely to be financially viable having regard to existing market conditions. The costs of development 128 Evidence in relation to the costs of providing water and sewerage to the site was given by Mr Geoff Slattery, a civil and structural engineer. He referred to reports prepared by Dr Daniel Martins and Mr James Waugh, although these were not tendered at the trial. Evidence was also provided as to the estimated prospective cost of developing the individual retreats by Mr Ralph Cashman, a building costs consultant and quantity surveyor. 129 The Court required each of these witnesses to confer with a view to reaching a joint position. This occurred and agreement was reached as to the likely costs of providing all of these facilities. The agreed costs were included in the hypothetical development analysis undertaken by the valuers. Having regard to the conclusions I have formed, it is unnecessary to detail the evidence which was given beyond the matters referred to elsewhere in these reasons. The evidence of Mr Robertson 130 Mr John Robertson of John Robertson & Associates Pty Ltd is a registered real estate valuer. He has considerable experience in the valuation of commercial property and has given evidence in this Court on many occasions. 131 All of the valuers, including Mr Robertson, approached the assessment of compensation by a piecemeal approach. Mr Robertson came to the view that there was a significant aesthetic impact from the transmission line and that there would also be concerns by some people about the health impacts if they resided near to it. This caused him to conclude that the transmission line would cause a substantial loss of accommodation units which could otherwise have been developed on the site. He has the view that, as a consequence, there would be a major impact on the profitability of the commercial facilities, including the restaurant, pro shop, golf club, convenience stores and other facilities. He is also of the opinion that the transmission line easement creates a blot on the title of the property and has a serious impact upon the visual amenity and aesthetic appeal of the whole of the property. 132 I have found it difficult to accept many of the judgments made by Mr Robertson. His conclusion that the presence of the transmission line has a significant impact upon the aesthetic quality of the whole property is at odds with the judgment made by golf magazines and others which have awarded the facilities a very high rating, including for its aesthetic qualities, even with the transmission line in place. 133 Mr Robertson described his method of valuation as being the traditional "before and after" method but applied in a piecemeal manner. In addition, he determined the quantum due to disturbance pursuant to s 59(f) of the Land Acquisition (Just Terms Compensation) Act having regard to the following matters:

The impact of having to redesign the lodges in site M and the additional costs associated with extra roads and infrastructure for this development area.

The loss of golf club memberships which are sold with each property at a separate and distinct premium.

The cost of professional fees to amend the Master Plan to take account of the transmission line easement and have the amended Plan approved by Coffs Harbour Council, including engineering costs associated with a different staging plan applicable to the provision of infrastructure in the amended Plan.

The costs and time required of the management of the golf club in overseeing and attempting to minimise the impact of the construction work being undertaken by Transgrid and/or its agents.

