HEARD : 22-24 SEPTEMBER, 13 OCTOBER, 30 NOVEMBER 2004

Town planning - Reservation for parks and recreation - Claim for compensation for injurious affection - Election to acquire instead of paying such compensation - Determination of price for such by determination of value of the land - Whether valuation of land could be by before and after method - Use of comparable sales - Use of sales to the acquiring authority - Whether recoverability of direct comparison method should be used - Legal and valuations costs - Recoverability of GST - Award of interest

Civil Judgments Enforcement Act 2004 (WA), s 8(1)(a)

Environmental Protection Act 1986 (WA), s 31(d)

Finance (1909-10) Act 1910 (Imp), s 25(1)

Local Government (Miscellaneous Provisions) Act 1960 (WA), s 374(1), s 374(1b)

Metropolitan Region Town Planning Scheme Act 1959 (WA), s 36(2a), s 36(2b), s 36(3)(b), s 36(6)(b)

Supreme Court Act 1935 (WA), s 32, s 37, s 142

Town Planning and Development Act 1928 (WA), s 5AA(3), s 11, s 12

Banno v Commonwealth of Australia (1993) 81 LGERA 3

Beard v Director of Housing (1961) 9 LGRA 74

Birmingham Corporation v West Midland Baptist (Trust) Association (Inc) [1970] AC 874

Brewarrana Pty Ltd v Commissioner of Highways (1973) 32 LGRA 170

Carson v Minister for Environment and Planning (1990) 70 LGRA 215

Commissioner of Highways v Tynan (1982) 53 LGRA 1

Commonwealth v Arklay [1952] HCA 76; (1952) 87 CLR 159

Commonwealth v Milledge [1953] HCA 6; (1952) 90 CLR 157

CSR Ltd v Valuer General (1977) 17 SASR 446

De Graaf v Valuer General, unreported; NSW Land and Valuation Court; 23 May 1968

Dilatte v MacTiernan [2002] WASCA 100

Flotilla Nominees Pty Ltd v Western Australian Land Authority & Anor [2003] WASC 122

Housing Commission of New South Wales v Falconer [1981] 1 NSWLR 547

Housing Commission of New South Wales v San Sebastian Pty Ltd [1978] HCA 28; (1978) 140 CLR 196

Inland Revenue Commissioner v Clay [1914] 1 KB 339

Inland Revenue Commissioners v Clay [1914] 3 KB 466 (CA)

J E Squarcini and Milino Pty Ltd v State Planning Commission, unreported; SCt of WA (Scott J); Library No 960200; 17 April 1996

John Bridge Ltd (in liq) v Commonwealth (1951) 11 The Valuer 375

Jones v Sutherland Shire Council [1979] 2 NSWLR 206

Leichardt Municipal Council v Seatainer Terminals Ltd (1981) 48 LGRA 409

Maurici v Chief Commissioner of State Revenue [2003] HCA 8; (2003) 212 CLR 111

Merivale Motel Investments Pty Limited v Brisbane Exposition And South Bank Redevelopment Authority [1988] 2 Qd R 562

Minister for the Environment v Florence (1979) 21 SASR 108

Minister of Environment v Petroccia (1982) 30 SASR 333

Morison v The Commonwealth (1971) 34 LGRA 273

Mount Lawley Pty Ltd v Western Australian Planning Commission [2004] WASCA 149; (2004) 29 WAR 273

Pastoral Finance Association Ltd v The Minister [1914] UKPC 77; [1914] AC 1083

Pointe Gourde Quarrying and Transport Co Ltd v Sub-Intendent of Crown Lands [1947] AC 565

Pownall v Conlan Management Pty Ltd (1995) 12 WAR 370

Raja Vyricherla Narayana Gajapatiraju v Revenue Divisional Officer Vizagapatam [1939] AC 302

Rendell v Release on Licence Board (1987) 10 NSWLR 499

RK Morgan Holdings Pty Ltd v Melbourne & Metropolitan Board of Works (1992) 77 LGRA 102

Royal Sydney Golf Club v Federal Commissioner of Taxation [1957] HCA 31; (1957) 97 CLR 379

Rukavina & Robertson v Wagga Wagga City Council (1993) 80 LGERA 8

Russia Lutvey & Sons Pty Ltd v Valuer General (1980) 7 QLCR 1

Spencer v Commonwealth [1907] HCA 82; (1907) 5 CLR 418

Trandos v Western Australian Planning Commission [2001] WASCA 346

West Australian Trustee Executor and Agency Company Limited v Perth Road Board (1929) 31 WALR 91

Western Australian Planning Commission v Arcus Shopfitters Pty Ltd [2003] WASCA 295

Woollams v the Minister (1957) 75 WN (NSW) 103

Arcus Shopfitters Pty Ltd v Western Australian Planning Commission (2002) 125 LGERA 181

Balquhidder v The Minister (1986) 40 SASR 63

Beutel v Commissioner of Irrigation and Water Supply (1975) 2 QLCR 327

Boland v Yates Corporation Pty Ltd [1999] HCA 64; (1999) 74 ALJR 209

Bronzel v State Planning Authority (1979) 70 LGRA 215

Bunney v State of South Australia (2001) 112 LGRA 213

Cienda Pty Ltd v South Australian Urban Land Trust (1988) 65 LGRA 419

Collins v Livingstone Shire Council [1972] HCA 35; (1972) 127 CLR 477

Freestone v Parramatta City Council (1974) 34 LGRA 35

Geita Sebea v Territory of Papua [1941] HCA 37; (1941) 67 CLR 544

Jovist Pty Ltd v Campbelltown City Council (1970) 19 LGRA 134

March v Frankston City [1969] VicRp 44; [1969] VR 350

Players Pty Ltd v Corporation of the City of Adelaide [2001] SASC 369

Queensland v Murphy [1990] HCA 42; (1990) 95 ALR 493

Redeam v South Australian Land Commission (1977) 17 SASR 508

River Bank Pty Ltd v Commonwealth (1974) 4 ALR 651

State Through Department of Highways v Hoyt 284 So 2d 763 (1973) (LA)

Vains v Gosford Shire Council (1976) 24 The Valuer 756

Wm Collins & Sons Pty Ltd v Co-ordinator-General of Public Works (1974) 1 QLCR 1

1 This is an action arising out of a claim for compensation for injurious affection of land. That claim was by virtue of the combined operation of the Town Planning and Development Act 1928 (WA) (the "TPD Act"), the Metropolitan Region Town Planning Scheme Act 1959 (WA) (the "MRTPS Act") (replaced by the Planning and Development Act 2005 (WA)) and the Metropolitan Region Scheme (the "MRS"). The land in question is the rear portion of the claimant's land in Wanneroo. I call the whole of the claimant's land in Wanneroo, including both the rear portion and the remainder, "the Land". The rear portion of the Land adjoins a lake area, and part of it is from time to time inundated. The rear portion has been reserved by an amendment to the MRS for parks and recreation purposes. I will from now on call the rear portion the "Reserved Portion". The remainder of the Land I will call the "Balance Portion".

2 These proceedings raise the question of the correct approach to be taken to valuation of the Reserved Portion. In particular, these proceedings raise the question of whether or not it would be appropriate in this case to adopt an approach that would value the whole of the Land, before any account is taken of the effect of the reservation of the Reserved Portion, and then to value the Balance Portion, using the difference as the value of the Reserved Portion. This approach was called in these proceedings "the before and after approach". A number of other issues as to the valuation of the Reserved Portion and other amounts claimed are raised in this case, whether or not the "before and after approach" or the "before and after method" is considered to be an appropriate approach.

3 I begin by setting out the background to the claim for compensation and the way these proceedings arose out of that claim, and the statutory framework to the claim and these proceedings. I then describe the proceedings, before providing a more detailed description of the Land and the Reserved and Balance Portions. I then deal with the issue of the application of the before and after approach, and the remaining valuation issues, as well as other claims in these proceedings.

The background to the claim for compensation, and that claim

4 The Land is known as Lot 37 (No 1954), Wanneroo Road, Neerabup. It is more particularly described as Lot 37 on Plan 8548, being the whole of the land comprised in Certificate of Title Volume 82 Folio 136A.

5 Effective 3 November 1994, before the claimant, the plaintiff in these proceedings, acquired the Land, and by Amendment 948/33 to the MRS, the Reserved Portion was reserved under Pt II of the MRS for the purposes of Parks and Recreation. Accordingly, the Reserved Portion had been reserved for a public purpose within the meaning of s 12(2a)(b)(i) of the TPD Act as applied (with the balance of s 12 and with s 11) to the MRS by s 36(1) of the MRTPS Act, and within the meaning of cl 20 of the MRS.

6 In August 1996 the plaintiff in these proceedings acquired the Land.

7 The Land at all material times has been located within the district of the City of Wanneroo. Prior to the reservation of the Reserved Portion, the Land, including the Reserved Portion, was zoned "rural" under both the City of Wanneroo Town Planning Scheme No 1 ("TPS1") and the MRS. The Balance Portion has at all material times also been zoned rural under both Schemes.

8 By an Application for Approval to Commence Development dated 17 May 1999 and lodged with the City of Wanneroo, the plaintiff applied for approval under TPS1 and the MRS to construct a "residential dwelling - single storey" extending into the Reserved Portion.

9 In accordance with cl 29(1)(a)(i) of the MRS, the City of Wanneroo forwarded the Application dated 17 May 1999 to the Western Australian Planning Commission (the WAPC), the defendant in these proceedings. The defendant is the authority responsible under cl 29(1)(a)(i) of the MRS for determination of applications to commence and carry out development of land reserved under Pt II of the MRS. The defendant is also the authority responsible for payment of compensation payable for injurious affection to land by reason of the provisions of the MRS, in accordance with s 11 and s 12 of the TPD Act.

10 By a notice dated 9 November 1999 the defendant informed the plaintiff that it refused the application. As a result, and pursuant to s 36(3)(b) of the MRTPS Act and cl 20(1) of the MRS, the plaintiff became entitled to claim compensation from the defendant for injurious affection. In accordance with cl 20(2) of the MRS the plaintiff submitted such a claim dated 8 May 2000.

11 By letter dated 4 August 2000 to the plaintiff's solicitors, and in accordance with cl 20(3) of the MRS and s 36(2)(b) of the MRTPS Act, the Minister of Planning on behalf of the defendant gave notice that, in lieu of paying compensation, the defendant had, on 18 July 2000 ("the election date") elected to acquire the Reserved Portion.

12 The parties have since then been unable to agree the price for the acquisition by the defendant of the Reserved Portion.

The statutory framework to these proceedings

13 That framework is provided by the MRTPS Act, s 36(2a) and s 36(2b), as follows:

"(2a) Where the Commission elects to acquire the land as provided in subsection (2), if the Commission and the owner of the land are unable to agree as to the price to be paid for the land by the Commission, the price at which the land may be acquired by the Commission shall be the value of the land as determined in accordance with subsection (2b).

(2b) The value of the land referred to in subsection (2a) shall be the value thereof on the date the Commission elects to acquire the land under that subsection, and that value shall be determined -

(a) by arbitration in accordance with the Commercial Arbitration Act 1985; or

(b) on the application of the owner of the land, made in the prescribed manner -

(i) by a Local Court, sitting at a place nearest to where the land lies - if the value of the land claimed by the owner thereof is not more than $1000; or

(ii) by the Supreme Court - if the value of the land claimed by the owner thereof is more than $1000;

(c) by some other method agreed upon by the Commission and the owner of the land,

and that value shall be determined without regard to any increase or decrease, if any, in value attributable wholly or in part to the Scheme."

14 These proceedings are on an application by the plaintiff for the determination of the value of the Reserved Portion under s 36(2a) and s 36(2b)(ii).

15 In his re-amended statement of claim the plaintiff claims:

• A determination that the value of the Reserved Portion is $175,000;

• Interest from the Election Date to judgment on the amount the subject of the determination, pursuant to s 32 of the Supreme Court Act 1935 (WA) at the rate of 6 per cent or such other rate as the Court thinks fit;

• Interest on the amount the subject of the determination pursuant to s 142 of the Supreme Court Act from judgment to the date of settlement on the sale pursuant to the election to purchase at the rate of 6 per cent, or at such other rate as the Court thinks fit;

• An order that the defendant indemnify the plaintiff for any GST payable by the plaintiff as a consequence of the judgment in these proceedings;

• Such further and other orders as the Court shall think fit; and

16 The plaintiff at the hearing before me claimed the legal and valuation costs the plaintiff incurred prior to the commencement of these proceedings. This was on three alternative bases. I will return to that claim and those bases at the end of this judgment, when I will also consider the claims for interest and for GST.

17 The defendant in its amended defence says that the value of the Reserved Portion as at the election date was not more than $85,000. The defendant also denies that the plaintiff is entitled to interest, costs and an indemnity for GST or any other relief.

18 I now need to describe the Land, the Reserved Portion and the Balance Portion, in rather more detail. I also need to refer to the valuation evidence, in detail, after considering the principal issues as to the before and after approach to valuation.

The Land, the Reserved Portion and the Balance Portion

19 The Land comprises 4.0974 hectares, although on occasion in the evidence it is referred to as 4.0975 hectares in area. Its north western boundary is what was called in the hearing before me a slip road, running parallel and close to Wanneroo Road. A number of the other lots sales of which were considered by one or other of the valuers as comparable sales for the purposes of the determination in these proceedings also fronted on or in one case was connected to this slip road.

20 The Land runs in a north easterly direction off the slip road. Its south eastern boundary is at Lake Neerabup, and indeed a portion of the Land forms a portion of that feature.

21 Lake Neerabup is part of what I may describe as the Lake Neerabup area, which is a parks and recreation reserve area running to the east of the north eastern boundaries of the lots on Wanneroo Road that run in a north easterly direction from Wanneroo Road between Flynn Drive to the south and Wattle Avenue to the north. Those lots include all of the Wanneroo Road lots considered in this case as the subjects of possible comparable sales. The Lake Neerabup area also lies to the south of two lots, one running south off Wattle Avenue and the other running south of the southern boundary of that lot, and both to the east of Wanneroo Road, which I also consider as the subjects of possible comparable sales. Land in the Lake Neerabup area, but on the evidence before me not the area's entirety, becomes inundated in winter if not every winter, forming a lake body or bodies whose area is referred to in this judgment (unless the context otherwise indicates) as Lake Neerabup. The Land included in the Reserved Portion includes land a part of Lake Neerabup. That meant that in winter the Land was liable to be underwater to that extent. As will become apparent there is a contest on the evidence before me as to that extent. It was not in contest, however, that in some winters there would be no or very little water in Lake Neerabup, or at least none in the part within the Reserved Portion.

22 The Land's parallel south eastern and north western boundaries measure approximately 90.53 metres, and its parallel north eastern and south western boundaries measure approximately 452.70 metres. The Land is thus rectangularly shaped.

23 The Reserved Portion of the Land has the north eastern boundary of the Land which is in Lake Neerabup. The Reserved Portion follows the north western boundary of the Land approximately 95 metres to the south west. The Reserved Portion follows the south eastern boundary of the Land approximately 231.60 metres to the south west, and has a straight line diagonal boundary running from the north western boundary to join the south eastern one at that south west point. The Reserved Portion of the Land comprises 1.4784 hectares. It is thus irregularly (trapezoidally) shaped.

24 The Balance Portion of the Land has the south western boundary of the Land at the slip road. The Balance Portion follows the north western boundary of the Land north east approximately 357.70 metres from the slip road, and follows the south eastern boundary of the Land north east approximately 221.10 metres from the slip road. Its remaining boundary is the straight-line diagonal boundary of the Reserved Portion. The Balance Portion of the Land comprises 2.6190 hectares. It is, like the Reserved Portion, irregularly (trapezoidally) shaped.

25 As at the election date, the Land was vacant land, although on it there were a shed, a windmill and a disused brick pumping station with pipes to Lake Neerabup. It also had boundary fencing. It would appear that the shed was on the Balance Portion, but the windmill, disused brick pumping station and pipes were on the Reserved Portion. The Land is mostly level, with some rise from the slip road and a gradual descent to Lake Neerabup. I did not inspect the Land. However, there are photographs of it in evidence (Exhibits 7, 8 and 9; and Exhibit 38, plaintiff's bundle of documents, at pages 60, 61 and 62) that confirm the Land is timbered, slopes gently down into Lake Neerabup, and has a pleasant aspect on that Lake, at least when it contains a considerable body of water.

26 The Reserved Portion comprised a portion to the north east which was regularly inundated, as well as the remainder to the south west which was partially timbered.

27 At the trial evidence was given by two valuers, one called by the plaintiff (Mr Kinglsey Vincent) and one called by the defendant (Mr Stuart Paterson). There was also evidence given by the plaintiff himself, and other witnesses called by the plaintiff, a geologist (a Mr Lex Bastian); a representative of a corporate purchaser of a lot on Wanneroo Road near the Land (Mr Paul Delaveris) and a representative of a corporate purchaser of another such lot (Mr Matthew Peterson); an employee of the Department of Housing and Works with responsibility for co-ordinating appeals to the Minister under the Local Government (Miscellaneous Provisions) Act 1960 (WA) (Mr Paul Scalzi); two town planning consultants (Mr Oscar Drescher and Mr Peter Goff); the Coordinator of Building Approvals of the City of Wanneroo (Mr Samuel Neale); and a planner employed by the City (Mr Philip Thompson). The defendant also called a Senior Natural Resource Management Officer in the Department of the Environment, Kwinana-Peel Region, who at the time of the development application for the Land was an Environmental Officer in the Strategic Projects Branch of the Policy and Planning Division of the then Water and Rivers Commission (Mr Adrian Parker); the Land Information Officer for the City of Wanneroo (Mr Robert Ruscoe); and a planner employed by the Department of Planning and Infrastructure (Ms Robin Watts).

The issues: the before and after approach to valuation

28 This approach as first put to me rested on the view that the characteristics of the Reserved Land required that the determination of the value of the Reserved Portion for the purposes of s 36(2b) MRTPS Act recognise the probability that the only person who would seek to acquire the Reserved Portion would be the owner of the Balance Portion adjoining it, at least if the WAPC itself was excluded. Those characteristics were that the Reserved Portion was landlocked, in the sense it had no road access, and much of its area was within Lake Neerabup (examination in chief of Mr Vincent, TS 188 - 190; cross-examination of Mr Paterson, TS 454 - 455). The adjoining land would offer road access and would comprise substantial land none of which was within Lake Neerabup.

29 The approach involved valuing the Land (the "before" valuation), and subtracting from it the value of the Balance Portion (the "after" valuation). The difference would represent the price the owner of the Balance Portion would assign to, and be prepared to pay for, the Reserved Portion.

30 Failing to use this approach would represent a failure to properly assess the value of the Reserved Portion for the purposes of s 36(2b) of the MRTPS Act.

31 The parties agreed that this was the single most significant issue in the proceedings. Accepting the approach would lead to a number of issues as to the valuation evidence that purportedly used the approach. Rejecting the approach would mean that those valuations could only be used if there were another approach that could be properly used that would sustain them; it would also lead to a number of issues as to the remaining valuation evidence.

32 To assess the applicability of the before and after approach to this case, I must consider the following:

• The proper approach to valuation for the purposes of s 36(2b);

• The proper approach to the use in such a case of expected interest in the land to be valued of an adjoining landowner; and

• Whether the before and after approach cannot be used because it would provide for matters of value to the owner of the land to be valued which on the authorities are no part of the proper approach to valuation for the purposes of s 36(2b).

The proper approach to valuation for the purposes of s 36(2b)

33 The principal authority on the proper approach to such valuations is the judgment of the Full Court in Mount Lawley Pty Ltd v Western Australian Planning Commission [2004] WASCA 149; (2004) 29 WAR 273. The Full Court there held (at [280] and [281]) that the proper approach is in terms of "market value", which it associated (at [281]) with the well known authority of Spencer v Commonwealth [1907] HCA 82; (1907) 5 CLR 418, per Griffith CJ, at 432, and per Isaac J, at 441. Partial quotations were set out from those pages of the judgments referred to in Spencer (supra) in the Full Court's judgment in Mount Lawley (supra) (at [281]). I set out in full the quotations from those pages in Spencer, because, as will appear, there are elements in them not reproduced in Mount Lawley that are of significance to me. I also set out later in this section other parts of judgments in Spencer which I also consider to be part of what the Full Court took from that case, and which are also significant for my purposes.

34 In Spencer (supra), Griffith CJ, at 432, said this:

"In my judgment the test of value of land is to be determined, not by inquiring what price a man desiring to sell could actually have obtained for it on a given day, i.e., whether there was in fact on that day a willing buyer, but by inquiring 'What would a man desiring to buy the land have had to pay for it on that day to a vendor willing to sell it for a fair price but not desirous to sell?' It is, no doubt, very difficult to answer such a question, and any answer must be to some extent conjectural. The necessary mental process is to put yourself as far as possible in the position of persons conversant with the subject at the relevant time, and from that point of view to ascertain what, according to the then current opinion of land values, a purchaser would have had to offer for the land to induce such a willing vendor to sell it, or, in other words, to inquire at what point a desirous purchaser and a not unwilling vendor would come together."

"To arrive at the value of the land at that date, we have, as I conceive, to suppose it sold then, not by means of a forced sale, but by voluntary bargaining between the plaintiff and a purchaser, willing to trade, but neither of them so anxious to do so that he would overlook any ordinary business consideration. We must further suppose both to be perfectly acquainted with the land, and cognizant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property."

36 This approach to valuation should be taken to be by reference to the highest and best use of the land, which may not necessarily be its present use, and which allows for a consideration of the potential of the land, whether or not presently realisable, as where the use would require a permission from a public agency which has not been obtained and might be refused: see Mount Lawley (supra), at [162] to [167]; and see Alan Hyam, "The Law Affecting Valuation of Land in Australia", 3rd ed, Sydney, Federation Press, 2004, at 122 - 124.

37 The matter of the consideration to be given to the potential of the land is also referred to in Spencer (supra), where the land in question was a vacant site in Fremantle at an early stage in the port's development. With respect to that aspect of the land Griffith CJ said this, at 431 - 432, immediately preceding the better known passage above:

"In the case of chattels it is often, though not always, easy to ascertain the value. In order that any article may have an exchange value, there must be presupposed a person willing to give the article in exchange for money and another willing to give money in exchange for the article. When there is a large or considerable number of articles of the same kind which are the subject of daily or frequent sale and purchase, the value of the articles is taken to be their current price. Thus, in the Sale of Goods Act, the measure of damages for wrongful refusal to deliver goods is to be ascertained with reference to 'the market or current price of the goods.' The foundation of this doctrine is that a man desiring to sell such articles can readily find a purchaser at a price which is fairly certain, and conversely that a man desiring to buy can find a seller at about the same price. But these considerations are not necessarily equally applicable to land. There is, no doubt, much land in many places the value of which per acre is as definitely fixed as the price of wheat or sugar. But in the case of a new port, in a new State, where the area of land is limited, and each piece differs in many of its characteristics from the rest, it is impossible to apply any such rule. Bearing in mind that value implies the existence of a willing buyer as well as of a willing seller, some modification of the rule must be made in order to make it applicable to the case of a piece of land which has any unique value. It may be that the land is fit for many purposes, and will in all probability be soon required for some of them, but there may be no one actually willing at the moment to buy it at any price. Still it does not follow that the land has no value."

38 With respect to the same aspects, as I read his judgment, Isaacs J said this, at 440 - 441, immediately preceding the better known passage from his judgment above:

"In the first place the ultimate question is, what was the value of the land on 1st January 1905?

All circumstances subsequently arising are to be ignored. Whether the land becomes more valuable or less valuable afterwards is immaterial. Its value is fixed by Statute as on that day. Prosperity unexpected, or depression which no man would ever have anticipated, if happening after the date named, must be alike disregarded. The facts existing on 1st January 1905 are the only relevant facts, and the all important fact on that day is the opinion regarding the fair price of the land, which a hypothetical prudent purchaser would entertain, if he desired to purchase it for the most advantageous purpose for which it was adapted. The plaintiff is to be compensated; therefore he is to receive the money equivalent to the loss he has sustained by deprivation of his land, and that loss, apart from special damage not here claimed, cannot exceed what such a prudent purchaser would be prepared to give him."

39 Immediately after the better known passage from his judgment which I earlier quoted, Isaacs J said this, at 441:

"In The Queen v. Brown [LR 2 QB 630], at p 631 Cockburn C.J. said:--'A jury, whether the dispute be as to the value of land required to be taken by the company, or as to the compensation for damages by severance, in assessing the amount to which the landowner is entitled, have to consider the real value of the land, and may take into account not only the present purpose to which the land is applied, but also any other more beneficial purpose to which in the course of events at no remote period it may be applied, just as an owner might do if he were bargaining with a purchaser in the market. That is the mode in which the land would be valued.' Having mentally placed itself in the position of the bargaining parties as on the critical date, 1st January 1905, the question for the tribunal is, what is the point at which the parties would meet; what is the sum the one would be willing to give and the other to take?"

40 The authorities, including the Full Court in Mount Lawley (supra), have noted a distinction between "market value" and "special value". What "special value" is, and whether "special value" is allowable in relation to s 36(2b), are matters I need to return to below, where I consider whether the before and after approach cannot be used because it would provide for compensation for matters of value to the owner of the land to be valued which on the authorities are no part of the proper approach to valuation for the purposes of the sub-section. While it is not clear from Mount Lawley (supra) that "special value" is one of those matters, it is clear on that authority that compensation for "damages for severance" is one of them, as I will explain.

The proper approach where an adjoining landowner is expected to be interested in the land

41 Although the Full Court did not address the matter in Mount Lawley (supra), in the authorities on the market value approach from Spencer (supra) it appears to be accepted that, consistently with that approach, account needs to be taken of the impact on market value of the expected presence in the market for the land of a possible buyer with a special interest in it. Such a buyer might be an adjoining owner. See Hyam (supra), at 100 - 101.

42 One of the leading authorities is Inland Revenue Commissioners v Clay [1914] 3 KB 466 (CA). The case involved the determination of the value of land for taxation purposes. The relevant statute called for the determination of the "amount which the fee simple of the land, if sold at the time in the open market by a willing seller ... might be expected to realise" (Finance (1909-10) Act 1910 (Imp), s 25(1)). It will be noted that this is very similar wording to that associated with the market value approach.

43 The land in Clay (CA) (supra) had a house and garden, and its value for the purposes of the provision as a residence for private occupation was accepted to be no more than £750. However, a nursing home adjoined the land, and the trustees paid £1000 for the land, on the basis it met their need for further accommodation. An appeal against a decision of Scrutton J, who had dismissed an appeal from a referee's determination of the value of the land at £1000, was itself dismissed.

44 Swinfen Eady LJ said this, referring to s 25(1) of the legislation, at 475:

"The section means such amount as the land might be expected to realize if offered under conditions enabling every person desirous of purchasing to come and make an offer, and if proper steps were taken to advertise the property and let all likely purchasers know that the land is in the market for sale. It scarcely needed evidence to inform us - it is common knowledge - that when the fact becomes known that one probable buyer desires to obtain any property, that raises the general price or value of the thing in the market. Not only is the probable buyer a competitor in the market, but other persons, such as property brokers, compete in the market for what they know another person wants, with a view to a resale to him at an enhanced price, so as to realize a profit. A vendor desiring to realize any land would ordinarily give full publicity to all facts within his knowledge likely to enhance the price. The local conditions and requirements, the advantages of the situation of the property for any particular purpose, and the names of the persons who are probable buyers, would ordinarily be matters of local knowledge to the property brokers and agents and speculators. In order arrive at the amount which the land might be 'expected to realise,' all these matters ought to be taken into consideration."

"The house or the land may immediately adjoin one or more landowners likely to offer more than the property would be worth to anybody else. ...

... To say that a small farm in the middle of a wealthy landowner's estate is to be valued without reference to the fact that he will probably be willing to pay a large price, but solely with reference to its ordinary agricultural values, seems to me absurd. If the landowner does not at the moment buy, land brokers or speculators will give more than its purely agricultural value with a view to reselling it at a profit to the landowner."

46 Similarly, the third member of the Court, Pickford LJ, said this, at 479, 479 - 480 and 480:

"I assume that the gross value is not to be measured necessarily by the price given by a buyer who is peculiarly in need of the particular piece of property, but it seems to me clear that the fact of there being such a person in the market must have an influence on the value in the open market. ...

It is not denied by the appellants that the wish of the trustees to buy the house is a fact to be considered, but it is said that the only effect to be given to it is that a small sum is to be added to the value of 750l. to represent a final bid made by the trustees in order to acquire the property. This seems to me to be a fallacy, and to ignore what is common experience. It assumes that the dwelling house value, 750l., having been reached, everybody except the trustees will decline to make any further offer, and allow the trustees to become the purchasers by a single offer, which exceeds that amount in however small a degree. ...

... I agree with Scrutton J. that the referee is not bound to take the actual [sale] figure given, and should not do so arbitrarily, but should consider all the circumstances and estimate what he considers the value in the open market. ..."

47 I return to the part of Scrutton J's judgment which it appears Pickford LJ was referring to, below.

48 It should immediately be noted that the difficulty in applying this approach in this case is the effect on the market value of the interest of the owner of the Balance Portion, as an adjoining owner, in the Reserved Portion could not be a matter of direct evidence as in Clay (CA) (supra). The plaintiff made no offer to buy the Reserved Portion, but only entered into negotiations to sell it, in the context that led to these proceedings by the plaintiff. On the plaintiff's argument for the use of the before and after approach, it is necessary to see as the adjoining owner the owner of the Balance Portion, and it is the very election to acquire that gives rise to the Balance Portion.

49 However, the matter of an owner becoming an adjoining owner by virtue of the transaction giving rise to the need to value is addressed in an authority that endorsed the application of Clay (CA) (supra) in the compulsory acquisition context, Raja Vyricherla Narayana Gajapatiraju v Revenue Divisional Officer Vizagapatam [1939] AC 302 (see especially at 317, quoting with approval from the judgment of Cozens-Hardy MR the passage as to the "small farm" quoted above). The Privy Council, in considering (at 313 - 314) how value might be determined where land possessed "potentialities of such an unusual nature that the arbitrator has not similar cases [of prices paid for land in the neighbourhood for land acquired for comparable purposes]", and there were "only a very limited number of persons capable of turning the potentialities of the land to account", said this:

"If the owner of the land is the only person who can do so, the value to him must be ascertained by reference to what profit he might thereby have been able to derive from the land in the future. Take as an example the case of an owner of vacant land that adjoins his factory. The land possesses the potentiality of being profitably used for an extension of the factory. But the owner is the only person who can turn the potentiality to account. In valuing the land, however, as between him and a willing purchaser, the value to him of the potentiality would necessarily have to be included."

50 As I will explain below, this quotation is not, however, entirely applicable in this case.

51 Evidence in this case on the claimed potentiality that only the adjoining owner could turn to account came from Mr Vincent, when he was asked to consider what impact it would have on the owner of the Land, intending to build two houses on the Balance Portion, of having the Reserved Portion (examination-in-chief, TS 198):

"In a valuation sense, the two-house proposition on the balance portion, how does it compare with the two-house proposition where you're building partly on - rather, how does it compare with the situation where you still have the reserved portion?---If you still had the reserved portion, that means you own part of the lake. You still have your access. You still have your uninterrupted views. It can't be built out. You have use of the lake for recreation purposes. As I mentioned, this eco-education higher and better use for the land would allow you to have access to the lake. Once the reserved portion is taken, you've lost that. The views might be built out. They could be planted out with trees. You certainly don't have access to the lake and you certainly can't use the lake.

Are you saying that views of the lake and access of the lake are attractions?---Very much so, yes."

52 The other evidence was from Mr Paterson, who said this (cross-examination, TS 478 - 479):

"WITTKUHN, MR: Mr Paterson, I would like you to assume that if the West Australian Planning Commission was to acquire the reserved portion pursuant to the election to purchase procedure, they would have the right to plant out views of the balance portion of lot 47 over the lake. You would have to accept, would you not, that that then would affect the value of the balanced portion of lot 37?---I suppose you could plant wall-to-wall plants around the buffer area, as I have described it, but I don't know what you would get to grow in the middle of the lake.

But if you were to plant along the boundary of the reserve portion, for example - - -?---Yes. You could possibly do that if you wanted to.

SIMMONDS J: I don't think that was your question, Mr Wittkuhn.

WITTKUHN, MR: No.

If that were to occur, do you accept that that would affect the value of the balance portion of lot 37?---Yes, I think it would have some impact on it.

In valuing the reserve portion, a valuer should attach some significance, should he not, to the fact that the ownership of the reserve portion would carry the benefit of being able to actually recreate on the lake when it is inundated?

SIMMONDS J: The witness may well understand that question. I am not sure I do. Could you re-ask it?

WITTKUHN, MR: Yes, certainly, your Honour.

You would expect, would you not, that the valuer should attribute some value to the fact that ownership of the reserve portion would entitle the owner to actually recreate on the reserve portion such as, for example, putting a kayak out there when the lake is inundated?---Yes, I accept that."

53 I have previously noted that Lake Neerabup was not always inundated. The only valuer to comment on the impact of that possibility on the interest of prospective purchasers was Mr Vincent, who testified as follows (examination-in-chief, TS 199):

"I wonder if Mr Vincent could be shown please exhibits 7 and 8.

Mr Vincent, can you comment on how those photographs affect, if at all, your views on value?---Exhibit 8 I think speaks for itself. The two photographs there in exhibit 8 are obviously taken on a sunny day in winter and I find them very attractive. The lake would fill up in winter and that would be the amenity and the enjoyment that you would get.

And the other photographs?---The other photographs - that's exhibit 7. I'm not sure what time of the year they were taken. Obviously it's in winter - very attractive, I find.

What about the periods when the lake is not inundated?---During the high point in summer, the lake would dry up, as many lakes throughout the metropolitan area do. I think there's one in Shenton Park which is Lake Jubilup or Julibup which is surrounded by the most expensive housing in Shenton Park. That dries up to a mud bath in summer. I don't think it would worry people. They know what the season is, what the four seasons are going to bring. They know that the lake is going to dry up in summer. They know that it is going to fill up in winter. This is all taken into account by purchasers."

