Supreme Court of WA|2003-07-24|Before: Templeman J

Macdougall v Western Australian Planning Commission [2003] WASC 138 (24 July 2003)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : MACDOUGALL -v- WESTERN AUSTRALIAN PLANNING COMMISSION [2003] WASC 138

Town planning - Acquisition of land reserved for parks and recreation - Highest and best use in absence of reservation - Whether reserved land would have obtained approval for subdivision - Compensation for injurious affection - Statutory approach to valuation - Whether matters to be disregarded by valuation include planning policy for minimum lot size and moratorium on development - Valuation by comparable sales without subdivision - Valuation if subdivision approved - Whether valuation should include interest and payments for rates, taxes, development proposals, etc since date of reservation or acquisition

1 TEMPLEMAN J: On 14 November 1996, some 64 hectares of rural land on the Darling Range escarpment, to the west of the Byford townsite in the Shire of Serpentine/Jarrahdale, was reserved for Parks and Recreation by an amendment to the Metropolitan Region Scheme. The purpose of the reservation was to include the land in the Darling Range National Park.

2 The reserved land is owned by the plaintiff. It is part of a slightly larger parcel, of almost 67 hectares, known as Lot 26, Nettleton Road, Byford. The plaintiff contracted to purchase Lot 26 in 1975, with the intention of retiring there. Later, the plaintiff formed the intention of subdividing the property and selling the lots so created.

3 In 1998, the plaintiff applied to the Western Australian Planning Commission ("the Commission") the defendant to these proceedings, through the Shire of Serpentine/Jarrahdale, for approval to commence the development of Lot 26 so as to construct a road and associated works which would support a future subdivision.

4 The plaintiff received no response to his application within 60 days. By the operation of cl 31(2) of the Metropolitan Region Scheme ("the Scheme"), the lack of response is deemed to be a refusal of the application.

5 On 26 February 1999, the plaintiff submitted to the Commission a claim for compensation for injurious affection resulting from the reservation of the major part of Lot 26.

6 On 23 April 1999, the Commission notified the plaintiff that it had elected to acquire the whole of the reserved land, as it was entitled to do pursuant to s 36(2b) of the Metropolitan Region Town Planning Scheme Act 1959 ("the Town Planning Scheme Act"). Having made that election, the Commission was obliged to pay a price for the land equal to its value at the election date.

7 The parties and their expert valuers negotiated, but were unable to reach agreement. That being so, the plaintiff commenced this action on 22 November 1999 for the purpose of having the value of the reserved land determined by the Court. The plaintiff contends that the value for the purposes of acquisition by the Commission should include a number of components which do not usually fall within the concept of value. I shall refer to these in more detail below.

8 The plaintiff contends that the highest and best use for the reserved land would be as a rural subdivision of seven lots ranging in size between 3.8 and 14.2 hectares. On that basis, the plaintiff contends that the value of the reserved land at the election date was $1,040,000.

9 Against that, the Commission contends that the reserved land was not suitable for subdivision, so that its highest and best use was as a single rural lot. On that basis, the Commission contends that the value of the reserved land was $400,000.

10 The pleadings in the action do not identify all the issues which emerged during the course of the trial. In order to clarify the issues and to facilitate counsel's closing submissions, I prepared a list of questions which appeared to me to require determination.

11 I invited counsel to consider the questions and to propose any amendments they considered appropriate. With the assistance of counsel, I settled the questions, which counsel then took as the framework for their closing submissions. As I told counsel, it was my intention to use the same framework in formulating my reasons for judgment. In the event, I have taken a slightly different course. However, I consider that the exercise was very worthwhile, and I am grateful to counsel for their assistance.

12 Lot 26 is situated approximately 2.2 kilometres south-east of the Byford townsite on the Darling Range escarpment. It is described in the title as:

"Estate in fee simple in portion of each of Cockburn Sound Locations 207 and 462 and being part of Lot 26 on Diagram 49314 and being the whole of Lot 26 contained in Certificate of Title Volume 1999 Folio 699."

13 The total area of the part of Lot 26 identified in the title is 66.9172 hectares. Of that area, 64.2776 hectares has been reserved, being the part of Lot 26 which is situated to the north of a seasonal creek known as Beenyup Brook. The brook is located within a Crown reserve to the south of the property.

14 The reserved land is broadly rectangular in shape. Its longer boundaries are to the east and west and the shorter boundaries to the north and south. It rises from approximately 100 metres AHD in the south-western corner to approximately 250 metres AHD in the north-eastern corner. However, there is an incised valley which runs diagonally through the central portion of the land from the south-west to the north-east. Thus, the steepest part of the land is the central portion. There are broader, flatter areas to the south-west and to the north. From the northern part, there are panoramic views to the north-west, across the coastal plain and round through more than 180 degrees, to the Perth city skyline.

15 The lower sections of the land have been partially cleared. A relatively small area was once used for grazing. The upper portions have been logged. Some of the original vegetation was destroyed in bushfires but there has been regrowth.

16 The reserved land is bounded to the west by Lot 300 Beenyup Road. This was owned formerly by Morex International Pty Ltd ("Morex") but was sold to the Commission in 1998, following a reservation for parks and recreation.

17 The Byford townsite, which is situated between the escarpment and the South Western Highway to the west, lies between AHD 55-60 and 110, rising gently to the east. The townsite is separated from Lot 300 by Lots 24 Beenyup Road and Lots 129 and 128 Old Brickworks Road. In that order, Lots 24, 129 and 128 run from the north to the south being respectively 6.336 hectares, 5.7 and 4.4 hectares in area. Lot 24 was originally part of the land owned by Morex, but was not reserved because it had a residential dwelling on it. These lots have a Rural Living designation. In effect, they form a buffer between the townsite to the west and the reserved land to the east.

18 To the north of Lot 26 lies Lot 2 Walters Road. This is owned by the brothers P and S Kargotich, and has been identified in these proceedings as "the Kargotich land". I shall continue to refer to it in that way. The part of the Kargotich land immediately to the north of the reserved land was rezoned special rural in 1989.

19 The reserved land is bounded to the east by the State forest and to the south, as I have said, by the Beenyup Brook Reserve.

20 The Town Planning Scheme Act, by s 36(2a) provides that:

"Where the Commission elects to acquire the land ... 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)."

Subsection (2b) provides that the value shall be determined by arbitration, in accordance with the Commercial Arbitration Act 1985 or (if the value claimed by the owner is more than $1,000) by the Supreme Court. The subsection goes on to provide:

"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."

21 The Scheme is defined in s 6 to mean:

"a town planning scheme for the metropolitan region or any part thereof, including the provisions therein for regulating and controlling the use of the land the subject of the Scheme and the purposes for which the land may be used and includes -

(a) the provisions of the Scheme;

(b) all maps, plans, specifications and other particulars contained in the Scheme and colourings, markings or legend thereon;

(c) the Scheme as varied or amplified by any amendment that has the force of law; and

(d) a subsequent scheme that has the force of law and any such subsequent scheme as varied or amplified by any amendment that has the force of law."