When determining the amount of compensation applicable to the loss of the utility of the equestrian centre proposed on site P, he has assumed that the equestrian facilities will be able to be relocated onto the rural land located on the western side of Cassidys Road. He has determined the compensation and the impact on the equestrian facilities based on the estimated relocation cost of the facilities. 134 Mr Robertson does not accept that if some potential accommodation is lost by reason of the transmission line, it can be relocated to other parts of the site. In this respect, I generally accept Mr Robertson's opinion. However, I am satisfied that some additional accommodation units could have been located on parts of the site not presently contemplated by the Master Plan. In particular, there is development potential adjacent to the first hole in the area of the existing accommodation. Furthermore, as I have indicated, it is plain that there is potential for more intense development adjacent to the existing clubhouse site. 135 Mr Robertson believes that the particular features of the site include its location and proximity to Coffs Harbour, good quality air and rail services to Coffs Harbour, and the high profile of Coffs Harbour as a tourist destination. He is also of the opinion that the road access is good. He believes the property to have superb visual amenity and aesthetic appeal. He believes there is a market demand for the development of residential living on golf course estates which have seen a significant rise in popularity in various parts of Australia. As a consequence of the demand, prices have increased. He believes this phenomenon in Australia is a reflection of a similar phenomenon which has occurred in the United States of America. 136 He concludes: "Based on the strength of the real estate investor market for golf course estates and the popularity of Coffs Harbour as a tourist destination, the saleability and demand from investors for good quality townhouse style retreats, particularly in such a picturesque environment with high quality recreational facilities as proposed in the Master Plan along with a strong tourist market for this type of facility, was considered high at the relevant date with the expectation that demand was continuing to strengthen." 137 By reference to sales of other property which Mr Robertson believes to be comparable but after allowing for location, size, non-permanent occupancy, accessibility to resort facilities and a golf course, difference in views and dates of sale, he adopted an en globo rate for the land affected by the easement of $58,000 per retreat. He believes this figure to be conservative. In particular, he had regard to the fact that sales of medium density residential development sites in and around Coffs Harbour reveal an average rate per unit from the analysed sales of approximately $73,500. The sales to which he has regard generally occurred in 1999-2000 and were for smaller sites within close proximity to the ocean, with no restriction as to permanent occupancy, but without access to resort facilities or a golf course. 138 As a check upon his comparable sales method, Mr Robertson has undertaken a hypothetical residual analysis to arrive at the en globo land value applicable to a development of 138 retreats. In his written report, he concluded that the average price for a retreat on the Bonville Golf Course would be $495,000 per retreat, a figure which he considered to be conservative. He assumed that the development would take place over a four year period which allows for a sales/construction period of three years plus an approval period of twelve months. 139 However, when giving his oral evidence, his position changed. He revised the level of quality of the proposed accommodation and said that he believed a sale price of $525,000 would be appropriate. This revision was adopted after criticisms from the respondent which significantly undermined the credibility of his evidence. Unless the revision was made, after allowing for the agreed cost of constructing a retreat, the land would show a negative value. His suggestion that by upgrading the accommodation the development could be shown to be viable was not convincing. 140 Using the hypothetical approach in his written report, Mr Robertson expressed his ultimate analysis as follows: " A. Assessment of the Before Value of the Retreat Sites Directly Affected by the Transmission Line Easement [TLE]: i) No of Retreats Planned for Area Affected by TLE: 123 ii) No of Retreats Injuriously Affected and Lost to Development Due to High Risk Associated with the Impact from the TLE: 15 - 15 Retreats in Site "Q" iii) Total No of Retreats Lost Due to TLE: 138 iv) En-globo Value per Retreat Site: 58,000 v) Market Value of the Retreat Sites Lost: 8,004,000 vi) Cost to Relocate Equestrian Facilities: 325,000 vii) Loss in Value of Golf Lodges in Reed Land Development from Injurious Affection: 500,000 (20 units @ $25,000 loss in value - 10%) TOTAL: $8,829,000 NOTE: No allowance has made for a loss of units within the Lodge Development proposed for Area M as I believe the lodges can be relocated within Area M to accommodate the Easements for Access. C. [sic] After Value of Land Affected by TLE: $200,000 Land in Proposed Easement - Allows for limited utility of area for growing turf and horticultural uses in the short to medium term until development of Site O. $200,000 D. Value Lost as a Result of the TLE: $8,629,000 ($8,829.000 - $200,000) E. Disturbance - Sect 59(f): i) Loss of Membership Sold with each Retreat/Condominium: $2,070,000 [138 Retreats @ $15,000 each] ii) Loss of Net Income in Perpetuity from Users of the 138 Retreats: (see Separate Claim) (Refer Report Prepared by Mr R Askew - Resort Brokers Australia) iii) Professional Costs to Amended Master Plan and to Obtain Development Approval in Principle: To be advised iv) Cost to redesign and relocate lodges in area M: $25,000 (to be confirmed by architects) v) Additional Management Cost During Construction Phase to Oversee Works and Ensure Impact is Minimised: $30,000 Total Sect 59(f) Disturbance Claim: $2,125,000 SUMMARY: 1. Loss in Value of Land in TLE: $7,459,000 (123 @ $58,000 + equestrian $325,000) 2. Loss in Value of Adjoining Lands: $870,000 (15 @ $58,000) 3. Loss in Value of 20 Golf Lodges in Reed Land: $500,000 3. [sic] Loss Due to Disturbance: $2,125,000 4. Deduct After Value ($200,000) Total: $10,754,000 Plus: s Impact to be Assessed and Quantified from Easements for Access "A" and "E" located in Development Site M. An allowance of $25,000 has been made but is subject to confirmation. s Legal Fees, Valuation Fees, Other Professional Fees Associated with the Claim for Compensation including professional fee to redesign the Master Plan. s GST if Applicable. NOTE: No allowance has been made for any reduction in compensation as a result of any Capital Gains Tax that may be applicable. I have assumed that Transgrid will give an undertaking as to Capital Gains Tax liability as has been their normal practice to date. Should this not be the case the valuation should be returned for further assessment. Heads of Claim: 55[a] Market Value of Land to be Acquired: $7,409,000 55[b] Special Value: Nil 55[c] Loss Attributable to Severance: Nil 55[d] Loss Attributable to Disturbance: $2,125,000 (Plus Legal, Valuation Fees etc) 55[e] Solatium: Nil 55[f] Any Increase of Decrease in the Value of Adjoining Land: $1,350,000" 141 To Mr Robertson's valuation must be added the value of the income assumed to have been lost by reason of the incapacity to develop the 138 retreats. This was the subject of a separate claim prepared by Mr Askew to which I shall refer later. 142 Mr Robertson's valuation was significantly criticised by Transgrid. I generally agree with the criticisms. In my opinion it was not appropriate to rely on sales of residential properties when the subject land can only be used for tourist accommodation which does not permit permanent residential use. By highlighting the trend towards residential golf courses in the United States, Mr Robertson correctly identifies that there is a market for this sort of facility within Australia. However, that is not the facility which is proposed for Bonville, which is constrained by the provisions of the Local Environmental Plan. Without a facility for permanent accommodation, the suggested development would almost certainly fail. 143 Mr Robertson is also criticised for allegedly ignoring the demand and supply characteristics for tourist accommodation in Coffs Harbour. In particular, the report of Mr Blunden indicates that, if applied to Mr Robertson's secondary basis of assessment, the residual analysis would reveal a lack of economic viability having regard to the cost, revenue and timing considerations relevant to such a development. I believe the criticism to be justified. 144 Mr Robertson is also criticised because of his failure to appropriately consider the poor trading performance of the existing golf course. It is suggested that if he had a proper regard to the number of rounds of golf played on the facility, he would have concluded that it is unlikely, having regard to the cost of maintaining the facility, that the golf course would become profitable. Furthermore, Mr Robertson has made no attempt to analyse the desirability of a golf course with accommodation in this location in competition with other similar facilities on the east coast of Australia and in particular in Queensland. There being no feasibility analysis done of the proposal and the Master Plan, it is suggested that Mr Robertson has no reasonable basis for concluding that the Master Plan concept could be carried into effect. 145 The existing data shows that 75% of golfers visiting the golf course do not stay in the existing accommodation. It has been suggested, and in my view it is correct, that this reflects a desire by those who come to Coffs Harbour for a holiday to utilise the beach facilities and incidentally enjoy the golf course. Beach facilities are a considerable distance removed from the golf course and require a motor vehicle trip of some minutes to access them. 146 Mr Robertson suggests that the transmission line, including its poles, has a dramatic impact upon the aesthetic qualities of the golf course. As I have indicated, this view is at odds with the fact that the course has been judged the best aesthetic golf course in Australia by Golf Course Guide during a time in which the transmission line has been in place. I do not believe that his conclusion that the transmission line creates a scar on the landscape, if by that he means an overall diminution in the quality of the golf course, can be accepted. Undoubtedly it is an unpleasant feature within the easement, but because of the nature of the topography and the existing mature vegetation, the impact of the transmission line is non-existent in many places on the golf course. I do not believe that it has any significant negative effect except in the locations where it can be directly viewed. The minimal impact of the power line results from the fact that the golf course was designed around a prior easement with the knowledge that the transmission line was in place. 147 As I have related, Mr Robertson relies for his sales evidence on sales of residential property within Coffs Harbour. He also relies on the sale of residential property within a golf course development known as Tall Woods, located at Hallidays Point, near Taree. Although these sales would provide evidence of the value of land suitable for the development of residential accommodation, the potential of the Bonville Golf Course is constrained by its zoning. An attempt was made in 1996 to have the Reed land rezoned for permanent residential use, but this was declined. Accordingly, it must be assumed that there is no foreseeable potential for permanent residential occupation of accommodation within the golf course. It follows that the sales evidence upon which Mr Robertson has relied is of little, if any, value. 148 Mr Robertson also relies upon sales of residential accommodation within the Cypress Lakes resort in Pokolbin. However, Cypress Lakes is located within one and a half hours of the Sydney metropolitan area and within the major wine growing area in the Hunter Valley. The attractions to persons extend well beyond the availability of a golf course. Being within relatively easy driving distance from Sydney, the facilities generate short stay week-end and mid-week accommodation. Of particular relevance is the fact that the prices Mr Robertson refers to for two bedroom townhouses within Cypress Lakes are in the order of $267,000 and three bedroom townhouses in the order of $460,000. Against these prices, Mr Robertson has assumed a gross realisation of $495,000 for the units suggested on the Bonville site. Having regard to the prices achieved at Cypress Lakes, I am satisfied that Mr Robertson's assumption as to the prices which would be achieved at Coffs Harbour are unrealistic. 149 Mr Robertson believes that the accommodation which might be developed on the golf course would be sold to investors who would expect an annual return of 5%. Assuming, as he does in his written report, an average price of $495,000 per unit, to achieve this return it would be necessary to achieve a daily accommodation rate of $450 per unit. However, the evidence of Mr Blunden, which I accept, suggests that it would be likely that $275 per day would be the rate achieved, making a more realistic value of a unit to be of the order of $300,000. Having regard to the profit margin which a developer would seek before undertaking this development, which I would accept would be of the order of thirty percent, the anticipated return would be significantly less than this figure, being in the order of fifteen percent. Transgrid says that with such a low return a developer would not undertake such a venture. I believe this criticism is appropriate. It would lead to the inevitable conclusion that development of the nature suggested in the Master Plan would not be viable. 150 There would be further difficulties for a developer in undertaking such a project. It will be necessary to raise significant funds to provide for the water and sewerage facilities and commence the development. Even if facilities could be sold off the plan, there would have to be a significant capital raising before the project could be undertaken. Given the likely return, I do not believe it would be possible to raise such funds. The evidence of Mr Danielson 151 Mr Danielson is a partner in Mitchell and Partners, chartered accountants who was requested by Ironhill to prepare a discounted cash flow analysis upon various assumptions to demonstrate the theoretical loss to Ironhill caused by the transmission line and the loss of development potential. Mr Danielson is not a real estate valuer or property developer and disclaims expertise with respect to infrastructure costs. 152 For his analysis he generates four different scenarios which assume selling price and construction costs and alternative discount rates. He offers the opinion that the appropriate discount rate should be 8% having regard to the nature of the project and current market conditions. 153 Mr Danielson's analysis suggests a substantial loss to Ironhill because of the transmission line. However, the utility of his analysis is strongly criticised by Mr Dempsey and I believe that criticism to be justified. I am satisfied that the assumptions he was asked to make about likely selling prices and the appropriate discount rate are inappropriate and, accordingly, his evidence is of no value in resolving the matter. The evidence of Mr Crompton 154 Mr Michael Crompton is a licensed real estate agent with involvement in tourist, residential and leisure related properties for around 17 years. He gave evidence that he has considerable experience in golf course developments.