54 I take from Mr Paterson's evidence that there is no contest that the owner of the Balance Portion would be a potential buyer for the Reserved Portion, and a reason for that owner's interest would be the views of Lake Neerabup that the Reserved Land would protect, and the amenity of access to the Lake that the Reserved Portion would afford. Indeed the plaintiff's evidence was also to this effect (Kelly, witness statement, Exhibit 10, par 7). Whether there were other reasons for such an interest is a matter I will return to below.

55 It was put to me for the defendant there were other adjoining owners than the owner of the Balance Portion to consider. There was the owner of the lot sharing the north west border above the Land (Lot 36 Wanneroo Road) and there was also the owner of the lot sharing the south east border below the Land (Lot 38 Wanneroo Road, although its north western border appears to end at the point at which the south eastern border of the Reserved Land begins). Both of those lots, like Lot 37, provided slip road access to Wanneroo Road. In March 2002, after the date as at which the valuation in this case must be made, Lot 36 became Lots 800 and 801 on Plan 31950, when Lot 800, whose north eastern boundary appears on the evidence to include all of the former Lot 36's boundary with Lake Neerabup, was sold to the defendant. As to Lot 38, it also has a boundary with Lake Neerabup. There was evidence, from Mr Paterson, that at the valuation date its owner "could possibly be interested in adding it [the Reserved Portion] to their parcel" (cross-examination, TS 454). As will become evident below, the owner of Lot 38 at that date was in fact the defendant.

56 It was put to me that the before and after method of valuation could have no application where there were more adjoining owners than one who were potential buyers. I do not agree. Assuming the method was otherwise appropriate (a matter still to be resolved), the fact that there might be the same potentiality of equivalent interest to more than one adjoining owner (as where adjoining owners' lands ringed the land being acquired) would not make the method any less useful a guide to the economic value of their interest in the Reserved Portion.

57 However, in any event here I consider there is no such equivalence of interest as between the three adjoining owners. I note that at the election date (the date for valuation) both Lot 36 and Lot 38 had their own access to the lake. In this respect their owners would not be adjoining owners of the same sort as the owner of the Balance Portion of the Land.

58 At the same time, it is a matter of some nicety to determine an appropriate method by which to arrive at the effect on the value of the Reserved Land of the interest of such an adjoining owner in the features described, considered as a particular "potentiality" of the land for the purposes of Raja (supra). For the plaintiff, of course, it is submitted that the before and after approach is that method. That approach (in this case) would direct attention to sales comparable to a sale of the Land, and to sales comparable to a sale of the Balance Portion.

59 It is not suggested that there were any sales of land comparable to the Reserved Portion to adjoining owners of land comparable to the Balance Portion, with a possible exception, for Lot 30 Wanneroo Road, to which I will return. However, there were some sales of land comparable to the Reserved Portion to the defendant, as I will indicate below. For the defendant, it is put that these illustrate that there were other potential purchasers for the Reserved Portion than adjoining owners, as indeed the basis for a valuation, of the Reserved Portion in different ownership than the Balance Portion, requires one to hypothesise a situation other than an acquisition on an election to acquire by the defendant that resulted in that ownership.

60 However, I do not consider that the fact there is a market for the land apart from an adjoining owner affects the applicability or otherwise of the before and after method of valuation. Indeed, there was just such a position in Clay (CA) (supra). I return below to the use of prices on sales to the defendant itself.

61 Further, the defendant lays emphasis on the authorities on the market value approach that stress the willing purchaser to be hypothesised is one who has no pressing need to acquire, who is acting prudently and who thus should not be expected to pay the full value to the purchaser of the potentiality, dealing with a willing vendor who would not hold out for the highest price. See principally Pastoral Finance Association Ltd v The Minister [1914] UKPC 77; [1914] AC 1083, at 1088 - 1089; and Inland Revenue Commissioner v Clay [1914] 1 KB 339 per Scrutton J at 348 - 349, and 350.

62 I particularly note the judgment of Scrutton J in Clay (supra), at 349, and 350, which appear to be the passages to which Pickford LJ in the Court of Appeal decision in that case was referring in the passage I quoted from his judgment. Scrutton J said this, at 349 (emphasis added):

"If the owner of No. 83 [the subject land] had said to an expert, 'I wish to sell, but am not forced to, and can wait and negotiate; my house is worth 750_l_. to private owners to live in, but my next neighbour desires to extend his premises, and my house is so convenient and well built that it will pay him to go up to 1200_l_. rather than build elsewhere; what do you think I can realize by a sale?' I think such an expert would have answered, 'Well, it depends on diplomacy in bargaining, but I should think you could be sure of selling for at least 1000_l_., and if you refuse to sell except at your price you can very likely get more.' I exclude the last hypothesis of refusal, as I do not think the vendor would then be a 'willing seller at the time', but I see nothing in the Act to require me to exclude the first hypothesis, which seems to me the obvious business way to look at the transaction. In other words I cannot exclude from the 'open market' the principal buyer, though for a genuine business reason he will pay a price higher than others."

"In my view, therefore, the referee was right in fixing 1000_l_. as the gross value of 83, Durnford Street both in April, 1909, when the nursing home having offered Mrs Buchanan 850_l_. and having been refused were enlarging No. 84, and in September, 1910, when they bought No. 83 for 1000_l_. He was right in this, not because of the sale for 1000_l_., but because of the reasonable expectation that a willing seller could get 1000_l_. or more from the nursing home. Referees in assessing gross value on the occasion of sales are not bound by the actual consideration figure, which may be a misunderstanding of market value without business foundation, but where they find a sale influenced by the business wants of the buyer and a profitable transaction to him I think they are justified in considering it, though no other buyer would give such a price except to resell to the one special client."

64 This might be expressed in the terms of what it is expected the person would be prepared to pay, not what that person expected to gain from the transaction, which falls to be determined: Beard v Director of Housing (1961) 9 LGRA 74, Crisp J, at 80. I note that the quotation from Raja (supra), at 313 - 314, above, referred to using the full value to the adjoining owner who was the claimant. However, in that respect I consider that quotation is not applicable in the present context, because the present is not a compulsory acquisition case, where (as I will explain) it is value to the claimant that is in issue.

65 I consider that the before and after method would indeed be inconsistent with these authorities if the method were one to value the Reserved Land in the hands of the owner of the Balance Portion, rather than as evidence to assist in determining the effect on the market value of the Reserved Portion of the interest of that owner in that land. The authorities require the valuation to recognise it is the land with its potentialities, not the land with their realisation, that is being valued: Hyam (supra), at 86. It is precisely the contention of the plaintiff that the before and after method is a proper guide to what the adjoining owner would be prepared to pay, not that it is a measure of what the potentiality would be worth in the adjoining owner's hands.

66 However, I consider that it is not appropriate to take the approach that the valuer called by the defendant, a Mr Paterson, did in the following exchange from his re-examination (TS 481 - 482; see also cross-examination, TS 455):

"You were asked a question early on about the obvious and natural market for the reserved portion of lot 37. What did you understand the question to mean as the obvious and natural market?---I would take it if a person had the opportunity to buy say two and a half hectares of good land and then he had the opportunity to buy another portion of low lying land that he couldn't really use, it would be a figure that he would be prepared to pay that would reflect that added value to him.

Is it your position that that figure is necessarily going to reflect the amount by which acquiring that property might increase the overall value of the property?---I believe it's one and the same, yes."

67 There is even stronger evidence to the same effect from Mr Vincent (cross-examination, TS 265):

"That wasn't my question, Mr Vincent. My question was: if someone is wanting to acquire some property adjoining theirs, what I'm suggesting to you is that they wouldn't be prepared to pay for that adjoining property the value that they think it might add to their land. They would be prepared to pay something less than that?---You can suggest that. I don't agree with it."

68 Taking the approach that the figure would be "one and the same" as the difference produced by the before and after approach, or that a valuer should exclude the hypothesis that an adjoining owner might not be prepared to pay for the adjoining property more than a sum less than the value they thought it might add to their land, cannot be reconciled with the approach to market value in Clay (CA) (supra), or the general approach from Spencer (supra), of a willing but not anxious purchaser. Taking that approach is to treat this case as one of a compulsory acquisition, where (generally speaking) it is "value to the owner" rather than simply "market value" that is in issue: see Hyam (supra), at 278 - 279. The present proceedings, as I will explain in more detail later, are not on a compulsory acquisition.

69 This takes me to the matter of what the before and after method contended for by the plaintiff does measure.

70 The before and after method of valuation has a well recognised use in cases of compensation for expropriation of part of a holding: Hyam (supra), at 114 - 116. Its use has been described as follows, in Carson v Minister for Environment and Planning (1990) 70 LGRA 215, Hemming J, at 220 - 221:

"Each valuer initially assessed compensation by the 'before and after' method. The subject resumption involved the compulsory acquisition of only part of an unsubdivided parcel of land. The 'before and after' valuation method is an acceptable tool, often employed by a valuer in such circumstances as one way of taking into account all elements of compensation to which the dispossessed owner is entitled. It is often the most appropriate method of valuation when the excised parcel is of unusual size or shape, or if other reasons make it likely to be difficult to sell or even unmarketable. This method is particularly appropriate to avoid the double counting of damages where questions of enhancement or severance arise: see Realty Corporation Ltd v Commissioner for Main Roads (1940) 14 LGR (NSW) 204 and Gosford Shire Council v Green (1980) 48 LGRA 201.

However, the before and after method is not necessarily appropriate in all circumstances and has been rejected in a number of cases: see Hieronymus v Minister for Education (Land and Environment Court, 29 June 1989, unreported), and the cases referred to in Proprietors of Strata Plan 20754 v Council of the Shire of Hawkesbury, Land and Environment Court, Stein J 25 July 1989, unreported).

The Court is not bound to adopt the before and after approach, and it appears to be inappropriate where, as in this case, each valuer eventually assigned little, if any, difference to the rate per hectare in each part of the exercise. As observed in the Hieronymus decision (supra), in such circumstances the exercise has no utility because the same result would be achieved by merely valuing the resumed parcel itself. It became common ground that compensation in this case should be assessed by determining the value of the resumed land as a separate parcel."

71 Here, there is no contest that the rate per hectare in the "before" part of the use of the method would be different from the rate per hectare in the "after" part of that use, although whether it would be higher or lower was a matter of contest, as I will indicate.

72 However, the defendant's submission was that the method was inappropriate for another reason, which was that the method necessarily measured matters which, on Mount Lawley (supra), at [326] - [330], were not part of the value to be determined under the MRTPS Act, s 36(2b). Those matters were severance damage and other matters of injurious affection to the land retained. These were not part of the value to be determined under s 36(2b), because that section is concerned with compensation for injurious affection in respect of the land reserved, the Reserved Portion in this case, not compensation in respect of any residual land not so reserved, the Balance Portion in this case, for which there may have been severance loss, or in respect of which there may have been some other injurious affection: Mount Lawley, at [328].

73 The authorities on the application of the before and after method are concerned with compensation for expropriation: there are none in relation to valuations under the MRTPS Act, s 36(2b). The former compensation is for the loss to the owner dispossessed as a result of the expropriation, whether the loss was of the market value of the expropriated property, or the loss was of a portion of the value of the dispossessed owner's retained land, with, if the statute under which the valuation is being done so requires, the loss to be reduced by any enhancement of the value of the retained land: see Hyam (supra), at 334 - 336.

74 The valuation under s 36(2b) of the MRTPS Act is a form of measurement of injurious affection to the land the subject of a reservation caught by the Act. However, the election to acquire by the defendant that is necessary for that form to be engaged is not equivalent to a compulsory acquisition: there is no power of compulsory acquisition under the MRTPS Act, s 36. See Mount Lawley (supra), at [237] to [263].

75 However, I do not conclude from the non-inclusion of compensation for severance damage to retained land, and more generally the lack of equivalence of the election to acquire under s 36 of the MRTPS Act to an expropriation, that the before and after method has no application in the former context. At the same time, the method would require careful use.

76 The method does it seems to me assist with valuation of land which by reason of its shape and landlocked character is likely to be difficult to sell, if not unmarketable, but which has an attraction a valuer should take into account, such as that acknowledged by both valuers in this case, to an adjoining owner in the position of the owner of the Balance Portion. The method assists a valuer, it seems to me, in two ways.

77 First, the method should (properly used) help to indicate whether indeed there is a potentiality in the reserved land the lack of ownership of which by the owner of the retained land would reduce the market value of the retained land. There must be a potentiality, available to the owner of the retained land, which would have an impact on that market value through the expected interest of that owner, to ground the use of the potentiality in the valuation exercise as the plaintiff submits.

78 Secondly, the method should (properly used) directly indicate the upper limit of the impact of the potentiality on the market price of the reserved land. However, market value requires that the valuer hypothesise a willing but not anxious purchaser facing a willing seller. Therefore the actual impact should be expected to be below the upper limit unless the evidence otherwise indicates.

79 The need for care in the use of the method arises out of the fact (if market values are used) it measures (in a case like this one) what the owner of a residual portion of land would lose by not buying the portion in question, not (directly) what the impact on the market value of the land the subject of the election would be of his interest in avoiding any such loss. To repeat, it is the impact on market price of the interest of the owner of the latter sort of which on the authorities of Clay (CA) (supra) and Raja (supra) account should be taken. Separating that impact from the loss the owner would suffer is not required in cases of compensation for expropriation, which are concerned with determining the loss of value to the owner resulting from the expropriation: Birmingham Corporation v West Midland Baptist (Trust) Association (Inc) [1970] AC 874, per Lord Reid, at 893; Hyam (supra), at 274. However, just such a separation is required in cases of valuation of the land in question under s 36(2b), on Mount Lawley (supra).

The before and after method and special value

80 For the plaintiff it was put to me that the before and after method could be justified by reference to the principle that an owner should be entitled to any greater value of the land in question that it represented to the owner, even if it was not value that would be enjoyed by any other or many other potential owners. Counsel put emphasis on the fact the Full Court in Mount Lawley (supra) at [282] had left open whether value for the purposes of s 36(2b) included such "special value".

81 The Full Court in Mount Lawley (supra), in indicating that the proper approach to the determination of value under s 36(2b) of the MRTPS Act is in terms of "market value", contrasted this with the matter of "special value", as follows (at [281], [282]):

"In Boland v Yates [Boland v Yates Property Corporation Pty Limited (1999) 74 ALJR 249] both Callinan J and Gleeson CJ (with whom Gaudron and Gummow JJ agreed) referred to the fact that land might have a 'special value', reflecting 'a value to the owner over and above the price which a hypothetical purchaser may pay' ([16] per Gleeson CJ; and see [292] per Callinan J).

It is not clear to us that compensation for injurious affection under s 36 can include any allowance for 'special value' in that sense, and we do not read Scott J in Hill [Hill v Western Australian Planning Commission [2000] WASC 101; (2000) 107 LGERA 229] to be suggesting otherwise. However, we do not need to decide this as, in our view, there is no demonstration of any 'special value' in that sense in this case."

82 I do not consider I need to address the argument that "special value" is included within "value" under s 36(2b), as I have already concluded that the use of the before and after method can be justified as I have indicated. That justification is in terms of, and accounts for, the special interest of the owner of adjoining land. It seems to me that that special interest might derive, not simply from the character of the land as adjoining land, but (unlike this case) from a special use of it by its then owner, a use which may be permissible only to that individual. It seems to me that the Full Court in Mount Lawley (supra), at [286] and [287] allowed for this when they said:

"In our view, it is likely to be a rare case in which there is a difference between the market value of land and its special value to the owner. That is because the factors of special value are likely to be components of the market value which are recognisable as such by a notional vendor and purchaser who are 'conversant' or 'perfectly acquainted' with the land and all its features.

Callinan J described 'special value' in the following way in Boland v Yates at [292]:

' ... its value to the owner over and above its market value. It arises in circumstances in which there is a conjunction of some special factor relating to the land and a capacity on the part of the owner exclusively or perhaps almost exclusively to exploit it.'"

83 The example Callinan J in Boland v Yates (supra) used to illuminate "special value" in that sense was described later in his judgment at [292] as follows (footnote omitted):

"There will in practice be few cases in which a property does have a special value for a particular owner. Obviously neither sentiment nor a long attachment to it will suffice. The special quality must be a quality that has an economic significance to the owner. A possible case would be one in which, for example, a blacksmith operates a forge in the vicinity of a racetrack on land zoned for residential purposes as a protected non-conforming use, the right to which might be lost on a transfer of ownership or an interruption of the protected use. Such a property will have a special value for its blacksmith owner, and perhaps another blacksmith who might be able to comply with the relevant requirements to enable him to continue the use but to no one else."

84 It seems to me that "special value" in the sense described by Callinan J is not involved in this case, because it is not suggested that the potentiality of the Reserved Portion was only available to the claimant, as opposed to any other or few other potential owners of the Balance Portion. Indeed, I understood counsel for the plaintiff and for the defendant so to agree.

85 I note that the plaintiff, Mr Kelly, has a background as a "civil/marine engineer" (his witness statement, Exhibit 10, par 4). He did give evidence that he would have been "prepared" to raise a house in the Reserved Portion "higher" than a "modest sand pad" would have provided for if that "was required", because of that background (par 30). However, I do not consider that to be evidence this gave the Reserved Portion a special value to him.

86 I also note that the before and after method of valuation is not one that (if it uses market values, as the method seems commonly to do) captures special value in the sense described by the Full Court in Mount Lawley (supra). Rather, the method requires supplementation to achieve such a capture, as is indicated in Commissioner of Highways v Tynan (1982) 53 LGRA 1, Wells J, at 10 - 11, as follows:

"This method requires the valuer to begin by taking the original tenement -- in this case, the farmland as held and used immediately before the valuation date, which is 4 September 1980, and giving to it its market value; he must then determine the value to the claimant of the retained land, and for that purpose he must first find a market value for the retained land, and then bring to account the special financial advantages, and the special exemptions from financial disadvantages, that were lost to the retained land by reason of the removal of the subject land from the original farm complex and the structure of use and occupation, in accordance with which the farm was formerly operated. If this procedure is thoroughly and imaginatively pursued, the difference between the before and after values will yield a figure representing the value of the subject land to the claimant. Where it is based on reasonable sales evidence, this method is generally reliable, provided the circumstances are scrutinized in order to identify all the special benefits lost, and no error of principle is made in assessing what was their value to the claimant."

87 No need for any such supplementation has been suggested here. In any event, such supplementation would be to account for the impact on market value of that special exemption or financial advantage, not the loss of either on an expropriation.

The highest and best use of the Reserved Portion

88 At this point I return to the matter of this use. I have already indicated that the zoning of the Land, including the Reserved Portion, was rural. Two classes of use within that zoning were referred to in the evidence, for both the Land and the Balance Portion. The Land includes the Reserved Portion, of course. One class was uses by commercial growers. There were a number of commercial growing operations in the area of the Land, and there was evidence that at one point the Land had been used in market garden operations, although that was some time ago, and the portion of the Land so used, which apparently included the Balance Portion for the most part, had "reverted to stunted regrowth" (valuation report of Mr Vincent of 20 June 2000, Exhibit 12). The other class of use was by purchasers for what were called "lifestyle" purposes. These included purchasers who would use the property for their own lifestyle, particularly the views and other amenities of Lake Neerabup, as well as purchasers who would use the property for a business in what was called "eco-tourism" or environmental education. There was evidence that such business uses would require the approval of the City of Wanneroo, and I return to that evidence later. A mixture of both sorts of use could be envisaged, on the evidence of the purchase of a lot similar in size to the Land, Lot 14 (witness statement of Mr Matthew Peterson, Exhibit 21, par 7), but without its connection with Lake Neerabup. I return to Lot 14 below.

89 There was a further use for the Land and the Balance Portion referred to in the evidence, that of residential subdivision. I return to this use below, where I consider that on the evidence it did not represent a potential use for the Land or the Balance Portion for the purposes of determining market value. However, Mr Vincent, who treated subdivision as the highest and best use of the Land and the Balance Portion, had this to say in one of his reports (Exhibit 15) with respect to "tourism-orientated uses" compared with subdivision:

"Whilst a tourism orientated business is not necessarily the highest and best use for the land, it is an alternative use to subdivision to a residential subdivision or a two-dwelling development, and as the above analysis demonstrates, a hypothetical purchaser would pay a similar rate for land for such a use, as they would for land with subdivision potential or a two-dwelling development that I have analysed in previous reports."

90 I return below to the matter of a "two-dwelling development", as well as a "tourism orientated business". I also return to the sale, of Lot 14, Wanneroo Road, on which Mr Vincent rested his analysis. That sale, as well as the others relied upon by one or other valuer or both as comparable sales provide support for what I conclude is Mr Vincent's view in the passage I have quoted, that purchaser for "lifestyle" purposes is, after residential subdivision, the highest and best use for the Land and the Balance Portion.

91 However, the only comparable sale of land which on the evidence was acquired for commercial growing purposes, a sale relied upon by both valuers but for different purposes as I will explain, that of Lot 30 Wanneroo Road, does tend to indicate the potential for higher values in purchases for commercial growing purposes. However, as I will also indicate, there are difficulties with relying upon that sale, having to do with its character as a sale to an adjoining owner who was already conducting a commercial growing operation on the land acquired, an operation being conducted in conjunction with that on his adjoining lands.

92 Mr Paterson's evidence as to the highest and best use of the Land and the Balance Portion, as between commercial growing and "lifestyle" uses, is less clear. In his valuation report (Exhibit 32), he says this:

"A significant factor which I believe a president [sic] purchaser would take into account is the fact that approximately 1 ha of the rear reserve land is under water in the winter months and therefor [sic] this portion would most likely be discounted in the purchaser price. However, to offset this with the exception of commercial growers, the aspect for a lifestyle property with lake views in the winter months is likely to be a more significant than the loss of the use of the land by inundation."

93 However, his use of comparable sales includes only one identified as a transaction with a buyer for commercial purposes, being the sale of Lot 30 to which I previously referred, which as I will indicate he particularly relies upon for his "after" value, that of the Balance Portion. If Lot 30 is put to one side, I find no support from Mr Paterson's evidence that the highest and best use of either the Land or the Balance Portion is that of a commercial grower.

94 I conclude on all of this evidence that the highest and best use for the Land and the Balance Portion is then for "lifestyle" purposes.

95 The evidence was less clear on the highest and best use of the Reserved Portion considered apart from the rest of the Land. On the evidence of the irregular shape and landlocked character of the Reserved Portion, and the testimony of the valuers (Mr Vincent, examination in chief, TS 188; and Mr Paterson, TS 454) it seems to me, however, that the Reserved Portion would only be of interest to an adjoining owner, whether of the Balance Portion or one of the lots bordering Lot 37, to its north or its south, putting aside a sale to the defendant itself. I deal with such a sale later in these reasons. This would then in my view mean that the highest and best use of the Reserved Portion must be considered as identified with the highest and best use of the Land and the Balance Portion.

The matter of permissible uses of the Reserved Portion: the "buffer" issue

96 At the trial there was considerable attention devoted to the question of what sorts of works could be undertaken on the Reserved Portion, and in particular on that part of the Reserved Portion not part of Lake Neerabup. This attention was directed to the question of whether or not a lifestyle purchaser could utilise any of that part for the purposes of building at least part of a dwelling, as the plaintiff had proposed to do under his Application for Approval to Commence Development dated 17 May 1999 previously referred to. Such a dwelling would be positioned so as to take advantage of the views of the Lake and of its other amenities. There was for the defendant said to be evidence that any necessary permission for such works would be refused.

97 I accept for the purposes of this argument that the plaintiff's application should be taken as an indication of whether or not a dwelling could lawfully be constructed at least in part on the Reserved Portion. However, as I indicate below, I conclude that on the evidence the answer to this question has not been shown to me to have an effect on the value of the Reserved Land.

98 There were two possible bases put forward for the need for and refusal of permission to undertake the works referred to. One was the Environmental Protection (Swan Coastal Plain Lakes) Policy 1992 ("the EPP") and its requirements for authorisation of certain activities with certain implications for "lakes". The other was the requirement for a building licence by virtue of Local Government (Miscellaneous Provisions) Act 1960 (WA) ("the LGMP Act"), s 374(1), and the relevance to obtaining such a licence of what was referred to in the evidence as the "buffer requirements" of the then Waters and Rivers Commission.

99 At all material times the EPP had the force of law under the Environmental Protection Act 1986 (WA), s 31(d). Its purpose was "to protect the environmental values of lakes on the Swan Coastal Plain" (EPP, cl 2). There is no contest that Lake Neerabup was one such lake. The EPP required authorisation for certain activities, including causing or permitting material to be placed in such a position that the whole or any part of a "lake" is "filled in" (cl 10), or causing or permitting the discharge or disposal of effluent into a "lake" (cl 12), or causing or permitting the construction of any system for the "drainage of water into or out of a lake" (cl 13).

100 With respect to EPP, cl 10, I note the evidence of Mr Parker, an officer of the Waters and Rivers Commission at the time, that the "building envelope" under the plaintiff's proposal would extend into the "wetland", represented by the boundary of the "wetland dependent vegetation", by which I understand Mr Parker to mean the extent of Lake Neerabup as the Commission approached it (cross-examination, TS 423). Later I consider the evidence on locating that boundary of the Lake as so understood. However, I note that the EPP defined the Lake as "those lakes on the Swan Coastal Plain that are shown coloured in green on Department of Land Administration Miscellaneous Plan No 1815" (cl 4(1)). The lakes are so defined by reference to aerial photographs, taken in the summer, of standing water (cl 4(2)). As I will shortly indicate, the approach to wetlands as used by Commission goes to a broader area. The Plan referred to (defendant's book of documents, Exhibit 39, page 94) shows, as seems to me to be confirmed by the plan for the dwelling under the plaintiff's proposal (Exhibit 39, page 98), an area well short of the proposed building area, even allowing for its projection lakewards by further works such as parking, that projection being a matter to which Mr Parker called attention in his evidence. Mr Parker in his evidence also indicated there was an "anomaly" between the "mapped EPP boundary and the extent of the wetland actually present upon Lot 37" (Exhibit 31, par 4). This "anomaly" apparently arose out of "problems in the mapping used by that policy" (cross-examination, TS 420 - although there is some confusion in the later cross-examination as to whether the question related to the boundary for the purpose of the buffer policy; and re-examination, TS 425). Further, as Mr Parker acknowledged, "in any event" the Commission "maintains that the extent of the wetland dependent vegetation will prevail as the wetland boundary" (Exhibit 31, par 4). On this basis, I do not consider Mr Parker's evidence establishes that the plaintiff's proposal would have required an authorisation to avoid a breach of EPP, cl 10.

101 I note the evidence of Ms Watts, a planner employed by the Department of Planning and Infrastructure, (Exhibit 35, pars 43 and 48) which would indicate her view that the uses she refers to, which appear to include the construction of a dwelling at least partly on the Reserved Portion, could not have been undertaken on that land "due to the constraints" of, among other things, the EPP. However, there is not further detail in her treatment of the topic, and I do not consider it adds to the treatment in Mr Parker's evidence. I also note that neither she nor, as I will indicate below, Mr Parker, discusses the possibility of authorisation under the EPP.

102 With respect to EPP, cl 12, Mr Parker's evidence was that, in relation to the plaintiff's application for development approval, the Waters and Rivers Commission had determined its "requirements" for a 100 metre horizontal separation for septic tanks from wetlands, a 50 metre vegetated buffer to be maintained from the edge of the wetland dependent vegetation, and an additional 20 to 30 metre development setback from the buffer, or parks and recreation reserve boundaries, for residential development (witness statement, Exhibit 31, par 3) were engaged. The Waters and Rivers Commission wrote to the defendant, by a letter dated 20 October 1999, that "the proposed location of the residence is not sufficiently set back from the lake to meet [these requirements]" (Exhibit 39, page 26). In his testimony Mr Parker referred to the 100 metre requirement as one to ensure effluent disposal systems did not have a deleterious impact on a lake like Lake Neerabup (examination-in-chief, TS 420).

103 I view Mr Parker's evidence just referred to, and his other evidence, as going to the application of the EPP by virtue of cl 12, on effluent discharge or disposal. I note for this purpose particularly Mr Parker's evidence as to the physical possibility for the flow of discharge of effluent from the rear of the Land, a matter with respect to which I ruled he was qualified by his experience to provide a response to evidence of one of the planners called by the plaintiff, Mr Goff (examination in chief, TS 394 - 396). In view of that experience I prefer that evidence to that of Mr Goff. Mr Goff's evidence was, however, not only that there would be no physical possibility of such flow, but that treatment systems to prevent objectionable effluent discharge could be used in relation to the plaintiff's proposal, and that in any event any such discharge remaining would be regarded by the authorities as unobjectionable in view of the levels of discharge of permitted seepage from adjacent market gardens (Exhibit 20, pars 16 and 17). Although the defendant put to me that viewing "the totality" of Mr Parker's evidence I should conclude that any authorisation required under the EPP would be refused, I note that evidence did not in fact indicate whether or not the use of the one of the systems referred to by Mr Goff would have an impact on the grant of authorisation under the EPP. I note that his evidence was as to the Commission's "requirements", and not to the possibility of authorisation under the EPP.

104 I refer again to the evidence of Ms Watts, which I have discussed above.

105 I conclude from all of this evidence that it has not been established that authorisation would have been refused under the EPP for the plaintiff's proposal so far as that proposal related to a possible breach of cl 12.

106 With respect to EPP, cl 13, the only discussion of its application is in Mr Goff's evidence (Exhibit 20, pars 18 and 19), where he concludes (par 19) that the:

"... surface flow of water over sandy soil near Neerabup Lake in the place where the pad would go [for the plaintiff's proposed dwelling] would be minimal to the point of negligible".

107 The only other evidence relevant to cl 13 appears to be that of Ms Watts, already discussed.

108 On all of this evidence, I conclude that a possible breach of EPP, cl 13 has not been established.

109 This takes me to the requirement for a building licence. There is no contest that a proposal to construct a single dwelling on the Land regardless of its location would have required a building licence from the City of Wanneroo under LGMP Act, s 374(1). There is evidence that, if there had been no reservation on the Reserved Land, the plaintiff's application for a building licence for a dwelling straddling the boundary of the Balance Portion and the Reserved Portion would have been refused by the City. This evidence includes evidence from Ms Watts (Exhibit 36), as follows:

"A dwelling (and associated alternative on-site effluent disposal system) would be required by the City to be located outside a 50m buffer from the 'critical influence area' (defined as the edge of the wetland dependent vegetation). A conventional on-site effluent disposal (septic) system would be required to be located 100 metres from the critical influence area.

The statement by Mr Goff that a person can build a house wherever he or she likes, subject only to any written law to the contrary, should therefore be qualified, as the City advised that if a proposed dwelling was within the required buffer distance the application would be referred to the Waters and Rivers Commission for advice. Such advice is likely to have been consistent with that given to the Commission on 20 October 1999, which recommended a 50 metre buffer from the edge of the wetland dependent vegetation, with an additional setback for residential development of 20 - 30 metres from the buffer ..."

110 The Land was recorded with the City of Wanneroo as subject to a "Wetland Alert" (witness statement of Mr Ruscoe, Land Information Officer of the City, Exhibit 26). This Alert would have resulted in the referral of an application for a building licence to the then Waters and Rivers Commission for its "assessment and comments" (witness statement of Mr Neale, Coordinator of Building Approvals in the Planning and Development Directorate of the City, Exhibit 27, par 7).

111 There was some contest on the evidence as to where to locate the wetland dependent vegetation line for the purposes of the measurements of these buffers, and I review that evidence below. However, measuring the buffers from the eastern side of the line closest to the Lake on that evidence, it seems to me on the evidence (especially that of Ms Watts: see Exhibit 35, par 42, on the location of the western boundary of the Reserved Land relative to the line of "what appears to be the extent of the wetland dependent vegetation") that the plaintiff's development would encroach on the narrowest of the buffers referred to, the "50 metre buffer".

112 Mr Parker's evidence was that the "requirements" of the then Waters and Rivers Commission were based on "draft" guidelines or policy of the Environmental Protection Agency (set out in Exhibit 39, at pages 186 to 188) (the "draft buffer policy") for "defining the extent of buffers for waterbodies" (cross-examination, TS 400). However, I note that the Waters and Rivers Commission's requirements, as to the 20 or 30 metres "development setback" from the "buffer" or parks and recreation boundaries, and the 100 metre "horizontal separation for septic tanks from wetlands", do not appear in the draft buffer policy. I consider therefore that the Commission's requirements are not simply based on the draft buffer policy's guidelines. Counsel for the defendant addressed considerable argument to me as to the lack of statutory basis for, the draft character of, and the lack of public consultation in relation to, the draft policy, and what was said to be the mistaken view that the draft policy simply gave effect to the EPP. However, in view of my conclusion on the relationship between the Commission's requirements and the draft policy, I do not consider that I need to address these arguments. That is, the Commission appears to have developed its requirements having regard but not bound to the draft policy.

113 The draft buffer policy is to establish "dryland buffer" areas as a measure "to protect water quality through separation of the waterbody from surrounding activities" by maintaining a "dryland vegetation buffer". The draft buffer policy went on (Exhibit 39, p 186):

"While the application of generic buffer distances is not the preferred mechanism for establishing waterbody buffers, it does provide a conservative starting point. Appropriate site specific buffer distances could be determined in consultation with all relevant authorities."

114 The draft buffer policy provided that, for "vegetation buffers",

"[t]o maintain the functional integrity of the buffer, adjacent developments should be planned so that the waterbody and the dryland buffer are isolated from land use changes. For wetlands this refers to the protection of the wetland area and the dryland buffer immediately surrounding it. For watercourses, the watercourse, the 1 in 100 year floodway and suitable buffer should be protected. This can be achieved through reservation in regional or public open space, or through enforceable management controls where the area is to remain in private ownership."