22 It is common ground between the parties, and rightly so, that in valuing the reserved land it would be inappropriate to disregard the whole of the Metropolitan Region Scheme. However, the definition of the Scheme includes "any part thereof". It follows, in my view, that where, as here, land has decreased in value as a result of a reservation, it is to be valued without regard to the reservation.

23 That is not the end of the matter, however. It is well settled that value is to be determined without regard not only to a decrease in value attributable to that part of a scheme which has a direct effect, but any part which is an indirect cause of the diminution in value, provided that may be identified as a step in the relevant process.

24 The principle derives from Pointe Gourde Quarrying and Transport Co Ltd v Sub-intendant of Crown Lands [1947] AC 565 which was followed in Australia in Housing Commission of New South Wales v San Sebastian Pty Ltd [1978] HCA 28; (1978) 140 CLR 196. More recently, the principle was restated in a joint judgment of the High Court in Queensland v Murphy [1990] HCA 42; (1990) 95 ALR 493 at 496:

"One purpose of this principle is to ensure that a resuming authority does not employ planning restrictions to destroy the development potential of the land and then assess compensation for its resumption on the basis that the destroyed potential had never existed ... The principle applies in cases where there is a direct relationship between the planning restriction and the Scheme of which resumption is a feature and extends to cases where there is merely an indirect relationship, provided that the planning restriction can properly be regarded as a step in the process of resumption ..."

25 There is disagreement between the parties about the matters which should be disregarded in the present valuation exercise. That is the next issue to be addressed.

What matters should be disregarded in carrying out the valuation?

26 The plaintiff contends that as early as 1980, Lot 26 was identified for possible inclusion within a proposed parks and recreation area. The plaintiff relies on a planning strategy for the south-east corridor stage "B", published in July 1980, by the Metropolitan Region Planning Authority. In that document, it was noted that:

"The Darling escarpment is already accepted as a landscape feature of regional importance. It provides a backdrop of considerable aesthetic appeal to the urbanisation on the coastal plain, and has major significance as a potential recreational area. In the Metropolitan Region Scheme, the escarpment is the subject of an almost continuous belt of reservation extending from Toodyay Road in the Shire of Swan to south of Albany Highway in the town of Armadale, a distance of some 40 km. In addition, the 'Stage A' report has suggested an extension of Bungendore Park to include a section of the Wungong Valley.

It is strongly recommended that this long established principle be continued and that the most significant features of the Darling escarpment - over its entire length within the Serpentine-Jarrahdale Shire - be reserved by the Authority as parks and recreation, with emphasis initially on the section between Byford and Mundijong."

27 A concept plan which formed part of the document, although drawn to a small scale (1:125,000) showed clearly enough that land to the east of the Byford townsite, including Lot 26, was proposed for parks and recreation "subject to further study". (Exhibit 2483)

28 In January 1993 the Department of Planning and Urban Development published for public comment a Darling Range Regional Park and Landscape Study (exhibit 348).

29 It was noted in the Study that some 560 hectares of land forming part of an existing parks and recreation reservation in the Wungong valley area was "of high scenic, conservation and recreation value and it should be included in the proposed park boundary". In addition, it was proposed that 40 hectares of "private Lot part 24 near Nettleton Road should be included subject to discussions with land owners". That is a reference to the land formerly owned by Morex.

30 There was, however, no proposal to include Lot 26, nor the easterly part of the Kargotich land, in the Darling Range Regional Park. Despite that, according to figure 8 of the study (a map of the area in which park land use guidelines are identified) Lot 26 and land to the north of it had a special landscape sensitivity. The significance of that designation is not clear.

31 Counsel for the plaintiff pointed out that Lot 26 was not identified within the 1983 System 6 Study. This was a study of areas of environmental significance in the Swan coastal plain, including land on and to the east of the Darling escarpment.

32 However, a comparison of the study area map (figure 146F in exhibit 344) with the Metropolitan Region Scheme Map for the Armadale to Serpentine area (exhibit 2470) shows that the System 6 Study area stopped some way to the north of the Byford townsite and did not, therefore, include Lot 26.

33 In 1998, a plan entitled "Perth's Bush Plan - Keeping the Bush in the City" was published for public comment.

34 Lot 26 is not identified on the Bush Plan as a site with either regionally significant bushland or other native vegetation. (Exhibit 384, map 84). However, none of the land to the east of the Byford townsite, on the Darling escarpment, nor any of the State forest further to the east, is identified as being in that category.

35 In April 1995, in Amendment 966/33 to the Metropolitan Region Scheme, statutory effect was given in the Metropolitan Region Scheme to planning proposals for that part of the southeast corridor contained in a draft structure plan of 1994.

36 The object of the amendment was to rezone land for urban and urban deferred purposes and to reserve other land for parks and recreation and other public purposes. On the Darling Range, a portion of Lot 24 and Lot 26 Beenyup Road were to be reserved for parks and recreation. As I understand it, the lot described as Lot 26 Beenyup Road is the subject land: now Lot 26 Nettleton Road.

37 The plaintiff contends that because land on the Darling Range escarpment has been identified as having the potential for parks and recreation reserves since 1980, the Commission has adopted policies designed to prevent fragmentation of the land in those areas: and that the planning constraints so applied, have caused a reduction in the value of the relevant land so as to enable the Commission, as the acquiring authority, to pay a lower price than would otherwise have been the case.

38 The plaintiff does not suggest that the Commission has acted improperly in this respect. However, counsel for the plaintiff submitted that what should be disregarded for the purpose of the valuation exercise is "the plain frustration of development in that area between 1980 and 1996". Counsel submitted that the frustration occurred on a cautionary basis because the Commission was not certain what areas in the Darling escarpment it wanted to reserve for parks.

39 Counsel submitted that the Commission's cautionary policy was implemented by the imposition of a 40 hectare minimum lot size for land with a rural zoning, and by a moratorium on developments in the relevant area.

41 In 1994, the Shire adopted a Rural Strategy (Ex 2069). This was a planning document:

"that allows the Council to take stock of its rural areas, and plan for land use, management, and development in the Shire."

42 The Strategy divided land within the Shire into a number of policy areas. Lot 26 was included in the Rural Policy Area. On p 42 of the Rural Strategy, the question of lot sizes for these areas was addressed:

"Overview

The large Rural Policy Area maintains the integrity of the Shire's rural and agricultural character. It provides for a mosaic of agricultural uses but does not offer the protection for agriculture embodied in the Agriculture Protection Policy Area. The Rural Policy Area essentially maintains the current standards and practice of agricultural use and development.

The protection of rural lifestyle, of agricultural production, and rural character are very significant, but not necessarily over-riding, objectives in the use and development of land.

...