155 Mr Crompton is familiar with Bonville, having sold it to Ironhill and having visited the golf course on many occasions for both business and leisure.

156 In a statement tendered to the Court, Mr Crompton expressed agreement with Mr Robertson's identification and assessment of comparable sales. He stated that, since 2001 to the present, there has been "a chronic shortage of good quality residential land for dwelling houses, townhouses and units in Coffs Harbour."

157 Mr Crompton further commented: "I have been involved in sales for several developments where after the initial purchase of land, buildings are constructed in accordance with an architectural code for sale. In my opinion, this would be a sensible and realistic way to sell units at Bonville International Golf Club and at a sale price of $495,000 per retreat, I believe a sale rate of 5 retreats per month could realistically be achieved. My opinion as to the abovementioned sale rate being achieved is based on the demand for units and townhouses in Coffs Harbour; and what I believe is the realistic price nominated by Mr Robertson. Moreover, Bonville International Golf Course has unique character because of its setting and the quality of the golf course and is comparable to resort courses such as Cypress Lakes in New South Wales and The Glades in Queensland." 158 Mr Crompton also gave evidence to the effect that, in his opinion, Bonville would not attract the "corporate type golfer", but would instead attract "a more family person" who does not wish to spend their whole holiday on the golf course and who wants to play an aesthetically pleasing golf course. He stated that other things of potential interest to non-golfing members of families around Bonville include white water rafting and fishing in the Nymboida River and Coffs Harbour. Later, Mr Crompton added that families would not be the only target mix for Bonville, which would also attract, for example, large clubs such as RSL and football clubs. 159 Mr Crompton also gave evidence of his "absolute conviction" that the power lines would be a "real deterrent" to selling properties at Bonville. 160 I do not accept Mr Crompton's evidence with respect to the likely sale price and commercial viability of development at Bonville. Where his evidence conflicts with that of Mr Dempsey, particularly with respect to market conditions in Coffs Harbour I accept Mr Dempsey. Where it conflicts with Mr Blunden, I accept the latter. The evidence of Mr Nicholson 161 Mr Nicholson is an experienced valuer of both residential and commercial property and has given evidence in the Court on many occasions. 162 He has concluded that but for the transmission line easement, it would be reasonable to have anticipated approval in principle for a master plan involving the creation of 979 accommodation units on the golf course. This would have included the development of units in the area affected by the easement. He believes that the acquisition of the easement has denied development potential for 183 units that would have been created by strata or community title. Having regard to sales evidence, Mr Nicholson believes that a unit value of $150,000 would be appropriate for the 183 sites. He believes that a unit value of this order recognises the premium which "this development will attract as a combined project of golf course incorporation and resort style living." 163 Applying an assumption of development costs totalling $1.96 million, he concludes that the value lost by reason of the compulsory acquisition is $17.64 million. In addition, he assumes a miscellaneous loss of $100,000 plus an additional loss by reason of the potential sale of golf course memberships to each unit at a rate of $15,000 each. He believes this is a capital sum identified with each unit over the development and sale term of five years, and assuming a net present value of eight percent per annum, is worth $2.22 million. 164 Mr Nicholson does not believe there are any environmental problems in developing that part of the site affected by the easement and accordingly, has made no allowance for this possibility. In his written report, he ultimately concludes that compensation should be assessed in the sum of $19.96 million. 165 Mr Nicholson's conclusions were significantly criticised by Messrs Murphy and Dempsey, the valuers called by Transgrid. In particular, they draw attention to the fact that the evidence of Mr Blunden would not justify the development assumptions which they believe Mr Nicholson has made. 166 Criticism is also made of Mr Nicholson's analysis because of his reliance upon golf course development which includes permanent residential accommodation (apart from Cypress Lakes) and upon the sales of unit sites zoned for permanent residential purposes. Many of the properties to which Mr Nicholson refers are within an urban environment, or are zoned residential and have all services connected including water, sewerage, telephone and electricity. Some are prime sites in the city of Coffs Harbour overlooking the ocean and the harbour with beach views to the north. 167 In my view, the criticisms are valid. I do not believe the sales are of any utility in valuing the lost potential on the subject site. 168 In my opinion, the evidence of Mr Nicholson must be wholly disregarded. I believe he has provided little, if any, justification for a value of $150,000 for each unit site which he claims to have been lost. The sales he refers to are of no assistance when attempting to value the potential of development sites on the subject land. His assumption that there has been a loss of $15,000 in golf course memberships for each accommodation unit is entirely unsupported by evidence. The evidence of Mr Dempsey 169 Mr Dempsey is a qualified and experienced valuer who worked for the New South Wales Valuer General's Department at Coffs Harbour between 1970 and 1979. Although the valuation exercise in the present case has to be conducted at the date of acquisition in 2001, Mr Dempsey nevertheless has a detailed knowledge, experience and understanding of the real estate market in Coffs Harbour and surrounding areas. 170 Mr Dempsey maintained personal real estate assets in Coffs Harbour during the 1970s and 1980s and has maintained an interest in the area ever since. During the 1990s he carried out valuations for various purposes of residential estates adjoining significant tourist facilities within the local area. I believe his knowledge of the real estate market in Coffs Harbour and his understanding of the tourist potential of the area means that his evidence deserves particular consideration in the present case. 171 Mr Dempsey carefully analysed the potential available from the approved Master Plan. He considered the evidence of Mr Chambers and his conclusions that the highest and best use of the land within the easement at the date of acquisition was for a golf course based tourist facility. However, the zoning precludes the site from being developed with permanent residential accommodation and the accommodation would be confined to short stay tourist facilities. 172 Mr Dempsey assumed that the proposal provided for in the Master Plan was that units would be created and on-sold to investors under a separate title and included amongst a pool of units managed by the golf course. This is, of course, an arrangement which is now familiar in the Australian market place. 173 Mr Dempsey also had regard to the evidence of Mr Blunden in relation to both supply and demand factors affecting the resort market in Coffs Harbour. He had particular regard to the following statements in Mr Blunden's evidence: "(a) The accommodation at BIG is rated 3-3.5 stars.

(b) The best occupancy achieved by BIG over the past five calendar years was 61% in 2003 and the worst being 39.5% in 2000.

(c) The average room yield peaked at $64.14 per night up to December 2003 with the poorest performance being to the calendar year-end June 2000 when it was $43.63.

(d) The average room rate in 2000 was $110.44 per night and in 2003 was $105.17 per night.

(e) The historical supply/demand occupancy and average room rate trends in Coffs Harbour, as a destination, failed to achieve any growth in room rates or occupancy in the five years between 1997 and 2002.