115 The draft buffer policy set for "wetlands" that, "as a guide",

"50 metres or 1 metre AHD higher than the furthest extent of the wetland vegetation, which ever is the largest, would be the minimum dryland buffer required. The entire buffer should be "reserved" with the wetland proper."

116 The draft buffer policy explains the term "wetland vegetation", and contrasts it with "dryland vegetation", as follows:

"Immediately adjacent to the waterbody, fringing or wetland vegetation occurs which is directly dependent on the close proximity of the watertable in these areas. Fringing vegetation may include emergent species, paperbarks, riparian vegetation along river banks, and other species that can tolerate wet conditions. In turn, the fringing vegetation is surrounded by the 'dryland buffer', comprising dryland vegetation that is less tolerant of wet and waterlogged soil conditions."

117 I return below to the location of the wetland vegetation boundary for the purposes of the draft buffer policy. For now, I note Mr Parker's evidence that, on the boundary as he identified it, the western boundary of the Reserved Portion fell short of the 50 metre buffer referred to (cross-examination, TS 404). I have already indicated my conclusion that the evidence on the line of wetland dependent vegetation supports that view.

118 For the plaintiff, it was put to me that, if that evidence were to be accepted, the Waters and Rivers Commission's requirements could not properly be applied to prevent the plaintiff's proposal or any like it going forward. Even if they could have been properly so applied, any resultant effect on the value of the Reserved Property had to be disregarded, because the requirements were part of the "scheme" in which the parks and recreation reserve was also a step: see MRTPS Act, s 36(2b), in fine; and Pointe Gourde Quarrying and Transport Co Ltd v Sub-Intendent of Crown Lands [1947] AC 565, as discussed in Mount Lawley (supra) (see especially at [70]).

119 As to the first submission, I begin by noting that the fact that a decision like one to refuse a building licence in fact would likely be made is not an answer to the argument that any such decision would not have been lawful: see Trandos v Western Australian Planning Commission [2001] WASCA 346, at [73], per Anderson J, Wheeler J and Einfeld AJ agreeing.

120 The plaintiff's argument was that in making a decision whether or not to grant a building licence, the City could only take into account building considerations, and in particular could not take into account planning considerations. I was directed to authorities in which a distinction is drawn between these two sets of considerations, including most notably, it was said, West Australian Trustee Executor and Agency Company Limited v Perth Road Board (1929) 31 WALR 91, where the Court determined that the Road Board's power to approve the erection of buildings under the Building Regulations in the Second Schedule to the Road Districts Act 1919 (WA) did not extend to withholding approval in a case involving no contravention of any "lawful by-law or some statute" but where the Board withheld the approval on the basis the buildings "may constitute a nuisance". The Court held that the Board had no such power, which was "foreign to the scheme of the Act": Perth Road Board (supra), at 92, per Draper J. I accept that environmental considerations are planning ones for the purposes of this distinction: see TPD Act, s 5AA(3)(b) and s 5AA(3)(c), and J E Squarcini and Milino Pty Ltd v State Planning Commission, unreported; SCt of WA (Scott J); Library No 960200; 17 April 1996. I further accept that considerations of the sort addressed in the draft buffer policy and the Waters and Rivers Commission "requirements" are environmental, and therefore planning, considerations for that purpose.

121 I take from Perth Road Board (supra) that the matter of the considerations that may properly be considered by a local government authority in considering whether or not to issue a building licence under LGMP Act, s 374 depends upon a consideration of the "scheme of the Act". For this purpose I note the terms of s 374(1), and s 374(1b), as follow:

(a) lay out for building, or commence or proceed with a building on, land in a district; or

(b) in respect of the structure of a building already erected on land in a district, amend, alter, extend, or enlarge, or commence or proceed with the amendment, alteration, extension, or enlargement of the structure of the building,

until he has caused to be submitted to the local government, and the local government has approved by the issue to the person of a building licence in the prescribed form and on payment of the prescribed fee, a copy of the specifications of, and a plan showing clearly, the building or the buildings proposed to be built, or the amendment, alteration, extension, or enlargement proposed to be made, as the case may be, and the area of land to be occupied by each building, or by the amendment, alteration, extension or enlargement of the existing buildings, as the case may be, and the position of the privies and drains and unless he complies with the conditions, if any, that are specified in the licence.

Penalty: Maximum penalty of $5000 and in addition a maximum daily penalty of $100 for each day during which the offence continues; minimum penalty of $200 and in addition a minimum daily penalty of $20 for each day during which the offence continues.

...

(1b) The authority to approve or refuse to approve plans and specifications submitted under this section may be delegated by a local government to a person appointed to the office of building surveyor, but where a plan and specifications so submitted conform to -

(a) all local laws in force in the relevant district or part of a district in respect of building matters, and the local government's pre-determined policy in respect of building matters; and

(b) all local laws and schemes in force in the relevant district or part of a district in respect of town and regional planning matters, and the local government's pre-determined policy in respect of town and regional planning matters,

the building surveyor shall not refuse to approve that plan or those specifications without first obtaining the consent of the local government."

122 I note that s 374 has strong similarities to Road Districts Act 1919 (WA), Second Schedule, reg 2, and that the balance of the Second Schedule has similarities to Pt XV Div 2 of the LGMP Act in which s 374 is to be found. However, the Second Schedule of the former Act has no provision corresponding to s 374(1b) of the latter Act.

123 In my view, refusal of approval of a building licence by the City under the LGMP Act for a reason to do with the impact of the building on Lake Neerabup would not be "foreign" to the scheme of the Act. It seems to me s 374(1b) makes it plain that conformity with certain town planning requirements, including the local government's pre-determined policy in respect of town and regional planning matters, may appropriately be considered in relation to an application for a building licence. I note that there was a policy of the City of Wanneroo, approved by Council on 11 July 2000 as part of the City's Interim Local Strategy (witness statement of Mr Drescher, a town planning consultant, Exhibit 29, par 28, and Attachment 12) requiring a "proponent of any development" in the area of the Land "to demonstrate the stormwater drainage and other environmental issues can be managed, especially with regard to the quality of water in Lake Neerabup" (City of Wanneroo, Interim Local Strategy, cl 5.12.5). I consider that this provides the City with sufficient authority to have the matters to which the Waters and Rivers Commission "requirements" relate reviewed prior to the issue of a building licence, and to refuse a licence if that review showed non-conformity with the policy referred to.

124 Counsel for the plaintiff drew my attention, however, to Statement of Planning Policy No 1 of the defendant, which I should take to have been incorporated into TPS1, and thereby to have full force and effect as if enacted, by virtue of TPD Act, s 7(3). That Policy, published in the Government Gazette of 4 October 2002, introduced Residential Design Codes to replace those published in the Government Gazette of 13 December 1991, and states that:

"The building licence application should not be used to impose planning conditions and a building licence should not be refused on planning grounds. Using the building licence process as a means of determining Codes compliance has in the past resulted in inappropriate appeals to the Minister for Local Government who is not able to take planning considerations into account when determining appeals."

125 It is not clear to me whether or not the Policy should be seen as having worked an amendment to LGMP Act, s 374, so as to remove the authority of the local government authority to consider compliance with the matters set out in s 374(1b)(b), above, or to confirm the defendant's advice that as a matter of practice local government authorities should not refuse a building licence on planning grounds (including non-conformity with the Residential Design Codes), although they had been doing so in the past. However, any such change, in the statute or, on the evidence before me, administrative practice, occurred in 2002, after the date as at which the value of the Reserved Portion is to be determined, 18 July 2000. At least prior to that date, in my view, the City of Wanneroo could refuse a building licence in a case of non-conformity with its Interim Local Strategy, cl 5.12.5.

126 It is also the case that TPS1 does not require "prior approval of the Council pursuant to the Scheme" in the case of a development on zoned land involving a "single house": cl 7.2 read with cl 7.1. This is unless (cl 7.2) the person:

"... wishes to carry out development of a single house involving the exercise of discretion by the Council or who wishes to construct a single house in an area or manner where the provision of a Structure Plan prepared and adopted under Part 10 of the Scheme or a Policy prepared and adopted under Clause 5.11 of the Scheme require ..."

127 In my view this needs to be read with the process for the issue of building licences under the LGMP Act, including s 374(1b). Even if it may be taken to indicate that s 374(1b) should be read, not as I have suggested, but rather to indicate that the issue of a building licence is a matter separate from that of a determination of conformity with the planning matters referred to there, it is not apparent to me why the saving in cl 7.2 is not applicable here. That is because of the policy in the City of Wanneroo's Interim Local Strategy to which I referred, which appears to me to have been introduced under TPS1, cl 5.11.

128 Accepting that considerations of the sort subsumed by the policy just referred to could be the basis, either for refusal of a building licence, or for the refusal of prior approval referred to in the saving in TPS1, cl 7.2, I am taken to the plaintiff's next argument as to propriety of a refusal of permission for works on the Reserved Portion. It is that the City would not have exercised an independent discretion in relation to the matters the subject of the Waters and Rivers Commission requirements.

129 I was referred to evidence from Mr Parker (TS 427) and Mr Neale (TS 338). Mr Parker's evidence was that:

"CHRISTIAN, MS: In the context of the sentence that appears at page 186 suggesting that generic buffer distances isn't the preferred mechanism for establishing water body buffers, as a matter of practice in 1999 what was the relevance of generic buffer distances?---In 1999, as it is today, the Western Australian Planning Commission with all due respect liked to have an arbitrary figure that they can place on maps and be able to measure quite easily. From a scientific perspective, that does not necessarily take into account the plethora of issues associated with wetland formation. Shape, size, soil type et cetera are a little more dynamic than an arbitrary 50 metre or 1 metre AHD figure. Therefore that advice is taken and specified as being a conservative starting point from which to determine wetland buffers. I hope I have answered your question."

"Yes, thank you, Mr Neale. Mr Neale, at paragraph 10 of your statement you say:

If the applicant declined to amend his or her application, the city would have refused it.

That's relating to the application which Mr Kelly did actually lodge with the City of Wanneroo for a house straddling the reserve boundary. Is that correct?---I was assuming this was a hypothetical. It says, 'If the applicant declined to amend the application.' Are we talking about the original one or are we talking about a new one? I thought that was in the context of the Waters and Rivers Commission.

Yes, certainly. Yes, it does arise in that context so if an applicant was to seek a building licence for the construction of a house within the - is it the zone of critical influence? Is that the correct phraseology?---Yes.

As defined by the Water and Rivers Commission, and if they refused to move the house or relocate the proposal to outside of that area, the city would have refused it. Am I right in thinking that that is because you consider yourself bound to give effect to the Water and Rivers Commission position?---Correct."

131 I consider on this evidence that the relevant decision-maker, which is here the City, not the Waters and Rivers Commission, would if it acted as Mr Neale indicated indeed be acting contrary to the requirement that a body, in the position of the City, exercise the independent discretion conferred upon it, by the LGMP Act or TPS1 and its policy. What this involves is set out in Rendell v Release on Licence Board (1987) 10 NSWLR 499, at 503 - 504, per curiam (Kirby P, Priestley and Clarke JJA; emphasis in the original):

"We think the Board's minute and the correspondence indicate that the Board, contrary to law, either failed to carry out its functions under the Prisons Act or exercised its discretion by reference to a rule adopted by a body other than the Board and without regard to its applicability to the particular circumstances of the claimant. A body upon whom Parliament has conferred a discretion must exercise that discretion in accordance with the legislation. The decision maker must not, for the purpose of the exercise of discretion, take into account extraneous or irrelevant considerations. Nor must the discretion be exercised by reference to general and inflexible rules which pay no regard to the particular circumstances of the case. This is so whether such rules are laid down by the decision maker or an external body. It is of course often useful and sometimes necessary for administrators to adopt guidelines. These may provide guidance to officers in the scattered agencies of the administration. They may ensure that decisions are made in an even-handed and consistent way. But such guidelines must be compatible with the legislation conferring the discretion. They must not purport to usurp the discretion or substitute administrative convenience for the individualised decision if that is what the legislation has provided for, as we think the legislation in the present case has done. Most especially, the administrator must not permit the decisions of third persons or their actions and attitudes, to control the way in which such discretion is exercised."

132 It seems to me that this indicates that the City could not apply the Waters and Rivers Commission "requirements" as if they were rules of law. There was no indication they formed part of the schemes in force in the Lake Neerabup area in respect of town and regional planning matters, or were part of the City's pre-determined policy in respect of town and regional planning matters, referred to by LGMP Act, s 374(1b).

133 However, it also seems to me that the City could, as Rendell (supra) explains, take account of the Waters and Rivers Commission "requirements" to inform the exercise of its independent discretion. I note I have no evidence of how that might affect the probability of a decision whether to issue the necessary approval for a dwelling straddling the border with the Reserved Portion. I find that those "requirements", or at least the 50 metre one, would at least be seen by the hypothetical purchaser properly to reduce the chances of approval being forthcoming for a development that engaged the relevant "requirement" (see the cross-examination of Mr Paterson, TS 462), but it is not evident by how much. It seems to me on Trandos (supra) the hypothetical purchaser would presume that the City would act as the law requires in respect of those "requirements". I conclude then that a valuer would need to take account of the reduction I have described.

134 This conclusion takes me to the argument for the plaintiff that any resultant effect of the "requirements" on the value of the Reserved Portion" had to be disregarded, because the requirements were part of the "scheme" in which the Parks and Recreation Reserve was also a step: see MRTPS Act, s 36(2b), in fine; and Pointe Gourde (supra).

135 The plaintiff's argument was that the reservation was a means of giving effect to the "draft buffer policy" and, because of the policy's influence on the "requirements" of the Waters and Rivers Commission, those "requirements". I note, in the policy, its reference to "reservation in regional or public open space, or through enforceable management controls where the area is to remain in private ownership" as a means of achievement of the policy. However, I am not convinced on the evidence that the reservation in this case was a step in a scheme of which the draft policy and the requirements formed a part. The reservation was a part of the implementation of the North West Corridor Plan, to achieve certain landscape protection objectives as part of the development of land within the City of Wanneroo (witness statement of Mr Drescher, Exhibit 29, pars 15 to 18). It seems to me this evidence tends to indicate that the "draft policy" and the "requirements" did not lead to the reservation, but rather were different responses to the landscape values in Lake Neerabup: see Housing Commission of New South Wales v San Sebastian Pty Ltd [1978] HCA 28; (1978) 140 CLR 196, at 206 - 207, as quoted in Mount Lawley (supra), at [152].

136 However, I do not need to reach a final conclusion on this point, as there is a further aspect of the matter that is relevant. It is that there is evidence the Interim Rural Strategy (which would include the policy at par 5.12.5 to which I have particularly referred) was a part of the scheme of which the North West Corridor Structure Plan was also a part (witness statement of Mr Goff, Exhibit 20, par 18). I consider that it follows from that evidence that any effect on the value of the Reserved Portion from the Interim Rural Strategy must be disregarded.

137 However, in any event, it seems to me that the answer to the question of whether or not a dwelling could lawfully be constructed at least in part on the Reserved Portion would not affect the determination of market value I must make. There is evidence that even if it was not permissible to undertake the works referred to, a home could be built sufficiently close to Lake Neerabup so as to utilise its "lifestyle" benefits. This is in the form of an annotation by Mr Vincent on the valuation report of a valuer who prepared a report for the defendant, a Mr Gregory McMahon (Exhibit 17, page 9), which read as follows:

"No real magic in the location as to whether straddling the reserve, in the reserve or outside the reserve. Either way, most of the reserved portion will be part of the curtilage to a dwelling with attractive lake views and will be used for recreation and lifestyle."

138 He slightly elaborated upon this position in his examination-in-chief (TS 198 - 199), as follows:

"I would like you to assume for a moment, contrary to Mr Goff's opinion, that a house would have had to be set back 70 metres from wetland-dependent vegetation. Does that have any implications for your valuation?---Not really that I can think of, no. Still, if the reserved portion is lost, you've lost all the amenities of the lake.

So assuming you don't lose the reserve, assume that's still in your ownership but you're prevented from building actually on the reserved portion and you have to go 70 metres back from the wetland-dependent vegetation, how is it that that doesn't affect a comparison with a situation where you're actually building on or partly on the reserved portion?---If I have heard you correctly, you're saying now: is there any effect if the house is built back from the reserve and you still own the lake? You still own the reserved portion?

Yes?---There is no particular magic where you put your house. You would still enjoy the views. You would still have access to the lake and you could still use the lake if you still owned the reserved portion. No-one is going to plant trees to build out your views because you own the lake, so you wouldn't build out your own view if you're putting a house further back so you would still have the enjoyment of the lake, the reserved area."

139 There is no evidence to a contrary effect, and I accept it. I take from this evidence that a hypothetical prudent purchaser would consider that a dwelling could be built on the Balance Portion to take full advantage of its relationship with Lake Neerabup. I also consider that on the evidence this could be done without engaging the "requirements" of the Waters and Rivers Commission. I note that one of those requirements, for septic tanks, called for a wider buffer than the 70 metres referred to by Mr Vincent. However, on the evidence of the slope of Land (see Exhibit 39, at page 5) I do not consider that the position would be any different in that case. Further, even considering the "requirements" simply as a "conservative starting point", such that the Waters and Rivers Commission might apply a wider zone of "critical influence", there is no evidence it would have been so wide as to prevent the construction referred to by Mr Vincent.

Application of the before and after method and other methods in this case

140 The fact that there is a place for the before and after method of valuation (or any other method of valuation) in a case like this one is one matter. Its proper use is another.

141 Both Mr Vincent and Mr Paterson produced valuations of the Reserved Portion using the before and after method. As will become apparent below, Mr Paterson's report also provided a valuation using what he described as the "direct comparison" method, to which considerable critical attention was directed. I deal with it separately.

142 Mr Vincent produced four reports in all, being Exhibits 12 to 15, while Mr Paterson produced one report, being Exhibit 32. As well Mr Vincent produced a "critical analysis" (Exhibit 16) of the report from Mr Paterson (Exhibit 32), while Mr Paterson produced a "critical analysis" (Exhibit 19) of two of the reports from Mr Vincent (Exhibits 12 and 14).

143 As all of these reports were the subject of testimony from the two valuers, and were the basis for the differences in valuations between the parties, it becomes important I analyse them. Before doing so, I need to consider the parties' submissions on the credibility of the two valuers.

144 I begin by noting that even if I find both valuers to be credible expert witnesses, this does not mean I simply apply to each the principles in Spencer (supra) and decide between their valuations. I note in that regard the following, from Minister for the Environment v Florence (1979) 21 SASR 108, at 111, per Wells J:

"Both valuers had, in person, carried out a thorough and careful inspection of the subject land, in addition to accompanying the Court on its view, and were conversant with its principal features. They appeared to me to be well-trained and experienced. They maintained an objective and independent attitude towards their work, and that attitude was reflected in their testimony. While remaining firm on what they deemed to be fundamental principles, they at no time appeared to me to be dogmatic. In short, I could find no reason in their personal qualities, the demeanours they displayed as witnesses, or in the standards they adopted, to mistrust the work of either.

Nevertheless, there was a difference of $130,000 in their valuations (subject to margins for error that each acknowledged) and, in my view, a court should not take two valuations so separated and purport to apply to them the principles enunciated in Spencer [supra], without first subjecting them to a critical examination in order to discover whether either should be adjusted or altogether discarded."

145 I begin my evaluation of the credibility of each valuer by noting that I have no reason to doubt the expertise of the two arising out of their respective backgrounds in valuation. Both have had extensive and relevant experience.

146 Mr Vincent, who was called by the plaintiff, is, on the curriculum vitae for him (Exhibit 38, pages 69 - 70), a licensed valuer and the principal of Kingsley Vincent & Associates. He has been a valuer since 1965, at the date of trial having been in private practice for 34 years. Early in his career he was a rural valuer, and has valued residential, commercial, rural, industrial property, leasehold and rental properties. He has valued properties for resumption and compensation purposes.

147 Mr Paterson, who was called for the defendant, is, on the curriculum vitae for him (Exhibit 39, pages 12 - 16), also a licensed valuer, and has been valuing properties since 1973. He has worked in the Valuer-General's office, as well in the private sector, including on his own account, and most recently as a member of a national firm of valuers and property consultants.

148 Both valuers gave their evidence in a clear and forthright way. Both showed that, while adhering to what they considered to be fundamental valuation principle, they were not dogmatic, both conceding to one another's views on some particular points. No reason to mistrust their evidence generally emerges from this. There are, however, points of detail where, as I indicate, I find difficulty with one or other of their approaches, and in some cases with the approaches on a particular point of both of them.

149 For the defendant, Mr Vincent's credibility was attacked on the basis of his claim that a method of valuation used by Mr Paterson in his valuation report (Exhibit 32), the "direct comparison" method, was not in fact a method of valuation at all, when he conceded there were methods of that sort that might be used, although not in a case like this one. I discuss this evidence below. I do not consider that it impugns Mr Vincent's credibility, but rather shows the strength of Mr Vincent's opinion as to the inappropriateness of the use of the "direct comparison" method in this case.

150 For the defendant, Mr Vincent's credibility was also attacked on the basis of Mr Vincent's evidence as to the rates chosen for a front lot in his valuation reports that were Exhibits 12 and 14. I also return to this evidence below. Again, I do not consider it causes me to call Mr Vincent's credibility into question. Rather, it shows Mr Vincent's preparedness to question his own valuation in suitable circumstances, and to endeavour to find a better approach.

151 For the plaintiff, Mr Paterson's credibility was attacked on the basis of his failure in his report (Exhibit 32) to provide detail of how he derived his valuations, and in particular of how he derived his figures for the dry land and wetland portions of the Reserved Portion to which he referred. However, as I will explain when I reach that report, below, there is material in it from which the process of reasoning from his basket of sales evidence to his valuations in the report, can be derived, with an exception which his evidence in chief addresses.

152 The "correct principle" in matters of the sort just described is described in Western Australian Planning Commission v Arcus Shopfitters Pty Ltd [2003] WASCA 295, per McLure J, Anderson and Steytler JJ agreeing, at [72] as follows (emphasis in the original):

"the valuer must reveal as far as possible the process of reasoning actually employed so as to enable the Court to evaluate the evidence and the expert's conclusions: Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305; (2001) 52 NSWLR 705, at 729 - 745."

153 This does not require the valuer either to identify the most comparable sale or to quantify adjustments affecting value: Arcus (supra) per McLure J at [71].

154 While Mr Paterson here did not provide as much detail in relation to his derivation of his valuations as Mr Vincent, he provided sufficient detail, in my view, to permit me to evaluate his conclusions, as I indicate below. I do not consider that because of the difference in the level of explanatory detail the two valuers provide, I should doubt Mr Paterson's credibility, or on that account prefer Mr Vincent's evidence. Rather, as I will explain, I need to weigh their respective conclusions on the matters of significance to me in the light of all of the evidence in relation to the subject matters of those conclusions.

155 It was also put to me for the plaintiff that I should doubt Mr Paterson's credibility because he had overlooked the presence of improvements on one of the lots (Lot 51 Wanneroo Road) the subject of one of the sales he had referred to in his report (Exhibit 32), not acknowledging the need to correct the oversight until cross-examined on the point. In addition, in his evidence he had indicated he had relied on a transaction with respect to a lot whose sale had post-dated that report (Lot 6 Lake Road). I consider the former not to be a major oversight, in view of his evidence as to the extent of his reliance on that sale in his valuation report; and his acknowledgement was prompt and unequivocal. I consider that the matter of the subsequent sale is explained in his evidence, as a matter with respect to which he had prepared a valuation by the time of his report.

156 I also note that the defendant had obtained a valuation from another valuer, a Mr Greg McMahon, to whom I have already referred, whose report as annotated by Mr Vincent, was tendered in evidence by the plaintiff and became Exhibit 17, previously referred to. It was put to me for the plaintiff that I should treat the defendant's failure to call Mr McMahon as giving rise to an inference that his evidence would not have assisted the defendant, particularly in respect of the matter of the improvements on one of the lots (Lot 50 Wanneroo Road) the sale of which was relied upon by Mr Vincent in one of his reports (Exhibit 12) as a comparable sale. I do not consider I should draw any such inference. It is true that on a number of occasions reference is made to the report prepared by Mr McMahon, both by Mr Vincent in his evidence and, more to the point, by Mr Paterson in his evidence. It emerged from that evidence that Mr Paterson had not inspected Lot 50 Wanneroo Road (to the sales of which relied upon by Mr Vincent I return below), sufficiently to offer an opinion as to the nature and value of the improvements on it, but that Mr McMahon had done so. It also emerged from that evidence that Mr Paterson, who had acknowledged there were improvements on Lot 51 Wanneroo Road as I have indicated, also indicated he had not inspected them, but would "go along" with the valuation of those improvements by Mr McMahon (cross-examination, TS 460; re examination, TS 482 - 483). The matter of what Mr McMahon believed to be the value in question was not of course proof of that valuation. However, without an indication that Mr McMahon was available to give evidence I do not consider I can go further than that: compare Morison v The Commonwealth (1971) 34 LGRA 273, at 281, per Stephen J.

157 I conclude then that I should approach the valuers' evidence as Wells J approached the valuers' evidence in Florence (supra), from which I also note the following, at 116 - 117, per Wells J:

"I wish once again to emphasize, what I stated first in the Brewarrana case [Brewarrana Pty Ltd v Commissioner of Highways (1973) 32 LGRA 170], that [it] is contrary to principle to extract items from one valuer's calculation and items from another's, and bring them together to form a third. It may be objected that, if some such course as that is not adopted, a court may find itself faced, at the end of a case, with two or more valuations which, even after adjustments have been made to them in consequence of valid adverse criticism based on evidence or principle, give markedly different figures, and no safe ground may exist for discarding one and adopting another. What then (it is asked) should a court do? It would be plainly contrary to principle to strike an average; cases are not to be decided that way. Are such results to be regarded as intractable?

It seems to me that to reason in this way is to overlook the importance of Spencer's case and the function that it has in this jurisdiction. It is, in the final analysis, the court that fixes compensation in accordance with the correct legal interpretation of s 25. One element in the assessment of compensation is the value of the land and for the purpose of assessing compensation with respect to the value of land the principles enunciated in Spencer's case are to be applied by the Judge as the tribunal of fact. Amongst the 'ordinary business considerations' which the hypothetical buyer and seller would not overlook are, in my opinion, to be included the valuations (adjusted or modified - it may be - in accordance with the evidence as a whole) to which the expert valuers have testified. Those valuations and all the other relevant considerations referred to in Spencer's case will then be weighed by the trial Judge in order to make a final assessment of compensation."

158 I note the further explanation of the process in which the Court is to be involved, from the same Judge, in Minister of Environment v Petroccia (1982) 30 SASR 333, at 362, per Wells J (footnote deleted):

"Bearing in mind all the material that I have discussed and evaluated, the medial conclusions that I have recorded, and the qualifications or modifications of the experts' views that I have formulated, I move to complete the judicial process by "put[ting] [myself] as far as possible in the position of persons conversant with the subject at the relevant time, and from that point of view [ascertaining] what, according to the then current opinion of land values, a purchaser would have had to offer for the land to induce such a willing vendor to sell it, or, in other words, to inquire at what point a desirous purchaser and a not unwilling vendor would come together": see Spencer's case at page 432. The undertaking of this "necessary mental process" (ibid.) is an integral part of the judicial process, and is not, in se, a third valuation by another expert."

159 Turning now to the valuers' evidence, I begin with the valuations of Mr Vincent.

160 Exhibit 12 gives a valuation figure for the Reserved Portion of $171,000.

161 Exhibit 12 is Mr Vincent's valuation dated 20 June 2000, and is as at 9 November 1999. That date, as I have indicated, was the date of refusal of the plaintiff's development application. It the date as at which, by MRTPS Act s 36(3)(b), the valuation is to be made as s 36(6)(b) provides. The latter paragraph so provides for cases where land is not acquired by the Commission. The correct date is 18 July 2000, the election date, to which Mr Vincent's other valuations speak, as I will indicate below.

162 Exhibit 12 assumes the highest and best use of the Land would be for subdivision into two lots, "each with an area in excess of 2 hectares" (page 5). Mr Vincent in his evidence (cross-examination, TS 212) confirmed that this assumption was "mainly" based on the subdivision of nearby land, Lot 35, now Lots 50 and 51, not on the advice of a planner. I return to the matter of the subdivisibility of Lot 37, using the example of Lot 35 and other sources, below.

163 It will also become apparent that Exhibit 12 assumes that, after removal of the Reserved Portion, the Balance portion could be subdivided into two lots, even although one of those lots would be less than 2 hectares even after allowing for a driveway. There is no consideration in the evidence of why any such assumption might be appropriate.

164 Exhibit 12's valuation figure does not include any provision for "improvements". The report refers to two classes of improvements, those which it indicates added no value to the Land, and those which it indicates added some value.

165 In the first class, of improvements to which it assigns no value, the report puts an "old windmill framework", an "old disused pumping shed" and "galvanized reticulation piping in the ground". I note that Mr Paterson in his report (Exhibit 32) also refers to a "windmill" and, "on the lower portion [of the Land]", an "old locked up brick pump house with pipes leading from it into the currently dry lake bed". His report, two paragraphs down from these references, says that "the above mentioned improvements situated on the reserved land have no added value".

166 In the second class, of improvements to which it assigns a value, the report (Exhibit 12) puts two items.

"... aged but useful 80m2 shed of steel framed and GCI clad construction with earth floor which provides for lock up storage if required."

168 The report assigns to the shed "a value of $5,000 at this time", presumably a reference to the date of Exhibit 12, which as indicated was 20 June 2000.

169 The other item that the report puts in the class of improvements on the land to which it assigns a value is fencing, the full description of which in the report I set out below. The report assigns a "value of $5,000" to this fencing.

170 The failure to include any provision in Exhibit 12's "before" and "after" valuations for either of the two items each valued at $5000 would appear to be on the basis that those improvements should be assigned no value in a valuation that assumes a subdivision of both the Land and the Balance Portion. Thus, I note that a figure for improvements (albeit the shed only) is, as I indicate below, allowed for in each of the "before" and "after" valuations in the report (Exhibit 14) which removes that assumption.

171 The figure for the shed aligns with the figure for the shed in Mr Paterson's report (Exhibit 32), as I will indicate below, which also confirms that the shed is located on the Balance Portion.

172 However, there is no such evident agreement, or clarity as to location, with respect to the fencing.

"The property is adequately fenced along the boundaries with good conditioned ringlock fencing of about district standard adding value of $5,000."

174 It is not clear from this passage whether the figure refers to the "ringlock fencing" alone or to the fencing as a whole, nor whether any part of the fencing extends into the Reserved Portion.

175 I note, from Mr Paterson's report (Exhibit 32) that he describes the fencing in terms of two components, as follows:

"The subject property has good wire cyclone mesh on steel posts at the road front boundary and post and wire fences to the rear."

176 He does not indicate a value for either component, or for the fencing as a whole. He does indicate in Exhibit 32 that "the improvements on the [Balance Portion] will have a consistent though nominal value on a before-after basis".

177 Mr Paterson's reference in Exhibit 32 to "nominal value" is somewhat difficult to understand, given he assigns a value of $5000 for the shed, in his "before" and "after" valuations in Exhibit 32, as I will explain, and given he refers to the fencing on the "road front boundary" of the Land as "good wire cyclone mesh on steel posts".

178 Mr Paterson does not indicate in Exhibit 32 or otherwise whether the "post and wire fences" extend into the Reserved Portion, although he does say that "the above mentioned improvements situated on the reserved portion have no added value". There is a photograph of the Land (Exhibit 9), taken at or near the Reserved Portion (cross-examination of Mr Kelly, TS 138 - 139), which appears to show post and wire fencing that may extend into the Reserved Portion. The fencing shown does not appear to be in good condition.

179 I conclude from this evidence that, to the extent there is value in the fencing, it lies in the fencing on the front boundary of the Land, which would form part of the Balance Portion. While this should be added to both the Before and After valuations, at least in valuations that do not assume a subdivision, the same amount would be added in both the "before" and "after" valuations, and so would cancel each other out, as is the case with the value of the shed. The importance of the value of the improvements on the Land might be seen rather to go to deriving its vacant land value, and that of the Balance Portion, for the purposes of considering the comparability of both to other lands the subject of possibly comparable sales for the purposes of "before" and "after" valuations. However, I do not consider the amount for the fencing is sufficiently significant for me to take further account of it, which appears to me to be the position of the two valuers.

180 Exhibit 12's "before" value is the sum of two amounts after deductions for the costs of subdivision. One amount was the result of the use, date-adjusted (by 1.88 per cent annually), of the rate per square metre from the sale, in May 1999, of Lot 50 Wanneroo Road (itself a product of a subdivision of Lot 35 Wanneroo Road, to the north of the Land). This rate was applied to a "deduced" hypothetical front lot of 18,912 square metres (1.891 hectares). That area was one of just over 2 hectares, before taking out a driveway to provide access from the slip road by Wanneroo Road to the rear lot. The other amount was the result of the use, similarly date adjusted, of the rate per square metre from the sale of Lot 51 (the other product of the subdivision of Lot 35) in May 1997, applied to a "deduced" hypothetical rear lot of 22,062 square metres (2.206 hectares). That area was also just over 2 hectares, plus the driveway to it from the slip road. From that sum costs of subdivision were deducted which are agents' and legal costs, profit and risk, the cost of subdivision and interest on the land for 3 months at 6.5 per cent. There was no contest as to these deductions.

181 As will become apparent below, Mr Vincent in his last two valuations used a different date adjustment figure from 1.88 per cent, reducing it to 1.25 per cent in Exhibit 14, and increasing it to 3.84 per cent and to 4.41 per cent in Exhibit 15. I return to those different figures below.

183 Exhibit 12's "after" value is the result of the same approach based on the rates per square metre for the sales of Lots 50 and 51 referred to, but with a modification in the latter case, and some adjustments in the costs of subdivision. The rate for Lot 50 was applied to the same front lot area, but the rate for Lot 51 was applied to a reduced rear lot area, and a further adjustment was made to the rear lot rate. From this sum there were deductions for the same items for the costs of subdivision, but with adjustments to the deductions for those items.