Lot Sizes

The Rural Policy Area is largely already subdivided at or below that for sustainable agricultural production. Existing farms are often amalgamations of allotments managed as a single farm. However, the subdivision of new lots is not supported below a minimum lot size of 40 hectares. Proposals to subdivide agricultural land will be assessed on a case by case basis and the minimum lot size is not considered a right or entitlement of land ownership. This is not set as a minimum viable lot size for agriculture. No meaningful minimum lot size for agricultural viability can be set where the range of agricultural and horticultural enterprise is as extreme as it is in the Shire. Rather, it is intended as a dis-incentive to subdivision for farmlets or residences. On the other hand, it is a size that allows some flexibility to subdivision for, and should not restrict, full-time commercial agricultural pursuits. (my emphasis)

Management lots

... Commercial farming is considered the major land use in the Policy Area but viability is low because of the poor productive capacity of the sandy soils and water-logging of low lying areas. A significant role is to be played by the Environmental Repair Overlay Policy in the Rural Policy Area and it is the Council's intention to promote the objectives of the overlay."

43 The Strategy sets out a number of "universal objectives" (p 29). So far as relevant, these include:

"U 1. To provide realistic and firm planning objectives, and to demonstrate flexibility in implementing these objectives;

U 2. To ensure that land is used and developed only within its capability for a particular use (as assessed by the WADA Land Capability Mapping and subsequent Site Analysis), and in recognition of the environmental constraints which exist;

...

U 5. To maintain and promote the 'rural character' of the Shire and its distinct rural-living lifestyle, and to build a healthy community with well developed neighbourhood and community values;

...

U 8. To protect and wisely use the Shire's natural and man made resources, and to ensure resource quality and availability for future uses;

U 9. To recognise, maintain and promote the natural beauty, landscape, recreation and tourism values of the Shire;

...

U 11. To minimise the clearing of vegetation and maximise retention and replanting of native and high water using vegetation;

...

U 14. To minimise the risk to life and property from bushfire."

44 In addition to these universal objectives, the Strategy sets out objectives relating specifically to land in the Rural Policy Area. These are:

"R 1. To retain and maintain the productive capacity of land and agricultural enterprise in close proximity to Perth and its markets;

R 2. To encourage, provide opportunities for, and control over, a mosaic of productive agricultural land uses;

R 3. To adopt pro-active and co-operative approaches with landowners and the wider community to address catchment management and land degradation problems;

R 4. To promote the objectives of the Environmental Repair Overlay in the Rural Policy Area;

R 5. To otherwise prevent the further fragmentation of land through subdivision for farmlet development in the Policy Area."

45 Although I have set out all the policy objectives, I do not regard R 3 and R 4 as relevant. There is no evidence to suggest that any catchment management and land degradation problems exist in relation to Lot 26. And the Environmental Repair Overlay is relevant only where "broad scale rehabilitation of degraded land is necessary and achievable" (see p 54). That is not a consideration here.

46 The reference to "farmlet development" in R 5, is, I think, to farmlets, as described in the Farmlet Policy Area (p 38):

"Farmlets are small farms that may be used for commercial production, alternative agriculture, and some intensive agriculture, or hobby pursuits in association with productive rural lifestyles. They also provide even greater sense of space and privacy and may be considered by some buyers as rural 'retreats'.

...

... Land capable of supporting farmlet development in the Shire is limited by, in particular, poor drainage, low soil productivity, erosion risk and poor effluent disposal ability. Consequently, a key strategy objective has been to direct farmlet development to better sites.

With two exceptions, the intention is to keep land release for Farmlets at a minimum and exclude Farmlet development outside the Farmlet Policy Area."

I note that the farmlet policy areas are at some distance from Lot 26.

47 I am not persuaded that the 40 hectare minimum lot size policy for land in the Shire's Rural Policy Area was adopted for the purpose of frustrating the development of land identified as having the potential for reservation. The policy was undoubtedly adopted to frustrate development: to prevent the fragmentation of land suitable for agricultural purposes or having a rural character. The policy was designed, as stated, "as a dis-incentive to subdivision for farmlets or residences".

48 As counsel for the Commission pointed out, this policy pre-dates the 1980 planning strategy in which it was proposed that Lot 26 be reserved for parks and recreation. For example, the policy was applied in 1977, when the Town Planning Board (the predecessor to the Commission) refused to allow the subdivision of the Morex land into six lots of various sizes, ranging from about 3 to 16 hectares (Ex 2472). The applicant was informed that the Board did not favour "the further fragmentation of rural land as this leads to smaller lot sizes which could result in closer development ... conflicting with the intent of the zoning, particularly in this area of high scenic value". (Ex 2473)

49 However, on appeal to the Minister, approval was given for the subdivision, conditional upon a revision of the plan so as to create a separate lot to the south of Beenyup Brook.

50 There is no evidence that the Commission has suspended or postponed its decision making role when dealing with applications for subdivision approval. An analysis of all relevant applications in the vicinity of Lot 26 was carried out for the Commission by Jennifer Lee Smithson, an experienced town planner and a director of BSD Consultants (Ex 2251).

51 In my view, it is clear from Ms Smithson's evidence that all such applications were considered on their respective merits as they were made.

52 I therefore conclude that in considering whether the plaintiff would have been granted approval to subdivide the reserved land, it is appropriate to disregard only the reservation itself.

Would subdivision approval have been obtained, but for the reservation?

53 In Ingram & Anor v Western Australian Planning Commission [2003] WASCA 77, Barker J noted that although planning documents such as, and including, the Shire's Rural Strategy do not have statutory force, the Commission intends that they should be applied when it considers applications for subdivision approval. This, his Honour said "promotes consistent and rational decision-making" (par [14]).

"The only qualification to this statement is that policies should not be applied inflexibly so that the circumstances of a case which suggest that a variance from a policy may be appropriate on a particular occasion, are not ignored: see Falc Pty Ltd v State Planning Commission (1991) 5 WAR 52; and discussion in Clive Elliott Jennings v Western Australian Planning Commission [2002] WASCA 276 at par [25] and par [28]."

I respectfully agree. For that reason, I accept the evidence of Timothy John Trefry, a town planning expert called by the plaintiff, who expressed the opinion that a decision whether or not to permit a residential subdivision in a rural zone should be based on planning considerations, rather than on the rigid application of policies such as the 40 hectare minimum lot size (Ex 300). Mr Trefry is an Associate Director of the Roberts Day Group and has extensive experience in his field.

54 The plaintiff contends that it would be appropriate to depart from the 40 hectare policy in the present case, because the reserved land has a greater suitability for rural-residential use, than it does for agriculture. That was the opinion expressed by Martin Richard Wells (at TS 197). Mr Wells is a land capability expert who gave evidence for the plaintiff.

55 Mr Wells, who has long experience in this area of expertise, is particularly well-qualified. That is because he was the co-author of the Darling Range Land Capability Study prepared by the Department of Agriculture, in 1990. In addition, Mr Wells was the principal author, in 1989, of a Department of Agriculture publication "Land Capability Assessment Methodology for Rural-Residential and Associated Land Uses".