(f) There is very little variation in occupancy and average room rates over the same period." 174 Mr Dempsey was pessimistic about the prospects of successful future development of Bonville. He expressed his conclusions in the following terms: "Having regard to the matters in Mr Blunden's statements and based on my own knowledge and experience of Coffs Harbour as a tourist destination, the addition of more supply of tourist accommodation units will not overcome the location issue nor will it erode the preference of most visitors who play a golf round at BIG (around 75%), to stay at other resorts all of which are in prime beachside locations. The Masterplan concept is not catering to an identified growing tourist demand for this type of accommodation in Coffs Harbour. BIG was never designed as an integrated golf course residential resort. The developers initially constructed 30 out of the 40 permitted units to cater for on course demand for accommodation. A further 100 units were approved but no action taken to commence this development. The development concept that resulted in BIG was flawed in that it did not have alternate income revenue. It was not possible at the time of the golf course development approval and at the date of acquisition and subsequently to provide permanent residential lots. … Tourist accommodation demand at BIG could not support the required number of investment accommodation units to justify the original construction cost of the course. The course was sold for less than half the development cost." 175 Mr Dempsey believes it appropriate to have regard to the sales of adjoining land to Ironhill when assessing compensation in the present case. The land referred to as the Bosshard land comprising 41.94 hectares, was sold on 13 December 2001 for $890,000. The Lepherd land, comprising 22.81 hectares, was sold on 13 December 2001 for $600,000. Mr Dempsey also had regard to a further sale of land from W J Creer to M Constable on 3 May 2000. The land had an area of 24.28 hectares and was purchased for $350,000. The site adjoins the Bosshard sale to the south and was zoned Rural 1A Agriculture and Environmental Protection 7A Habitat and Catchment. 176 Utilising these three sales, Mr Dempsey identified the land value as varying from $14,415 per hectare to $26,304 per hectare. He believes the different rates can be explained by reference to the size of the respective sites and the nature of the structural improvements on them, plus an adjoining owner influence. 177 Mr Dempsey also had regard to the sale from Newman-Jones to Ironhill of an area of 12.3 hectares of land, the contract being dated 29 November 1999. The land was zoned Open Space 6C Private Recreation. It was mainly timbered land purchased by Ironhill and now forms part of the main holding on the Master Plan concept. The sale represents a price of $9,756 per hectare. 178 Mr Dempsey believes that although earlier in time, the sale of the main property in December 1998, in the circumstances to which I have already related, provides a significant guide to the market value of the land. He also considered the sale of two other golf course properties. They are both in the Hunter Valley which he considered to be a superior location to the subject site being within 2 hours driving time of Sydney, thus giving them the advantage of convenience and the potential to cater for the tourist market from Sydney, Wollongong and Newcastle. 179 The first of these sales is of the Vintage Golf Course site which sold in December 1999. The purchase price was $8 million and the area of land 323.15 hectares. The zoning of the land allows permanent residential accommodation and it is proposed to provide 335 accommodation units and a hotel on the site. The sale included approximately $1 million worth of works undertaken to prepare the golf course which had been completed by the vendor. 180 In March 2002 an existing 18-hole golf course situated in a total area of land of 64.3 hectares in the heart of Pokolbin was sold for $7.8 million. The property sold with development approval for a 150 room hotel and 175 tourist units. The sale occurred under some pressure from a mortagee. 181 In comparison with golf resorts in the Hunter Valley, Mr Dempsey believes Bonville is remote and lacks the benefit of proximity to a major population source. He believes, having regard to the evidence of Mr Blunden, that proximity to large population centres is a key success factor in golf resort development. He also believes that it is essential to be able to develop an integrated golf course and permanent residential estate. Mr Dempsey believes that the proposed 979 tourist accommodation units which exclude any permanent residential use is not financially feasible. He expressed his conclusion in the following terms: "Based on my knowledge and experience of the Coffs Harbour property market over the past 33 years, the Masterplan concept is a typical scenario not unlike other major tourist resorts in Coffs Harbour where optimistic expectations were forecast but never achieved. The remoteness of Coffs Harbour compared to more convenient competing locations offering a wider range of tourist facilities is a key factor that developers must have regard to when planning a tourist resort in Coffs Harbour. Having regard to my knowledge and experience of Coffs Harbour, the number of accommodation units proposed under the Masterplan is unrealistically optimistic and inconsistent with market demand. I conclude that, based on my knowledge and experience in Coffs Harbour and those other experts noted in this report, the highest and best use potentials of BIG relate to the existing use of the subject property as a golf course incorporating a limited number of tourist accommodation units, marginally above that which currently exists, and associated facilities. I am supported in this view by the approval for 100 rooms on a 4.4 hectare site located on the south-western side of the site adjoining Cassidy's Road, and in close proximity to the clubhouse facilities, that has not been developed or substantially commenced since the approval in May 1998. This approval was due to expire on 18 May 2003 and would suggest that had this site, which is considered to be prime land for such development been viable, construction would have been completed at the current date or at least substantially commenced. Based on my knowledge and experience of Coffs Harbour over the past 33 years, Coffs Harbour has had a poor record in relation to the success of tourist developments, including the failure of Opal Cove, Pacific Bay, Anuka Resort and the Pelican Beach Resort. The subject Masterplan concept is the only major resort proposal received by Council since the previous failed resorts were developed. The Masterplan concept reflects an unrealistic vision compared to the reality of the Coffs Harbour tourist accommodation market as set out in Jeffrey Blunden's statement. Any future proposed development in my opinion, would need to be to a standard that would not detract from the current marketing image of the golf course and as a consequence would need to be to a standard higher than the existing accommodation. Given the density and visual impact of a large number of rooms within the golf course the location of additional tourist accommodation should be as discreet as possible so as not to impact on the aesthetic and amenity that characterises BIG. I rely here on these other experts who have provided statements including Robert Chambers, Jeffrey Blunden, James Wilcher, Richard Lamb and Brian Toyota. The Masterplan concept will superimpose a total change inconsistent with the undeveloped natural setting and aesthetic that is widely recognised as the point of difference of BIG compared to other golf courses as described in the rating considerations in Jeffrey Blunden's report. … Having regard to Jeffrey Blunden's report and my own extensive experience in the Coffs Harbour market, I consider it to be unlikely in the foreseeable future that an addition to the existing tourist accommodation units can be completed to a suitable standard on a profitable basis. This position appears to be supported by the absence of any new units since the purchase of BIG by Ironhill." 182 Mr Dempsey also considered the report of Mr Danielson, in relation to which he comments: "I have reviewed the Mitchell & Partners report dated 28 November 2004. This report was prepared by Stephen J Danielson, a Partner of the chartered accountants firm of Mitchell & Partners. They were instructed to assess the land owner's calculation of the net present value of the proposed development of Bonville International Golf Club by the discounted cashflow method. Based on my experience and knowledge as a qualified valuer over the past 29 years and in particular my familiarity with discounted cashflows in the context of feasibility analysis I am of the opinion the basis of the findings set out in Mr Danielson's statement is unreliable and the findings are inconsistent with the Coffs Harbour market. Mr Danielson has not undertaken any independent research. He notes in his statement that he is 'not a real estate valuer, not a property developer and is not an expert on the cost and services of an infrastructure nature.' In my opinion he is not suitably qualified to review his own report to assess how reasonable or otherwise his findings may be. Mr Danielson has relied on inputs from others without commenting on the reasonableness of these inputs and related assumptions. Mr Danielson has adopted a discount rate without being suitably qualified to understand the risks that should be considered in adopting a discount rate. In my opinion his findings are unrelated to market considerations and should not be relied upon. Notwithstanding that Mr Danielson has admitted that he is not qualified in certain key areas, he assumes his findings are correct. In my opinion his findings have not been independently assessed. In my opinion Mr Danielson does not set a basic standard of competency in relation to the matters he was asked to consider, other than in the construction of a discounted cashflow, in coming to his answer." 