184 The rear lot was (apart from its driveway) irregularly shaped, described as "triangular" in the Report, and being the remainder of the Land after subtracting the front lot of 18,912 square metres (1.8912 hectares), and the Reserved Portion. The rear lot's total area was 7,278 square metres (0.727 hectares) including the driveway to the lot from the slip road. The rate per square metre from the sale of Lot 51 was reduced to 62.5 per cent of that rate, to account for the net effect of its "triangular shape, smaller size and rear position". There was no contest as to that reduction, although I note it is not apparent to me how the "rear position" of this irregular lot differed from that of Lot 51.

185 The costs of sub-division were adjusted, reducing the amount for agents and legal and for interest, and with a slightly greater amount for costs of subdivision. Again, there was no contest as to these amounts.

187 The result from this application of the "before and after" method is thus the amount for the Reserved Portion of $171,000.

Criticisms of Exhibit 12's "Before and After" valuation

188 Putting aside the date for the valuation, the assumption that the Land and the Balance Portion were both to be subdivided, and the use of a before and after method, there were two criticisms directed at the valuation in Exhibit 12. One was that the valuation used the same rate per square metre for the entirety of the rear lot in the before value, when only part of that lot was the Reserved Portion. For the defendant it was submitted that a different rate should be applied to the (lower value) Reserved Portion comprising part of the rear lot. However, I consider this to be a variation on the objection to the use of the before and after method. If the Reserved Portion permitted the creation of a higher value rear lot then that might be expected to create a special interest in its acquisition for the purposes of a subdivision by the adjoining owner, the owner of the Balance Portion. It is the effect of that special interest on market price that the before and after method can help to indicate and to measure. I have already indicated that there is a place, in those terms, for the before and after method in the valuation in this case.

189 The other criticism was focussed on Mr Vincent's use in Exhibit 12 of the Lots 50 and 51 rates per square metre. The criticism was in terms of the principle for the comparable sales method that "the sales evidence must be both relevant and sufficient in volume": Arcus Shopfitters Pty Ltd (supra) per McLure J, at [48], referring to Maurici v Chief Commissioner of State Revenue [2003] HCA 8; (2003) 212 CLR 111, per curiam at [18]. In Arcus, her Honour at [49] quoted a passage in the judgment of Wells J in Brewarrana Pty Ltd v Commissioner of Highways (1973) 32 LGRA 170, at 179 - 180 as a "helpful description of what the comparable sales method involves". Wells J as so quoted said this:

"It is general valuation practice for sales characterized as comparable sales to be used as bases for the valuation of lands said to be similar. But allowances must always be made before such sales can be so used. No two parcels of land are identical in all respects: the sale price of any given piece of land is not necessarily the price at which it ought to have been sold, or the same thing as its true value. Before using any allegedly comparable sale, therefore, the valuer must consider whether, having regard to the circumstances ... appertaining to the parcel of land in question, and to the transaction of sale, there are sufficient similarities to the circumstances appertaining to the subject land and to the notional sale presupposed by the test formulated in [Spencer] ... to warrant a court's reasoning from the sale price paid under the allegedly comparable sale, with or without other evidence, to a value for the subject land. Adjustments must, of course, be made every time reasoning of that kind is undertaken. For example, in relation to the land itself and the circumstances appertaining to it, it may be necessary to consider such matters as topography, location, size, shape ... land use (actual and potential), scope for, and difficulties of, development, ...; and in relation to the transaction of sale, the valuer must weigh such things as the character, business and relationships of the parties, their motives, the terms and conditions in their contract of sale, and any other special considerations that induced or may have induced them to conclude the contract at the selling price agreed, as well as the dates when the contract of sale and the transfer were concluded or effected."

190 Of particular relevance to this case are the following passages from Arcus (supra), per McLure J, at [51] and [52]:

"However, a core requirement of the comparable sales method is that the comparable sales be sufficient in volume to justify a deduction or inference as to value. What is sufficient in volume will vary from case to case. Generally, it will require multiple (more than two) sales. In those circumstances it is necessary to consider the comparable sales evidence as a whole in order to assess whether any of the sale prices are out of line with the main body of the sales evidence or whether there are any other conflicts in the evidence. As Wells J noted in Brewarrana (supra), the sale price is not necessarily the same thing as market value. There may be some unknown factor affecting the price paid or a sale may, after collective analysis, legitimately be regarded as a market aberration. To consider each sale relied on by the experts in isolation and rule as to its comparability with the subject land in the way the trial Judge did is to assume firstly, that the sale price reflects market value and secondly, that there will be a single most comparable sale on which to determine value. Those matters should not be assumed. They must be tested.

... In my view, there is no requirement that a valuer identify the most important comparable sale. There is a requirement that a sufficient sample of comparable sales be collected and analysed collectively and individually. Having performed the analysis, a valuer in the course of the process is likely to attach different weights to individual sales and if so will be able to identify the sale or sales to which he can appropriately accord the greatest weight. On this approach comparable sales are weighted but the sample remains representative and sufficient in volume."

191 I take from this that a valuer may conclude that there is a single most comparable sale. However, such a conclusion can only be reached after analysing a basket of sales including that sale, on the basis of which analysis the valuer determines that that there is a single most comparable sale. I consider now if Mr Vincent could be seen to have so proceeded.

192 In Exhibit 12, under the heading "Unaffected Sales Evidence", Mr Vincent provided sale price and related details for five sales, including two sales of Lot 50, one in 1996 and 1999 (these two sales were used to derive the date adjustment figure of 1.88 per cent annually, as I will explain), and one sale of Lot 51, in 1997 (as I will indicate in relation to a later report of Mr Vincent, this lot was resold in 2003). The other two sales so referred to were the sale of Lot 19 Wanneroo Road, in 2000 and the sale of Lot 13 Wanneroo Road, in 1996.

193 In addition, in papers forming what appear to be annexures to the report, there is a list of nine sales, under the heading "Neerabup Land Sales as at June 2000". This list includes some sales not referred to under the heading "Unaffected Sales Evidence" earlier in the document, with the remainder being some of the sales that were so referred to. Of the former sales so listed, apart from the sale of the Land to the plaintiff himself in 1996, only the sale in 1995 of Lot 38 Wanneroo Road, the lot adjoining the Land to its south, was the subject of other evidence before me. It was a sale to the defendant, and the only evidence with respect to it, apart from its appearance in aerial photographs, was from Mr Vincent. His evidence was that, while, like the Land, it comprised significant areas both of land within Lake Neerabup or the wetland associated with it, and land outside those, or dry land, he had disregarded it for valuation purposes, as the sale was one to the defendant (cross-examination, TS 155 - 156). I return to the 1995 sale of Lot 38 in connection with other sales to the defendant, below. As to the remaining sales, I consider on the evidence neither of Mr Vincent nor Mr Paterson relied on them as comparable sales, and I have insufficient evidence as to them to come to any other conclusion.

194 The sales other than of Lots 50 and 51 that were referred to in the report (Exhibit 12) were, as I have indicated of Lot 19 Wanneroo Road. That sale was on 28 January 2000. The other sale, of Lot 13 Wanneroo Road, is referred to as one in "February 1996", which it appears from other evidence was 27 February 1996. Lots 19 and 13 are both south of the Land, and are similarly rectangular in shape, running parallel to it from Wanneroo Road (rather than, so far as is indicated by the aerial photographs in Exhibit 39, at pages 1 and 2, the slip road) to the north east, and ending in or near land which appears to be what I have described as Lake Neerabup.

195 Lot 19's area is shown as 4.057 hectares. It is described as having been for sale for "some time asking $600,000 through a local agent", having improvements in the forms of "a small, thirty year old house and artist studio" valued at $60,000. Lot 19 is described in Exhibit 12 as "a little inferior" to the Land, having a "sharp rise up from Wanneroo Road to a rear plateau that has not been well developed, until now (April 2000) when considerable improvements were being made to the land". Mr Vincent testified that he had visited Lot 19 in 2000 (cross-examination, TS 220). Exhibit 12 gives Lot 19's sale price in January 2000 as $480,000, and its vacant land price then at $10.35 per square metre.

196 In his evidence, Mr Vincent described Lot 19 as being limestone affected, where the Land was not. There is other evidence of the latter fact: see Exhibit 25, report of Mr Lennox Vernon Bastian, retired geologist called for the applicant, and his testimony (evidence-in-chief, TS 278). This evidence does not, however, refer to Lot 19 although, from the plan forming part of the report, it may be inferred that Lot 19 (and indeed Lot 13, to the north of Lot 19, to which I return below) were limestone affected in the sense that they lay across part of the Yanchep Dunes feature shown on the plan. However, the report does not address that matter, and I conclude it cannot safely be relied upon for the drawing of that inference. There is, however, other evidence that the Lots 19 and 13 were affected by limestone, from Mr Kelly the plaintiff (examination-in-chief, TS 161 and TS 169, respectively), a matter on which, I ruled at the trial, he was competent to give evidence. Indeed as to Lot 13, his other evidence was that the house there was built on "a significant limestone outcrop" (Exhibit 10, par 43) and there was evidence to a similar effect from Mr Vincent (cross-examination, TS 201). This evidence was not contested.

197 Mr Vincent's later valuation, Exhibit 14, referred to Lot 19 as having an "[i]nferior location to subject. Limestone", although there is no reference to limestone in Exhibit 12. It appears I was to infer from these references to limestone that it has a negative effect on land values, at least in a context of property like the Land. There was, however, evidence somewhat to the contrary from Mr Paterson, emerging in cross-examination of him (TS 464):

"Do you agree that all other things being equal, a limestone-affected property will tend to sell for less these days than a property not so affected? When I say 'these days', let's say as at July 2000. All other things being equal, a non-affected property would sell for less (sic) than an affected property?---I think it would have very limited effect when you're looking at four hectare or two-hectare parcels. I don't believe it would have any significance when you're looking at a lifestyle housing sort of a property with elevated good homesites where you can quite readily check the soil stability for your house pad and the balance of it I don't believe is terribly significant at all."

198 I understand this evidence not to deny that limestone increases the cost of erecting a building, but to affirm that, where there is also land not affected by limestone on which construction may be undertaken, such an effect can be avoided (and indeed he so testified in re-examination, TS 483). I find that limestone is capable of affecting market value to the extent it is perceived to reduce the flexibility of a purchaser purchasing to build as to siting the building, which raises the question of the extent of the limestone on a property. As I have said, there was none on Lot 37, while there was at least some on Lots 13 and 19. The extent of the limestone was not referred to; however, I am prepared to conclude that the vacant land values of Lots 13 and 19 would need to be seen as inferior to that of the Land, other things being equal.

199 However, I also consider that the extent of the discount should not be seen to be great, at least in relation to Lot 19, in view of the reference to that lot in Exhibit 12 as a "little inferior" to the Land, and the lack of any evidence that limestone was only discovered after Exhibit 12 was prepared. I have noted that the difference in that Exhibit between the rate per square metre for the Land ($12.49) and the rate per square metre of Lot 19 as vacant land in that Exhibit at sale on 28 January 2000 of $10.35. That in my view is a greater difference than would be conveyed by a "little inferior". However, I note in the valuation in Exhibit 14, returned to below, the corresponding difference is between the rate per square metre for the Land of $10.84 and that rate per square metre for Lot 19 (before a modest date adjustment). This is a difference that is consistent with Lot 19 being a "little inferior" to the Land, although below I indicate that the basis for the figure of $10.84 is problematic. I also note that the valuation in Exhibit 14 is on the basis that the Land was not subdivisible, an assumption which as I find below was appropriate.

The valuation of the improvements on Lot 19

200 The house on Lot 19 was considered by both Mr Vincent and Mr Paterson in relation to a single storey house Mr Kelly had built on the Balance Portion, completed in 2004 it would appear, for a cost of "just over $129,000", which appears to be the cost of the house alone without its associated works nearby (Kelly, witness statement, Exhibit 10, par 38). There was no contest as to this amount.

201 Mr Vincent described the house on Lot 19 as "considerably older" (examination-in-chief, TS 179) than the house Mr Kelly had had built on the Land. The house on Lot 19 was also described as one using a design which is "no longer a popular design among builders" and inferior in size (examination-in-chief, TS 179). I note also that the house on Lot 19 included a "fibro" upper storey (examination-in-chief, TS 160).

202 I note that Mr Paterson's valuation (Exhibit 32) assigned a value to the house on Lot 19 of $130,000. However, under cross-examination he conceded, on further reflection in the light of the assumed cost "in the mid-130s" of construction of a newer house and its associated works nearby, on Lot 37, by Mr Kelly, the value he had put on the house on Lot 19 was "not sustainable" (TS 474), although he noted also that the house was two storey where Mr Kelly's was a single storey one, and "has got a lot of other little bits of infrastructure and stuff around it as well". He considered Mr Vincent's $60,000 was "too harsh". In re-examination, he testified that a value "in the order of $100,000" was more appropriate (TS 486).

203 As I will indicate below, when I compare the rates per square metre date adjusted from the sales of Lot 19, Lot 13 and Lot 51, all considered as vacant land, there is support for a figure for improvements at or about the figure Mr Vincent assigned from a comparison of Lot 13 with Lot 19. As I indicate there, on balance, I consider I should find the improvements on Lot 19 should be valued as Mr Vincent did. I do this although it is not clear that it is appropriate to determine the value of improvements simply by using the replacement cost of a more modern design and materials and then depreciating that cost: see Russia Lutvey & Sons Pty Ltd v Valuer General (1980) 7 QLCR 1 at 8, referred to in Hyam (supra), at 127. This is because, as I have indicated, there is other evidence supporting Mr Vincent's valuation. In any event, this case is clearly distinguishable from Russia Lutvey (supra). There, the person supplying the valuation on the basis referred to was not an expert valuer, but a builder, and the method of valuation gave rise to values considered on other evidence to be substantial over-estimates. Nor was any objection taken to Mr Vincent using as his approach to valuing improvements, both here and more generally (for other land), the replacement cost of buildings less depreciation (see cross-examination, TS 270).

204 Mr Vincent also acknowledged that, unlike the Land, Lot 19 had very little wetland, it seeming to "just touch the lake system at the rear" (cross-examination, TS 221). By this it seems to have been meant there was only a very small part of Lot 19 that in winter was underwater as part of Lake Neerabup, although I note that Mr Paterson, in his evidence, refers to Lot 19 as "set back significantly from the lake's edge" (cross-examination, TS 464). I return to this difference between the Land and Lot 19 in relation to the later report, Exhibit 14, below.

205 As I have indicated, Lot 19's sale price with improvements on 28 January 2000 was $480,000, or $420,000 after deducting $60,000. (As will become apparent below, Lot 19 was subsequently resold in 2002, after the date of Exhibit 12, at a price of $490,000 that does not appear to reflect any "considerable improvements".) Lot 19's rate per square metre without improvements at sale is shown as $10.35. Although this is not done in Exhibit 12, that rate may be adjusted back to 9 November 1999 using the date adjustment rate of 1.88 per cent annually, to produce $10.31 per square metre. However, I will return below to the matter of using sales after the valuation date in this way. In fact, also as I will indicate below, no such issue arises in respect of the sale, on 28 January 2000, of Lot 19, in relation to the correct valuation date, 18 July 2000. This is the date used in Mr Vincent's valuation reports, below.

206 Lot 13's area is given as 4.0469 hectares. It is described as (Exhibit 12, page 5)

"... basically vacant land improved then with an old orchard which was grubbed out shortly after purchase and replaced with a new mango orchard. There was a small aged brick and tile, unoccupied house of nominal value on this property."

207 In his evidence, Mr Vincent testified that Lot 13's house was built on a limestone pad, in an elevated area (cross-examination, TS 201) and was when he last inspected it actually occupied, but "still in a rundown condition" (examination-in-chief, TS 201). In his later valuation, Exhibit 14, Lot 13 is described as "affected by limestone".

208 Mr Vincent also testified that there was no wetland in Lot 13, which I would understand to indicate that no part of it was part of Lake Neerabup as I have referred to it, and thus subject to seasonal inundation from the Lake (cross-examination, TS 221). He contrasts this with Lot 19, which "may have a tiny bit" of wetland (cross-examination, TS 253). I return to this aspect of Lot 13 below, in connection with the use of the sale of Lot 13 in relation to Mr Vincent's report in Exhibit 14.

209 Exhibit 12 gives Lot 13's sale price in February 1996 as $415,000, showing "an overall land value rate" of $10.25 per square metre. This would indicate that no value was assigned for any improvements on the property, although as I will indicate below Mr Vincent's valuation in Exhibit 14 did assign a value of $15,000 for improvements, while his valuation in Exhibit 15 assigned a value of $35,000 for them, after he had had an opportunity to inspect Lot 13 more closely (cross-examination, TS 222). This figure was not further tested. Mr Paterson did not assign a value to improvements on Lot 13, as he did not rely on its sale as a comparable sale (cross-examination, TS 475). Thus, the only evidence from a witness before me assigns a value for the improvements of $35,000, which is the value I will use. If the last figure, of $35,000, is used in Exhibit 12, this would yield a vacant land price at the 1996 sale of $380,000, or $9.39 per square metre. As I will indicate below, this is the price for Lot 13 given in Mr Vincent's report, Exhibit 15.

210 Although this is not done in Exhibit 12, the rate for Lot 13 in February 1996, of $10.25 per square metre, may be adjusted, up to 9 November 1999, using the date adjustment rate of 1.88 per cent annually. This produces $10.99 per square metre. If the figure of $35,000 for improvements at the 1996 sale is used, the figure which I have indicated I accept, the date adjusted figure is $10.06 per square metre as at 9 November 1999. This figure is lower than the corresponding one for Lot 19, which, as I have indicated, was, assuming improvements valued as Mr Vincent did, $10.31. If, however, the improvements on Lot 19 were valued as Mr Paterson did in his report (Exhibit 32), the figure for Lot 19 (date adjusted to 9 November 1999) becomes $8.59, a disparity that seems to me to be hard to justify on the evidence. If the value of the improvements is reduced, as Mr Paterson conceded they would need to be on the assumption I previously described, to a figure much closer (than the $100,000 Mr Paterson allowed) to that assigned by Mr Vincent, the rates per square metre become much more comparable in a way that is understandable given the evidence as to the characteristics of the two lots.

211 A difference in rates per square metre for their vacant land values between the two lots of the sort indicated by Mr Vincent's figures suggests that Lot 19 as vacant land would tend to be assigned a higher market price than Lot 13 as vacant land. There is no corresponding evidence from Mr Paterson in his valuation report: he, as has been seen, did not use the sale of Lot 13 in that Report. A difference of the sort Mr Vincent's figure describes might be explained by reference to the assignment of value to the sort of access to Lake Neerabup that ownership of a portion of the Lake would afford. I have already indicated that there is support in the evidence for such an assignment, from both Mr Vincent and Mr Paterson.

212 However, I also note the sale of Lot 20 Wanneroo Road in August 1999. This sale is referred to in Mr Paterson's Report (Exhibit 32, Sales Evidence), although it is not referred to in Mr Vincent's Report in Exhibit 12 or singled out in Mr Vincent's later Report (Exhibit 14) in which, as I will indicate, Mr Vincent seeks to align his valuation with the sales used by Mr Paterson in his Report. The sale in August 1999 of Lot 20 is, however, referred to in Mr Vincent's still later valuation report (that is, Exhibit 15), although not as a comparable sale to which he gave any or much weight, as I will shortly indicate.

213 Lot 20 is the lot running along the northerly boundary of Lot 19, and is, at 4.0356 ha, slightly smaller than Lot 19's 4.0570 ha. Mr Paterson refers to a sale price of $385,000 and values the improvements, which as set out in Exhibit 32 appear to have been extensive, at $85,000. This equates to a rate per square metre at sale of $7.43, and date adjusted at 1.88 per cent annually to 9 November 1999 yields a figure of $7.47. It is not clear what explains this difference from the corresponding figure for Lot 19 of $8.59, on Mr Paterson's original (Exhibit 32) figure for improvements, or $10.31, on Mr Vincent's figure. I note in particular that Lot 20, like Lot 19, appears to take in a small portion of Lake Neerabup. There is no feature of Lot 20 to which the evidence refers that would seem to explain the difference. However, I consider below, in connection with another lot with similar features to Lots 19 and 20, being Lot 24, a possible explanation.

214 However, it may be that the improvements on Lot 20 have been overvalued. Mr Vincent in his Exhibit 15 indicates that as at the date of that report (7 May 2004) the house and surrounds on Lot 20 had been "extensively improved", making "current inspection a highly unreliable guide to improvements value as of 09.96". A reduction in the improvements to a nil amount, for example, would yield a rate per square metre of $9.59 as at 9 November 1999. However, Mr Vincent does not attempt to put a value on the improvements on Lot 20. Mr Paterson was cross-examined on the figure of $85,000 he put on the improvements, by reference to the evidence of the purchaser, a Mr Paul Delaveris. The evidence of Mr Delvaris was that he had over the five years between his purchase and the trial put between $180,000 and $200,000 in work and materials into the house and its surrounding area on the property, gutting the house, which was "in a very different condition" then, replacing the roof, adding a large patio area and a bushwalk, and tidying up the surrounding area, which had been "in a real mess" (witness statement, Exhibit 22; cross-examination, TS 248). Mr Paterson maintained that his figure for the improvements was nonetheless (TS 473):

"... a fair added value for a five bedroom, two bathroom home of that size, depreciated value. It has got a bullnose verandah and everything else on it now and it looks quite good."

215 It would seem from the date of Mr Paterson's instructions for what became his valuation report in Exhibit 32, 28 March 2001, and the date of the report, which as I will indicate I take as 18 April 2001, that he would have inspected the improvements on Lot 20 some time between those dates, by which time on Mr Delvaris' evidence he would have done some work on those improvements, although it is unclear from his evidence how much work he would have done.

216 Thus, there are difficulties with the evidence concerning deriving the sale price as vacant land of Lot 20. In addition, it appears that Mr Paterson himself did not rely heavily on this sale in deriving his valuation of the Reserved Portion, as I will explain below. In those circumstances, I consider relatively little weight should be put on the sale of Lot 20 as a comparable sale.

217 I also note the sales of Lot 24 Wanneroo Road, in September 1996 and October 2000. These sales are also referred to in Mr Paterson's Report (Exhibit 32, Sales Evidence), and also are not referred to in Mr Vincent's Report in Exhibit 12, or in either of his later Reports (Exhibits 14 and 15). Lot 24 is a lot further to the north of Lots 19 and 20, and is, at 3.9263 ha, slightly smaller than both. Mr Vincent gave evidence that Lot 24 contained a small amount of wetland, "just a touch" (cross-examination, TS 226). Mr Paterson in his valuation report (Exhibit 32) refers to Lot 24 as "generally off the edge of the lake area with no water views", and the lot "does not have the lake views that the subject has". There is also photographic evidence of some limestone on Lot 24, although the extent is not in evidence (Exhibit 38, page 55, photograph 16).

218 Mr Paterson in his report (Exhibit 32) refers to sales prices for Lot 24 in 1996 of $325,000, when on his valuation the improvements he refers to, which were less extensive than those on Lot 20, were $40,000, and in 2000 of $360,000, when on his valuation the improvements were $50,000. The improvements referred to were a "small framed asbestos clad cottage and various sheds on the lower ground". Mr Paterson was cross-examined on his valuations of the improvements on Lot 24 at the times of the sales of that lot; however, he maintained that those valuations, while at the "absolute top end" for the house that represented those improvements, were a "fair assumption" (TS 469).

219 I note that Mr Vincent gave evidence that the value of the cottage on Lot 24 at the time of his inspection of the lot in May 2004 was nil, because it was "run down" and not inhabited (examination-in-chief, TS 160 - 161), and it was "the only building" on the lot (examination-in-chief, TS 161). It is not clear whether or not his position was that the value of the improvements should be taken to be nil in both 1996, some eight years earlier, and in 2000, some four years earlier.

220 A comparison of the two vacant land values using Mr Paterson's improvement values implies a date adjustment figure very close to Mr Vincent's in Exhibit 12, of 1.88 per cent; the corresponding figure for Mr Vincent's values if they are taken to be nil on each occasion yields a figure of about 2.5 per cent. On this comparison, I would prefer Mr Paterson's valuations.

221 However, using Mr Paterson's figures also yields date adjusted rates per square metre of Lot 24 to 9 November 1999 of (on the 1996 sale) $7.63 or (on the 2000 sale) $7.69. On his figures Lot 24 is similarly priced land to Lot 20, which has a similar area and which also has a small amount of Lake Neerabup or its wetlands. Like the sale of Lot 20, the sales of Lot 24 are difficult to reconcile with that of Lot 19.

222 However, a possible explanation for the differences between the sales of the first two lots and the sale of the third lies in the discussion of Lot 24 in Exhibit 32, where Mr Paterson says its price:

"[i]ncreased only approximately 11% over four years. Subject [the Land] originally purchased around the same time. The same growth rate would only indicate the value of around $305,000 for the subject, however, Lot 24 does not have the lake views that the subject has."

223 As I will indicate below, Mr Paterson in his valuation report (Exhibit 32) assigns a vacant land value to the Land of $90,000 per hectare ($9 per square metre), which is significantly closer to the rate per square metre at its sale in January 2000 of Lot 19 than it is to the rate per square metre of its sale in August 1999 of Lot 20, or the rate per square metre at its sale in October 2000 of Lot 24. Date adjustments make little difference to these comparisons of reasonably proximate sales.

224 This would indicate that, to the extent he used the sales of Lots 20 and 24 in his "before" valuation in Exhibit 32, Mr Paterson made significant adjustments in the rates per square metre for Lots 20 and 24 and a much less significant one to the rate for Lot 19, and that he did so by reference to differences in their respective lake views.

225 Mr Vincent indicated he had not used the sales of Lot 24 in his valuation (cross-examination TS 223 - 226).

226 It seems to me on all of this evidence I should weight the sale of Lot 24, like that of Lot 20, relatively low by comparison with that of Lot 19. At the same time I should note what Mr Paterson has indicated as to the impact on market value of lake views.

227 On all of this evidence also, I would accept the value for improvements to Lot 19 of $60,000, the value Mr Vincent assigned.

228 In the valuation in Exhibit 12, the sale of Lot 13 in February 1996 is described as "well out of date" for the purposes of consideration for a November 1999 valuation, but it is also referred to as providing a "guide to the valuation, however" (page 5). Lot 19's sale was however much closer to Exhibit 12's valuation date, and for that matter to the correct valuation date, that in Exhibit 14, 18 July 2000, as will be seen.

229 However, as I will indicate below, Lot 13 assumed greater significance in Mr Vincent's valuation in Exhibits 14 and 15.

230 In addition, the sales of Lots 19 and 13 are described as of "un-subdivided" or "en globo" land" (page 5). The report goes on to say (page 6) it is:

"... necessary to compare and contrast some recently subdivided and sold lots to the [Land], to arrive at the 'en globo' land value as at November 1999."

231 In his evidence Mr Vincent said this (cross-examination, TS 216):

"So sales of lots of similar size unsubdivided don't give you much assistance, do they?---Well, they do, but unfortunately both of those sales have improvements on them which had to be deducted from the sale price to arrive at the land value.

Do you agree that there's always difficulties in dealing with improvements. It would be far better to be comparing vacant land with vacant land if you could be?---Yes, yes, I'm aware of that."

232 I have already commented on the discrepancy between the rate per square metre for Lot 19 and the rate per square metre for the "before" valuation. It is possible that the assumption of a subdivision in the latter case accounts for the size of this difference, which is not as great in Exhibit 14, as will be seen.

The value of access to the slip road to Wanneroo Road

233 There is a further aspect of Lots 13 and 19 which needs to be referred to, as it also differentiates them from Lots 50 and 51 (as well as the Land and, as will be seen, certain other sales one or other or both of Mr Vincent and Mr Paterson considered as comparable, at least to some extent). That aspect was the fact Lots 13 and 19 had frontage on to Wanneroo Road itself, rather than on to the slip road which the other lots fronted (see Exhibit 39, pages 1 and 2).

234 The only evidence I have on the effect on values of access to a slip road is in the cross-examination of Mr Paterson, where the following exchange took place (TS 464):

"Would you accept that a slip-road represents an advantage which in normal circumstances a prospective purchaser would be prepared to recognise as a special advantage they would be prepared to pay a bit more for?---I think that's reasonable, yes."

235 However, I do not consider this evidence establishes that there would be a substantial special advantage so recognised. This is a conclusion I draw both from the evidence quoted ("a bit more"), as well as the fact none of the valuation reports of Mr Vincent and Mr Paterson makes mention of this form of frontage, except for Mr Paterson, who refers in his report (Exhibit 32) under "Services Available" for the Land to an "upgraded slip road ... under construction", but makes no reference to access to a slip road in the "Sales Evidence" addendum to his report, which includes references to at least one lot (Lot 30) which as will be seen also has access to the slip road.

236 The treatment in Exhibit 12 and Mr Vincent's evidence of the sales of Lots 19 and 13 there referred to needs to be considered with that of the sales of Lots 50 and 51 to determine if he has properly weighted, as Wells J in Brewarrana (supra) describes, the five sales, as Arcus (supra) indicates he should.

237 Lots 50 and 51 were the result of a subdivision, in January 1993, of former Lot 35 Wanneroo Road, which was two lots north of the Land. Lot 50 is shown as the lot at the front, bounded by the slip road by Wanneroo Road, with an area of 2.004 hectares. This is somewhat larger than the size of the front lot in the assumed subdivision of the Land for the purposes of the "before" valuation, which as I have indicated was 1.891 hectares. Lot 51 is shown as the lot at the rear of the former Lot 35, with access to the slip road by "a long battleaxe neck" (page 6), and with an area of 2.098 hectares. This is somewhat smaller than the size of the rear lot in the assumed subdivision of the Land for the purposes of the "before" valuation, which as I have indicated was 2.206 hectares.

238 In his testimony, Mr Vincent's evidence as to the relationship with Lake Neerabup of Lots 50 and 51, relative to that of the Land, was this (re-examination, TS 267):

"Could you look please at exhibits 7 and 8? Those are the photographs of the inundation. Mr Vincent, the amenities and attraction you have referred to arising from the lake on lot 37, are those amenities available to either lots 50 or 51?---No, they're not."

239 I return to this difference between Lots 50 and 51, and the Land, below.

240 Exhibit 12 also shows Lot 51 as having been sold in "May 1997", which is particularised in the annexures as 12 May 1997, when it had unfinished improvements in the form of a "small kit home" (page 6), to which a value of $25,000 was assigned. Below I consider Mr Paterson's evidence as to these improvements.

241 In his evidence Mr Vincent referred to Lot 51 "as a little bit lower towards the eastern boundary, the rear of Lot 51, but it would appear to be above the lake system" (cross-examination, TS 220). Mr Paterson's evidence was also that Lot 51 was "all dry land", not (like the Land) "part wet and part dry" (re-examination, TS 482), and this does not appear to be in contest. Finally, there is no reference to any limestone feature of Lot 51.

242 I return to the "wet" feature of the Reserved Portion below, when I consider Exhibit 14.

243 Exhibit 12 gives Lot 51's sale price on 12 May 1997 as $235,000. This represented "a vacant land value" of $10.00 per square metre for that lot. This value is then brought up to the valuation date of 9 November 1999 using the date adjustment rate of 1.88 per cent annually, to produce a vacant land value of $10.49 per square metre. This puts its calculated value as at 9 November 1999 as between those as at that date of Lot 19 ($10.31) and Lot 13 ($10.99, if Lot 13 is treated as having been sold in 1996 without any improvements), but closer to the lower value for Lot 19 than to the higher value for Lot 13.

244 The relativity just described is not discussed in Exhibit 12 or addressed in the other evidence before me. It would not be easy to explain if, as was accepted both by Mr Vincent and Mr Paterson, there is a discount for greater land area (that is, the rate per square metre of a lot of larger size is less than the rate per square metre of a lot of smaller size, all other things being equal). Indeed on the evidence of Mr Vincent the discount involves "some considerable form of adjustment" (cross-examination, TS 224), while, as will appear below, when I consider Mr Paterson's critical analysis of a valuation of the Balance Portion that would yield a lesser rate per square metre than the Land, Mr Paterson's evidence seems to be to the same effect. Further, the relativity is not easy to explain if, as is the case on Exhibit 12, as I have indicated, the value of limestone affected land is less than that of land not so affected. As I have indicated, the evidence was that both Lots 19 and 13 were limestone affected, while Lot 51 was not.

245 At the same time, allowance needs to be made for the evidence of Mr Vincent that rear lots are less valuable than front lots, other things being equal (cross-examination, TS218 - 219). Although there is no corresponding evidence from Mr Paterson, I note the following exchange in the cross-examination of him in which he was asked to consider the approach to valuing property in the Perth suburb of Peppermint Grove with an elevated limestone ridge offering a view on the Swan River:

"What do you recommend would be the appropriate approach? Try and find a comparable sale of land with an elevated area?---Yes. You would try and find as much comparable evidence as you had with size and views and frontage and try to take all factors into account and test the market as best as you can.

So you would have to wonder why someone would even consider valuing the limestone area separately and valuing the flat area separately because it's not a valuation method that makes much sense?---Well, if it's in Bindaring Parade and it's looking over the river, you know, the ultimate thing is going to be the frontage and the elevation and the views, and it does drop down steeply on that street in the same situation. I mean, you're not really going to split it up, so you will have 1.3 million for the front bit but 200,000 for the bottom bit or something like that."

246 I return to this evidence below when I consider Mr Paterson's use of the direct comparison method of valuation. However, I understand his view to be that frontage on a road or its absence is a significant factor in the determination of comparability.