56 Mr Wells' evidence was directed to the capability of the reserved land to support rural-residential development of the kind proposed by the plaintiff. In making his assessment, Mr Wells identified a number of different land types present in the reserved land. The largest single type is Myara, Mal. This is characterised by short, moderately incised, rocky valleys, which are moderately to well drained; and by 10-20 per cent rock outcrop. The valley slopes are described as moderately steep, to steep having gradients ranging from 20 per cent to over 30 per cent.

57 Mr Wells' evidence was that the Mal land type would have low capability for grazing and "a very low, prohibitive capability for any form of intensive agriculture such as vineyards or market gardening."

58 Mr Wells does not say, however, that the reserved land is particularly suitable for residential use. He identified the area used formerly for grazing as having a high capability for rural-residential development, but this amounts to only one per cent of the total area. The Mal land type, and the strip abutting Beenyup Brook, which accounts for 44 per cent, have low and very low capabilities respectively. The balance - 55 per cent - comprising the northern and eastern parts of the land, between about AHD 190 and 240, has a fair capability.

59 Mr Wells' evidence that the reserved land was more suitable for rural-residential than agricultural use was not challenged, and I accept it. However, in my view, it does not advance the plaintiff's case. As I have noted, the object of the Rural Policy Area is not only to preserve or promote agricultural use. It is also intended to preserve the rural character of the Shire and to act as "a dis-incentive to subdivision for farmlets or residences". Accepting that this policy should not be applied inflexibly, I cannot see that a greater suitability for rural-residential than agricultural use would justify a departure from the policy in the present case, in the absence of any more compelling considerations.

Other limitations on subdivisional development

60 Mr Wells recognised that there are land-use impediments to subdivisional development of the reserved land. These include a high risk of erosion in the predominant Ma 1 land type. It was Mr Wells' opinion, that "subject to engineering cost feasibility", roads could be constructed in a way which "satisfactorily addresses the risk of erosion". (Ex 308, p 9). He recommended was that internal driveways should be positioned so as to progress in a zigzag fashion, thereby avoiding rocky areas and minimising gradients to resolve the risk of erosion from storm water run-off. This solution would have involved a partially common access way, which traversed several lots in different ownership. However, it was the evidence of Andrew Theodorus van der Meer, an experienced developer who gave evidence for the plaintiff, that such a design would be unacceptable from a marketing perspective (TS 269). I shall refer to Mr van der Meer's evidence in more detail, below.

61 Of equal, if not greater significance, was Mr Wells' opinion, expressed in cross-examination, that it would be desirable to provide a bridge across Beenyup brook to gain access to the reserved land, rather than a culvert. Mr Wells said he would recommend a bridge, in order to "minimise the degree of site disturbance and hence the risk of soil moving into the stream" (TS 220). Although this would not be a problem where the sides and base of the brook were comprised of sheet rock. Mr Wells said this was the position in only a few places: hence his recommendation, albeit subject to engineering review.

62 Land capability evidence was given for the Commission by Adrian Vlok, an associate director of BSD Consultants and the manager of their Environmental Services.

63 Mr Vlok agreed that "the environmental preference would be for a bridge", because "it would result in the least environmental impact" (TS 801).

64 As I understand it, this issue has not been raised with the relevant planning or environmental authorities. Mr Vlok said it would not surprise him if a bridge was required. But if it was, the cost would be prohibitive. Although no costings have been prepared, Mr van der Meer was firmly of the view, which he acknowledged he was well qualified to express, that "Bridges are too expensive" (TS 278, 292-3).

65 Mr Wells noted that the lack of soil depth in limited areas of the reserved land was a factor likely to prevent the effective use of leach drains for the purification of domestic waste water (Ex 305). Mr Vlok pointed out that site-specific investigations into this issue had not been undertaken.

66 In my view, the lack of information adds to the plaintiff's difficulty of demonstrating that the reserved land is suitable for subdivision. This was the view expressed by the Health Department of Western Australia, when asked to comment on an earlier proposal for a 22 lot subdivision (Ex 2058).

67 The need to deal with the high fire risk is also important. Evidence was given for the commission by David Gossage, who is the Shire's Fire and Emergency Services Officer. Although Mr Gossage had held that position only since February 2001 he was a Shire ranger before his appointment.

68 Mr Gossage impressed me as a man of considerable experience in fire fighting in the relevant area who had a sensible and practical approach to the issues which arose in this context. He referred to the very high fire risk which would arise from a subdivision, evidence which he is well qualified to give, and which I accept. Hence, the importance, to which he referred, of linking strategic firebreaks on adjacent properties (TS 704). That process would be facilitated by the common development of the reserved land and adjacent properties. However, I find it to be unlikely that any such common development would have been permitted.

69 Overall, I do not discern much disagreement between Mr Wells and Mr Vlok. They differed in that Mr Vlok thought there was insufficient information to demonstrate that all the limitations and constraints on subdivision could be overcome. However, he went on to say:

"While almost all site limitations and constraints could be overcome, it must be achieved within the context of what is economically viable and suitable from a planning perspective". (Ex 2281, p 12)

That is, essentially, Mr Wells' position. And given that almost any problem can be solved by the expenditure of enough money, the proposition is hardly contentious.

70 Mr Vlok did, however, draw attention to one potential problem which might be more difficult for the plaintiff to overcome: the possible existence on Lot 26 of significant flora and fauna in need of protection. This is not a matter about which it is possible to reach any conclusion, because, as Mr Vlok noted, no flora or fauna surveys have been undertaken.

71 Reference to the Metropolitan Region Scheme Map (Ex 2470) shows that virtually all the unreserved land in the Shire, which is in the vicinity or to the south of the reserved land, and to the east of the South-Western Highway has a Rural zoning.

72 In recent years, apart from some boundary adjustments, which are irrelevant for present purposes, there have been very few subdivisional approvals in this area, a fact which indicates that an application in relation to the reserved land is likely to have been unsuccessful.

73 Approval was given in 1996 to the subdivision of Location 824, on Nettleton Road (Ex 2253). This involved the creation of two lots, of 11 and 13 hectares, on which different uses had already been established. The approval was not implemented, however, and an application in 1999, for approval to create four lots, was refused.

74 Approval was given in 1997 to the subdivision of a 10.1 hectare lot in Old Brickworks Road, abutting the western boundary of the Morex land, into two lots of 4.4 and 5.7 hectares respectively. These became lots 128 and 129 (Ex 2253). They are located immediately to the east of the Byford townsite and were included in the Rural Living B policy area under the Local Rural Strategy.

75 Lots 128 and 129 are situated at the base of the escarpment, rather than on it, a fact which undoubtedly influenced the decision to approve subdivision.

76 There is a subdivision of rural land in Phillips Road, to the east of Lot 26. This was created in the 1940's, well before the existence of any relevant planning regime. It is not, therefore of any significance for present purposes.