183 Apart from considering the impact of the easements upon the land from which they have been taken, Mr Dempsey also identified an impact upon the adjoining land, Site A. Mr Dempsey expressed the view that if a decision was made to create further residential accommodation it would be likely to be constructed adjacent to the clubhouse, or on the Reed land rather than being placed along the easement. He expressed his view as follows: "Given the large areas of land either side of the clubhouse facilities, it would, in my opinion, be inconsistent with the image of BIG to construct tourist accommodation units on the easement. If units were viable, it is likely they would be developed in stages in close proximity to the existing units or on the Reed land. Based on my knowledge and experience and having regard to the opinions expressed in the statements of Robert Chambers, Jeffrey Blunden, James Warren, Richard Lamb and Brian Toyota (which identify the range of sites on the perimeter of the golf course in generally close proximity to the main facilities), it is my opinion that it is improbable a developer would build units on the easement (even assuming viability), given the steepness of the land, remote location from the clubhouse and other facilities and lack of desirability, environmental and planning challenges and the negative impact on the amenity." 184 Mr Dempsey concluded that on a before and after basis, there would be little difference in the selling price of Bonville as it existed at December 2001 compared to the date of contract for the acquisition of the whole site. However, he accepted that the owners were entitled to modest compensation for the easement which he concluded to be the sum of $637,000. He expressed his conclusion in the following terms: "Having regard to the sale of the subject property being the original purchase plus a subsequent acquisition and notwithstanding the lack of viability for an immediate or foreseeable opportunity to develop additional accommodation units, I consider an owner would require compensation for the imposition of the easement and associated structures, and the loss of potential future opportunity regardless of how remote that potential. In arriving at the differences I have considered the sale of the subject property in 1998 at $6,250,000 plus the purchase of one additional adjoining parcel of land for $120,000 totalling $6,370,000. The market movements in various classes of real estate do not necessarily move together. I consider the demand for golf courses to be a submarket different to the residential market that was reflecting an improvement in 2001. I consider reasonable compensation having regard to the issues raised above would be in the range of 5% to 10% of the value noted in paragraph 159 in order to resolve all doubts in favour of the owner. In arriving at this range I have had regard to my inspection of the property and my opinion that the majority of the property is unaffected by the easement or the electricity structures having regard to the permitted uses under the Masterplan concept and the viability of such uses. For most of the property there would be 0% loss of future opportunity. For those reasons I have assessed compensation of the Section 55(f) to be at the upper end of the range nominated in paragraph 162 being $637,000." 185 Mr Dempsey did not consider any compensation was payable for the access easements which generally follow an existing right of way. He was of the opinion that the figure of $637,000 would capture the compensation due with respect to the impact on the Reed land. Mr Dempsey's view of the claim of Ironhilll Management Pty Limited 186 Because he was of the view that there was no viable opportunity for any significant increase in tourist accommodation units, Mr Dempsey was of the opinion that there was no sustainable claim arising by Ironhill Management from the taking of the easement. Mr Robertson's criticism of Mr Dempsey 187 Mr Robertson gave evidence critical of Mr Dempsey and in particular challenged Mr Dempsey's conclusions in relation to the strength of the relevant real estate market. Mr Robertson says that it is inappropriate to assess the Master Plan proposal by reference to the existing success of tourist accommodation in Coffs Harbour. Rather, he says the development will make it a destination in itself. He draws attention to the success of the Sheraton Mirage at Port Douglas to support his thesis. 188 I am satisfied that Mr Dempsey is correct when he says that it is necessary to look at the Coffs Harbour market. It seems to me that although the golf course developed as part of the Port Douglas Sheraton Mirage resort is an important element of its success, the Mirage is located on a beach nearby to an attractive small township and in a position which gives access to the Daintree Rainforest and the Great Barrier Reef, both of which are amongst the great tourist attractions of the world. It seems to me that notwithstanding the natural qualities of Coffs Harbour, it is not possible to sustain an argument that an inland golf course, without access to the beach, would create a destination which could compare with the Mirage at Port Douglas. In my opinion the same is true of a number of other golf course facilities to which reference was made in the evidence. 189 Criticism is also made of Mr Dempsey's utilisation of the Bosshard and Lepherd sales because they were zoned Rural 1A without any tourist potential. Although the zoning of that land was rural, it is plain from the approval of the Master Plan that the Council was prepared to contemplate tourist accommodation and facilities on that land. Accordingly, it was reasonable to assume tourist potential for the land, the subject of those sales beyond a mere rural use. The evidence of Mr Murphy 190 Mr Murphy is also an experienced valuer although without the in-depth knowledge of Coffs Harbour which Mr Dempsey has. In his written report Mr Murphy assessed the total value of compensation as a sum of $1.27 million. His assessment comprises a number of elements. 191 The first element is compensation for the impact of the easement on the existing facilities, the second is for the loss of development potential of the land he refers to as the "balance." This second element is comprised of two elements being the impact on the easement land and the impact upon the value of the development site (Site A) adjoining the easement. The third element is compensation for the access easements. His conclusion, in summary, is stated as follows: " Component Compensation Golf course, Clubhouse and existing accommodation units s Value Before Easement $5,000,000 s Value After Easement $4,625,000 $375,000 Balance (Development) Land · Easement Land - loss of 30 Unit Sites @ $20,000/Site (Refer to Section 20.3) $600,000 · Development Site Affected By Easement (Discount in Value) - 100 Unit Site @ $25,000/Site: 10% discount $ 250,000 $850,000 Access Easements · Easement Through Lot 102 $37,000 · Easement Along Boundary of Lot 21 $3,000 · Easement through Lot 21 $5,000 $45,000 Total Compensation $1,270,000 The compensation for the golf course, clubhouse and (existing) accommodation units covers all potential losses incurred by the property owner, including: s loss of land s loss of amenity s any loss of profit. It should be noted that this assessment excludes disturbance items. My assessment expressed in terms of the heads of compensation provided for in Section 55 (excluding compensation of $45,000 assessed for the access easements) is as follows: Heads of Compensation Compensation Market Value of Land Acquired ($55,000 + $600,000) $655,000 Decrease in Value of Adjoining Land ($320,000 + $250,000) $570,000 Disturbance Nil Total $1,225,000 This assessment includes the interests of both Ironhill Pty Ltd and Ironhill Management Pty Ltd. I have assessed compensation for each of these related companies as follows: Interest Compensation Ironhill Pty Limited $1,270,000 Ironhill Management Pty Ltd Nil Total $1,270,000 " Mr Murphy's before value 192 Mr Murphy makes the point that there was a period in the late 1980s and early 1990s when significant golf course development was undertaken within Australia in resort style facilities. These were particularly aimed at the Japanese tourist market. However, with the significant reduction in that market due to the collapse of the Japanese economy there is now little overseas demand for golf course facilities. Although there have been a number of successful golf courses constructed with residential facilities, these provide permanent accommodation rather than tourist type facilities. The market for tourist facilities in association with the golf course is now confined to tourists from within Australia. 193 Mr Murphy comprehensively analysed the market for golf courses and associated tourist facilities within Australia. He concluded that the market evidence of demand for golf courses is relatively limited. With respect to Coffs Harbour, Mr Murphy believes it to be the major tourist centre on the north coast region of New South Wales with the largest number of accommodation, café and restaurant businesses. He says the major market for the Coffs Harbour region is the domestic family market comprising low to middle income earners who generally stay in budget forms of accommodation, travel to the region by car, visit mostly during the school holidays and are not large spenders. He says that for a number of reasons the occupancy rate of the accommodation is poor, with the consequence that the profitability of most tourist accommodation is also relatively poor in what is a "fairly well supplied market." He does not believe the city has the capacity to absorb the additional tourist rooms suggested in the Master Plan. 194 Mr Murphy emphasised that Coffs Harbour has been characterised by a number of well documented financial failures in the tourist market including the Pacific Bay resort, the Opal Cove resort and the Big Banana, which he says was redeveloped for a reported $14 million in 1989 and sold by a mortgagee for $1.5 million in 1993. In addition, the management company running the Aanuka Beach Resort was liquidated in 2001. 195 Mr Murphy believes that the past failures in the tourist development in Coffs Harbour would make it difficult to obtain finance for a project as ambitious as the Master Plan. He believes that investor confidence in a major tourist development like the one foreshadowed at Bonville would not be particularly high. 196 Mr Murphy concludes that the Bonville International Golf Course is a good quality 18-hole course. The layout, appearance and presentation is of a high standard. Although it is the superior course in Coffs Harbour because of the relatively small size of the market and due to the socio-economic profile of the area, Bonville competes with both Coffs Harbour and Sawtell for patrons. 197 Mr Murphy draws attention to the fact that the property was sold in 1998 for $6.25 million which included the right to any compensation. Mr Murphy apportions that purchase price in the following manner:

Golf course, clubhouse and accommodation units 4,500,000 Added value of balance of land 1,250,000 Added value of potential compensation 500,000 Total 6,250,000 198 This analysis of the transaction is based upon evidence from a number of sales including Paradise Springs, Gold Coast, Robina Wood on the Gold Coast, Lakelands on the Gold Coast, the Glades on the Gold Coast, North Lakes at Brisbane and the Links at Port Douglas. 199 The added value of the balance of the land has regard to the existing zonings and the fact that at the date of the sale, the Master Plan had not yet been prepared or approved in principle by the Council. 200 Mr Murphy believes, as does Mr Dempsey, that the price achieved for golf course sites did not change significantly between 1998 and 2001. Mr Murphy evidences this from a number of sales, including sales of properties on the Gold Coast and in the Hunter Valley. 201 I accept Mr Murphy. In my opinion it is unlikely that the price which could have been achieved in the market place for the subject property changed significantly between the date of sale in December 1998 and the date of acquisition. No doubt a purchaser may have paid a little more by reason of the fact that the Master Plan had been developed, although the uncertainties about the ultimate form of any development and the doubtful commercial viability of it would have confined the additional amount which may have been paid. 202 Mr Murphy is of the opinion that the Lakelands course, which sold for $9 million in July 1999, is significantly superior to the subject property. The Glades, which was sold for an effective price of approximately $10.5 million in October 2000, is also considered to be significantly superior to the subject property. He is of the view that both properties are superior due to their Gold Coast location and the quality of their features. Mr Murphy believes that the Robina Woods course, which was sold in June 2000 for $7.75 million, is closer in quality to Bonville, but its Gold Coast location also makes it a superior property. 203 Mr Murphy believes both the North Lakes and the Links courses are superior to the subject course in terms of their location. North Lakes is situated in a large residential community to the north of Brisbane, which is being developed in accordance with a master plan, and has the opportunity to attract golfers from the under-supplied Brisbane golf market. The Links, which is located near Port Douglas, is in a market which appeals to the upper end of the domestic tourist market as well as the international tourist market. 204 In Mr Murphy's view, the sale of the Paradise Springs course for $5.2 million, the sale of the golf course component of the Hunter Valley Golf and Country Club for $5 million, and the earlier sale of the subject property provides the best evidence of value of Bonville. Accordingly, Mr Murphy assessed the value of the golf course and associated facilities without the impact of the easement at $5 million. Mr Murphy's after value 205 In assessing the after value of Bonville with impact from the transmission line, Mr Murphy concluded that the power lines do not have a significant impact on the amenity of the golf course because, with the knowledge that the power lines would exist, the course has been designed to minimise their impact. He acknowledges that golfers have to pass under the power lines between the second and third holes, ninth and tenth holes and seventeenth and eighteenth holes. However, because the course has been constructed in a flooded gum plantation, the lines are largely disguised by the trees although they do impact on the practice fairway and a hole used as a spare when the course is being repaired. The power lines are barely visible from the clubhouse and are only just visible from the existing accommodation units. 206 Mr Murphy had regard to two golf course sales where transmission lines affect a golf course. The first was a sale at Paradise Springs on the Gold Coast and the second Longyard at Tamworth. 207 The Paradise Springs course is impacted by a major overhead transmission line which is far larger and more obvious than the power lines passing through Bonville. Photographic evidence was tendered of the power lines. 208 The course was developed by a Japanese company which was apparently experienced in tourism development and the operation of resorts. The course was subsequently purchased by an experienced American operator, but is now owned by a consortium of local investors. 209 As with Bonville, the Paradise Springs course was designed under power lines which existed before the course was constructed. The developer and both purchasers advised Mr Murphy that the presence of the power lines did not have any discernible affect on the price achieved or paid for the golf course. Although the parties would have preferred if the lines were not present, the price paid was determined by the fundamentals of the property rather than any discount for the presence of the power lines. 210 With respect to the Longyard golf course at Tamworth, it was sold in 1997 for $1.67 million as a going concern. Apparently it is a high quality golf course designed by Greg Norman's design team, although the construction budget was not the same as for good quality resort courses. The course has a modest quality clubhouse and related facilities. 211 The course is affected by a 132kV power line and has been designed around it. However, the presence of the power line is obvious due to the open and relatively flat nature of the golf course site. Mr Murphy has made inquiries of the property's developer and has been advised that the presence of the power line did not have any impact on the price achieved for the golf course. 212 Again, the price paid for the course was determined by the fundamentals of the property including its country location, course and clubhouse quality, profitability and limited market. 213 One of the reasons Mr Murphy believes the existence of power lines does not adversely impact on golf course sale prices is that in the prevailing market, golf courses are purchased for considerably less than their replacement cost. Accordingly, the price paid does not have a lot of scope to reflect discounts for extraneous matters when the whole property is being purchased for a heavily discounted price (compared to historical or replacement cost). 214 Although the market evidence does not disclose an identifiable discount for transmission lines, Mr Murphy believes that compensation is appropriate in the present case. He believes, based on generic evidence for discounts attributable to power lines, that discounts should be applied to the golf course, clubhouse and accommodation units component of the property of at least 5%, but no more than 7.5% of the unaffected value of the property. Accepting the higher figure, Mr Murphy's assessment of the after value of the golf course, clubhouse and accommodation units is $4.625 million. Based on this approach, the compensation which would be payable is $375,000. This assessment of compensation includes: · the land acquired for the easement; · the injurious affection to the golf course; · the injurious affection to the clubhouse; · the injurious affection to the existing accommodation units; and · any loss of profit incurred by the golf course, clubhouse and (existing) accommodation. Compensation for Further Development Potential 215 Mr Murphy believes that the value and reputation of Bonville is largely based on its heavily treed and rural environment. If the Master Plan was executed, he believes that the ambience of the pristine facilities may be lost due to the intrusion of a large number of tourist accommodation units into the property. 216 Mr Murphy identifies that the approved Master Plan is based on the use of the land for tourist accommodation purposes, which is a permitted use under the existing zoning. However, he believes that based on the performance of the existing supply of tourist accommodation in Coffs Harbour, and the impact that an additional 949 units would have on the competitive supply, this type of tourist development would not be commercially viable. 217 In addition to macro supply/demand considerations, Mr Murphy believes that the location of the proposed tourist accommodation is not conducive to a successful development. He believes that the main reason people visit Coffs Harbour is because of its attractive coastline and beaches. It is for that reason that all of the existing top quality accommodation is situated in the northern beach precinct of the city. However, notwithstanding the locational advantage of these accommodation facilities, they do not perform well and their investment performance has been very poor. 218 Accordingly, he does not believe that the Master Plan tourist development would be a commercial success and he does not believe that construction finance would be available for such a project which would incur significant upfront costs. 219 Mr Murphy accepts that there may be a potential for some further development on the site but believes, having regard to the existing tourist accommodation facilities in Coffs Harbour and the ability of the market to absorb additional room stock, the potential of the property for tourism accommodation units is more in the order of 150 rooms, including the 30 existing rooms. The potential for additional room stock is consequently, in his opinion, in the order of 120 rooms. 220 Mr Murphy believes that although there are examples of golf course based developments with a larger number of tourist accommodation units, these developments are located in better performing tourist destinations. 221 A good example of such a development is Cypress Lakes in the Hunter Valley, where the golf course based development is approximately 230 villas used predominantly for tourist accommodation. Cypress Lakes is located in a very good quality site in the heart of the Hunter Valley wine growing and tourism precinct. The development is a two hour drive from Sydney and it has been successful because of its site quality, the quality of the golf course and facilities, and its location in relation to the major markets of Sydney and Newcastle. 222 Mr Murphy does not believe that it is a reasonable proposition to suggest that this type of development could be emulated in the Bonville area, which is a six and a half hour drive from Sydney. Once visitors have decided to drive extended distances or fly to a destination, a lot of other options become available, including Port Stephens, the Gold Coast, the Sunshine Coast or other parts of Queensland. 223 Queensland destinations have the advantage of better flights, more choice of flights and access to low cost flights. As golfing destinations, they provide golfers with a range of top quality resort courses rather than only one such course. They also provide families and groups with a wide choice of activities apart from golf: theme parks, restaurants, night clubs and a range of activities in relation to northern Queensland the Great Barrier Reef. 224 Upon the assumption that there was a viable market for a further 120 units on the site, Mr Murphy believes it would be best developed with 20 in Site P (already contemplated on the Master Plan) and the remainder in the site adjacent to the tenth fairway (Site A), for which approval for 100 units has already once been given. If it was possible in the future to accommodate any further tourist accommodation, he believes it may be appropriate to then consider construction of units on Site B1, although this would increase the available accommodation beyond that which he accepts as being commercially viable. 