247 I accept Mr Vincent's evidence, although I will need to return to the matter of how to weight frontage on a road against other characteristics of land said to be the subject of a comparable sale. Lots 19 and 13 are of course lots running from Wanneroo Road to the Lake Neerabup area. Lot 51 runs to the Lake Neerabup area, but does not run from the slip road by Wanneroo Road, with which it has a connection through a battleaxe neck. There is also evidence, which I have referred to, that bordering on or access to a slip road is itself an advantage over bordering on or access to a road like Wanneroo Road. I return to both matters below.

248 However, if the rate per square metre for Lot 13 using $35,000 of improvements at its sale in 1996 is used ($10.06), then Lot 51's vacant land price per square metre ($10.49 as at 9 November 1999, as indicated) is above the corresponding prices for the other two lots. As I have indicated $35,000 is the value for improvements on Lot 13 that I accept.

249 Two further matters arise in respect of the price per square metre of Lot 51, considered as vacant land, and used in Mr Vincent's before and after valuations in Exhibit 12. The first is the value of the improvements on Lot 51. The other is Lot 51's lack of the "amenities and attraction arising from the lake on lot 37" (Mr Vincent, re-examination, TS 267). The evidence of the valuers Mr Vincent and Mr Paterson on both is conveniently dealt with at this point.

250 In Exhibit 12 Mr Vincent valued the "unfinished improvements of a small kit home" on Lot 51, as I have said, at $25,000. Mr Paterson in his valuation Report, as I will indicate below (Exhibit 32), put no value on any improvements on that lot. However, in cross-examination, Mr Paterson testified that in fact there were improvements on the lot, consisting in "a kit home of about 90 square metres with bore", and that he would "go along with" a value for those improvements of $55,000, although he also testified he had not inspected Lot 51 (cross-examination, TS 460; and re-examination TS 482). I have previously noted that Mr Vincent had inspected it. The higher valuation would change the rate per square metre for Lot 51 as vacant land, to $8.58, at the date of sale, and, date adjusted to 9 November 1999 at 1.88 per cent annually, to $8.98. This is significantly below the corresponding figures for both Lot 13 and Lot 19, and, while Mr Paterson's testimony included his acceptance of the rate for the date of sale (TS 460), the figure for improvements of $55,000 is hard to accept on his evidence recognising that there should be a discount for size (examination-in-chief, TS 433, to which I return below), and that, while there was some advantage to having land that extended into the lake as opposed to simply having views over it (cross-examination, TS 478 - 479), Lot 51 nonetheless had a "similar good aspect to the lake, that the subject will have after taking off the reservation" (Exhibit 32). I return to Mr Paterson's evidence in the last two respects next.

251 On balance, I consider on this evidence that I should prefer the evidence of Mr Vincent as to the value to be put on the improvements on Lot 51. I do this notwithstanding, as I will explain when I consider Mr Vincent's valuation report that is Exhibit 15, Mr Vincent had only inspected Lot 51 in 2000, and that the improvements on Lot 51 had been worked upon between the 1997 sale and the date of that inspection.

252 As to Lot 51's lack of the "amenities and attraction arising from the lake on lot 37" (Mr Vincent, re-examination, TS 267), there is evidence from Mr Paterson, in his valuation report (Exhibit 32), which I have quoted in part, and which in full is that Lot 51 had a:

"... similar good aspect to the lake that the subject will have after taking off the reservation. Considered to be a good example of the increased dollar per hectare rate achieved with smaller lots with good aspect."

253 I return to this evidence in relation to Exhibit 32 below, where I indicate this evidence needs to be understood in the context of Mr Paterson's acknowledgement of the value of access to the Lake of the sort the Reserved Land would afford and the possibility of loss of the views to the Lake from plantings on the Reserved Portion by a different owner (cross-examination, TS 478 - 479). As I will indicate also when I return to Mr Paterson's evidence, I find that a valuer would also assign some value to land that was subject to seasonal inundation. However, on that evidence, it would follow that, as between land comprising a greater portion subject to seasonal inundation and land comprising a lesser portion subject to such inundation, a higher price per square metre would be paid for the latter than the former, other things being equal.

254 This body of evidence leads me to conclude that Mr Paterson like Mr Vincent saw the Land having amenities and attractions, for which a valuer would assign value, and which Lot 51 lacked. This indicates that using Lot 51 in relation to a "before" valuation for the area of the rear lot on the Land (assuming a subdivision of it) would require adjustment for this factor, as well as for the factors of the date of its sale, its size, its lack of inundated land and its lack of access to a slip road. On the evidence I would, not without some difficulty, accept that Mr Vincent made all five of these adjustments to arrive at the rate he did for the rear lot, by settling on the rate from Lot 51, date adjusted. Mr Paterson's evidence seems to be that he did not use the 1997 sale of Lot 51 for the purposes of his "before" valuation to any significant extent at all, as I will indicate when I discuss his valuation report (Exhibit 32).

255 In relation to making adjustments to sale prices of sales that might otherwise be comparable sales, I note the following, from Arcus Shopfitters (supra), per McLure JA, at [50]:

"There is no hard and fast rule by which a valuer can draw the line that clearly separates sales that are comparable from those that are not. It is a matter of degree. Some adjustment is always necessary but too much adjustment may render it unsafe to use a sale. Where the line is to be drawn is a matter for the expert valuer to determine."

256 As will become apparent below, I do not consider Lot 51 is properly to be used in a "before" valuation (or even an "after" valuation, as will also appear) as Mr Vincent did in Exhibit 12, because of his assumption about the Land and the Balance Portion being subdivisible. Putting that point aside, I would also have some difficulty with Mr Vincent using Lot 51 as he did in his "before" valuation given the range of adjustments that needed to be made to use it in that way, and in view of Mr Paterson's position. However, I do not need to reach a final view on this point.

257 I turn now to consider Lot 50 and its use in the "before" valuation in Exhibit 12.

258 As to Lot 50, Exhibit 12 shows it as having been sold, as I have said, twice before the valuation date used in that report, 9 November 1999.

259 The first sale of Lot 50 was shown in Exhibit 12 as "in March 1996" (page 6), although it is shown as "May 1996" in the Schedule of Comparable Sales, Exhibit 2, and in a Plan for the Valuers General Office, Exhibit 3. There is a further modest difficulty with the date of the 1996 sale of Lot 50. Later in Exhibit 12 that date is referred to as "February 1996" (page 7), for the purposes of calculating Exhibit 12's date adjustment rate of 1.88 per cent annually. As will be indicated below, that calculation assumes the 1996 sale was on 28 February. This is the likely date in Exhibit 12.

260 Exhibit 12 describes Lot 50, the front lot on what had been Lot 35 as I have indicated, as having on it at the 1996 sale "a smaller aged cottage used by the [vendors] as a tearooms" (page 6). The purchasers "discontinued using the building for that purpose after purchase" (page 6). In his testimony, Mr Vincent said that he did not inspect the tearooms until some time in 1999 or 2000, when he observed they were in a "bad state of repair" and did not appear to have been occupied or used for "some considerable time" (cross-examination, TS 202). The allowance for improvements in Exhibit 12 is $90,000. As will become apparent below, there is a substantial disagreement as to whether or not there was also a further building on Lot 50 at the 1996 sale. This, on Exhibit 2, the Schedule of Comparable Sales, would add a considerable amount to the deductions for improvements.

261 Exhibit 12 shows the 1996 sale price of Lot 50 as $410,000, or a "vacant land value" of $320,000 (page 6), equating to $16 per square metre at the time of sale.

262 Exhibit 12 also shows a further sale of Lot 50, in "May 1999", which is particularised in the annexures as 29 May 1999. The only change in condition of the lot is a reference to the "tearoom improvements at sale" being "in a run-down, unused condition", and the purchasers are said not to have used the "former tearooms as tearooms" since the purchase, with them being used at the date of the valuation report (as indicated, 20 June 2000) "for modest residential accommodation" (page 6). The value put on "the aged improvements" at the 1999 sale is $75,000.

The date adjustment figure of 1.88 per cent derived from the sales of Lot 50

263 Exhibit 12 shows the 1999 sale price of Lot 50 as $415,000, or a "vacant land value" of $340,000 (page 6), equating to $17 per square metre at the time of sale. The 1996 and 1999 vacant land values can be compared to derive a gain in value of 1.88 per cent annually for 3.25 years, as Exhibit 12 does. These figures indicate that the date of the 1996 sale used for the calculations was 28 February 1996. This figure is then used to bring the vacant value of Lot 50 as at 9 November 1999 to $17.16 per square metre.

264 Below I will indicate there is a difficulty on the evidence in deriving the vacant land value of Lot 50, because it may be that account was not taken in Exhibit 12 of a second building on the lot at the point of both sales. This would make it very difficult to derive a date adjustment figure from the two sales of Lot 50 as Mr Vincent did. However, I note that Mr Paterson's evidence was that he considered a growth rate of 1.88 per cent per year between 1996 and 2000 was "correct" (examination-in-chief, TS 447). As I will explain below, on the evidence before me this is the date adjustment figure I should use with comparable sales.

265 I should note that this figure is simply one to enable a valuer to consider how to assess those sales that might be seen to be comparable. The figure should not be allowed to give an "illusory appearance of certainty and accuracy" to a valuation (RK Morgan Holdings Pty Ltd v Melbourne & Metropolitan Board of Works (1992) 77 LGRA 102, per Gobbo J, at 108).

266 It will be seen that the date adjusted vacant sale price per square metre of Lot 50 is dramatically larger than the corresponding figure for Lot 51. The only explanation for this differential apparent on the evidence before me is the greater value of a front lot compared with a rear one, as I have indicated. This would not, however, explain the dramatic difference from Lots 13 and 19, which would have to be drawn from limestone and their lack of access to the slip road by Wanneroo Road, as well as their greater sizes, but offset to some extent at least, in the case of Lot 19, by its relationship with Lake Neerabup. However, on the evidence (in particular the cross-examination of Mr Paterson, TS 464) no large discount should be allowed for the first two factors. It is unclear on the evidence whether the remaining factors should be seen to account for the remaining difference, as neither Mr Vincent nor Mr Paterson addressed the point in their evidence.

267 However, there is a further explanation that might be drawn from the evidence. It is that the vacant land value of Lot 50 is overstated, because account was not taken of another improvement on the lot, a matter to which I previously referred.

268 That improvement was a building, which none of the valuation reports from Mr Vincent or Mr Vincent mention. There is some evidence before me there was such a building, however, in the form of indications ("blobs") on aerial photographs taken in 1980 (Exhibit 39, page 172) and in 2001 (Exhibit 39, page 1). One witness, Mr Oscar Drescher, a town planner called by the defendant, testified that he interpreted the blob on the 2001 photograph as a building (cross-examination, TS 363), corresponding with a similar indication on an aerial photograph in his report, being attachment 1, page 1, to his report, Exhibit 29. Mr Paterson also indicated that he could identify a building from an aerial photograph of Lot 50 (Exhibit 33), being an enlargement of a 2001 aerial photograph showing Lot 50 (Exhibit 39, page 3). However, neither witness was able to be more specific about the building's nature, and neither could testify as to a building from his own knowledge. If there were another building, and it had significant value, this would make the price of Lot 50 as vacant land more comparable to that of the other lots, although the evidence is unclear as to what value should be ascribed to it. I note that Exhibit 2, the table of comparative sales, indicates two valuers for the defendant ascribed a value of to the buildings on Lot 50 of $175,000 at its first sale, although one of those valuers was Mr Paterson, and the other was not called. Mr Paterson testified he had not himself arrived at that value, not having inspected the improvements (cross-examination, TS 488 - 489). There is a higher value of $177,000 assigned to the buildings at the second sale, but the valuer assigning that value, the other valuer for the purposes of the figure on the 1996 sale of Lot 50, did not give any evidence in these proceedings.

269 If the higher valuations for the improvements on Lot 50 are used in the "before" valuation as Mr Vincent did in Exhibit 12, this reduces the overall rate per square metre of the Land from $12.496 per square metre ($124,957 per hectare) (the "before" valuation of $512,000 divided by 4.0974 hectares), to $11.42 per square metre ($114,242 per hectare) ($468,096.89 divided by 4.0974 hectares). This is a significantly higher rate than either of those of Lot 13 or Lot 19.

270 As I understood the closing submissions of counsel for the plaintiff, I should conclude that there was sufficient evidence before me to cast doubt on the correctness of the vacant land value of Lot 50 as used in Exhibit 12. On the analysis I have set out, I agree. The result, however, is that it is not possible to assign very much weight to the Lot 50 sale prices employed in Exhibit 12. This is apart from the question of whether an adjustment should have been made in the rate per square metre for Lot 50 in view of its somewhat larger size than the front lot for which it was used in the "before" valuation in Exhibit 12.

271 Of course, mathematically any different value ascribed to Lot 50 would not affect the difference produced by the "before" and "after" valuation that assumes subdivisibility.

272 There is, however, another issue in relation to Exhibit 12, its assumption that there would be a subdivision, both for the "before" and the "after" scenarios. This assumption appears to have guided Mr Vincent to use the values from both Lots 50 and 51 as he did. However, such use would not be appropriate if the land were not subdivisible.

273 As I previously indicated, Mr Vincent based his assumption "mainly" (cross-examination, TS 212) on the subdivision of nearby land, to the north of Lot 37, Lot 35, now Lots 50 and 51, not on the advice of a planner. However, I note the testimony of Mr Drescher, a planning consultant to whom, and to whose report, Exhibit 29, I have made reference earlier. In his examination-in-chief he said this (TS 352):

"Just to summarise, you [sic] report is obviously quite lengthy but in a brief summary can you say what your opinion is in relation to subdivision potential of lot 37 as at 2000?---The views I expressed were that there was no chance of lot 37 having any subdivision potential in view of the WAPC's policies, the council's position with respect to their various policies and their interim rural policy. Based on my experiences at the City of Wanneroo four hectares is the minimum lot size and an appeal would be the only grounds upon which an application may have been successful and my view is that the chance of an appeal on this land was pretty remote - successful appeal would have been pretty remote.

Does that opinion depend - sorry. What is the effect on your opinion of the existence of the reservation on lot 37?---I don't think the reservation would have had any bearing because in the case of an appeal, the land lost as a result of reservation is generally taken into consideration as part of the lot area to approve a subdivision. The problem here is that four hectares is the minimum lot size. This lot is four hectares and has no potential with or without the reservation.

Sorry. Can I just clarify - what did you say the minimum lot size for subdivision was?---Four hectares.

For a subdivision?---Four hectares in the rural zone is the minimum lot size. There are a number of policies that were about at the time, starting back in 1977, when this area was regarded as a 20-hectare minimum lot size area. The city promoted that the linear chain of lakes that Neerabup is one of should be considered within the four hectare minimum lot size because most of the lots were fours, sixes and eights. In time the commission accepted that principle and subsequent policies generally reflected the four hectares as the minimum that would be accommodated. In fact the minimum throughout the city, through any of the rural areas in the city - four hectares was the minimum outside of special rural zones which are a different category."

274 This conclusion is confirmed by the evidence of a planner employed by the Department of Planning and Infrastructure, Ms Watts, called by the defendant (examination-in-chief, TS 491). The plaintiff put it to me that I should not give her evidence, at least in this respect, and others in relation to the development potential of the Land, any credence. I was referred to instances of her evidence in which she indicated limitations on conclusions she had expressed not initially apparent from her evidence. I do not consider these instances call for me to proceed as the plaintiff suggest, but rather indicate a further elaboration of the basis for her evidence. I consider that her manner of giving evidence did not indicate a general disposition to unduly downplay the development potential of the Land.

275 Further, the evidence of a planner employed by the City of Wanneroo also called by the defendant, Mr Thompson, included that the City administration would not have supported an application for subdivision of the Land in 2000 (Exhibit 28, pars 3 - 7). His evidence was also that there was a subsequent application for approval of a subdivision of the lot immediately to the north of the Land, Lot 36 Wanneroo Road, which was refused (par 8). I consider that this evidence establishes that a hypothetical prudent purchaser as at 18 July 2000 would not have assigned any value to any possible future subdivisibility of the Land.

276 The plaintiff for its part relied upon the subdivision that produced Lots 50 and 51, and the principle that inconsistency in administrative decisions should be avoided. The plaintiff also relied on evidence of the possibility for future readier subdivisibility of the Land.

277 The concern as to inconsistency in relation to planning decisions was described in the authority cited to me, Dilatte v MacTiernan [2002] WASCA 100, Malcolm CJ, Wallwork J and White AUJ agreeing, as having the:

"... potential of bringing the decision making process into disrepute because it suggests that the decision is arbitrary, rather than one made in accordance with a disciplined approach reflecting the application of sound town planning principles and consistent with commonly accepted notions of justice."

278 However, it is necessary to attend to the circumstances of each of the decisions, as Malcolm CJ in Dilatte (supra) indicates (at [62]):

"The determination whether there has been inconsistency between successive decisions depends upon a comparison of the circumstances in each case and, in particular, to those relevant to each decision. The comparison obviously involves questions of fact and degree. The test is that ordinarily there would need to be 'a similarity, if not a virtual duplication of circumstances and conditions to establish the basis for a complaint of inconsistency': Progress Properties Ltd v Woollahra Municipal Council (1969) 18 LGRA 166 at 171 per Else-Mitchell J. Decisions by a council with respect to planning applications made by the same applicant in respect of the same land should ordinarily be consistent. For example, it is not open to a planning authority simply to change its mind about the merits of a particular application and withdraw a consent or approval previously made and communicated, even if the consent or approval has not been acted upon by the applicant: Northcott Pike & Associates Pty Ltd v Berri District Council (1984) 55 LGRA 119 at 123 - 4 per Cox J."

279 Subdivision of Lot 35 had originally been refused, but was allowed by the Minister on appeal, on "compassionate" grounds, in terms that the decision should not be construed as "a general precedent for subdivision in this area" (Ms Watts, examination-in-chief, TS 490; and Exhibit 34). The only evidence of what those compassionate grounds were was from Mr Drescher (cross-examination TS 360), where he indicated they had to do with the financial difficulties of owner of the tearooms business on Lot 35.

280 In the face of that evidence, it does not seem to me that there is sufficient purchase for the consistency principle in this case, unless there is a proper planning principle of "compassion", and there would have been some basis for its application in this case. At the least there is in the evidence no basis for the application of any such principle in this case.

281 The evidence as to the potentiality for the subdivision of the Land was in the form of the evidence of Mr Drescher that the Land or the Balance Portion might in the future be rezoned rural-residential, which might depending on the policy of the relevant local authority permit subdivision into lots of as little as 1 hectare (report, Exhibit 29, par 27 and Attachment 8). I also note that there is evidence from Ms Watts (report, Exhibit 35, par 49), stating "there may be future subdivision potential/development potential for the [Balance Portion]", although this was expressed to be subject to the need "to demonstrate that there would be no detrimental impacts on the wetland or the buffer area", which as will be seen is a reference to the Reserved Portion. The plaintiff also referred to the East Wanneroo Land Use and Water Management Strategy of 2004 (Exhibit 37), where (at pages 17 - 18) it refers to ways of dealing with pressure on water resources arising out of the horticultural practices permitted by existing rural zoning. Two ways are referred to. One is better water utilisation strategies apparently assuming existing rural uses, and the other, "a major issue raised for discussion", is rezoning that would permit subdivision into "smaller rural living lots". However, I note that the Strategy document indicates that its planning scenarios had not been endorsed by among others the defendant or the City of Wanneroo (Exhibit 37, page 1).

282 While I consider this evidence does indeed establish there was a potentiality for subdivision, this evidence it seems to me is highly qualified and in the case of Exhibit 37 speaks to a time after 18 July 2000. I do not consider that it weighs heavily against the evidence which I have indicated I accept that a hypothetical reasonable purchaser as at 18 July 2000 would not have assigned value to any such potentiality.

283 In that regard, I note that the only evidence from Mr Drescher that addressed whether or not the rezoning his report referred to would occur appears to be his testimony, having been asked for his opinion "as at 2000", responding "there was no chance of Lot 37 having any subdivision potential" (examination-in-chief, TS 352 - 353). The only such evidence from Ms Watts was "there would have been no subdivision potential at the date of election to purchase" (examination-in-chief, TS 491).

284 It follows in my view that the fundamental assumption underlying Exhibit 12 is removed. The uses of Lot 37, whether before or after the removal of the Reserved Portion, would not have been treated by a reasonable purchaser as including subdivision.

285 This does not mean that the use of the properly derived vacant land values of Lot 50 or Lot 51 would be inappropriate even in a properly constructed "before" and "after" calculation, or indeed otherwise. However, I have already referred to the difficulty in deriving the vacant land value of Lot 50 on the evidence before me. In any event its use, or that of Lot 51's vacant land value, in the "before" or the "after" valuations as Mr Vincent does in Exhibit 12, where he applies the vacant land value of Lot 50 to part of the Land and the vacant land value of Lot 51, or a proportion of it to the remainder, in each valuation would not represent their use in a properly constructed "before" and "after" calculation. It will shortly become apparent that Lot 50 is not used in Exhibit 14, or indeed in Mr Paterson's valuation. However, Lot 51 is used, at least in Exhibit 14, where it assumes considerable prominence, as I will explain below. There was also a return to Lot 50 in Mr Vincent's testimony in relation to his valuation in Exhibit 14. How Mr Paterson used Lot 51 is not quite as clear, as I will also explain. It is clear, however, that he did not use Lot 50 in his valuation.

286 Exhibit 13 gives a valuation for the Reserved Portion of $173,000.

287 Exhibit 13 is a report dated 24 October 2002, and is as at 18 July 2000, rather than Exhibit 14's 9 November 2000. The later date is that of the defendant's election to acquire the plaintiff's land, and is in fact the correct date to use. The valuation in Exhibit 13 simply took that in Exhibit 12 and adjusted it, using the figure of 1.88 per cent per annum I previously referred to, to the later date.

288 In Exhibit 13 Mr Vincent also considered the valuation to be returned when:

"... instead of subdivision being possible, it would be possible instead to obtain development approval for the construction of two dwellings on the lot, with a possible 'purple title' arrangement."

289 On that assumption, he reported that he did not consider any different result would be produced. He went on:

"If anything such an arrangement might indicate a lower value for each undivided share and there are other problems that can occur where for instance the two houses are not of equal value and when the interest might be sold to others and separate financing is required by one or other of the two parties."

290 I note that no reference is made in Exhibit 13 to any allowance for improvements. I assume this is because a "purple title" arrangement should be treated the same as a subdivision for this purpose.

Two dwellings on the Land, and purple title

291 I interpret the passage preceding the one just quoted as indicating that Mr Vincent assumed a purple title arrangement would have been possible both for the Land and for the Balance Portion, apparently generally.

292 There was some question on the evidence whether in fact as a planning matter purple title arrangements would have been allowed generally in either case. The City of Wanneroo had policies in place in July 2000 that allowed it to grant permission for such arrangements in lots the size of the Land and the Balance Portion, the principal ones of which appear to have been TPS 1 (Exhibit 4), referred to in the evidence of Mr Goff, a town planning consultant called by the plaintiff (see his report, Exhibit 20, par 20; and his evidence-in-chief, TS 319); and City of Wanneroo Town Planning Policy 3.3.10, referred to in the evidence of Mr Thompson, Exhibit 28, par 15 (Exhibit 39, at pages 105 - 107), which was first implemented on 1 July 1999. Neither on its face bore a restriction of the possibility of a purple title arrangement for the Land, or for the Balance Portion.

293 It was the evidence of Mr Drescher that permission for a second dwelling had only been granted in his eighteen years at the City, between 1980 and 1998, where the land was used for a rural activity and the second house was required for a continuance of that rural activity, as where a family member involved in that activity wished to have a separate dwelling (examination-in-chief, TS 357). This experience was, however, before the implementation of City of Wanneroo Town Planning Policy 3.3.10, previously referred to. That Policy, which was "to provide a policy in respect of two dwellings on one lot", does not bear any such restriction on its face, and indeed delegates approval of such arrangements to the City's Director, Planning and Development, which might suggest a broader approach than previously, although there was no other evidence to that effect.

294 There was also evidence from Mr Goff that he could see "no relevant planning justification for refusal of a second dwelling" (Exhibit 20, par 21).

295 However, there was also evidence the relevant Minister had indicated opposition to the continued allowance for a second dwelling as the Scheme provided, and on 26 March 1999 (that is, before the introduction of the Policy 3.3.10) had consented to the advertising of a draft modified planning scheme for the area provided it was modified "to remove any ability for the City to approve grouped dwellings on a rural zoned lot" (Exhibit 28, par 17). This position was one "pending further consideration of appropriate provisions in the Local Rural Strategy" (Exhibit 39, p 114). While it is not clear this position would have been influential with the City had it been considering an application for a purple title arrangement in 2000 (cross-examination of Mr Thompson, TS 345, who does not mention it as one of the matters bearing on the approach to an application), as at 18 July 2000 the impact for the future would also have been unclear, in view of the Minister's position. This position appears to have resulted in 2001 in a change in the provision for two dwellings on one lot that set a new lot size minimum, of 8 hectares, that would have prevented such grouped dwellings on the Land and the Balance Portion (Exhibit 28, par 22, and Exhibit 39, Defendant's Book of Documents, volume 2, page 147), a result which might have been anticipated from the Minister's position.

296 On this evidence, it does not seem to me that an assumption of a purple title arrangement being possible generally, for the Land or for the Balance Portion, would have been treated by a hypothetical reasonable purchaser as justified on 18 July 2000. At the same time, it seems to me an approach to permission for purple title arrangements not inferior to that described by Mr Drescher might reasonably have been assumed by that purchaser to be likely then. This would cause me to put valuations to one side that assumed purple title arrangements would have been seen by a prudent purchaser on 18 July 2000 to have been possible generally. I thus put aside the valuation in Exhibit 13.

297 However, to the extent a "before" and "after" calculation uses values derived from comparable sales where the same considerations of more limited availability of purple title arrangements were present, there is no issue of that sort that presents itself. This would seem to apply to all of the sales in this case that occurred before the 2001 change in provision for two dwellings on one lot.

298 Exhibit 14 gives a valuation for the Reserved Portion of $173,000, the same as Exhibit 13.

299 Exhibit 14 is dated 8 November 2002, and like Exhibit 13, but unlike Exhibit 12, gives its valuation as at 18 July 2000. The Exhibit 12 valuation, like the Exhibit 13 but unlike the Exhibit 12 one, does not assume that the Land would have been subdivided.

300 I also note that Exhibit 14, unlike Exhibit 12, includes a figure for improvements, both in the "before" and in the "after" valuations it provides, of $5000. It is not clear to me from the evidence why the allowance is not in a greater amount, to allow for both the shed and the fencing on the Land, to both of which, as I have indicated, a figure of $5000 was assigned in Exhibit 12. I note that in Mr Paterson's report (Exhibit 32) he also assigned a figure of $5000 for improvements, while indicating this was a reference to the "shed", and making no provision for the fencing.

301 However, as I have previously indicated, I consider this matter can be set aside for the purposes of the valuation to be performed in this case.

302 Exhibit 14 sets out in two schedules sales which are "comparable" for the "purpose of ascertaining the 'before' or 'unaffected' value of Lot 37", and the "'after' or 'affected' value" of that lot, respectively.

303 The comparable sales for the purpose of the "before" value so listed are the sale of Lot 19 in 2000, the sale of Lot 13 in 1996 and the sale of Lot 30, Wanneroo Road, in 2000. I have previously considered the first two sales, and I return to all three in the present context below.

304 The comparable sales for the purpose of the "after" value so listed are the sale of Lot 51 in 1997 and sale in 2002 of part of Lot 36 Wanneroo Road, the part which became Lot 800 on Plan 31950. I have already referred to the former sale, and I return to in this connection below. The latter sale was to the defendant, and I also return it below.

305 Exhibit 14's "before" value is the slightly adjusted result of the use of the date-adjusted (by 1.25 per cent annually) rate per square metre on the sale of Lot 30 Wanneroo Road on 14 December 2000, considered as vacant land, plus the $5000 for improvements. The rate per square metre on Lot 30 was $10.88, before the date adjustment, or, on my calculation, $10.82 after date adjustment. (The rate per square metre in Exhibit 14's "before" value is shown as $10.84.) Exhibit 14 indicates that "three relatively recent sales being Lots 13, 19 and 30" were used, "in an effort to line up with the valuation evidence" represented by Mr Paterson's report (Exhibit 32), with the valuer having "relied considerably upon the sale at Lot 30". I have previously referred to the sales of Lots 13 and 19. I return to those sales in the context of the sale of Lot 30 referred to, below.

306 The "before" value so derived is $450,000, which is a rounding up of the total of $444,158 and $5,000. No objection was taken to that "before" amount on that account.

307 The "after" value is the result of the use of the date adjusted (at 1.25 per cent annually) rate per square metre from the 1997 sale of Lot 51 Wanneroo Road, considered as vacant land. I have previously referred to that sale, in relation to the report that is Exhibit 12. The present report says in relation to the "after" valuation that "we have fully considered the same sales evidence" as used in the Paterson report (Exhibit 32). I return to that use below.

308 The "after" value so derived is $277,000, which is a rounding down of the total of $272,376 plus $5,000. No objection was taken to that "after" amount on that account. The date adjustment of 1.25 per cent, as I have indicated, should be compared with Exhibit 12's 1.88 per cent. The lower figure in Exhibit 14 is derived by comparing the rate per square metre on the sale of Lot 13 Wanneroo Road on 27 February 1996 and the rate per square metre on the sale of Lot 19 Wanneroo Road, on 28 January 2000, both considered as vacant land. I have already described these two lots, and the two different values for improvements for Lot 13 Mr Vincent used, $15,000 in Exhibits 14 and $35,000 in Exhibit 15 (putting aside the assignment of no value for improvements in Exhibit 12). As I have explained, the higher value for improvements is to be preferred. Thus, the vacant land rate per square metre for Lot 13 at its 1996 sale would have been $9.39, as I indicated above. The vacant land rate per square metre for Lot 19 at its 2000 sale would have been $10.35, also as previously indicated. Using those two values, the date adjustment figure in Exhibit 14 ought to have been 2.5 per cent. However, there was no use of that figure in the evidence by either Mr Vincent or Mr Paterson. As I previously indicated, there is agreement between Mr Vincent and Mr Paterson on the figure of 1.88 per cent. I consider that is the figure to use, as I have indicated. I will, however, return to two other figures used by Mr Vincent in his Report that is Exhibit 15.

309 If the figure of 1.88% is used, the date adjusted rate per square metre for Lot 30 considered as vacant land is $10.79, not the $10.84 used in Exhibit 14 (itself, it seems to me, in error, as the figure I derive using 1.25% is $10.82). This changes the "before" value to $442,109.

310 Similarly, if the figure of 1.88 per cent is used, the date adjusted rate per square metre for Lot 57 considered as vacant land is $10.62, not the $10.40 used in Exhibit 14. This changes the "after" value to $278,138.

311 The difference between the "before" and "after" values becomes then $163,971.

312 Exhibit 14 indicates that the sale of Lot 30 on 14 December 2000 was chosen because both he and Mr Paterson's report (Exhibit 32) "relied considerably upon" it. However, as I will indicate below, Mr Paterson did not use it in the "before" valuation, but rather in the "after" valuation.

313 Lot 30 has an area of 4.0775 ha. Like Lot 51, it apparently does not front on to Wanneroo Road itself, but on to the same slip road (Mr Paterson, cross-examination, TS 464; see also Mr Drescher, cross-examination, TS 361, on Lot 50, the front portion of former Lot 35; and the aerial photograph in Exhibit 39, at pages 1 and 2). At the time of sale it was being used, as part of a market garden with land adjoining it to its north (Lot 29) and its south (Lot 31), by the owner of those last two lots, who was leasing Lot 30 prior to its sale to that owner. The evidence is that the lower portion of Lot 30, that portion closest to Lake Neerabup, was being used as a strawberry garden (Mr Paterson, examination-in-chief, TS 445). There is evidence from Mr Vincent that the garden stopped short of the eastern boundary, which might indicate a portion of the lot was not suitable for such purposes, as "wetland"; however, his evidence was also that no part of Lot 30 formed part of Lake Neerabup (cross-examination, TS 254), which would seem to me to be supported by the aerial photographs.

314 There was also a water licence applicable to Lot 30, and other improvements, the values of which assigned by Mr Paterson (in his report, Exhibit 32) were accepted by Mr Vincent (in his report, Exhibit 14). I also note that there is no evidence that Lot 30 was affected by limestone.

315 For the defendant it was put to me that Lot 30 was of no assistance, as it was a sale to an adjoining owner of land on either side of Lot 30 who as I have found was operating the three lots as a market garden.

316 It is indeed clear, from Arcus (supra), per McLure J, Anderson and Steytler JJ agreeing, at [58], that:

"... it is appropriate that a valuer who seeks to rely on a sale to an adjoining owner to justify an inference as to the value be required to satisfy himself or herself that the sale does not reflect any element of special value to the adjoining owner. That may be done in a number of ways. One way would be to consider, as part of the collective analysis, whether the sale was out of line with the basket of sales."

317 However, while both Mr Vincent (cross-examination, TS 256) and Mr Paterson (examination-in-chief, TS 433) acknowledged that there might be difficulties in using the sale of Lot 30 because it was a sale to an adjoining owner, both also considered the use of it as they had was appropriate, that notwithstanding, albeit their uses differed.

318 However, the date adjusted (by 1.88 per cent annually, to 18 July 2000) sale prices as vacant land of the comparably sized Lots 19 ($10.44 per square metre) and Lot 13 ($10.19 per square metre), after allowing (the relatively small discount) for their limestone, indicate that the date adjusted sale price of Lot 30, also considered as vacant land ($10.79 per square metre, as I have indicated), is the highest of the three, although not by a significant margin. It also needs to be noted that Lot 19, unlike Lots 13 and 30, takes in a part of Lake Neerabup, a feature which on the evidence, as I have indicated, would enhance its market price and which, if it ensured a Lake view, would on the evidence both of Mr Vincent and of Mr Paterson enhance its value significantly, other things being equal. These comparisons, in my view, indicate the need for caution in the use of Lot 30. That caution is required because there are indications there may have been an effect of its market price of its sale to an adjoining owner, where the source of the special interest of the adjoining owner was different from any that would operate in respect of the Reserved Portion.