77 Nor do I regard as significant a subdivision approval given in 1984, which resulted in the creation of lots 67 and 68 Nettleton Road (Ex 2253). This approval was given before the adoption of the local rural strategy. Further, although the reasons for decision are not in evidence, a letter from the Town Planning Board to the owner's agent referred to the decision being made "in the light of the circumstances relating to the particular features on the land and should not be construed as a precedent for subdivision of other land in the area into similar sized lots" (Ex 2024).

78 The plaintiff then relies on the fact that in January 1996, the Shire supported a proposed rezoning of Lot 1 Admiral Road.

79 This support was not given initially, however. The Shire first rejected the application, because of the high fire risk. The proponent then submitted a revised design which addressed the Shire's concerns by providing for an area of open space to the northern boundary of the site, and proposing a sealed perimeter road (Ex 110).

80 Neither of these features exists in the subdivision proposals for the reserved land. Furthermore, there is no evidence that the Commission has been asked to approve the subdivision of Lot 1 Admiral Road: nor of its likely response. This matter does not, therefore, advance the plaintiff's case.

81 The plaintiff relies also on the fact that subdivision approval has been given in respect of land immediately to the north and south of Lot 26. However, in those cases, there were more compelling considerations which clearly influenced the relevant decisions. I shall deal with them in turn.

Land to the south of Lot 26 - the Barge Road subdivision

82 The Barge Road subdivision comprises 10 lots, ranging from about 6 to 16 hectares in Nettleton Road and Barge Road. These were created out of three lots of 11.1, 55.7 and 48.4 hectares, which contained a disused quarry.

83 The original application for subdivision, in March 1976, proposed the creation of 27 lots. This was refused by the local planning authority (then the Shire of Armadale-Kelmscott) and by the Town Planning Board. The landowner was equally unsuccessful in seeking approval to re-establish the quarry.

84 There was then an appeal to the Minister, who deferred his decision, pending the outcome of an application for re-zoning the land to special rural.

85 In September 1997, the Minister wrote to the Shire, (which had become the planning authority by that date) and expressed some sympathy for the landowner's position. The Minister asked for advice about the lot sizes that might be considered reasonable in the relevant area.

86 The Shire responded in November 1997, saying that it was prepared to support the proposed subdivision, provided that the quarry was re-instated to its satisfaction.

87 There were then further negotiations between the landowner and the Shire. As a result, on 20 February 1978, the Minister allowed the appeal. Approval was given for a modified plan of subdivision, subject to a condition requiring the reinstatement of the quarry to the satisfaction of the Shire (Ex 2021).

88 The circumstances in which the Barge Road subdivision was approved were therefore significantly different from those of the present case. Apart from the fact that the approval was given over 20 years ago, and well before the adoption of the Rural Strategy, the presence of the disused quarry and the Minister's wish to help the landowner resolve a difficult situation, were clearly important and unique factors. This, I think, answers the point made by counsel for the plaintiff, that whatever the land capability limitations on the subdivision of the reserved land, they must have existed in the Barge Road subdivisional area. Accepting that to have been the case, the factors in favour of subdivision were more compelling.

Land to the north of Lot 26 - the Kargotich land

89 In 1981, the whole 217 hectares of the Kargotich land and some neighbouring properties were earmarked for reservation in a proposed amendment 328/33 to the Metropolitan Region Scheme (Ex 247). After considerable delay, the proposed amendment was modified, when the Metropolitan Region Planning Authority took account of the wishes of various landowners in the affected area.

90 The modifications involved the deletion of two parts of the Kargotich land. One part was an area of 28.5 hectares to the west, which fell more logically into the Byford townsite. A special residential zoning was proposed for that area. An area of 118.5 hectares to the east, lying due north of Lot 26 was also deleted, for which a special rural zoning was proposed. This left a central area, of some 70 hectares to the north of Lot 24 (the Morex land) which it was proposed to reserve for parks and recreation.

91 The proposal to remove the eastern and western areas of the Kargotich land from the reservation was the subject of a planning officer's report dated 25 May 1987 (Ex 129). That report referred to:

"• the delay in finalising the amendment to the Town Planning Scheme, as a result of which "landowners have remained in uncertainty, with some experiencing financial difficulty as a direct result;

• the fact that Mr Kargotich was known to have had a long-standing intention to re-zone the unaffected portions of the land to Special Rural and Special Residential: although he had never been informed that approval would be given "Mr Kargotich has also never been discouraged or advised that the proposals would not be supported and it may be difficult at this late stage to recommend refusal;

• it was understood that if the Special Rural Zone did not proceed, Mr Kargotich would request the Commission to purchase the whole of the Kargotich land."

92 In view of these matters, the planning officer recommended approval of the Special Rural Zoning of the area of the Kargotich land to the north of Lot 26 (Ex 129).

93 The Commission accepted this recommendation. It was the subject of a report of May 1998 to the Minister which, in effect, recommended rezoning, but only on the basis that the Kargotich brothers ceded the reserved portion of their land at no cost (Ex 118). It was the Commission's understanding that the Kargotich brothers had agreed to this course as early as 1983. The Commission recommended that amendment 50 to the Town Planning Scheme should make this clear.

94 Whatever the original intention of the Kargotich brothers, it seems that in 1987, they were not willing to cede the reserved part of their land free of charge. Following representations and negotiations, it was agreed in February 1988 that the Commission would pay $1,750,000 for that part. This was approved by the Minister (Exhibits 253 and 80).

95 The price of $1,750,000 reflects a value per hectare of $6,730, whereas the Valuer-General had recommended $6,000 per hectare, apparently accepting that the Kargotich brothers would have been able to subdivide into rural lots ranging between 2.5 and 8 hectares in area. Assuming that to have been the case, it does not follow that Lot 26 was subdivisible. Reference to the contour plan (Ex 2253) shows that the eastern part of the Kargotich land is generally higher and flatter than Lot 26. This was accepted in cross-examination by Mr Trefry, the plaintiff's town planning expert (TS 577). Indeed, much of the Kargotich land had been park-cleared and used for grazing, over many years. By contrast, as I have noted above, only a small portion of Lot 26, in the south-western corner, was suitable for that use.

96 It is significant, I think, that the proposed subdivision of the Special Rural Zone in the Kargotich land involved the creation of some 54 lots having an average size of not less than 2 hectares (Ex 254). This is a far higher density than proposed by the plaintiff for his reserved land, reflecting the much lower suitability for subdivision of that land.

97 In my view, a combination of factors, including the topography of the Kargotich land, the perception that it would be difficult to refuse subdivision approval and what proved to be the forlorn hope that land could be obtained for public purposes free of charge, which led to the decision to grant that approval. However, the circumstances are quite different from those of the plaintiff's reserved land. The only common feature of any consequence is, I think, the fact that neither the proposed development of the Kargotich land, nor of the reserved land would have been visible from the South Western Highway. But I do not regard that as a compelling point, given the policy of avoiding fragmentation of rural land.