225 He concludes that the most generous allowance for development on site B1 would be for "say" 30 units at some time in the future, with a relatively low probability of successful and viable execution. 226 Mr Murphy further believes that, if there is only a market demand for a total of 150 tourist accommodation units on the developable land around the golf course, it may be difficult to create a viable development, having regard to the significant external costs which would be incurred, in particular the provision of water and sewerage. 227 However, although he has considerable doubt about the matter, Mr Murphy is prepared to accept the possibility that the B1 land may have accommodated up to 30 units. He believes that the proposed unit sites on the easement are inferior to the 20 units site (Site P) and the 100 units site (Site A), which he considers would exhaust most of the tourist accommodation potential on the golf course. However, having regard to the necessity to resolve doubts in favour of the land owner, Mr Murphy accepts that the 30 unit sites for which there may be some potential could be valued at $20,000 per unit site. On the assumption that that potential has been lost, he assesses compensation for the balance land at $600,000. 228 The assessed rate per site is based on the rate of $25,000 per site, which he assessed for Site A, and the discount he made for the risk associated with the viability of these sites and the fact that they would only be developed (if at all) after the more suitable sites are developed. 229 Mr Murphy also accepts that the transmission line injuriously affects the 100 unit site (Site A). Mr Murphy believes that the unaffected value of the 100 sites would be of the order of $25,000 per site or a total unaffected value of $2.5 million. He derives this value from the market evidence and the fact that considerable external costs would have to be incurred before the land is able to be developed. 230 Mr Murphy is not aware of any market evidence which accurately demonstrates the impact of transmission lines on land such as the subject property. In his experience, the market evidence derived from the sales to which I have earlier referred, indicates discounts for transmission lines for different types of properties of between 2% and 15%. 231 Mr Murphy believes that the market evidence indicates that good quality sites in superior Gold Coast resorts with services available to the boundary of the sites sold for prices which ranged from approximately $30,000 to $40,000 per unit sale. 232 Mr Murphy also had regard to the sale of the Hunter Valley Golf and Country Club for $10 million in May 1999. This sale includes the potential for a 150 room hotel and 175 apartments and includes a developed golf course. He believes that when analysed it reveals an average of $15,384 was paid for each hotel room and apartment site. 233 He also looked at the sale of the Vintage property in 1999 in the Hunter Valley for $8 million. The property includes a golf course site and balance land which is being developed with a total of 837 dwellings and 150 hotel room sites. He analyses that sale to show that the price represents an average of $7,600 per dwelling and hotel room site. 234 His analysis of development land in golf course and resort developments in Coffs Harbour and the Hunter Valley indicates rates per dwelling site ranging from $7,600 to $16,600 per dwelling site. 235 He considers that an appropriate discount for the proximity to the transmission line is 10 percent. Whilst the transmission lines are visible from the site they are separated from the site by a fairway and their impact is softened by the trees on the property. Accordingly, he assesses the injurious affection for the land known as Site A as amounting to $250,000. 236 He believes the development potential on the balance of the land is limited to one hectare lots. Based on previous proposals for such lots on the property, their likely positioning is not affected by the transmission lines, and accordingly, Mr Murhpy does not assess any additional compensation for these lots. The claim of Ironhill Management 237 Mr Murphy says that no allowance should be made for any loss by Ironhill Management. Although he acknowledges an impact on the value of Sites P and A, he does not believe there would be any loss of development potential. Accordingly, even if compensable, Ironhill Management will not suffer any loss of potential revenue. Otherwise, he believes that the development potential of Site B1 is so uncertain and so unlikely to be developed in the foreseeable future that no amount should be allowed for the loss of potential management rights of that part of the site. Conclusion 238 I have concluded that I am unable to have any confidence in the evidence of Mr Robertson. In my opinion he has an entirely unrealistic appreciation of the desirability of Coffs Harbour as a resort destination that includes a golf course. Although there is evidence of a number of successful golf course resort developments in other parts of Australia, they are generally associated with other facilities including beaches or other high quality golf courses which provide an attraction for dedicated golfers, other significant tourist attractions or are close to major population centres. Most of the successful developments have included facilities for permanent residential accommodation. 239 Notwithstanding the visual attractiveness of Bonville International Golf Course, it is located a significant distance from the coast and provides no other attractions for golfers and their families. Being a significant car journey from Sydney, it would have difficulty in competing with resorts closer to the metropolitan area. Although it can be accessed by aeroplane, once a person looking for golf course and associated resort facilities has made their way to the airport, the travel time to southern Queensland would be similar to the travel time to Coffs Harbour and only an hour longer to the more northern parts of Queensland. All of the Queensland destinations provide significantly greater attractions than are available to someone at Coffs Harbour. The history of commercial tourist accommodation in Coffs Harbour and its lack of financial success does not justify a conclusion that any significant tourist accommodation development of the subject site would be viable. 240 As I have indicated, during the course of proceedings various experts met to identify a common position in relation to a number of matters. One of the matters upon which agreement was reached was the likely construction costs, including the provision of water and sewerage upon the assumption that 138 units could be developed along the line of the easement. Those construction costs varied significantly and were higher than the costs which had originally been assumed by Mr Robertson. When those costs were assumed for the purpose of analysing a hypothetical resort, the result was a negative value for the land. 241 This outcome was consistent with the position which Mr Dempsey had taken. Furthermore, the loss would increase if the assumed realisation for each unit of a sale price of $495,000 was not achieved. It was the view of Mr Dempsey and Mr Murphy that this was a price well in excess of the value which the market evidence disclosed was appropriate. I accept their evidence. 242 Faced with the agreed costs and a consequent negative value for the land, Mr Robertson produced a revised analysis in which he suggested that by increasing the quality of the accommodation in the units, he would be able to achieve a higher realisation price. Surprisingly, he also believed that a lesser profit and risk was appropriate and, by this recalculation, suggested that he could demonstrate a value for the land. 243 In my opinion, this exercise by Mr Robertson is completely unrealistic and undermines the credibility of his entire evidence. The value which he ultimately assumes for each unit is significantly inflated above that which the evidence would suggest is appropriate. I am satisfied that the adjustments which he made after it was demonstrated that the land would have a negative value bear no relationship to a true assessment of the market position. 244 In my opinion, Mr Nicholson also has an entirely unrealistic appreciation of the value of the Bonville site. Having regard to the sale in 1998 and my conclusion that the value of the site at the date of acquisition had not significantly increased, Mr Nicholson's evidence cannot be accepted. Drawing as he does upon permanent residential accommodation for his analysis, he has, in my opinion, come to unrealistic conclusions. 245 I accept the evidence of Mr Murphy and believe he provides an appropriate and generous assessment of the applicants' claims. I am satisfied that there was limited, if any, potential for further tourist development on the Bonville site. To date, the site has functioned as a high quality golf course drawing upon a local residential market and some tourists. The limited and modest accommodation on the site has not been fully utilised and I do not believe it appropriate to assume that there was viable potential for development consistent with the Master Plan or indeed for any significant development at all. The site does not have the benefit of the major attractions available to almost every other golf resort within Australia. Notwithstanding its limited desirability, it would have to compete in that market to attract investors who would only invest if they were satisfied that the golf course would attract consistent usage justifying a return on their investment. Because the site cannot be used for permanent residential accommodation, its market would be confined, with the consequence that I am not satisfied that it would attract sufficient investors to provide a return on the capital necessary to carry out the development. 246 I accept Mr Murphy's evidence that if there is a potential for further development on the site it is modest and would be carried out on sites other than B1 and B2. If land within the corridor of the easement is contemplated for development, in my opinion this would be confined to select areas within B1 and any development would be significantly less intense than is shown on the Master Plan. This could be achieved without having to confront the issue of the impact upon the koala population and the making of appropriate provision to accommodate the bushfire risk. 247 In my opinion because of the topography, distance from the main facilities, and the poor relationship that the residential accommodation would have to the golf course, there is no prospect of development in the area shown as B2. 248 In accepting the evidence of Mr Murphy, I indicate that I also generally accept the analysis undertaken by Mr Dempsey. However, as Mr Murphy resolved the matter in a manner more favourable to Ironhill than Mr Dempsey, I believe it appropriate to accept his opinion when determining the appropriate compensation. 249 As a consequence, in my opinion the appropriate compensation payable to Ironhill includes the following elements:

Market Value of land acquired for the easement $655,000 Market Value of access easements $45,000 Decrease in the value of adjoining land $570,000 $1,270,000 250 Ironhill Management Pty Ltd has failed to make out its claim and in my opinion that claim should be dismissed. Disturbance 251 Ironhill is also entitled to compensation for any loss attributable to disturbance. Disturbance is defined in s 59 and includes: "(a) legal costs reasonably incurred by the persons entitled to compensation in connection with the compulsory acquisition of the land." 252 Under s 59(a) three items were originally claimed. They are as follows:

Legal fees Peter Montgomery for the period of 5 June 1998 to 5 May 2002 $145,200.

Legal fees and disbursements of Pike, Pike and Fenwick for the period 16 January 2002 to 9 May 2002 $6,633.

Fees of John Webster SC $1,375 253 The fees payable to Pike, Pike and Fenwick and to Mr Webster have been agreed. However, Transgrid submits that no sum is properly payable with respect to the legal fees claimed with respect to Mr Montgomery. 254 Notwithstanding the submission that the amount originally claimed is justified, counsel for Ironhill has indicated that the company would accept half of the amount claimed, being the sum of $72,600. 255 Mr Montgomery has filed an affidavit in which he describes the work that he says justifies the claim. Although he is a solicitor, his practice is modest and generally relates to conveyancing, the majority of his activities being his own business ventures. In that capacity he was for a time a co-director of the Ironhill companies and for the remainder of the time relevant to these proceeding he has been the sole director. As I indicated earlier, his co-director for a time was Mr John Dunagan whose company, Green Development Corporation, is a fifty percent shareholder in Ironhill. Mr Montgomery gave evidence that he had a conversation with Mr Dunagan at about the time he became aware of the Transgrid proposal in which he said that he would be doing substantial legal work for the company and "any claim for compensation which Ironhill may have and I intend to charge the company for my time." Mr Montgomery says that Mr Dunegan responded by saying "that is fine by me." 256 The affidavit also discloses that Mr Montgomery spent considerable time negotiating in relation to endeavours to stop the line being constructed where proposed, endeavouring to have it placed underground, and other related matters directed to attempting to stop the proposal from going forward. In this capacity I am satisfied he was acting as director of the company and not as the solicitor for Ironhill. 257 Mr Montgomery was also involved in negotiations in relation to the basis and possible quantum of compensation. These negotiations were typical of negotiations which take place between individuals and corporations when public authorities are contemplating compulsory acquisition. The purpose of the negotiations is to avoid the need for a compulsory acquisition and provide for a transfer of the relevant interests for an agreed price. When those negotiations broke down, Mr Montgomery instructed Pike, Pike & Fenwick to act for Ironhill to pursue the claim for compensation. 258 Mr Montgomery also gave evidence of various research and investigative tasks which he carried out on behalf of Ironhill. I do not believe these tasks can be correctly described as legal work which would give rise to legal costs within the meaning of s 59. In my opinion, this work has the character of tasks carried out by a director who was effectively the managing director of the company in the course of carrying out his management tasks. 259 I appreciate that Mr Montgomery corresponded at various times on his solicitor's letterhead. Although this would on its face give the appearance that he was carrying out legal work and acting as the solicitor of the company, I do not believe this was always the case. 260 In resisting the claim by Mr Montgomery, Transgrid points to the fact that although costs were said to have been incurred over a period of in excess of six years, it was not until during the course of these proceedings that an account was rendered by Mr Montgomery. Furthermore, that account has not been itemised and no endeavour has been made to identify the time spent in discharging professional responsibilities nor disbursements which might have been incurred in relation to the company's activities. Furthermore, although the original claim was made in the sum of $145,200, there is no evidence that, if compensation for that amount is not recovered, the company would be liable to make payment. The likelihood that liability has not in fact been incurred is reinforced by the fact that it is said that for the purpose of these proceedings, Mr Montgomery has offered to accept half of the original claim, being the sum of $72,600. In order to be recoverable under s 59 of the Act, the costs must have actually been incurred (West v Roads & Traffic Authority of New South Wales (1995) 88 LGERA 266; Sydney Water Corporation v Besmaw Pty Ltd [2002] NSWCA 147 at [13]). 261 Notwithstanding these difficulties Transgrid accepts that it is likely that some of the work that Mr Montgomery carried out is properly described as legal work on behalf of the company and would, if properly documented, have been compensable. I accept that this is likely, particularly in relation to the negotiations which took place in an endeavour to reach agreement without the necessity for compulsory acquisition. Although Mr Montgomery would have undoubtedly been exercising his judgment as a director of the company, he nevertheless should be understood as also providing legal advice in relation to this aspect of the matter. 262 Having regard to the fact that no attempt has been made to break down the claim, it is difficult to quantify any sum which might be payable in relation to this aspect of it. However, doing the best I can I believe a sum of $10,000 would be appropriate. 263 Other aspects of the disturbance claim include valuation fees. These have been agreed as follows:

Fees of John Robertson & Associates Pty Ltd for period 23 October 2001 $30,244.

Fees of John Robertson & Associates Pty Ltd for period to 23 October 2001 to 13 March 2002 $11,760.

Fees of Goodwin & Southwell Architects for period 6 March to 30 April 2002 $4,388. 264 In addition, compensation for the cost of providing for the supervision of the work and construction of the line has also been agreed in the amount of $7,297. Conclusion 265 In the circumstances, I am satisfied that for the reasons I have indicated, Ironhill is entitled to compensation which includes the various sums I have identified. In order to ensure that the appropriate sum is reflected in the orders, the parties are to bring in short minutes which reflect these reasons. Costs may be argued.

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