319 However, I also note the sale of Lot 51 in 1997, to which I have already referred. This is one of the sales referred to in Mr Paterson's report (Exhibit 32), although it is not singled out by Mr Vincent in relation to his "before" calculation in Exhibit 14.

320 The sale of Lot 51 in 1997 was, as I have previously indicated, of a subdivided lot of 2.098 ha, a much smaller area than Lots 13, 19 and 30. Like Lots 13 and 30, although not Lot 19, Lot 51 was all dry land, although (as I have already indicated) the portion of Lot 19 within Lake Neerabup was slight, and gave it the view and amenities on the Lake none of the other three lots provided. Like Lots 13, 19 and 30, Lot 51 had access to Wanneroo Road, or its slip road, although in Lot 51's case through a battle axe neck, which reflected its character as a rear lot, which on Mr Vincent's evidence would tend to depreciate its value (cross-examination, TS 219), a principle which I indicated I accepted. Like Lot 51, but unlike Lots 13 and 19, Lot 30's access to Wanneroo Road was via the slip road. Adjusting the rate per square metre as vacant land of Lot 51's sale price by 1.88 per cent to 18 July 2000, that rate is $10.62. This is above the rates per square metre for Lot 13 ($10.19) and Lot 19 ($10.44), which may be explained by the discount for greater land area of those two lots, as well as their limestone affected character, and their lack of access to or frontage on a slip road. However, as I have explained, those discounting factors must on the evidence be adjusted for the character of Lots 13 and 19 as front lots and, in Lot 19's case, by its taking in of a small portion of Lake Neerabup.

321 However, Lot 51's rate per square metre is less than that of Lot 30, which is also not limestone affected, but which is substantially larger. This might be explained on the basis that Lot 51 was a rear lot with slip road access via a battleaxe neck, where Lot 30 was a front lot that did not, however, run down to a slip road. On the evidence, as I have indicated, a larger allowance should be made for the former (rear lot) feature than the latter (slip road) feature. On this analysis, particularly the discounts for size, the rear lot feature and the lack of the amenities on the Lake, the sale of Lot 51 in 1997 would not receive much weight in relation to the "before" valuation. There is no indication that it was given much weight in that valuation, by either valuer.

322 The context in which Lots 13, 19 and 30 could be better used would seem to me to be the "before" value, rather than the "after" value. The difficulty with the use of Lot 30 in relation to the "after" value as Mr Paterson did is that the Balance portion is significantly smaller than Lot 30 (or the comparably sized Lots 13 and 19). On the evidence of the valuers, as I have indicated, there is a discount for greater land area. When questioned on this point, Mr Paterson agreed that the sale of Lot 30 considered as a comparable sale "would not be as reliable as the sale of a smaller area" (cross-examination, TS 462), although he was also of the view that the sale of Lot 30 had the advantage of closer proximity to the valuation date (December 2000, for Lot 30, rather than May 1997, for Lot 51: cross-examination, TS 459).

323 I have noted that the sale of Lot 30 relied upon occurred after the date as at which the valuation is to be made. No objection was taken to the use of Lot 30 on this basis. However, I consider below objections to the use of sales that occurred rather longer after the valuation date.

324 At the same time, I consider on all the evidence that the use of a rate per square metre from Lot 30 in relation to the "before" value would be less reliable than using a rate that gave greater weight to Lots 13 and 19, for the reason I have already indicated. The rate that would seem to be the most comparable would be that for Lot 19, given the fact it has a portion of the Lake, unlike Lot 13, and its proximity in date. At the same time allowance needs to be made for the limestone aspect of Lot 19, its topography and its lack of access to the slip road, although on the evidence as I have indicated no large discount on any one of these accounts should be used. There is also the fact that Lot 19 had very little inundated land, a matter I turn to next.

325 As I have previously indicated, the proportion of Lot 19 represented by its part of Lake Neerabup on the evidence is considerably less than the corresponding portion of the Land. Correspondingly the proportion of Lot 19 represented by dry land is considerably greater. On the evidence I review below, I consider that there was a "dry land" advantage to Lot 19. I need to assess that advantage in order to determine the extent to which it offsets the other differences, of better topography, of no limestone and of slip road access, previously referred to, between the Land and Lot 19.

326 Mr Vincent makes no allowance for the portion of the Land that was seasonally inundated in his report that is Exhibit 14. In his evidence he indicates that he did not consider, as comparable, sales of property near the Land that were entirely within Lake Neerabup and so subject to inundation, representing sales of land that was nothing more than, or almost all, "swamp" (cross-examination, TS 168). I return below to a number of these sales, as sales to the defendant, and as raising special considerations in that respect. Mr Paterson explained the use in his report (Exhibit 32) of a higher rate per square metre for the Balance Portion in his "after" valuation than for the Land in his "before valuation" in these terms (examination-in-chief, TS 433):

"There's a number of reasons. A couple of significant factors are that as the parcel of land becomes smaller, the rate per hectare increases, and secondly, it also reflects the fact that the after land, on average of all the after land, is better quality land than the whole parcel of the before land."

327 The quality differential Mr Paterson appears to have in mind is the presence of land subject to inundation in the Reserved Portion (see examination-in-chief, TS 434, on his "direct comparison" method of valuation, to which I return, below). However, Mr Paterson did not consider the land subject to inundation was worthless. In his examination-in-chief, the following exchange occurred, in relation to the direct comparison method of valuation, to which I return below (TS 434 - 435):

"Why did you consider that method to be appropriate in the circumstances of this matter?---Because of the low lying land. It's very hard to envisage what use you can put to it at any time because of the fact that it is totally inundated in the wintertime. That's why I split it up into two portions, of what I thought to be the totally unusable wet part which is inundated in winter and the portion around the edge from the wetland to the edge or the reserved area. I sort of said that that's certainly better than the inundated portion of the property which is not worth as much as the other.

Sorry. You said it's not worth as much as - - -?---The buffer land - I'd recognise that strip where you can actually walk around the edge of the lake and do things and enjoy the lake for what it is has to be worth a bit more than the land that's inundated actually in the middle of the lake. What happens is that you take it around - you're still going to get the views of the lake. That's not going to be taken away from you. That's probably a significant part of the value, the views rather than the actual utility of the land."

328 This evidence seems to me to be to the effect that a purchaser would see value in owning a portion of Lake Neerabup, and, as I will indicate, when I consider his direct comparison valuation, would see greater value in owning more rather than less, although the land would be less valuable than the dry land because of the latter's greater utility. As I understand his report (Exhibit 32), in his view this would hold at least for a purchaser buying for "lifestyle" reasons as compared with a purchaser who was a "commercial grower".

329 Further, I note the evidence of Mr Drescher that, while construction on land subject to inundation was not necessarily impermissible or impractical, it added to the cost of construction because of the need for elevation of the foundation on which the construction would rest (examination-in-chief, TS 305).

330 I consider on all of this evidence that, other things being equal, as between two pieces of land each with a portion of Lake Neerabup, the higher the proportion of land in Lake Neerabup the less the market price the land would command.

331 In determining the extent to which the greater portion of the Land within Lake Neerabup would offset the effects of the discounts for Lot 19's topography, limestone and lack of access to the slip road, it is material to consider the proportion of the Land represented by that part of the Reserved Portion forming part of Lake Neerabup. Mr Vincent gave no evidence as to the precise extent of that part.

332 There was however such evidence from Mr Paterson. In his examination-in-chief (TS 436) the following exchange occurred, in relation to his division of the Reserved Portion into wet and dry areas for the purposes of his valuation by direct comparison to which I return below:

"And you have divided, in your second method there on page 2 of your report, the dry area 0.474 hectares and the wet area one hectare?---Right.

Are you able to explain how you arrived at those figures?---When I was on the property, I sort of paced out from the various points where the areas were and I also had aerial maps and I tried to scale it and make an estimate and I came up with a figure which is either side and then adopted right of that was one hectare for the wetland but I did have some estimates of areas, and so that's sort of like probably - I mean, without the benefit of a full survey, it's quite a good scaled assessment based on aerial photograph and my on site pacing of the subject property."

333 It was put to me for the plaintiff that the extent of the seasonally inundated area was in fact 0.75 hectares rather than 1 hectare. This it was said was established by evidence of Ms Watts (examination-in-chief, TS 489). She had marked on an aerial photograph of the Land the "actual boundary of the lake" as coinciding with a line shown as a "whiter portion" on an attachment (Exhibit 20, attachment 22) to her witness statement (cross-examination, TS 558 - 559). It was put to me that inspection of the area so marked out indicated that the seasonally inundated area was the 0.75 ha referred to.

334 However, I note that Ms Watts was not herself asked to make that estimate, nor did she clearly make her determination of "the lake" in terms including seasonally inundated land. Nor is clear to me from inspecting the photograph that the proportion of the Reserved Portion to the west of the boundary (the "dry" area) is 1 ha (or 57 per cent) of that Portion as opposed to 0.75 ha (or 43 per cent) of the Reserved Portion.

335 Further, there is evidence that would identify the "wetland" portion of the Land with a line of vegetation to the west of the white line referred to by Ms Watts, as I will shortly indicate. This appears to be the line, appearing on aerial photographs of the Land, to which Mr Paterson was referring.

336 However, for the plaintiff it was put to me there was other evidence that helped to establish the lesser area of the seasonally inundated land. Reference was made to whether the line of vegetation I have just referred to, in the evidence referred to as the line of wetland dependent vegetation, was in fact not such vegetation at all. Locating that line is important for the purpose of the policy, the "draft buffer policy", that would be applied to construction within what was called in the evidence the dry land buffer, if there were such a policy that would properly be applied, a matter to which I have already referred. That policy, as I indicated, identified wetland dependent vegetation as vegetation which directly depended on close proximity to the water table in areas of water bodies in their natural state (Exhibit 39, at 186).

337 I should immediately note, however, that it is not clear from the evidence that wetland dependent vegetation should be seen as establishing the limit of seasonal inundation, that is, that winter inundation might in particularly wet seasons extend beyond the line of wetland dependent vegetation. Indeed there is evidence that the water level does not "necessarily" reach such vegetation (Mr Goff, re-examination, TS 326). There had been particularly wet seasons in which the waters of Lake Neerabup had extended higher than previously (Exhibit 39, at page 185, "highest recorded water height"); and I draw from Mr Goff's evidence that the converse is true.

338 However, I conclude on the evidence that regular seasonal inundation would not extend beyond or be significantly short of the line of wetland dependent vegetation, at least if that vegetation included certain sorts of wetland dependent vegetation. That sort was identified in the evidence as including paperbark, as a wetland dependent or wetland indicative species of eucalypt, and including sedge, a form of grass (Mr Goff, cross-examination, TS 304). It appears to me, on the evidence, that the line of wetland dependent vegetation would be that which would mark for the hypothetical prudent purchaser the boundary between the "dry" and the "wet" land for the purposes of the assessment of the quality of land touching or including Lake Neerabup.

339 There is evidence that would establish the boundary of the "wetland" in the Land with the lakeward or easterly side of the line of vegetation shown on the aerial photographs of the Land (Mr Goff, cross-examination, TS 310, on Exhibit 39, p 1). This aligns with the evidence of Mr Kelly himself, who testified that the edge of the wetland was to be seen as to the right of the 14 metre AHD (Australian Height Datum) line on the aerial photograph shown to him (cross-examination, TS 139). I also note the evidence of Mr Goff (cross-examination, TS 310) identifying the boundary of the wetland as lakeward of a line of vegetation which appears, from the aerial photograph he is referred to, when it is compared with the aerial photograph to which Mr Kelly is referred, to be to the right of the 14 metre AHD line.

340 I further note that from the aerial photographs the line of vegetation in question appears to align with, or its eastern limit appears to be slightly to the west of, the "whiter portion" line referred to in the evidence of Ms Watts.

341 However, I note the evidence of Mr Goff that it was only to lakeward of the line of vegetation so identified that paperbark was encountered (re-examination, TS 322 - 323, on the photographs in Exhibit39, at page 182), which as I have indicated, on the evidence before me, is a wetland dependent species of eucalypt. There is also evidence that some of the trees in the line of vegetation referred to were not wetland dependent vegetation, from Mr Parker, who described himself as having "a good working knowledge of wetland and dryland species" (re-examination, TS 429). There was also evidence from Mr Kelly himself (witness statement, Exhibit 10, pars 10 and 31).

342 However, both of the last two bodies of evidence are somewhat equivocal.

343 Mr Parker in his cross-examination (TS 416) said, in reference to the trees in question, that they:

"... appear to either be eucalyptus rudis, which is a flooded gum which does happen to be a wetland-dependent vegetation species, or possibly tuart. It's a little difficult to tell because they do have similar colouring on the trunks."

344 Mr Kelly, who did not claim any expertise to distinguish the two types of tree, said he "believed" the trees in question were tuarts.

345 However, I note that neither Ms Watt nor Mr Parker themselves visited the property to inspect the feature in question, although Mr Goff had himself seen the "wetland" (examination-in-chief, TS 309). To the extent they relied on aerial photographs, I note the evidence of Mr Goff as follows (re-examination, TS 324):

"What would you consider to be the most accurate manner of identifying fringing vegetation of a wetland?---Go out on site and inspect it and have in effect the location of the vegetation surveyed.

From looking at the defendant's book of documents, volume 1 page 4, is it possible to tell with complete accuracy from that aerial photograph whether the line of vegetation that you identified was of the paperbark or sedge variety?---Not with 100 per cent accuracy, no."

346 I consider on this evidence, and particularly the photographs to which Mr Goff referred, that the line of wetland vegetation, if it is not the lakeward boundary of the line of vegetation he identified in the aerial photographs, is not far to the east of it.

347 In those circumstances, I consider that the evidence upon which I should rely as the weightiest in relation to the question of the extent of the seasonal inundation of the Land by reference to the "fringing" or "wetland" vegetation is the evidence of Mr Paterson. His is the only evidence addressed to the matter of the extent of the area represented by the wetlands based at least in part on a site visit. While it is not evident he measured from the paperbarks identified by Mr Goff, I find it more likely than not he measured from the lakeward boundary of the line of vegetation evident from the aerial photographs not far to the west of those paperbarks.

348 In any event, the difference between the proportion of wetland of the Land (the Balance Portion plus the Reserved Portion) Mr Paterson estimated and the proportion of the Land indicated for the defendant as calculable from the evidence of Ms Watts, whose line appears to be lakeward from the paperbarks, is the difference between 24 per cent and 18 per cent. It seems to me both figures represent significant proportions of the Land, and to be of a similar order. Land subject to seasonal inundation is not worthless land, however, as I have indicated, although, at least if it is not necessary for the attraction and amenity access to Lake Neerabup provides, it is worth less than dry land, also as I have indicated. It seems to me both would to some extent at least offset the effects of the discounts for the limestone, topography and lack of access to the slip road of Lot 19. The question is of the extent of the offset.

The use of the sale of Lot 19 in a "before" valuation

349 The evidence of Mr Vincent and Mr Paterson appears to me to indicate their view that the "before" value of the Land considered as vacant land was higher than that of Lot 19 considered as vacant land, but (except in Mr Vincent's Report that is Exhibit 12, as I have previously noted) by not a large sum. This appears from comparisons of the rates per square metre of their Before valuations, in Mr Vincent's Reports in Exhibits 12, 14 and 15, and in Mr Paterson's Report in Exhibit 32 (as will be seen shortly) with their respective Reports' rates per square metre for Lot 19. I note, of course, that there are differences between the "before" valuations in all of those Reports, as well as between Mr Vincent's rate per square metre for the sale on 28 January 2000 of Lot 19 in all of his Reports (before the modest date adjustment for that sale) and that of Mr Paterson in his Report.

350 Putting aside the valuation in Exhibit 15 for the reasons which appear below, the differences between the two valuers' "before" valuations and their assigned rates per square metre for Lot 19 are in the range of 4 per cent to 10 per cent, or 3 per cent to 9 per cent if the sale of Lot 19 is date adjusted. I consider an adjustment in the order of 5 per cent is indicated by these comparisons. I note that I should not engage in what would simply be "guesswork", which "would not be truly a judicial valuation" (De Graaf v Valuer General, unreported; NSW Land and Valuation Court; 23 May 1968, Else-Mitchell J, as quoted in Hyams (supra) at 420). However, I am not limited to choosing between the competing valuations (here, the "before" valuations) of the two valuers, Mr Vincent and Mr Paterson (Commonwealth v Milledge [1953] HCA 6; (1952) 90 CLR 157, at 161, per Dixon CJ and Kitto J; and Hyams (supra) at 417). I can make appropriate adjustments to their respective valuations in the application of proper principles to the evidence: Florence (supra), at 111, per Wells J. This can be done even if it involves some guesswork: Royal Sydney Golf Club v Federal Commissioner of Taxation [1957] HCA 31; (1957) 97 CLR 379, at 395, per Kitto J; Leichardt Municipal Council v Seatainer Terminals Ltd (1981) 48 LGRA 409, at 434, per Hope JA.

351 I note that a rate per square metre for the Land using the rate from the sale of Lot 19 date adjusted as I have indicated would be about $10.96 per square metre, or approximately $449,000, which would be higher than the date adjusted (at 1.88 per cent annually) rate for the sale price of Lot 30 of $10.79, or the date adjusted (at 1.25 per cent annually) rate for the sale price of that lot of $10.88, the latter, when it is date adjusted to $10.82, being the basis for the slightly higher rate of $10.84 per square metre used in Exhibit 14. However, I have already indicated the need for caution in the use of the sale of Lot 30.

352 That is, I consider on the evidence a prudent purchaser would regard the vacant land value of the Land as higher than that of Lot 19, by an amount in the order shown by these figures.

353 I have already indicated why I consider resort to the sale Lot 19 as the most comparable sale is justified.

The use of Lot 51 in the "after" valuation in Exhibit 14

354 This takes me to the "after" valuation in Exhibit 14. That "after" valuation, as I have indicated, uses the date adjusted price per square metre for the 1997 sale of Lot 51.

355 It must immediately be noted, however, that Lot 51 (at 2.098 hectares) was significantly smaller than the Balance Portion (at 2.6190 hectares), a sufficient difference, on the evidence of Mr Paterson (cross-examination, TS 459), to make the rate on Lot 51 higher on that account than the rate on the Balance Portion. His evidence is:

"In relation to your comment that you consider it to be a good example of the increased dollar rate per hectare achieved with smaller lots, you would accept, would you not, that the hypothetical balance of lot 37 after excision of the reserved area would be larger than lot 51?

Perhaps you could go to attachment 80 of your report for a start?---You're saying that lot 51 will have a higher rate than the balance area of lot 37 of 2.6 hectares?

I put that to you, yes?---I think it's reasonable, yes."

356 However, account would also need to be to be taken of the fact that the Balance Portion was a front lot on to the slip road by Wanneroo Road, while Lot 51 was a rear lot with access to the slip road only by a long battleaxe neck. Those factors would, as I have indicated, tend to discount the price per square metre of Lot 51 relative to that of the Balance Portion. Mr Paterson does not comment on this point, although as I have indicated his evidence was that there is a limited advantage to access to a slip road, and he appears to recognise the relevance of whether or not land is a front lot to determining the comparability of sales of it to the valuation of a front lot. I take his evidence just referred to be to the effect that making all appropriate allowances Lot 51's rate per square metre would still be higher than that for the Balance Portion.

357 The matter last referred to is a point confirmed by Mr Paterson's "after" valuation in his report (Exhibit 32). This uses a rate for the Balance Portion of $110,000 per hectare ($11.00 per square metre). This rate sits below, but not significantly below, the rate for Lot 51. Lot 51 is described in Exhibit 32 as a "rear battleaxe shaped lot, two lots north of subject". Lot 51's sale price per hectare, without date adjustment from its May 1997 sale (its date being the reason, as I have indicated, why in Mr Paterson's view he did not "weigh [that sale] heavily": cross-examination, TS 459), is given in his report as $112,011 ($11.20 per square metre). The rate for the Balance Portion sits above, but not significantly above, that for Lot 30, which, also without date adjustment from its sale in January 2000 (a sale on which he relied "more", because its sale was more proximate in time to the valuation date in his report: cross-examination, TS 457 - 459), is $108,767 per hectare ($10.88 per square metre).

358 There are, however, difficulties with Mr Paterson's figures, starting with the valuation date he chose in Exhibit 32. That date was 18 July 2001, a date which as will be seen when I consider his report he conceded should have been 18 July 2000.

359 There are also difficulties with the figures for Lot 51 Mr Paterson uses, in view of my determination of the value for improvements that should have been used for it, of $25,000 instead of nil. Making the adjustment for that value produces figures for Lot 51 of $100,095 per hectare ($10.01 per square metre) at the date of sale. Adjusting that figure for the date of sale to the correct valuation date, that used in Exhibit 14, of 18 July 2000, at the annual rate which I have indicated I accept, of 1.88 per cent, the rates become $106,167 per hectare ($10.62 per square metre), below his figure of $110,000 per hectare ($11.00 per square metre) in his "after" valuation.

360 There are also difficulties with Mr Paterson's use of Lot 30, in view of its sale to an adjoining owner, to which I have earlier referred.

361 I return to all of these difficulties in relation to Mr Paterson's valuation in Exhibit 32 below. However, I do not consider these difficulties detract from the point that the use of Lot 51 as the rate for the "after" valuation in Mr Vincent's report in Exhibit 14 is not appropriate without adjustment for the factors of its size and its character as a rear lot as I have indicated.

362 Indeed, Mr Vincent, in his evidence appears to concede that in fact Lot 51 is not appropriately used in his "after" valuation as he did, in view of the value he had assigned in his "after" valuation in Exhibit 12 to the front part of the Balance Portion that corresponded with the area of Lot 50 (cross-examination, TS 260 - 263):

"You're saying that is justified on the basis of what?---Now, I'm glad you asked me because the whole exercise on 8 November 2002 was to treat the property, taking the position that the property could not be subdivided. Now, lot 50 has its own title. It has its own area. It has its own lot area. It is a subdivided lot. You're asking me to compare a subdivided lot with the unsubdivided residue of lot 37.

You have one lot that is in size 2.004 hectares?---Yes.

Which you would give a value of $17.60 per hectare to?---It's what the sales showed.

Which is $343,886. Then you have another lot that is 2.619 hectares?---Yes.

That you say someone is only to pay $10.84 - - -?---$10.40.

$10.40?---In the unsubdivided state. It's not the same area as lot 50. It's quite a bit larger than lot 50.

So someone is going to pay $277,000 for 2.6 hectares fronting Wanneroo Road, or they are going to pay $343,000 for 2.04 hectares?---Yes. Another way of looking at it

Is that correct? Someone who is going to buy lot 50 is going to pay $343,000?---They did.

Yet you're going to go down the road and buy a slightly larger lot and you're going to pay $277,000 for it?---Firstly, it is not slightly larger. It is a fair bit larger. Secondly, it is in the unsubdivided state and it has an odd shape.

There's a portion of the lot though that is identical in shape to lot 50?---That's correct.

So you are getting lot 50 and a little bit more land?---Yes.

According to you, you're going to pay $66,000 less for more land that has an odd shape?---Yes. Probably what I could do is - out of that 2.619 hectares, I could take out the same area as lot 50 and give it the full value of $16.

$17.16?---Yes, give it that value. Then the balance of the $277,000 would equate to the land behind.

What would that do to your before and after scenario? I suggest to you, it would get approaching - can you undertake that exercise?---Yes. You will have to give me the area of lot 50 again.

The area of lot 50 is 2.004?---And the figure was 17.16?

Yes?---That's a figure of $343,000.

Yes. Then someone is going to pay something for the additional - well, even if they pay nothing for the additional - let's work out what it is: .61 hectares?---Yes.

You agree that they will pay some sum for that additional?---Certainly.

So what would they pay for that?---What would they pay for that? It's probably in the vicinity of $10.40 a square metre."

363 I should indicate that the figures referred to for the rate per square metre for Lot 50, $17.60, $16 and $17.16, correspond (except for the first) with those for Lot 50, without ($16) and with ($17.16) the date adjustment in Exhibit 12. I have already indicated the difficulty with using those figures in before and after valuations with respect to the Land. However, using $16 and after adjusting for the correct valuation date and the higher values for Lot 50's improvements as I have indicated, and the rate of $10.40 per square metre for the "additional" area, the "after" valuation produced would be in the range of $11.72 to $12.18 per square metre. This range is significantly above the rate per square metre for Lot 51 that might have been employed in Exhibit 14 using its valuation date and its date adjustment figure. This would tend to indicate that Mr Vincent was ascribing a larger significance to Lot 51 as a rear lot relative to its smaller size than was Mr Paterson.

364 The question becomes then of what adjustment to the price per square metre for Lot 51 should appropriately be made for its rear location and its lack of access to the slip road, considered with its smaller size, or, to put the matter another way, how to weight its sale for those factors. I have already indicated how I would adjust the 1997 sale of Lot 51 for its date, by the use of an annual adjustment of 1.88 per cent, and for its improvements, preferring Mr Vincent's figure of $25,000. On balance, I prefer the evidence of Mr Paterson, that the Balance Portion would have a lower rate per square metre than that for Lot 51. I do not consider that the difference would be very great, as is also indicated by his valuation report (Exhibit 32), especially in view of the rate per square metre for the sale of Lot 19, which represents more land that is limestone affected and without access to the slip road, albeit land with amenities with respect to Lake Neerabup that Lot 51 lacks. This would put the "after" valuation between the rate for Lot 19 and that for Lot 51, as I have found those rates after date adjustment, closer to Lot 51 than to Lot 19, at approximately $276,000, or $10.55 per square metre.

365 I note that the use of the 1997 sale of Lot 51 as I have indicated, in an "after" valuation, would involve making adjustments for the four factors I have described - date, improvements, size, and lack of access to the slip road - although on the evidence of the valuers I consider the uncertainties in doing so are significant only for the third, given the relative lack of importance of the fourth. In view of the way in which Lot 51 is used by both Mr Vincent and Mr Paterson, I do not consider that such adjustments make the 1997 sale of Lot 51 one that is not comparable for the purposes of an "after" valuation such as that in Exhibit 14, by reference to Arcus Shopfitters (supra), per McLure J, at [50].

366 I note that the result of weighting the most comparable sales in the way I have suggested is that the rate per square metre in the "before" valuation is greater than that in the "after" valuation. A difference of this sort is also characteristic of the "before" and "after" valuations in Exhibit 14, and is criticised by Mr Paterson in his critical analysis in Exhibit 19. There he emphasised the discount for greater land area, the presence of "totally unusable swamp bed land" as part of the Land and that the retention of the Reserved Portion would not affect the view of Lake Neerabup. I have already commented on the first two aspects. As to the last, it seems to me Mr Paterson's comment is not consistent with my conclusion that his evidence was also that the Reserved Portion in the hands of the owner of the Balance Portion would protect views of Lake Neerabup, and afford the owner the amenity of access to the Lake. That is, it is indeed possible for the rate per square metre of the Balance Portion to be lower than that for the Land, and that is precisely a matter a properly constructed "before" and "after" valuation can assist a valuer to ascertain. I made a similar point earlier when considering the submission of counsel for the defendant as to the use of the before and after valuation method in relation to land with varying physical features.

367 There is a further aspect of the valuation report by Mr Vincent that is Exhibit 14 to which I should refer. It is his reference to a sale to the defendant of part of the lot to the south of the Land, a sale also referred to by Mr Paterson. Mr Vincent refers to that sale as indicating "a minimum value for the subject reserved land". This is a reference to the sale in March 2002 of part of Lot 36 Wanneroo Road, lying at the rear of that lot. That part became Lot 800 on Plan 31950. As that sale raises issues of the relevance of sales to the defendant itself, as well as of a sale some time after the valuation date, I return to it below.

368 I turn now to consider Mr Vincent's remaining valuation report, which is Exhibit 15.

369 Exhibit 15 gives no overall valuation, but rather refers to "recent comparable transactions which have occurred after entry of this case for trial". Mr Vincent acknowledges that "there are not many comparable transactions around 18 July 2000 to rely on", and so looks at "sales that are somewhat removed in time". Exhibit 15 refers to three sales pre-July 2000, the 2000 sale of Lot 19, the 1996 sale of Lot 13, the 2000 sale of Lot 30 and the 1997 sale of Lot 51. I have previously commented on all of those sales. As will shortly become apparent, the sale of Lot 13 assumes particular significance in Exhibit 15. Exhibit 15 also introduces four sales post-July 2000, the 2002 sale of Lot 19, the 2003 sale of Lot 14, Wanneroo Road, the 2003 sale of Lot 801 on Plan 31950, and the 2003 sale of Lot 51. I return to those sales below. Exhibit 15 also refers to one post-July 2000 sale previously referred to in Exhibit 14, the sale in 2002 of Lot 800. As I have previously indicated that was a sale to the defendant, and I return to it in that context below. Mr Vincent indicates in Exhibit 15 that he had inspected all of the properties listed.

370 Exhibit 15 is dated 7 May 2004, and like Exhibits 13 and 14 refers to the "relevant valuation date" as 18 July 2000. It does not indicate what assumptions as to subdivisibility of the Land are made in it; however, as will shortly appear, it seems to assume neither the Land nor the Balance Portion is subdivisible.

371 Two different "before" values for are given for the Land, without its improvements (referred to as "buildings"). These are based upon two different date adjustment figures, derived from the sale of Lot 13 in 1996 to which I have previously referred, when that sale is compared with two other sales, each of a different lot, both in 2003. Exhibit 15 indicates that:

"[t]o establish the growth rates in the vacant land, I have firstly chosen vacant land values that straddle the pegged valuation date of 18/07/2000. Sales of comparable lands either side of that required date will provide a general trend in sales values and if there is a close correlation in the growth rates deduced then the growth rate data has more reliability for that purpose."

372 Below I consider in more detail the evidence as to the reliability of the "general trend" Exhibit 15 derives, and thus the weight to be given to the sales chosen.

373 For now, it is sufficient to note that the two different annual date adjustment figures so derived are given, 3.84 per cent and 4.41 per cent. Those are purportedly the percentages required to bring, to the same rates per square metre, on the one hand the vacant land sale price per square metre of Lot 13 (up to the valuation date of 18 July 2000), and on the other hand the vacant land sale prices per square metre of two other lots, both sold in 2003 (down to that valuation date).

374 The first pairing is of the sale of Lot 13 on 27 February 1996 with the sale of Lot 14 Wanneroo Road, on 27 May 2003. The first pairing produces the equivalence referred to at $11.08 per square metre (yielding the annual date adjustment figure of 3.84 per cent).

375 The second pairing is of Lot 13 and Lot 801, Plan 31950, formerly part of Lot 36 Wanneroo Road, on 8 June 2003. The second pairing produces the equivalence referred to at $11.35 per square metre (yielding the annual date adjustment figure of 4.41 per cent).

376 The difference in the figures so derived is not directly explained in Exhibit 15. However, it might be explained by reference to Exhibit 15's reference to the substantial limestone on Lot 14 for which there is no corresponding indication for Lot 801, as well as the somewhat greater area of Lot 14 relative to Lot 801.

377 However, it appears the figure of 3.84 per cent so derived should, on Exhibit 15 itself, be 3.71 per cent. That is because, while the indicated vacant land sale price at the date of sale (27 February 1996) of Lot 13 ($9.38 per square metre) appears to be correctly calculated, being in fact the one that I indicated earlier I accept, the vacant land sale price for Lot 14 does not appear to be correctly calculated. The sale price at the date of sale, 27 May 2003, is given as $580,000, while the improvements are valued at $85,000. The vacant land sale price produced by dividing the difference between those two figures by the area given for Lot 14, 4.0469 hectares, or 40,469 square metres, is $12.23 per square metre, while Exhibit 15 gives that figure as $12.33. This matter is not explored in the evidence before me.

378 Also, it appears the figure of 4.41 per cent so derived is not correctly calculated, and should, on Exhibit 15 itself, be 4.43 per cent. The difference appears to arise because Exhibit 15 uses, as the difference in years between the sale of Lot 13 and the sale of Lot 801, "7.33 years", when in fact that difference appears to be 7.28 years. Again, this matter is not explored in the evidence or the submissions before me.

379 The effect of adjusting for the matters just referred to is that the date adjustment figures for the pairing of Lot 13 and Lot 14 is 3.71 per cent, from an equivalence of $11.02 per square metre, and 4.43 per cent, from an equivalence of $11.36 per square metre. Especially in the case of the second rate, the difference from the corresponding figure in Exhibit 15 does not appear to be significant.

380 However, as will shortly appear, it is rather more significant how any of the date adjustment figures are used in "after" valuations.

381 In fact, Exhibit 15 only uses its date adjustment figures in "before" valuations, which the report indicates:

"... confirm the "before" or Unaffected valuation given to [the solicitors for the plaintiff] in my Memorandum of 08/11/2002 [Exhibit 14]".

382 This reference appears to confirm that the assumptions underlying Exhibit 15 are otherwise the same as those for Exhibit 14, which would include the assumption that the Land and the Balance Portion were not subdivisible.

383 The "before" valuation in Exhibit 15 using its $11.08 per square metre (the annual 3.84 per cent date adjustment) is shown as producing a valuation for the Land of "$454,000 ex buildings". This is the product of the rate and the area of "4.0975 hectares" for the Land (however, as I have indicated, elsewhere in the evidence in this case that area is 4.0974 hectares). The "before" valuation in Exhibit 15 using its $11.35 per square metre (the annual 4.41 per cent date adjustment) is shown as producing a valuation for the Land of "$465,000 ex buildings". These valuations compare with Exhibit 14's "before" valuation (without $5000 for the shed) of $445,000. I consider Exhibit 15's figures are indeed comparable figures to that in Exhibit 14.