98 I therefore conclude that the subdivision approval given to the Kargotich brothers in 1989 provides no precedent for the present case.

99 I return to the question whether, but for the reservation, approval would have been given for the subdivision of Lot 26. In my view, the likelihood of approval would have been negligible, because I see no grounds for departing from the 40 hectare policy. Both Mr Trefry and Mr Wells were somewhat critical of the policy: but it exists, and I can see the justification for it, as set out in the Shire's Rural Policy, to which I have referred above.

100 In any event, Lot 26 is not particularly well suited for subdivision, having regard to its topography, a point which is emphasised by the fact that even on the plaintiff's case, the highest and best use involves the creation of only seven lots. Nor are there any special circumstances, such as existed in relation to the Kargotich land or the Barge Road subdivision, which would militate in favour of subdivision.

101 In my view, therefore, an application for subdivision approval would have been likely to fail on its merits, not simply on the rigid application of policy. Even Mr Trefry acknowledged that any owner of Lot 26 who wished to subdivide "would have to be prepared to go all the way to appeal" (TS 607).

102 In reaching that conclusion, I am mindful of the evidence of the plaintiff to the effect that he would have co-operated with Morex to see whether, in combination, they could obtain a subdivisional approval to develop the Morex land and Lot 26 in tandem. I accept this evidence, as I accept that of Keith Perry, who acted as an unofficial agent for a Mr Kuh, now deceased, the proprietor of Morex. Mr Perry approached the plaintiff on Mr Kuh's behalf, to propose such co-operation. Mr Perry also approached Mr Kargotich on a similar basis. Mr Perry had in mind reciprocal road access for public access and fire fighting purposes (Ex 314).

103 I accept also the evidence of Mr Trefry to the effect that local planning authorities and the Commission prefer landowners to band together rather than propose subdivision of individual parcels on an ad hoc basis (TS 603). However, in the present case, no joint proposal was ever formulated: and there is no evidence to suggest that the Shire or the Commission would have looked more favourably on some non-specific joint proposal which must inevitably have resulted in the fragmentation of a considerable area.

104 In all the circumstances, I conclude that the highest and best use of the plaintiff's reserved land is as a single rural lot, which has negligible subdivision potential.

The value of the reserved land as a single rural lot

105 The principal valuation evidence was given for the plaintiff by Stephen Barry McMahon and for the Commission, by Alan Kenneth Morcombe. Both Mr McMahon and Mr Morcombe are well qualified and experienced valuers. Both recognised the difficulty of valuing the reserved land, due to the lack of truly comparable sales.

106 Mr McMahon's opinion was that whether as a single lot or as a seven-lot subdivision, the reserved land has a similar value: between $1 million and $1.2 million (TS 385). Mr McMahon reached a similar conclusion when he valued the land on the basis of a 15 lot subdivision: $1.08 million (TS 386), albeit without taking specific engineering costs into account (TS 387).

107 Mr McMahon explained the relatively high value for the single lot, on the basis that a purchaser who wanted the lifestyle which could be enjoyed on such a large property, "would probably pay a premium over a subdivisional cost ... and keep the land for its future potential, or indeed never develop it" (TS 388).

108 Whether or not that is so, Mr McMahon justified his valuation by reference to five sales he regarded as comparable. I deal with each in turn.

1. Lot 1, Lot 210 and Location 1683, Hella Kipper Drive

109 This is a property extending over 64 hectares which has already been subdivided, in the sense that it comprises the three lots referred to above. Although two of those lots do not have road access, three lots with such access could easily be created: see Exhibit 2491. The property was sold in August 1997 for $2.045 million. It boasts a substantial residence and a large and extremely attractive lake. The lake was created by damming a creek which runs through a valley within the property. Mr McMahon described it as "quite scenic" (TS 393).

110 Mr McMahon said the property was difficult to analyse. However, he made what he described as a generous allowance of $1 million for the improvements. After allowing for chattels, Mr McMahon concluded that the underlying land value was $1.025 million, this equating to $16,015 per hectare.

111 The difficulty with this approach, lies in the fact that it would be impossible to create on the reserved land a lake similar to that of the Hella Kipper Drive property. And yet it is the lake which gives the property its unique characteristics. I understand that to be a property having some unique characteristic which places it in a high-value market. On that basis, I accept Mr Morcombe's description that it is a "trophy property".

112 For these reasons, I do not regard the sale of the Hella Kipper Drive property as a valid comparable.

2. Lots 26 and 29 Robinson Road and Lots 22 and 23 South Western Highway, Cardup

113 These four lots comprise 296 hectares, on two titles. All four lots were sold to the same purchaser in March 2000 for $3.25 million. Allowing for some limited improvements, Mr McMahon arrived at an underlying land value of $10,762 per hectare.

114 These properties are situated in an urban deferred area just to the north east of the Mundijong townsite. Although Lot 22, of some 61 hectares, has been reserved, the balance has a potential for subdivision albeit, in Mr McMahon's opinion, that potential is unlikely to be realised for at least 10 years (TS 406).

115 These properties are situated on the coastal plain, and were purchased by a mineral sands company. There is no evidence about the use to which the purchaser intends to put the property.

116 Despite the difference in topography between this property and the reserved land, and the fact that it has been cleared to a greater extent than the reserved land, Mr McMahon was of the view that the property bore "a relationship" to values in the area of the reserved land (TS 406).

117 As I understood Mr McMahon's evidence, it was that if the reserved land was not affected by the reservation, it might have had a potential for special rural residential subdivision. And because of its elevated position, it would have realised a value greater than land on the coastal plain with no immediate development potential, for which a purchaser was prepared to pay in excess of $10,000 per hectare.

118 In my view, having regard to the entirely different location and characteristics of the Robinson Road/South Western Highway property and the reserved land, this is a very tenuous argument.

119 This is a property of 51.4 hectares, which is zoned rural. It is situated on the coastal plain, flat and cleared. It was transferred, apparently between family members, in April 1997, for a consideration expressed as "natural love and affection". However, stamp duty was assessed on the transfer at a value of $1.175 million, reflecting a value of $22,880 per hectare.

120 It is not clear from the evidence whether the Valuer General determined the value of $1.175 million or accepted a value nominated by the parties to the transaction. It was common ground between Mr McMahon and Mr Morcombe that if the nominated value was higher than the Valuer General's assessment, the higher value would be accepted for stamp duty purposes.

121 For this reason, and again, because the location and topography of Lot 202 Kargotich Road are quite different from that of the reserved land, I do not think this transaction can be regarded as a valid comparable sale.

122 This property, of 116.5 hectares, was sold in March 1996 for $1.49 million, reflecting a value of $12,259 per hectare, after making adjustment for improvements. Again, this is cleared flat land on the coastal plain.

123 Mr McMahon accepted that the property had been purchased by a syndicate of investors with a view to its subdivision potential (TS 411). However, the property is at present within a rural zone and the extent of the potential for subdivision is unclear. I do not think this can be regarded as a comparable sale.

124 Mr McMahon did not rely on this property in his reports but was asked about it in his examination-in-chief. It is a property of some 40 hectares situated just to the east of the reserved land. It was sold in 1999 for $700,000 apparently by a mortgagee. This represents a value of $17,500 per hectare.

125 Mr McMahon said that the land was "affected by an expired quarry which does contain water in the winter" (TS 366). He regarded the quarry as a liability, because of the risk it presented to children and stock.

126 With all respect, I do not think Mr McMahon's description of the property does it justice. The photographs taken by Mr Morcombe in March 2003 (Exhibit 2490) justify his description of Lot 716 Admiral Road as another "trophy property". The disused quarry has been turned into an extremely attractive water feature, complete with what appears to be a beach. As with the Hella Kipper Drive property, this is a feature which could not be created on the reserved land. In my view therefore, the sale of Lot 716 Admiral Road cannot be regarded as truly comparable for present purposes.

127 Mr Morcombe's approach was somewhat different. He regarded the sale of the Morex land as comparable. However, having regard to the lack of any other relevant sales in the area of the reserved land, he looked further afield. He assessed sales evidence from Gidgegannup in the north down to South Dandalup in the south. His justification for doing so was that these properties were situated on the Darling Range escarpment and therefore gave some indication of the value of land of that type.

128 The Morex land was sold in July 1998 to the Commission for a price of $302,338. This represented a value of $8,859 per hectare for the 34.126 hectares. The Morex land has a similar outlook and elevation as the reserved land but lies much closer to the urban area of Byford (Exhibit 2102).

129 The plaintiff relied on the evidence of Mr Perry to cast doubt on the validity of this sale as a comparable. It was Mr Perry's evidence, which I accept, that Mr Kuh, on behalf of Morex, accepted the offer of $302,338 made by the Commission without counter offering and without obtaining a professional valuation for himself, contrary to Mr Perry's advice.

130 I am not, however, prepared to draw an inference that Morex could have achieved a better price had Mr Kuh decided to negotiate. The valuation (on the basis that the rural land had no subdivision potential) which resulted in the Commission's offer of $300,000, was carried out by Graeme Charles Young, a valuer of considerable experience, who is retained regularly by the Commission. Despite his long-standing relationship with the Commission, Mr Young was called to give evidence on behalf of the plaintiff.

131 Because part of the land owned by Morex was not the subject of a reservation, Mr Young carried out his valuation on a "before and after" basis. That is to say, he considered the value of the land without the reservation and then deducted the value of the unreserved portion. Mr Young adopted $13,600 per hectare for the whole of the 40 hectares assuming no reservation, and deducted $250,000 as the value of the unreserved portion of 6.6 hectares which retained its rural zoning and which included some improvements. Thus, Mr Young assessed the value of the reserved part of the Morex land as having a fair market value of $300,000, this equating to $8,858 per hectare.

132 As Mr Morcombe pointed out in his cross-examination, and as I accept, the land retained by Morex was all cleared and developed and overlooked the town of Byford. Thus the value per hectare of that portion would be greater than the value per hectare of the reserved part, although neither Mr Young nor Mr Morcombe analysed the sale in that way. As I understood Mr Morcombe's evidence in cross-examination, he accepted that if Mr Young's "before" value was pro rated from a 40 hectare basis to a 68 hectare basis (that is, the size of the reserved land) the value per hectare would be 70 per cent of Mr Young's figure. (TS 984). Seventy per cent of $13,600 equates to $9,520 per hectare. This figure cannot, however, be used to assess the value of the reserved land because the Morex land is in a superior position.

133 I have already referred to Mr Morcombe's assessment of sales of escarpment land between Gidgegannup and South Dandalup. He analysed these sales by adjusting for improvements and plotting them on a graph which related land value per hectare to size (Exhibit 2494). Mr Morcombe also plotted on this graph the results of his analysis of the sales of much smaller properties. He then drew what appeared to him to be a line of best fit. He drew the line by eye, not as a result of any statistical or mathematical process.

134 A number of points emerge from Mr Morcombe's graph. First, it is apparent that for smaller properties, the price per hectare relates well to the size of the property. Thus, the line of best fit passed through all of the points relating to the eleven small properties which Mr Morcombe had analysed, ranging in size from some 5 to 15 hectares.

135 Secondly, the line taken by the graph became almost horizontal for properties over about 110 hectares in area. In other words, as might be expected, the price per hectare of broad acre land remains constant whatever the size of the property.

136 Thirdly, in the range between 30 to 70 hectares, the nine sales analysed by Mr Morcombe were well scattered. There was no comparable sale between 68 hectares (a property in Gidgegannup) and 115 hectares (being Lot 1 Admiral Road).

137 Fourthly, Mr McMahon's figure of $16,024 per hectare for the reserved land appears to be so far above the (albeit scattered) points plotted by Mr Morcombe as to demonstrate the implausibility of his valuation.

138 Using his graph, Mr Morcombe arrived at a value of $6,250 per hectare for the reserved land, which is a point slightly above the line of best fit. Counsel for the plaintiff submits that this is unreasonably low, given that part of the Kargotich land, was valued at $6,000 and $6,500 per hectare in 1988, and a sale was agreed at $6,730 per hectare. However, as I have noted, these valuations were produced on the basis of a special rural zoning, or potential, which would have permitted subdivision into lots of between 2.5 and 8 hectares. I therefore see no inconsistency between Mr Morcombe's valuation of the reserved land and the 1988 valuation of part of the Kargotich land.

139 It was put to Mr Morcombe in cross-examination that the production of his graph was "a pretty subjective exercise". Mr Morcombe agreed but said "It's a long way better than not having that sort of thing to go by". (TS 923). I accept that to be so, given the need to identify sales evidence which is "relevant and sufficient in volume": see the judgment of the High Court in Maurici v Chief Commissioner of State Revenue [2003] HCA 8; (2003) 195 ALR 236, at [18]. I can see the force in the argument that many of the sales plotted by Mr Morcombe are not relevant, because of the distance of the respective properties from the reserved land, or because of their size. However, as a basis for exercising a judgment based on experience, I consider Mr Morcombe's graph to be helpful.

140 Mr Morcombe's value was almost the same as that for a 64 hectare, mostly uncleared, scenic property at Gobby Road, Keysbrook, which also provided good views to the south west. That property is located 25 kilometres south of the reserved land and is therefore not as well located in relation to town amenities. However, it does include a significant proportion of agriculturally useful, improved land (Exhibit 2101).

141 Mr Morcombe was asked in cross-examination whether he considered the Gobby Road sale to be the best possible for the purposes of comparison. He said he did not:

"Gobby Road is further from the subject property than a lot of the other sales but it does have the advantage that it has got quite a bit of cleared land, developed land ... the subject property doesn't have any developed land, or very little so there's sort of compensating factors there, but it does come up with the same value as the one shown by Gobby Road which I think is a smaller sized property as well, which is another reason why it compensates for the distance away from Byford." (TS 923).