384 The corresponding figures produced by adjusting the rates per square metre in Exhibit 15 as I have indicated produces "before" valuations, using $11.02 per square metre (an annual 3.71 per cent date adjustment) of $452,000; and using $11.36 per square metre (an annual 4.43 per cent date adjustment) no significant change. Again I consider these to be comparable to the figure in Exhibit 14.

385 However, if Exhibit 15's and the adjusted rates are applied to produce "after" valuations, significant difficulties ensue. This is because, as Exhibit 15 indicates, Lot 51 Wanneroo Road, on which Exhibit 14 bases its "after" valuation, was resold on 10 June 2003, for $396,000. Exhibit 15 allows a figure for improvements at the date of that sale of $46,000, which compares with the corresponding figure at the date of the sale of Lot 51 used in Exhibit 14, 21 May 1997, of $25,000. The difference is accounted for in Exhibit 15 in terms of the part completion of the "fibro kit house", the improvement of the "surrounds" and the establishment of an "enclosed shed". This produces a vacant land sale price for Lot 51 in 2003 of $16.68 per square metre, compared with the corresponding price for the 1997 sale of $10 per square metre. The difficulty with producing an "after" valuation is that, if the two vacant land rates per square metre for Lot 51 are compared, the annual date adjustment figure which equates them is 8.78 per cent, while, if the annual date adjustment figures from Exhibit 15 are used, very significantly different rates per square metre for Lot 51 as vacant land as at the valuation date are produced, depending on whether the 1997 sale is brought up or the 2003 sale is brought down. This of course is simply an implication of the significant difference between the date adjustment figure of 8.78 per cent, and the other date adjustment figures.

386 Thus, bringing the 1997 sale of Lot 51 up using 3.84 per cent and 4.41 per cent annually, rates per square metre as at 18 July 2000 are produced of $11.28 and $11.47, respectively. Using 3.71 per cent and 4.43 per cent the rates per square metre are $11.23 and $11.48, respectively.

387 However, bringing the 2003 sale of Lot 51 down using 3.84 per cent and 4.41 per cent annually, rates per square metre as at 18 July 2000 are produced of $14.96 and $14.72, respectively. Using 3.71 per cent and 4.43 per cent the rates per square metre are $15.01 and $14.71, respectively.

388 The differences just referred to produce even more significant differences between the "before" and "after" valuations.

389 It is not clear how these difficulties might be addressed. In Exhibit 15 Mr Vincent indicates that of the pre-July 2000 sales he considered in Exhibit 15 he used Lot 13 because Lot 13 presented "the least complications in establishing vacant land value". He contrasted Lot 51 in this respect. Since Lot 51's 1997 sale the kit home had been "completed", a shed "erected" and the surrounds "improved", "making inspection today an imperfect guide to improvements value in 1997". If so, it is difficult to see how the matter of an "after" valuation should be approached and, in particular, whether recourse to Lot 51 should be abandoned, and if so how the "after" valuation should be approached. I have already considered this matter in another context, above.

390 I also note that, apart from the sales of Lot 51 pre- and post-July 2000, there is another pair of such sales that Mr Vincent might have compared. These are the sales of Lot 19 in 2000 and 2002. Mr Vincent had visited Lot 19 in 2000, as I previously indicated, and visited it again for the purposes of the preparation of Exhibit 15. As I will indicate below, this would reduce the complications in valuing both its 2000 and its 2002 improvements. I have previously referred to the sale of Lot 19 in 2000, which produced a vacant land rate per square metre at sale of $10.35. Exhibit 15 shows Lot 19 as having been sold on 19 August 2002 for $490,000 when the improvements on the lot were valued at $60,000, the same figure as for the 2000 sale. The date adjustment figure that equates these two rates is 0.9 per cent, which is difficult to explain in terms of a marked increase in sale prices since 2000. It may be that the value of the improvements has been significantly overstated, or that there are other factors at work. As the matter is not explored in the evidence, I put the 2002 sale of Lot 19 to one side.

391 However, there is another significant difficulty with the use of the approach in Exhibit 15. It is that in his evidence Mr Vincent indicated that there had been a marked increase in the market prices in the area of the Land since 2000, by comparison with that before the valuation date in 2000 (examination-in-chief, TS 183; cross-examination, TS 202, and TS 232 - 233). However, it was not possible to quantify the difference or differences in rates of increase. I particularly note the following exchange (cross-examination, TS 232 - 233):

"So on what basis can you possibly say that that average growth rate that you have calculates is equally applicable pre-2000 than it is post-2000?---Pre-2000 because the comparison there is between lot 13 which sold in February 1996, so I have got every right to say that it predates the valuation. There is new evidence. A wider span between the two sales being compared gives me a more reliable indication of the long-term growth rate.

I would suggest to you in fact that it is a less reliable indication of the long-term growth rate when you in previous evidence have admitted that there was a marked increase in the market post-2000?---Yes.

Could it not be that the 31 - I'm looking at table 2 on page 3 of exhibit 15. The 31.45 per cent increase between sale 2 in 1996 and sale 5 in 2003 - that 20 per cent of that 31 per cent increase could have occurred after 2000?---Yes. That's a reasonable assumption.

Is it not more reliable when we're trying to ascertain what happened or what this lot was worth in 2000 to rely on your sales percentage increases that you calculated previously, the 1.88 per cent and the 1.25 per cent?---Your assumption is quite arbitrary. I don't know what proportion of the 31.4 per cent is attributable before the valuation date and how much is attributable afterwards.

That's the point?---The analysis hasn't shown that.

It makes it unreliable and we're not interested. If we were interested in what the value was in 2003, then this would be useful. If we're interested in what happened in 2000, it's not very useful at all, is it?---It's useful as a guide but, yes, you've made some good points there."

392 I note that there is evidence the pattern of the increase since 2000 itself was not uniform. Mr Paterson in his critical analysis dated 10 May 2004 and being Exhibit 19, of Mr Vincent's Report in Exhibit 14, stated he would not reduce the valuation he had used in his report (Exhibit 32) as at the valuation date of 18 July 2001 to the correct date, 18 July 2000, as he was "of the opinion that the market was only moving very slowly over that timeframe".

393 It is indeed the case that sales subsequent to the valuation date may be used as comparable sales: John Bridge Ltd (in liq) v Commonwealth (1951) 11 The Valuer 375 at 377, High Court, per Webb J; Commonwealth v Arklay [1952] HCA 76; (1952) 87 CLR 159, at 170, per Dixon CJ, Williams and Kitto JJ. This is subject to allowance, as a matter of the weight to be given to such sales, for any indications that their prices have been affected by events which at the valuation date were matters as to which there was uncertainty: see Housing Commission of New South Wales v Falconer [1981] 1 NSWLR 547, at 576, per Mahoney JA. One such event in this case is the change, in 2001, with respect to the permissibility of more than one dwelling on a property like Lot 37, as I have indicated. There was no consideration in Mr Vincent's report (Exhibit 15) or in his other evidence of the impact of this event on the sales after the valuation date introduced by Exhibit 15. However, that apart, the weight to be given to the subsequent sales used as Mr Vincent did in his Exhibit 15 is qualified both by their distance in time from the valuation date, and the difference in the rate of increase in market prices in the area of the Land since the valuation date. When I combine those aspects with the effects of that use on an "after" valuation, I conclude that I cannot give the weight to the sales of land in 2003 that Mr Vincent did.

The comparable sales introduced by Exhibit 15

394 At the same time, I note that if the sales introduced by Exhibit 15, being sales after the valuation date, are otherwise comparable they may indeed be considered for the guidance they may offer. There were the sales in 2003 of Lots 14, 801 and 51 previously referred to, and the sale of Lot 800 on Plan 31950 in 2002.

395 I put aside the last sale, as it was one to the defendant. I deal with such sales, including this one, under that heading below.

396 Lot 14 Wanneroo Road was sold on 27 May 2003 for $580,000. The property is referred to in Exhibit 15 as 4.0469 hectares in area and having "limestone rear unusable 50%", and as having been purchased for an "eco tourism and environmental education business" with "no intention to subdivide". Exhibit 15 assigns a value for the improvements on Lot 14 at the date of its sale of $85,000. The improvements are described in terms "GCI sheds are of 1300 m2" and a "hardstand area of 1200 m2" with "no house". There is no indication on the evidence that any part of Lot 14 touches Lake Neerabup. The vacant land price of Lot 14 is shown as $12.33 per square metre at the date of sale.

397 Lot 14 is said by the plaintiff to illustrate the potential for the use of land like Lot 37 for an eco tourism and environmental education business. It is not clear what this adds to what could be inferred from the price for the sale of Lot 14 in 2003 as to the value of the Land on 18 July 2000, the valuation date.

398 I also note that Mr Vincent was cross-examined as to the value he put on the improvements on Lot 14 at the date of its sale. Mr Vincent maintained his assessment, in terms that do not suggest to me that I should consider that assessment to have been shown to be incorrect (TS 233 - 235). Mr Paterson gave no evidence as Lot 14, whether as to its improvements or otherwise.

399 I find that Lot 14, like Lot 13 Wanneroo Road, the sale of which on 28 February 1996 I considered previously, indicates a price per square metre which requires adjustment for the date of its sale, its lack of a boundary with Lake Neerabup and for its limestone, offset to some extent by its lack of land subject to inundation from the Lake. However, unlike Lot 13, it is not clear at what rate Lot 14's sale price should be discounted to the valuation date. It is also unclear how account should be taken for the application to Lot 14, but not at the valuation date to Lot 13 or to the Land, of the restriction on more than one dwelling that became policy in 2001. In those circumstances, I do not consider that the sale of Lot 14 in 2003 should be weighted as much as the sale of Lot 13 in 1996, notwithstanding that Lot 13 was sold at a point in time over one year more remote from the valuation date than Lot 14.

400 Lot 801, on Plan 31950, was sold on 8 June 2003 for $557,000. The property is referred to as 3.8066 hectares in area and adjoining the Land. As I previously indicated Lot 801 is the portion remaining of former Lot 36, Wanneroo Road after its owner sold the rear portion, including the former lot's border with Lake Neerabup, to the defendant. This indicates to me that no part of Lot 801 touched Lake Neerabup. There is no reference in the evidence to any limestone on former Lot 36, and therefore on Lot 801. Exhibit 15 assigns a value for the improvements on Lot 801 at the date of its sale of $67,000. The improvements are described as a "house", "old garage", "old rear aviary" and a "shed", with no value being assigned to the shed. The vacant land price of Lot 801 is shown as $12.87 per square metre at the date of sale.

401 I note that Lot 801 appears to be, of all the sales referred to by either Mr Vincent or Mr Paterson as comparable sales, the only sale of land in the area of Lot 37 representing the balance after a rear lot bordering on Lake Neerabup had been excised. As such it bears comparison with the Balance Portion, and therefore its price would appear to have a bearing on the "after" value, although Lot 801 is significantly larger than the Balance Portion.

402 I note on the evidence that there was some considerable contest over the value to be assigned to the improvements on Lot 801.

403 Mr Vincent had his attention drawn to vines and supporting facilities, but rejected the proposition that any value should be assigned to them for the purposes of a vineyard for wine grapes, because of the age and condition of those improvements when he inspected Lot 801 in May 2004. He also rejected the proposition that any value should be assigned to them for the purposes of a vineyard for table grapes, because of their unsuitability for that purpose (cross-examination, TS 236 - 237). He testified that he came to the latter conclusion based upon his experience having owned vineyards.

404 Mr Paterson, on the other hand, testified that he attributed a value of $100,000 to all of the improvements, which he described as (examination-in-chief, TS 447) as:

"... the house and the infrastructure around the house and the existing ongoing vines and the whole composite value of all the improvements over and above the land value and the fact that it is already sort of working and tilled up as a table grape production vineyard."

405 This assessment was one Mr Paterson based on his inspection of Lot 36 at the time of the sale of a portion of it at the rear, in March 2002, to the defendant, a portion which became Lot 800 on Plan 31950, and a sale to which I return below. Mr Paterson was at that time acting for the defendant, and had produced a valuation of the land for it. That valuation included an allowance for improvements on what became Lot 800 of $750 and the costs of relocation of existing posts and wires there put at $500 (his critical analysis, Exhibit 19; examination-in-chief, TS 467). This is a conflict in the evidence I do not find easy to resolve.

406 On balance, however, I consider a figure closer to Mr Vincent's is to be preferred. On the evidence, Mr Vincent, unlike Mr Paterson, inspected the improvements on Lot 801, or at least those on former Lot 36 as a whole, rather than, as it appears to me was Mr Paterson's evidence, focussing his inspection on Lot 800. Mr Vincent's evidence was also of his experience with vineyards, where Mr Paterson referred to no corresponding experience. However, Mr Paterson's figure is closer to the value for improvements on Lot 800 that results in a vacant land value that can be discounted back to 18 July 2000 at much the same rate as Lot 14 (after adjustment in relation to the sale of Lot 14 for its limestone and its somewhat greater size) and to yield the same rate per square metre as Lot 13 brought up to that date at the date adjustment rate I have previously referred to, of 1.88 per cent, a rate of $10.19 per square metre. The rate to discount back Lot 801 is indeed much higher than the rate of 4.41 per cent Mr Vincent used for Lot 801, which is consistent with the evidence of a marked increase in the rate of appreciation of land in the Lake Neerabup area over the period from 2000 to the sales of Lots 801 and 14, in the middle of 2003.

407 However, I consider that Lot 801 cannot be given much weight in determining the "before" value for the Land, in view of the adjustments that need to be made to the price paid for Lot 801 in 2003 for the date of its sale, its lack of a boundary with Lake Neerabup, offset to some extent by its lack of land subject to inundation from the Lake, its somewhat smaller size and the uncertainties as to the value of its improvements, as well as the application to Lot 801, but not at the valuation date for the Reserved Portion, of the restriction on more than one dwelling that became policy in 2001. I also note that as a result of the excision of Lot 800, Lot 801 has a somewhat irregular shape, a matter that on Mr Vincent's evidence affects value.

408 At the same time, I consider that Lot 801 can be used as a check on the "after" value, for the Balance Portion, which Lot 801 in a number of respects resembles, more closely than any other land the subject of sales put forward as comparable sales. I refer here to Lot 801's irregular shape, frontage on the slip road, and lack of a portion of Lake Neerabup, as well as its proximity to the Land, bordering it to the north. At the same time allowance needs to be made for Lot 801's larger size than the Balance Portion, the date of its sale, the uncertainties as to the value of its improvements and the application to Lot 801, but not at the valuation date for the Reserved Portion, of the restriction on more than one dwelling that became policy in 2001. It seems to me that the sale of Lot 801 can be used as a check on the "after" value for the Balance Portion that might otherwise be arrived at.

409 I have previously described Lot 51 Wanneroo Road, in connection with its sale on 21 May 1997, which is referred to in Exhibits 12 and 14. Lot 51 was resold on 10 June 2003, as I have indicated, for $396,000, and Exhibit 15 assigns $46,000 for Lot 51's improvements, to produce a vacant land price of $16.68 per square metre at the date of sale.

410 In respect of his establishing the vacant land price for the 2003 sale of Lot 51, I note that Mr Vincent indicates in Exhibit 15 that he had chosen Lot 13 as his "pre-July 2000 comparison point" for the purpose of determining date adjustment figures using post valuation comparable sales because, of the pre-18 July 2000 sales to which Exhibit 15 refers (apart from the sale of Lot 13 itself, the 1996 and 1999 sales of Lot 50, the 1997 sale of Lot 51, the 1999 sale of Lot 20 and the 1996 sale of Lot 24), it presented the "least complications in establishing vacant land value".

411 The complications of the 1997 sale of Lot 51 were referred to as two. One was its smaller size than the lots the subject of the post-valuation date sales. However, I note that no reference is made in this connection to the 2003 sale of Lot 51 itself. I further note that the date adjustment figure that equates the 1997 and 2003 sales of Lot 51 on Mr Vincent's vacant land prices for those sales is 8.8 per cent, significantly higher than any of the date adjustment figures his valuation reports use.

412 The other complication with using Lot 51 as a pre-July 2000 comparison point that is referred to is that:

"In addition on Lot 51, the kit home was completed, a shed was erected and the surrounds were improves since its sale in 1997, making inspection today an imperfect guide to improvements value in 1997 ... "

413 However, I note Mr Vincent's evidence that he had in fact inspected the improvements on Lot 51 at the time of his first valuation report (Exhibit 12), which would put that inspection at or about June 2000, as well as in May 2004 (examination-in-chief, TS 170). The earlier inspection would tend to reduce the complication referred to somewhat, but not eliminate it.

414 I take it that it is predominantly the second complication, albeit as so reduced, that explains why in fact the 1997 sale of Lot 51 was not chosen as a pre-July 2000 comparison point with its 2003 sale.

415 I have already considered the figure for the improvements on Lot 51 at the time of its sale in 1997 in the context of the first report in which that figure, $25,000, appeared (Exhibit 12), and indicated why I accepted that figure. As to the 2003 figure, of $46,000, I note the only evidence I have as to the improvements is from Mr Vincent, whose inspection of Lot 51 was about 1 year after the 2003 sale. I would expect that determination of value to have a lower level of uncertainty than the determination of the 1997 figure, which I accepted. I thus accept the 2003 figure.

416 However, I conclude there is only limited guidance I can derive from the sales in 2003 of Lot 51. The difficulty is that of determining the rate at which its price should be adjusted back to the date of valuation. On the basis of the rate of 1.88 per cent for the 1997 sale, a rate which I indicated I accepted, the rate which would produce an equivalence for the 2003 sale is 16.86 per cent. This appears to be a much higher rate than might be derived for the other 2003 sales. In these circumstances, Lot 51's 2003 sale appears to be one affected by circumstances that render it of very little use in determining the value of the Balance Portion.

417 Exhibit 32 is the valuation of Mr Paterson, the valuer called as a witness by the defendant. Exhibit 32 gives two valuations, one on a "before" and "after" basis, and on one a direct comparison basis. I deal with the latter valuation separately below.

418 Exhibit 32's valuation of the Reserved Portion on a "before" and "after" basis is $85,000, or $57,495 per hectare ($5.75 per square metre). It bears a date stamp from the Ministry of Planning of 18 April 2001, which it was accepted was the date on or about which the report was signed by Mr Paterson. Exhibit 32's valuation date is 18 July 2001, that is, a date falling some 3 months after his valuation report was signed. That valuation date was, as Mr Paterson, in his critical analysis (Exhibit 19), acknowledged, in error, as it should have been 18 July 2000. As I have previously indicated, he indicated in Exhibit 19 that no adjustment to his valuation was required on that account, because "the market was only moving very slowly over that timeframe". I have previously commented on that evidence.

419 Exhibit 32 includes a provision for improvements in the form of a "shed" in the amount of $5000 in both the "before" and the "after" valuations. I have already commented on that aspect of Mr Paterson's valuations in this report.

"[i]n assessing the valuation ... analysed the most comparable sales which are of the of the same rural zoning facing onto Wanneroo Road and generally in the same locality of Lake Neerabup."

421 A total of seven sales are listed at the end of the report, in a "Sales Evidence Addendum 1". These are the 1996 sale of the Land itself, the 1996 and 2000 sales of Lot 24, the 1999 sale of Lot 20, the 2000 sale of Lot 19, the 1997 sale of Lot 51 and the 2000 sale of Lot 30. I have previously commented on all of these sales.

422 Exhibit 32's "before" valuation is the product of the area of the Land (4.0974 hectares) and a rate per hectare of $90,000 ($9.00 per square metre), to which $5000 for the shed is added, to yield a total of $375,766.

423 Exhibit 32 does not clearly indicate how the "before" rate per hectare is derived from the "most comparable sales", and Mr Paterson testimony did not directly deal with the point. There is a contrast with the derivation of the "after" rate per hectare, for which there is an account in Mr Paterson's testimony. In that testimony, he said this (examination-in-chief, TS 433 - 434):

"Mr Paterson, going to your report at page 2 of your report, you there have valued lot 37, reserved portion of lot 37, using two different methods, first of all the before and after method, and you there use the rate of $110,000 per hectare for the after valuation. Can you explain why you use that rate per hectare and what the basis for it was?---There's a number of reasons. A couple of significant factors are that as the parcel of land becomes smaller, the rate per hectare increases, and secondly, it also reflects the fact that the after land, on average of all the after land, is better quality land than the whole parcel of the before land.

What sales evidence did you rely on to arrive at that rate?---The sales evidence in the report plus other evidence in the area that I had been working in as well. Overall probably the most significant sale was - probably the most recent sale at that time was sale number 6. That's lot 30. That was a fairly significant sale in my overall judgment of effective rate per hectare on that, even though it was to the adjoining owner."

424 I return to this testimony below when I consider Exhibit 32's "after" valuation.

425 I have already discussed the proximity of the rate per square metre in the "before" valuation in Exhibit 32 to the rate per square metre from the sale of Lot 19 in January 2000, by comparison with rate from the sale of Lot 20, in August 1999, and the rate per square metre from the sale of Lot 24, in October 2000. There is an even greater distance between the rate per square metre in the "before" valuation in Exhibit 32 and the rates per square metre from the sales of Lot 51 in May 1997 (on Mr Paterson's figures, $112,011 per hectare, or $11.20 per square metre) and of Lot 30, in December 2000 (on Mr Paterson's figures, which I have indicated Mr Vincent accepted, $108,767 per hectare, or $10.88 per square metre). I consider this indicates that Mr Paterson in Exhibit 32 drew particularly on the sale of Lot 19 in arriving at his "before" valuation, and to a much lesser extent on the other sales. I have already indicated other reasons why I consider that to be a reasonable approach, and how I would use that approach to derive a "before" valuation in this case.

426 This takes me to the "after" valuation in Exhibit 32. That valuation is the product of the area of the Balance Portion (2.6190 hectares) and a rate per hectare of $110,000 ($11.00 per square metre), to which $5000 for the shed is added, to yield a total of $293,000.

427 I have already referred to Mr Paterson's testimony in which he indicated he drew particularly on the sale in December 2000 of Lot 30. For the reasons I gave earlier, I do not consider that to be an approach that I should follow.

428 I note that Mr Paterson had his attention drawn to the sale in 1997 of Lot 51, when it was put to him he had particularly relied upon in it in deriving his "after" valuation. The 1997 sale of Lot 51 in his report was sale item number 5, the price per square metre of which, before any date adjustment, is given in Exhibit 32 as $112,011 per hectare ($11.20 per square metre), without any allowance for improvements, as I have previously indicated. He was asked whether in fact he had drawn more heavily on that sale than the sale of Lot 30 in 2000, sale number 6 in Exhibit 32. The exchange was as follows (cross-examination, TS 459):

"The comments that you have made in relation to item 5, you say:

'Old sale though vacant lot with similar good aspect to the lake that the subject will have after taking off the reservation. Considered to be a good example of the increased dollar per hectare rate achieved with smaller lots with good aspect.'

In light of that aspect of your commentary, do you not now agree that it was predominantly item 5 in your addendum that you relied on in establishing the after value?---I think, you know, what the problem really is - that there's only a couple of sales close to the relevant date and I probably overall leant closer to sale number 6 and the other sales that I've mentioned in the report and made, you know, a reasonable adjustment for the difference in the areas rather than specifically relying on that sale.

But you would accept that you did rely to some extent on sale 5 in the addendum in establishing the after rate?--- Not really because it was a 97 sale. I was trying to get closer to the actual effective date of the valuation. I was just trying to demonstrate a point there but I didn't actually really weigh heavily on that rate per hectare."

429 I have already discussed the use of Lot 51 in an "after" valuation. I interpret this evidence as indicating that Mr Paterson had not relied heavily on the 1997 sale of Lot 51, because of its date, not that he had not used it all (see also cross-examination, TS 457).

430 I consider that an "after" valuation which weighted the 1997 sale of Lot 51 as I have indicated would be appropriate, and would represent a lower rate per square metre than, both that for Mr Paterson's "after" valuation, and that for his "before" valuation.

The "direct comparison" method of valuation

431 As I have indicated a valuation by this method was also provided in Mr Paterson's report (Exhibit 32). This was described in the report as a method "based on dissecting the various components of the reserved land". In Exhibit 32 he applied a rate of $90,000 per hectare ($9 per square metre) to the "dry-buffer" part of the Reserved Portion, given as 0.4784 hectares, and $30,000 per hectare ($3 per square metre) of the "wetland" part, given as 1 hectare. I have previously explained how he arrived at the areas of these parts. The resultant valuation was $75,000.

432 Mr Paterson in Exhibit 32 recommended the higher value of $85,000, produced by the "before" and the "after" method be used:

"... to compensate for the unquantifiable factors such as the remote, potential long term possibility that some future subdivision potential benefits may be lost. However, this is also largely reflected in the comparable sales evidence which would also have the same latent potential."

433 I have previously commented on the "remote, potential long term possibility" referred to, and indicated that, on the evidence, a hypothetical prudent purchaser on 18 July 2000 would not consider that a possibility to which value should be assigned.

434 Exhibit 32 does not clearly indicate how the rates for the "dry-buffer" and "wetland" were derived. However, the former rate is the same as that for the "before" valuation, which in my view goes some distance to explaining how he derived the rate from his basket of sales. However, there is no corresponding indication as to his wetland figure.

435 Mr Paterson was asked in his examination-in-chief how he derived the wetland rate, and objection was taken to the question, on the basis that his report (Exhibit 32) did not set out that derivation. However, I permitted the question to be asked, but left to the plaintiff the matter of making an objection to the answer, in particular to the extent the answer referred to sales other than those in Exhibit 2, the schedule of comparable sales. In the event, as will be apparent, Mr Paterson referred to one such sale, and in cross-examination to one other such sale, as well as a further sale.

436 In his examination-in-chief, Mr Paterson explained the matter in this way (TS 439 - 441):

"Mr Paterson, you were explaining to the court the basis for you selecting $30,000 per hectare for the one-hectare portion of wetland, and can you continue to do that?---You know, just because it's not mentioned in the report - I mean, I've been valuing properties for over 20 years and I have a lot of experience with various grades of property and I consider that to be a figure that represents a reasonable figure that somebody would rather have the land than not have the land, or in my opinion where it would sit in the market as of - I mean, you can't say the land is worth nothing, it has to be worth something, and to my opinion that's - you know, based on my experience, that's where it would sit in the echelon of property values as much as anything. I mean, I can try and substantiate it with other sales but just because it's not in the report doesn't mean to say that it's not in my head and is experience which hasn't been demonstrated exactly in the report. A lot of these things are value judgments where you have to use the limited evidence you have at the time to make a reasonable assessment.

In terms of your - you have mentioned lot 6 Lake Road. What involvement did you have with that sale?---I had previously valued that for the department, for the Ministry of Planning.

Perhaps you could go to volume 1 of the defendant's book of documents?---Page?

Page 1?---The map?

Yes, the aerial photograph. Can you just identify where lot 6 Lake Road is in that?---It's towards the top of the page, the second lot south of Wattle Avenue with lot 80 adjoining immediately on the north side of it. It's in the lake land on the west side of Lake Road. Lake Road is not shown on that map but it's a small gravel track that runs down on the east side of lot 6 around the edge of the lake.

In terms of that property, how does that property compare to the subject land?---As you come along the road front, there's a fairly steep rocky drop down from the limestone track that runs down there. There was an argument that there was a small portion of land - probably you could say that also would be considered to be buffer land. There was an argument or a possibility that a house may have been constructed on that portion, so there was a bit of added value for that actual breakaway area, the actual sloping area from the road which is quite steep and rocky limestone, rocky as it runs down, and then it goes down to the lake bed which is virtually identical to the wetland on the subject property, being all of the same contour - flat, with swampy, reedy-type vegetation on it. I haven't seen that in the middle of winter but I would assume that in the same middle of winter it would be totally inundated, the same as this from the aerial photograph. There is very little buffer land, only a small strip that could be possibly considered to be of buildable use or something to that effect."

437 No objection was taken to this testimony. Lot 6 Lake Road, to which I return below, was in Exhibit 2 as sale item 13.

438 Although the testimony just quoted does not clearly explain how the "dry-buffer" rate per hectare was derived, Mr Paterson provides this explanation later, in his cross-examination (TS 475 - 477):

"Can I take you please to exhibit 2, schedule of comparable sales? Perhaps before taking you to that document, you say you relied, did you not, on lot 6 in establishing the wetland value?

SIMMONDS J: I'm sorry, what was that question again, Mr Wittkuhn?

WITTKUHN, MR: I asked Mr Paterson whether he relied on lot 6 - lot 6 Wattle Road. Is that right, Mr Paterson?---Lake Road.

Lot 6 Lake Road, as establishing the wetland value. Correct?---Correct.

If you would go now to the schedule of comparable sales, second last page - perhaps again I will ask one more question, Mr Paterson, before I ask you to look at that. You agree that in determining comparable sales you always look to the date of contract rather than the date of transfer?---I had prior knowledge to this because I had been valuing it prior to the date of sale, but, yes.

Because lot 6 in the schedule as shown as sale date July 2001. Correct?---Correct, yes.

So you couldn't have been relying on lot 6 Lake Road as a sale per se in April 2001 when you gave your valuation report, exhibit 32?---Not on the sale date, no, but I was aware of it prior to that sale date.

You used something that you were negotiating on in another matter as a basis for arriving at a wetland valuation in this matter?---I wasn't negotiating on it personally but I knew the negotiation was under way.

Did you apply a wetland, dryland direct comparison approach to lot 6 Lake Road?---We did.

When you say 'we', who is 'we'?---I did, yes; my company, yes.

Your company, yes. Where in turn did you draw the wetland dry land valuations for that?---Actually I went

Just general experience?---No, I actually went further up here to Dayrell Road and around the corner and these ones here and I think there is - there is a negotiation there on that lot 2 on Dayrell Road there, 250,399.

So when you say negotiate, you mean at the time of preparing the lot 6 Lake Road valuation you were relying in turn on another as yet unconsummated negotiate?---No; no, that one lot 3 Dayrell Road, it sold at 250,000 in March 99.

In kilometres how far is that from Lake Road?---It's 200 metres, .2 of a kilometre - no, probably 300 metres, yes, 250.

Is that in Neerabup?---It is, yes.

Is it in the Lake Neerabup valley?---It is. It extends on. You probably can see it in that wetland.

That's okay, Mr Paterson. I don't want to go into too much detail here?---It had a house on the front of it as well.

In any of these negotiated sales that you have mentioned, lot 6 Lake Road, lot 800 or the one 300 metres north, were the owners represented by lawyers in the negotiations?---Well, that one in Dayrell Road, I just went up and saw the chap and he was quite happy to let me go and have a look around the place and tell me what his

Were they represented by lawyers? Were any of those three represented by lawyers?---I don't know that's even a Ministry of Planning sale. I think that was an outright purchase. I don't think any lawyers had to do anything and the other one - which was the other one you're talking about?

801 or lot 6 Lake Road?---I believe - I wasn't dealing - I was just doing the valuation. I don't

You don't know whether they were represented by lawyers?---I don't know, no.

Do you know whether they obtained their own valuations in either case?---I don't know, no."

439 Later still, he confirms that in the valuation of Lot 6 some account was taken of the strip of land that was not in Lake Neerabup (cross-examination, TS 479):

"Let's confine it to lot 6 then. I put to you that they are virtually true swampland and nothing else?---As I said when I gave the range the values previously, there is a small curtilage along the front there which the owner argued it was possible to get a building licence on. We did make some extra allowance for the fact that, you know, as I said, there was a split rate - we allowed a bit extra for that portion and the balance of it as the inundated lake land."

440 It will be evident that Mr Paterson was relying on his "general experience" as a valuer of land, including of land in the area of the Land which was land comprised in substantial part of Lake Neerabup or land bordering on the Lake, and in particular the valuation he had done for one transaction concerning Lot 6, a transaction which ultimately (after the date of his report that is Exhibit 32) resulted in a sale to the defendant in July 2001. In that valuation he had used the dry-buffer and wetland approach. In relation to that valuation he had in turn particularly drawn on the sale of a piece of land in the area in March 1999, which on his evidence was not to the defendant. His testimony would indicate he had no involvement in that sale. There is also no dissent by the witness from counsel's reference to a transaction concerning Lot 800, which it appears was to the sale to the defendant in March 2002 of Lot 800 on Plan 31950, to which I have referred previously, as a sale of a rear portion of Lot 36 Wanneroo Road. Mr Paterson had done a valuation for the defendant in relation to that land, as I have indicated. Lot 800 was not referred to in Exhibit 2, although it was used by Mr Vincent in his valuation report that is Exhibit 14, and was referred to by Mr Paterson in his critical analysis that is Exhibit 19.

441 I will return to the sales of Lot 6 and Lot 800 in respect of their characters as sales to the defendant, below.

442 The sale of "Lot 3 Dayrell Road" is not dealt with in any of the other evidence, and in particular is not contained in Exhibit 2, and it seems to me that the details as to that sale would have been inadmissible hearsay had they emerged in examination-in-chief and been objected to (Pownall v Conlan Management Pty Ltd (1995) 12 WAR 370, at 375 to 378, per Ipp J, Malcolm CJ agreeing; and at 387 to 388, per Anderson J). However, in view of the way in they did emerge, it seems to me that they may be used for whatever "rational persuasive power" they may have (Jones v Sutherland Shire Council [1979] 2 NSWLR 206 at 219, per Samuels JA, quoted in Heydon J D "Cross on Evidence", 7th Aust ed Sydney LexisNexis Butterworths Australia, 2004 at [1665]). However, it seems to me that that any such persuasive value is insignificant, in view of the sketchiness of the details of the sale in question.

443 I also note that in his critical analysis that is Exhibit 19 of Mr Vincent's reports that are Exhibits 12 and 14 Mr Paterson indicated he was "pleased to support the rate of $90,000/ha for the dry buffer land, or maybe even arguably up to Kingsley Vincent's rate of $10.84/m2 for the buffer strip". The reference to $10.84 per square metre appears to be one to the rate in Mr Vincent's "before" valuation in Exhibit 14. Using that rate would raise the "direct comparison" valuation to $81,859.

444 Two issues arise in respect of Mr Paterson's use of the "direct comparison" method employed here. One is that, to the extent it relied on comparable sales, they were, with the exception noted, sales to the defendant. I return to that issue below. The other issue with the "direct comparison" method was that it was not a proper principle of valuation, or was not properly applied to the Reserved Portion.

445 As to the second issue, Mr Vincent in his critical analysis (Exhibit 16) of Mr Paterson's report (Exhibit 32) had stated that the "direct comparison" method used in that report was "not a method of valuation at all". However, in his evidence, Mr Vincent appeared to me to qualify this view, by acknowledging that, at least for rating purposes, there were methods of valuation that used different rates per square metre for different parts of the land to be valued (cross-examination, TS 207 - 209), variously referred to as the 4321 method, the summation method (when land and its improvements were being valued), the aggregate method and the piecemeal method. However, it was his view none of these was "properly applicable" to this case, for the following reasons (re-examination, TS 271):

"I think you wanted to expand a little on why the piecemeal approach was not appropriately applied here. If you can just do so, but if you could keep your comments as brief as you can?---I think a prudent purchaser of lot 37 would have taken into account the overall aspects of the lot. To my mind I don't believe that a purchaser would have broken it up into lake and dry land, wet and dry land. A prudent purchaser would have considered the property as a whole, more so possibly from the amenities that come with the lake and also the potential use that the land could be put to as a whole."

446 Although the reference is to "Lot 37", in the context of the questions Mr Vincent had been asked, and his critical analysis (Exhibit 16), it seems to me he was referring to the Reserved Portion.

447 I prefer the evidence of Mr Vincent in this connection to the extent that that evidence confirms the need to take account of prospective purchasers who would recognise the interdependence of the two aspects of the land. It seems to me, on the evidence of both Mr Paterson and Mr Vincent as to the connection between the portion of the Land that formed part of Lake Neerabup and the remainder to which I earlier referred, that there was a form of interdependence between the two a prospective purchaser would recognise and for which a valuer would need to account. The direct comparison method however characterised appears to me to involve no recognition of such an interdependence. At the same time, however, as I have indicated, on the evidence a prudent purchaser would pay less for land that combined wetland and dry land where, other things being equal, that land contained a higher proportion of wetland. Further evidence to that effect is represented by the pattern in the evidence of sales to the defendant, the acquiring authority, to which I will shortly refer. That evidence points to the existence of a market for land which is all or almost all wetland in the Lake Neerabup area, albeit a market with only one prospective purchaser, the defendant.

448 There were eight of these in the area of the Land, around Lake Neerabup that were addressed in the evidence before me. I have already indicated that at least two of these sales appear to have influenced the use of the "direct comparison" method of valuation by Mr Paterson.

449 The authorities with respect to valuations on a compulsory acquisition establish that a sale to the acquiring authority of comparable land may be admissible as a comparable sale, but must be scrutinised with some care, to determine if and the extent to which the sale is indeed a comparable one: Flotilla Nominees Pty Ltd v Western Australian Land Authority & Anor [2003] WASC 122, at [27], per Pullin J. The issue of the comparability of the sale goes the extent to which the sale may have been subject to "extraneous influences that would have taken the parties markedly outside the influence of free market forces": Petroccia (supra), at 356, per Wells J. His Honour provides two illustrations (at 341):

"Where numerous acquisitions have been made in a large, but reasonably identifiable, area it is no doubt generally true that the Authority is in a position, within limits that may vary from case to case, to establish its own market, and set its own price.

But the circumstances are often wholly different. Where an Authority makes a very limited sortie into an area, and acquires one or two, or, at all events, a limited number of, parcels, the positions of the parties may be reversed. Where, for example, it is important for the Authority to obtain the property, it is likely to find itself in the role of an anxious buyer and the landholder or landholders in the role of reluctant seller or sellers. In those circumstances, the Authority may be disposed, having regard to its limited aims, to present a more liberal and benign countenance to the asking price or prices, and prefer to pay what, or more nearly what, is asked than expose itself to the fortunes of compulsory acquisition proceedings; whereas in cases like the Woollams case [Woollams v the Minister (1957) 75 WN (NSW) 103], where the Authority could ill afford anything that savoured of widespread liberality, it would tend to keep a firmer check on its spending. It all depends on a wide review of the circumstances of each case."

450 In relation to the first situation at least, which as I will explain below appears to be closer to this case than the second, which was the class of case to which Wells J considered Petroccia (supra) belonged, the basis for the need for care has been put in the leading authority, Woollams v the Minister (1957) 75 WN (NSW) 103, at 109, per Hardie J, as set out in Petroccia (supra) at 340, per Wells J, concerning the admission of and weight to be given to sales to the Board for the purposes of constructing a storage dam in a valley, as:

"... bearing in mind that the Board had a statutory power of resumption and that it is reasonable to infer that all the vendors knew of that power, and that they would also know that the Board would exercise it and resume their properties if a negotiated sale was not made. The negotiated selling prices may be said to reflect the views of the vendors and the purchaser as to what the vendors would be likely to recover in an action for compensation following a resumption, discounted perhaps to some extent by the knowledge that some legal and other expenses incurred in such an action would have to be borne by the dispossessed owners and that there would be some delay in having compensation assessed and paid, rather than to reflect a market selling price agreed upon between a willing vendor and a willing purchaser on the basis of the Valley enjoying the amenities and other conditions which would have prevailed had there been no scheme on foot and under way for its inundation."

451 However, it is because the prices negotiated may be expected to reflect the views referred to that it is no objection to the purchases that they were for the purposes of the scheme, whose impact on value must be ignored: see MRTPS Act, s 36(2b), in fine. The views would (absent other evidence to the contrary) be expected to derive from the proper measure of value, but subject to the distortions I have described. Thus, I do not consider that the sales must be rejected because they were (it was not contested they were) for the purposes of the scheme of which the reservation of the Reserved Portion for parks and recreation was a part.

452 The weight to be accorded to sales to an acquiring authority may also be affected by the availability to the valuer or the Court of other evidence, including sales to other parties, which is satisfactory for its purposes: Merivale Motel Investments Pty Limited v Brisbane Exposition And South Bank Redevelopment Authority [1988] 2 Qd R 562, at 564, per Matthews J, Ryan J agreeing; Petroccia (supra) at 356, per Wells J. I return to this point later.

453 In this case, of course, there was no question of compulsory acquisition of land under the legislation in relation to the present claim for compensation. However, I consider that the same principles apply as in the case of a power of compulsory acquisition, whether the land sold had previously been reserved for parks and recreation or not. Where it had been reserved, the sale might be seen as avoiding the need for the election to purchase process under the legislation, and, where the election to purchase process had been undertaken, the sale might be seen as avoiding the need for proceedings such as these. Where land had not been reserved there was the possibility of reservation of the lands in question in the same way that the Reserved Portion was reserved.

454 I note that at least two of the sales in question here, those of Lot 6 Lake Road and Lot 800 on Plan 31950, were ones for which Mr Paterson prepared valuations for the defendant. I have already referred to evidence as to the use of the "direct comparison" method by Mr Paterson in relation to the valuation of Lot 6. There is no corresponding evidence as to his valuation of Lot 800, which he discusses in his critical analysis (Exhibit 16). It does not seem to me that the correctness of those valuations is a matter that goes to affect the weight of the sales to the acquiring authority, assuming, as the evidence suggests in both cases, that those valuations influenced the defendant. This is for the reasons given by Wells J in Petroccia (supra), at 342 - 343.

455 This takes me to the sales in question. I note immediately that these include the only sales of land that is landlocked and is on the boundary of or including wetland in the evidence before me. I put aside for this purpose Mr Paterson's reference to Lot 3 Dayrell Road, above, for the reasons previously indicated.

456 I begin with Lot 800 on Plan 31950, to which Exhibit 2 (the schedule of comparable sales) and Exhibit 14 (Mr Vincent's report of 8 November 2002), as well as Exhibit 16 (Mr Paterson's critical analysis), refer.

457 Lot 800, the sale of which in 2002 appears in Exhibit 2 as sale item 5, is, as I have indicated, part of the rear portion of former Lot 36 Wanneroo Road. It included a portion of a vineyard that extended across the boundary between Lot 800 and the balance of former Lot 36, which is Lot 801 on Plan 31950. I earlier referred to this vineyard. Lot 800 is landlocked, and has an area of 0.2901 hectares (on Exhibit 14: in Exhibit 16 it is given as 0.2898 hectares, a difference I ignore as insignificant), and includes on Mr Paterson's evidence "a very small portion in the corner of the lot that was actually inundated wetland" (Exhibit 16). However, on Mr Vincent's evidence Lot 800 contained "no wetland, but a bit of wetland buffer" (cross-examination TS 223). Lot 800 was sold to the defendant in March 2002 for $28,000. There is no indication on the evidence of whether or not at that time Lot 800 was the subject of a reservation for parks and recreation. The land appears to have been sold by the owner of Lot 36, who was left with the balance of that lot, as Lot 801 on Plan 31950, which was subsequently sold to a third party, as I have indicated.

458 On Mr Vincent's evidence Lot 800 had "no improvements" (Exhibit 14), although it would appear from his evidence at to Lot 801 that he meant by this that he assigned no value to any grapevines and their infrastructure on Lot 800. Mr Paterson's evidence was that in his valuation of Lot 800 for the defendant he had assigned $750 to the grapevines and also included an allowance of $500 to relocate the posts and wires on the lot, as I earlier indicated, while valuing the land itself at $9 per square metre. Mr Paterson acknowledged that the amount the defendant paid for Lot 800 was greater than the total of the amounts on these accounts.

459 Depending upon whether an amount for improvements is allocated or not, the price for Lot 801 as vacant land in March 2002 falls within the range of $9.65 (no improvements) to $9.22 (improvements valued at $1250), which would need to be adjusted back to 18 July 2000, the valuation date.

460 Mr Vincent in his Exhibit 14 treated the rate of $9.65 per square metre as setting "a minimum value" for the Reserved Portion, although it should be noted, as Mr Paterson does in Exhibit 16, there is no indication Mr Vincent has allowed for the greater proportion of the Reserved Portion that is wetland, an adjustment which as I have indicated the evidence indicates to me should be made where land merely touches the Lake. Nor is there any indication that Mr Vincent has allowed for the substantially smaller size of Lot 800, or for the matter of any date adjustment, the need for both of which in relation to other sales his other evidence acknowledged. I consider that the need to make these three adjustments qualifies the weight that can be given to the sale of Lot 800. However, I consider that the sale, when considered with the sale I refer to next, tends to indicate a higher price would be paid for land which has relatively little wetland while touching Lake Neerabup, compared with land with relatively more wetland forming part of the Lake.

461 Lot 6 Lake Road, the sale of which in 2001 appears in Exhibit 2 as sale item 13, was described in Mr Paterson's evidence from which I quoted above as being made up almost entirely of the same sort of lake bed as the Land, while having "very little buffer land, only a small strip that could be possibly considered to be of buildable use or something to that effect", with a steep drop from a "limestone track", which appears to be Lake Road. This track appears to offer access to the road to the north, Wattle Avenue, via Lake Road, and to mean that Lot 6, unlike Lot 800, was not landlocked. Mr Vincent in his evidence described Lot 6 as being "virtually nothing more than swamp land" (examination-in-chief, TS 168). Lot 6 comprised 6.9480 hectares, and on Exhibit 2 was sold as vacant land.

462 Lot 6 was sold in July 2001 for $140,000, at a time when, on Exhibit 2, it was the subject of a reservation for parks and recreation. The sale price represents $2.01 per square metre. Mr Paterson had valued this land for the defendant, as I have indicated, apparently no later than the time of his report (Exhibit 32), April 2001.

463 As I have indicated, Mr Paterson in his evidence referred to his valuation of Lot 6 as a basis, with his general experience, for the value he assigned to the wetlands in the Reserved Portion in his "direct comparison" valuation. On his evidence, there would be a need to adjust the price of Lot 6 for its greater area, although not for the date of sale in relation to the valuation date of 18 July 2000, on his evidence that "the market was only moving very slowly over that timeframe" (Exhibit 16). However, it seems to me that Lot 6 would be of only limited assistance in relation to a valuation of the Reserved Portion, given that it appears to have only a very small proportion of dry land, and that land was inferior to the corresponding portion of the Land (cross-examination TS 479 - 480). However, as I have indicated, the sale of Lot 6 tends to indicate a lower price would be paid for land which has relatively more wetland forming part of Lake Neerabup, compared with land with relatively less wetland forming part of the Lake.

464 A portion of the rear of Lot 22 Wanneroo Road, now Lot 1010, appears as sale item number 12 in Exhibit 2. Lot 22 lies to the south of the Land. Exhibit 2 indicates that the portion's area was "3.988 ha (3938 m2)", which appears to be in error - the correct area, given the size of Lot 22 shown on Exhibit 3, a plan of the Lake Neerabup area from the Valuer-General's Office, would appear to be 0.3938 hectares (3,938 square metres). The portion appears to be landlocked. Mr Vincent in his cross-examination refers to this portion as land that went "into the lake system" so far as it appeared from his inspection of the aerial photograph in Exhibit 39, page 2 (TS 227), and as having been sold to the defendant (TS 226). Mr Paterson gave no evidence as to the October 1998 sale of this portion of Lot 22. Exhibit 2 indicates that the portion of Lot 22 was sold in October 1998 for $30,000 as vacant land when it was the subject of a reservation for Parks and Recreation. This price represented $7.62 per square metre.

465 Neither Mr Vincent nor Mr Paterson relied upon this sale, however. Its use would appear to require adjustments for its smaller size and the date of the sale, at least. Considering the need for those adjustments, and without knowing more about the land, including its topography and the proportion of it represented by wetland, it is difficult to see what weight can be assigned to this sale.

466 Lot 43 Wattle Avenue (also referred to as Lot 80), lies to the north of the Land, and immediately north of Lot 6, and its sale in February 2002 appears as sale item 14 in Exhibit 2. Lot 43 appears to front on to Wattle Avenue. Exhibit 2 indicates that Lot 43's area is 6.8145 hectares. Mr Vincent in his evidence referred to this lot as being a "total lot involved in the lake system" (examination-in-chief, TS 168), with "not too much buffer on that one but it does appear to be at the north-eastern corner where the road comes down from Wattle Avenue" (cross-examination, TS 228). Mr Paterson's only evidence with respect to the sale of Lot 43 in February 2002 is his indication that he did not rely upon it in his valuations (cross-examination, TS 479). Exhibit 2 indicates that Lot 43 was sold as vacant land to the defendant for $210,000 in February 2002 when it was the subject of an election to purchase as land subject to a reservation for parks and recreation. This price represented $3.08 per square metre.

467 Again, neither Mr Vincent nor Mr Paterson relied upon this sale. Its use would appear to involve adjustments of the same sort as for Lot 6, whose price per square metre is similar if lower. It tends to confirm the price for Lot 6, while also indicating some measure of appreciation in prices between 2001 and 2002 which is in line with the evidence I have previously referred to.

468 Lot 16, Wanneroo Road, lies to the south of the Land. The sale of the rear portion of the lot, which was landlocked, to the defendant in October 1999 is not referred to in Exhibit 2, although it does appear in Exhibit 3. Mr Vincent gave evidence that Exhibit 3 showed the sale was of an area of 2950 square metres for $23,600 (cross-examination, TS 229). This price represented $8.00 per square metre. Mr Paterson gave no evidence as to this sale.

469 Again, neither Mr Vincent nor Mr Paterson relied upon this sale. Its use would require the same sorts of adjustments as for the sale of the rear portion of Lot 22, above, whose price per square metre is similar. I note, however, that there is no evidence as to whether there were any improvements on the rear portion of Lot 16 sold to the defendant, or whether any part of it was wetlands. It is difficult to see what weight can be given to this sale in all the circumstances.

470 Lot 17 Wanneroo Road, lies to the south of the Land and borders Lot 16 to its south. The sale of the rear portion of Lot 17, which was landlocked, to the defendant in January 2001 is again not shown in Exhibit 2, although it does appear in Exhibit 3. Mr Vincent gave evidence that Exhibit 3 showed the sale as of 2962 square metres for $24,000 (cross-examination, TS 230). This price represented $8.10 per square metre. Again Mr Paterson gave no evidence as to this sale.

471 Again, neither Mr Vincent nor Mr Paterson relied upon this sale. Its use would require the same sorts of adjustments as for the sale of the rear portions of Lots 16 and 22, above, whose prices per square metre are similar. Again, as with the sale of the rear portion of Lot 16 to the defendant, I note there is no evidence as to whether there were any improvements on the land the subject of the present sale or the proportion of the lot, if any, that is wetland. Again, it is difficult to see what weight can be given to this sale in all of the circumstances.

472 Lot 23 Wanneroo Road, lies to the south of the Land and borders Lot 22 to its south. The sale of the rear portion of Lot 23, which was landlocked, to the defendant in January 2001 is again not shown in Exhibit 2, although it does appear in Exhibit 3. Mr Vincent gave evidence that Exhibit 3 showed a sale of 3413 square metres to the defendant in January 2000 for $30,000 (cross-examination, TS 230). This price represented $8.79 per square metre. Again Mr Paterson gave no evidence as to this sale.

473 Again, neither Mr Vincent nor Mr Paterson relied upon this sale. Its use would require the same sorts of adjustments as for the sale of the rear portions of Lots 16, 17 and 22, above, whose prices per square metre are similar. Again, as with the sale of the rear portions of Lots 16 and 17 to the defendant, I note there is no evidence as to whether there were any improvements on the land the subject of the present sale or the proportion of it (if any) that is wetland. Again, it is difficult to see what weight can be given to this sale in all of the circumstances.

474 Lot 38 Wanneroo Road, borders the Land to its south. It has a frontage on to the slip road. Its sale to the defendant in January 1996 is sale item 11 in Exhibit 2. (This date appears to be the date of settlement: a "sale date" of 20 December 1995 is given in Mr Vincent's report 20 June 2000 which is Exhibit 12.) Mr Vincent's evidence was that "quite a bit of the lake system" was within Lot 38 (cross-examination, TS 255). Lot 38 was 4.0469 hectares in area, and was vacant land. Lot 38 was sold as vacant land to the defendant in January 1996 for $250,000, which represented $6.18 per square metre. Mr Paterson gave no evidence as to this sale.

475 Again, neither Mr Vincent nor Mr Paterson relied upon this sale. Its use would require adjustments at least for its date, and its greater area. However, its price would tend to confirm that for land including both dry land and wetlands forming part of Lake Neerabup, a lower price would be paid the greater the proportion of such wetland.

476 Overall, as I have indicated, the sales of Lot 800 (in March 2002, at $9.22 to $9.65 per square metre), Lot 6 (in July 2001, for $2.01 per square metre), Lot 43 (or Lot 80) (in February 2002, at $3.08 per square metre) and Lot 38 (in December 2005, for $6.18 per square metre) appear to me at best to serve as a check on the results of other bases for valuation: see Woollams (supra), at 109, per Hardie J; and Petroccia (supra) at 356, per Wells J. There is no evidence there was any other significant purchaser than the defendant of lots like the Reserved Portion in bordering on or taking in portions of the Lake, at least if the lot was landlocked. In this sense, it seems to me that the sales to the defendant here are closer to the first situation described in Petroccia (supra), of the defendant setting the price for such land, than to the second, of the defendant taking the price set by the owner. In neither case, however, would the price paid by the defendant be one that is the result of the untrammelled operation of free market forces. It seems to me, however, that the need for caution in the use of the sales to the acquiring authority would be greater in the first case than the second. While this does not prevent the use of those sales as I have described, I do not consider I can put them to any further use, except as I indicate below.

477 On the analysis I have set out, I first consider the "before" and "after" valuations in respect of the Land and its Balance Portion to determine whether or not there is an indication of a potentiality for the adjoining owner of the Balance Portion that the before and after method can measure, and to determine the upper limit to the value of that potentiality.

478 On balance, I prefer the valuation evidence of Mr Vincent, subject to the adjustments and qualifications I have referred to, many of which follow from the evidence of Mr Paterson.

479 In particular, I conclude that the rate per square metre in the "before" valuation is less than that in the "after" valuation, as Mr Vincent did, although I do not entirely agree with his figures. His approach to the "before" valuation needs in my view to take account of the difficulties with using the sale of Lot 30 as a comparable sale that I have identified, which makes resort to the sale of Lot 19 in 2000 more reliable, where I drew on both his approach to that sale and that of Mr Paterson. Mr Vincent's approach to the "after" valuation requires greater adjustment of the price of Lot 51 in 1997 than he makes. I derive some assistance in coming to this conclusion from the use of the sale in 2003 of Lot 801, although the extent of that assistance is limited, as I have indicated. At the same time I have noted the other sales I have indicated are of assistance in arriving at these values.

480 On balance, drawing on all of this evidence and making these adjustments and checks, I have come to the conclusions that follow.

481 The "before" value, the value of the Land was $449,000 (or $10.96 per square metre), while the "after" value, that of the Balance Portion, was $276,000 (or $10.55 per square metre).

482 In arriving at these figures, I have moved as Wells J did in Petroccia (supra), at 362 (footnote deleted) to:

"... complete the judicial process by "put[ting] [myself] as far as possible in the position of persons conversant with the subject at the relevant time, and from that point of view [ascertaining] what, according to the then current opinion of land values, a purchaser would have had to offer for the land to induce such a willing vendor to sell it, or, in other words, to inquire at what point a desirous purchaser and a not unwilling vendor would come together": see [Spencer (supra), per Griffith CJ] at page 432. The undertaking of this "necessary mental process" (ibid.) is an integral part of the judicial process, and is not, in se, a third valuation by another expert."

483 The resultant before and after value is of course $173,000 ($11.74 per square metre), which is very close to that arrived at by Mr Vincent in his valuation reports Exhibits 12, 13 and 14. However, as I have indicated, I have arrived at that value by somewhat different means.

484 I consider that the before and after method does indeed indicate that the adjoining owner of the Balance Portion of the Land (and to a lesser extent the owners of the land adjoining the Land to its south and to its north, as I have indicated) would pay more for the Reserved Portion than it might otherwise be worth to other buyers not buying for resale to that adjoining owner. The only such buyer it was suggested would be a potential buyer for this land was the defendant itself. I have already considered the sales to the defendant, which in my view in the circumstances of this case are some evidence of the price such a buyer would pay, albeit evidence that must be approached with considerable caution.

485 However, for the reasons I gave previously, I do not consider that I can simply take the before and after value as the market value of the Reserved Portion. That value would be expected to be some lesser figure, if the purchaser was not anxious but desirous to buy, after allowing for a seller not anxious but not unwilling to sell. In arriving at the lesser figure, I also note, for the reasons I gave previously, that the market value is not simply that amount only slightly above the market price that would apply in the absence of an adjoining owner's influence on the market which the adjoining owner would have to bid to acquire the land, and to this extent I would not follow any indication to the contrary from the judgment of Wells J in CSR Ltd v Valuer General (1977) 17 SASR 446, at 455. Doing the best I can with the evidence I have available to me, including in particular the evidence I reach in the next paragraph, I have arrived at a value of $140,000, or $9.50 per square metre.

486 I should note that, if it were not possible to use the before and after method of valuation, as here, it is not clear to me it would have been necessary on the evidence as I have understood it to resort only to the sales to the acquiring authority, "faute de mieux" (Petroccia (supra) at 356, per Wells J). That is because there is at least one sale that might have been resorted to, as well. It is the 1997 sale of Lot 51. However, that sale would have had to have been adjusted up for its date, its greater size and its lack of the amenities of Lake Neerabup, while down for its regular shape, its lack of inundated land and its access to the slip road to Wanneroo Road. Using the sales to the defendant as a check, I consider that would have yielded a value for the Reserved Portion not much different than that using the before and after method, although I would have derived that value with less confidence given the lack of the guidance that the before and after method allows me in my task of assessing the impact on market value of the interest in the Reserved Portion of the adjoining owner, of the Balance Portion.

487 For the plaintiff it was put to me that he was entitled to be awarded these costs, being legal and valuation costs incurred in relation to the negotiations with the defendant that ultimately were fruitless and led to the institution of these proceedings. The nature and amounts of these costs appear from evidence of the plaintiff (Exhibit 10, pars 44 - 45) and in detail from invoices supplied (Exhibit 38, pp 72 - 80). The total involved is $9,148.35.

488 As I understand the submission, two of the three bases for the claim for these costs were for them other than as part of the costs of the proceedings themselves. The defendant made no objection to my considering that claim on those two bases, but sought to reserve for further argument after the decision was delivered the matter of dealing with the present claim as part of the costs of the proceedings themselves.

489 However, it is convenient I say something about the costs of the proceedings first.

490 The costs of the present proceedings are those of obtaining the valuation referred to in MRTPS Act, s 36(2b). It seems to me that in making the appropriate order as to those costs I should be guided by the authorities on compensation for compulsory acquisition. I now explain the basis for that view.

491 I have already indicated that the defendant's election to acquire is not the equivalent of a compulsory acquisition. However, I should note, as does the Full Court in Mount Lawley (supra), at [237] - [264], that the election to acquire is an alternative the MRTPS Act, s 36(2)(b) allows the defendant to paying a claimant the compensation for injurious affection to which an owner of land is entitled under s 36(3)(b) of the MRTPS Act and cl 20(1) of the MRS. This is the compensation the owner has duly claimed under cl 20(2) of the MRS. As s 36(2a) (set out in full at the beginning of these reasons) provides, in the event (with the emphasis supplied):

"... the Commission and the owner of the land are unable to agree as to the price to be paid for the land by the Commission, the price at which the land may be acquired by the Commission shall be the value of the land as determined in accordance with subsection (2b)".

492 The provision last referred to, s 36(2b) (also set out in full at the beginning of these reasons), which is the provision under which the plaintiff is proceeding here, is for the owner to make application to the Supreme Court (in this case), to determine "the value" of the land.

493 In those circumstances, it seems to me that these proceedings are about one of the alternative ways in which the plaintiff's entitlement to compensation for injurious affection may be finalised. It is true that the plaintiff has a wider array of choices than an owner in a compulsory acquisition setting, who is faced either with accepting the acquiring authority's offer or commencing proceedings: see on compulsory acquisitions: Banno v Commonwealth of Australia (1993) 81 LGERA 34, at 53, per Wilcox J. While the defendant is bound by its election to acquire, the plaintiff in the case of an entitlement to claim compensation under s 36(3)(b) of the MRTPS Act and cl 20(1) of the MRS can take the course of not accepting the defendant's election to acquire at the value determined by this Court or determined in one of the other ways (where applicable) provided for in s 36(2b) of the MRTPS Act: see Mount Lawley (supra), at [240], [257] and [263]. However, in the case of non-acceptance, it seems to me the plaintiff has withdrawn its claim for compensation, because the defendant cannot be compelled to pay compensation instead of the price, determined as the MRTPS Act provides, of the land for the acquisition of which it has elected, and by which election it is bound. That is, in a case like this one, the plaintiff has no option to force the defendant, where it has so elected, but where it has not agreed a "price" for the purposes of that election, to acquire the land at any other price than that determined as the legislation provides following such non-agreement. Whether the plaintiff accepts the defendant's election at that price or not, the plaintiff's claim for compensation in effect has been finalised.

494 On that basis, it seems to me that the authorities on costs in cases of claims for compensation on compulsory acquisition should guide me in making my determination as to the costs of these proceedings, the costs of which are otherwise governed by the law for the costs of proceedings in this Court, most notably Supreme Court Act 1935 (WA), s 37 and Rules of the Supreme Court 1971, O 66. Of particular relevance to that determination, in this case, is the quantum of the value determined here, as well as the other issues determined in these proceedings. For that purpose I note the issues "critical to the determination of that value" (Rukavina & Robertson v Wagga Wagga City Council (1993) 80 LGERA 8, at 9, per Pearlman J), most notably whether or not the before and after method could be used in any way, and the use of the valuation evidence proffered by the parties. I also note the novelty and difficulty of the principal issues in this case, which in my view made appropriate the length of time and detail in the submissions devoted to them (see Banno (supra), at 53, per Wilcox J).

495 I should note that I have not reached a final view as to the costs order to be made in this case, and I will hear further from the parties as to it in light of the determinations I have arrived at. In particular, I will hear further on the basis for the claim for legal and valuation costs incurred prior to the commencement of these proceedings order as part of such costs.

496 This returns me to the two other bases for the claim for the costs concerned.

"... a hypothetical reasonable vendor would have sought to recover these costs in the negotiated sale and the hypothetical reasonable purchaser would have accepted this as being reasonable".

498 The other basis put forward is that the legal and valuation costs are aspects of "special value" to the plaintiff. If special value is included within "value" in s 36(2a) of the MRTPS Act, then the plaintiff can claim those costs on that account.

499 Taking the last matter first, I refer to my discussion of "special value", in the context of the before and after method of valuation, above. Even assuming that special value is included within "value" within s 36(2a) of the MRTPS Act, it seems to me that this basis of the claim cannot sustain it, on Mount Lawley (supra), at [287] - [289].

500 Nor, it seems to me, can the other basis for the claim sustain it, on the same authority.

501 The Full Court in Mount Lawley (supra), at [287] - [289] said this, in relation to the claim in that case for the costs of preparing the development application that was refused, that refusal giving rise to the claim for compensation which led to the defendant's election to acquire, as well as to the claim for rates and taxes paid on the land prior to completion of its acquisition by the defendant, interest on the purchase price and the costs incurred in buying a replacement property:

"Callinan J described 'special value' in the following way in Boland v Yates at [292]:

' ... its value to the owner over and above its market value. It arises in circumstances in which there is a conjunction of some special factor relating to the land and a capacity on the part of the owner exclusively or perhaps almost exclusively to exploit it.'

Even if that test is applied to the additional components of value identified by the trial Judge in the present case, none of them qualifies.

The cost of preparing the development application represents an amount expended to produce information about the use of the land that might have been permissible absent the reservations. It is the kind of expenditure identified by Callinan J in Boland v Yates at [271] - [273] which demonstrates the potential of the subject land. It is therefore reflected in the market value. There is nothing in that expenditure reflecting a capacity of the appellant to exploit the land that is exclusive or almost exclusive to the appellant. See also St John Ambulance Association of Western Australia Inc v East Perth Development Authority [2001] WASC 85; (2001) 114 LGERA 112 at [87] - [99]. This is even more clearly the case for the holding costs of the land and interest on the sale price until settlement, and the costs the appellant would have incurred in buying a replacement property.

Those costs and that interest do not relate to attributes of the land, but rather, as the trial Judge acknowledged, to the particular sale transaction itself. They represent matters that do not go to increasing the value of the land, but rather to compensating the vendor for loss on delay in completion of that transaction and from being forced to find replacement property. The principle of s 36(2a) of the Scheme Act is that compensation is to be determined by fixing a price by reference to value as at the stipulated date, disregarding the stipulated items, and by the mechanisms indicated. That principle does not encompass compensation for other loss or damage, whether from dispossession or otherwise. Even in relation to resumption, the authorities from Spencer's case forward have clearly distinguished between claims for the value of the land and claims for "damage otherwise": Isaacs J, in Spencer's case at 438, quoted by Callinan J in Boland v Yates at [355]."

502 It seems to me that the legal and valuation costs are not "attributes of the land" but rather go to "to the particular sale transaction itself" and the demonstration of the potential of the land. They are therefore part of the value of the land determined by other means, and not capable of being "special value".

503 While this item is claimed, there is no supporting argument for it. The defendant's defence denies any liability for GST.

504 In my view the claim for GST stands on no better footing than the previous claim. That is, GST cannot be claimed as a separate item, except as part of the costs of these proceedings.

505 As to the second basis for claim, it is not easy for me to see how GST can be successfully claimed as part of the costs of these proceedings.

506 As to the first basis for claim, I repeat that the Court is determining "value" for the purposes of the MRTPS Act. Until there is a contract of sale, there is no liability to GST. While the GST may diminish the effective price the plaintiff will receive once it accepts the price as determined in these proceedings, and may have had an impact on the market value of land from the time the tax was introduced, any such impact will be reflected in the determination I have described.

507 It is true that a number of the sales relied upon in this case as comparable sales pre-dated the introduction, on 1 July 2000, of the GST. However, there was no indication in the evidence of the valuers that there had been any measurable market impact of that introduction, and no indication in the prices, some of which were shortly before, and some of which followed not long after that introduction, of any such effect.

508 While the Full Court in Mount Lawley (supra) (see especially at [292]) determined that interest could not be claimed as part of the "value" of the land to be determined in proceedings such as these, the Full Court did decide (see [306]) that a Court making a determination of value in proceedings like these had the power to award pre-judgment interest under Supreme Court Act, s 32. The defendant's defence denies the plaintiff is entitled to interest.

509 I have concluded that, if the plaintiff determines to accept the defendant's election to acquire at the price determined by these proceedings, pre-judgment interest should run on the value that supplies that price. Were it not for the plaintiff's claim, I would have had interest run until "the judgment takes effect" from the date of the plaintiff's claim for compensation, not the defendant's election to acquire. It seems to me that it is the former which corresponds to the "date the cause of action arose", and it is the exercise of the defendant's option as I have described it that has transformed that claim into a process for determination of the price to be paid instead of the compensation to be allowed. Nor do I see a reason to abridge that period in any way. However, as the plaintiff's claim was only for interest from the Election Date, I consider that is the commencement date I should use.

510 Interest on the judgment itself will of course run as Supreme Court Act s 142 and Civil Judgments Enforcement Act 2004 (WA), s 8(1)(a) respectively provide.

511 I also consider that, in the absence of any other basis apparent to me in the evidence, the rate of pre-judgment interest should be that which would apply to the sum as if it was a judgment debt, at the rates applicable to judgment debts. Those rates are the ones which were those gazetted for the purposes of former s 142 of the Supreme Court Act, and are now, effective 1 May 2005, the ones prescribed by regulation under s 8(1)(a) of the Civil Judgments Enforcement Act 2004 (WA).

512 I will hear from the parties as to the orders I should make in the light of these reasons.