142 In fact, the Gobby Road property is only very slightly smaller than the reserved land, 64.0618 hectares, compared with 64.2776 hectares, a difference which I do not regard as significant. Furthermore, Gobby Road is described as having good views to the south west, whereas the reserved land enjoys panoramic views through at least 180 degrees, including views of the city skyline. The coincidence of the values of the reserved land and the Gobby Road property must therefore be attributable to factors the market would regard as compensatory.

143 There is, however, a further valuation which serves as a cross-check of Mr Morcombe's assessment. It is that produced by the application of the Valuer-General's figures. As Mr Morcombe noted in his report, the Valuer-General's valuation as at 1 July 1998 equated to an average rate of $7,780 per hectare for the whole of Lot 26. For 67 hectares, this would result in a total value of $521,260.

144 However, as Mr Morcombe pointed out, the Valuer-General's valuation includes some 2.7 hectares of Lot 26 that were not subject to the reservation. This is land having good access and a frontage to Beenyup Brook. It is parkland cleared. For these reasons, the unreserved land is likely to have a greater value per hectare than the reserved land.

145 Reference to Mr Morcombe's graph shows that the 2.7 hectare parcel is likely to have a value per hectare in excess of $40,000, representing an overall value of more than $100,000. Thus, the value of the reserved land would be in the range of $400,000 to $421,000.

146 This result accords with Mr Morcombe's opinion that if account was taken of the 2.7 hectare parcel of unreserved land, the Valuer-General's figure would be lower than $7,780 per hectare although it might not be as low as the $6,250 per hectare of his valuation (TS 996).

147 The coincidence of Mr Morcombe's valuation and that derived from the Valuer General's figures, leads me to the view that I should accept Mr Morcombe's result. I fully accept that the lack of closely comparable sales has posed a considerable difficulty for the valuers. Had there been a relatively small difference between them, I might have accepted the higher value. However, Mr McMahon's valuation seems to me to be so far removed from the albeit scattered range of values on which Mr McMahon's valuation is based, that I feel it cannot be accepted. I am encouraged in this view, by the fact that Mr McMahon's valuation of the reserved land is higher as a single lot, than it would be if the land had subdivisional potential. In the absence of any evidence about the "trophy" potential of the reserved land (other than its extensive views) this strikes me as a surprising result, which casts further doubt on Mr McMahon's conclusion.

148 I therefore accept Mr Morcombe's evidence and find that the value of the reserved land, at the acquisition date of 23 April 1999, was $400,000.

149 Given my conclusion that the reserved land has negligible subdivision potential, it is not necessary to consider its value on that basis. However, in case I am wrong, I shall summarise my views in relation to that issue.

150 It is common ground between Mr McMahon and Mr Morcombe, that if the reserved land was subdivisible, its value would be determined by subtracting from the gross realisations for the individual lots, the costs of development and associated selling and holding costs. I deal with these matters in turn.

151 Both valuers considered that properties in the Barge Road subdivision and Lot 315 Kiln Road were comparable to the lots in the hypothetical 4, 6 and 7 lot subdivisions of the reserved land: and both looked at recent sales evidence, making adjustments for the value of improvements, so as to arrive at the underlying land values.

152 Despite this common approach, Mr McMahon's projected gross realisations were approximately $500,000 greater than Mr Morcombe's, for each of the 4, 6 and 7 lot subdivisions.

153 The principal reason for this divergence is that Mr McMahon made substantial adjustments to his comparables, to allow for what he regarded as the better location of the reserved land over the Barge Road subdivision, and for a general increase in land values since the date of the comparable sales.

154 Generally, Mr McMahon adopted an increase of 20 per cent for the better position and quality of the reserved land, and an increase in land values of 5 per cent per annum.

155 Mr McMahon's position and quality adjustment was based on his 35 or so years of experience as a valuer. His land value adjustment was based on his perception of a general rise in the market, and his analysis of sales and re-sales (TS 396-8).

156 Mr Morcombe's analysis showed what he described as a fairly consistent level of land values, in the range of $205,000 to $230,000, for lots ranging from 6 to 14 hectares. This for land lying at a similar elevation as the reserved land, which was from about 100 AH to about 250 AHD (Ex 2101) and enjoying similar views of the coastal plain to the west and south-west.

157 That being so, I have difficulty in accepting Mr McMahon's opinion that land in the hypothetical subdivision would command a 20 per cent premium over the Barge Road subdivision.

158 Further, I am not persuaded that land values have increased to the extent adopted by Mr McMahon. His view is not supported by figures published by the Valuer General's Office for the City (sic Shire) of Swan and the Shire of Murray. These figures showed that had been little increase in rural land values for small lots, over a seven year period, from 1995 to 2002. I accept Mr Morcombe's evidence that movement of values in the Shire of Serpentine-Jarrahdale are broadly comparable.

159 Nor is Mr McMahon's view supported by a REIWA analysis of growth in residential property values over a period of five years, from 1995 to 2000, in several suburbs in the south metropolitan region. Although Byford was not included, Mr Morcombe assessed growth rates in that area as falling within the range of 0.5 to 2.5 per cent per annum during that period.

160 For these reasons, I prefer and accept the evidence of Mr Morcombe in relation to gross realisations. I therefore find that the gross value of the hypothetical subdivisions to be as follows:

161 This is essentially an engineering issue. It was the subject of expert evidence from Mr van der Meer for the plaintiff and John Andrew Longin Kotula for the Commission.

162 Mr van der Meer is a graduate consulting engineer who has a Master's degree in soil mechanics. He has been advising developers in relation to subdivisions since 1970. Since 1987, he has been developing land on his own account, and has carried out a number of subdivisions in the Byford area.

163 Mr Kotula is a director of BSD Consultants. He is also a graduate engineer, with extensive experience over nearly 19 years in carrying out rural subdivisions, including a current project in the Shire of Serpentine-Jarrahdale.

164 Both Mr van der Meer and Mr Kotula analysed the cost of developing the reserved land in accordance with the 4, 6 and 7 lot subdivision designed by Mr Trefry.

Macdougall v Western Australian Planning Commission [2003] WASC 138

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (258 paragraphs)

Macdougall v Western Australian Planning Commission [2003] WASC 138 (24 July 2003)

What matters should be disregarded in carrying out the valuation?

Would subdivision approval have been obtained, but for the reservation?

Other limitations on subdivisional development

Land to the south of Lot 26 - the Barge Road subdivision

Land to the north of Lot 26 - the Kargotich land

The value of the reserved land as a single rural lot

1. Lot 1, Lot 210 and Location 1683, Hella Kipper Drive

2. Lots 26 and 29 Robinson Road and Lots 22 and 23 South Western Highway, Cardup

Construction of water tanks for fire fighting purposes

Parties

Legislation Cited (4)

Cases Cited (5)