3 In the late 1980s Homeswest and Sanwa formed a company known as Ellenbrook Management Pty Ltd (Ellenbrook Management). That company proposed to develop the land owned by Homeswest and Sanwa as a new suburb to be known as Ellenbrook (Ellenbrook Project). Mount Lawley was initially to be involved in the development. However, it subsequently withdrew from it. The Ellenbrook Project was ultimately successful. In the early stages of its implementation the land to be developed (Ellenbrook land) was rezoned from rural to urban deferred. This was done by way of an amendment to the Metropolitan Region Scheme (MRS). This was Amendment 879/33 to the MRS which was gazetted on 16 October 1992. That amendment also effected the reservation of 301 hectares of the Mount Lawley land for parks and recreation. Another 8 hectares or so of the Mount Lawley land (CAH land) was reserved for a controlled access highway. The unreserved portion of the Mount Lawley land (some 11.9 hectares on Lot 47) was rezoned, by Amendment 879/33, to urban deferred. The Mount Lawley land had, until then, been zoned rural. The reservation of the 301 hectares for parks and recreation was made for the purpose of protecting and preserving significant wetlands and associated vegetation on that land. It is, for the purposes of the appeal, common cause between the parties that 175 hectares of the reserved land consisted of drylands, that 75 hectares consisted of wetlands (or lakes) and that the remaining 50 hectares consisted of drylands that were likely to be required by the Environmental Protection Authority (EPA) to be used as protective or 'buffer' zones around the wetlands, if development occurred on adjacent dryland areas.

4 In December 1995 the appellant applied to the respondent for approval to begin development of earth works for urban development and sand mining on the Mount Lawley land. As had been anticipated, the development application was refused. On 13 February 1996 the appellant claimed compensation for injurious affection in respect of its land. It was entitled to do so by virtue of s 11(1) of the now repealed Town Planning and Development Act 1928 (WA) (Town Planning Act). That section provides that any person whose land is injuriously affected by the making of a town planning scheme shall (if the claim is brought within the specified time) 'be entitled to obtain compensation in respect thereof from the responsible authority'.

5 Section 36(1)(a) of the former Metropolitan Region Town Planning Scheme Act 1959 (WA) (Scheme Act) provided, at the material time (like the Town Planning Act, it was repealed in 2005) that, for the purposes of applying s 11 of the Town Planning Act to the provisions of the MRS, that section shall be construed as if the respondent was the 'responsible authority'. Section 36(2) of the Scheme Act, when read with s 12(2a)(b) of the Town Planning Act and the terms of the MRS, required the respondent, when faced with a claim for injurious affection under the Town Planning Act, either to pay compensation to the claimant or to elect to acquire the affected land.

6 By letter dated 9 May 1996 the respondent elected to acquire the Mount Lawley land instead of paying compensation. However, the parties were unable to agree on the price to be paid. By s 36(2a) of the Scheme Act the price was consequently to be 'the value of the land as determined in accordance with subsection (2b)'. That subsection, so far as it is material, read as follows:

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 -

(b) ...

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

or

(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.

7 The 'Scheme' was defined in s 6 of the Scheme Act as:

[A] town planning scheme for the metropolitan region or any part thereof ... 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.

...

8 Both parties were, as they still are, content to treat Amendment 879/33 to the MRS and a later amendment, 950/33 (which rezoned the Ellenbrook land and the unreserved portion of the Mount Lawley land from urban deferred to urban), as 'the Scheme' for the purposes of s 36(2b) of the Scheme Act. That is because the amendments are the only parts of the MRS that relevantly affected the value of the Mount Lawley land. We will consequently refer to the amendments as 'the Scheme'.

9 The value of the Mount Lawley land was determined by the Supreme Court. It was found to be $2.9 million. This was significantly less than the value which had been placed on it by the appellant. The appellant appealed. The appeal was successful: Mount Lawley Pty Ltd v Western Australian Planning Commission [2004] WASCA 149; (2004) 29 WAR 273 (first appeal). The decision of the trial judge was set aside and a retrial was ordered. The retrial took place during February, March and April 2006. This time the trial judge (not the judge who had previously determined the value) concluded that the value of the Mount Lawley land was $4 million: Mount Lawley Pty Ltd v Western Australian Planning Commission [2006] WASC 82. He awarded interest on that sum from 7 May 1996. The appellant appealed once again. Its amended grounds of appeal comprised 24 grounds running to some 33 pages. Some of these grounds have since been abandoned. The respondent has cross-appealed upon three grounds and lodged a notice of contention in the appeal. The appellant (cross-respondent) has lodged a notice of contention in the cross-appeal.

10 Before turning to the reasons of the trial judge and to the grounds of appeal and cross-appeal, it is convenient to give a broad overview of the issues that arise and to explain how the parties have agreed that they should be dealt with.

11 The principal issues essentially concern the following:

1. The proper construction of s 36(2b) of the Scheme Act, encompassing the question of when an increase or decrease in value is 'attributable wholly or in part to the Scheme'.
2. Whether the trial judge erred in his approach to the question of what factors, having an effect on value of the Mount Lawley land, should be excluded as having been 'attributable wholly or in part to the Scheme' (grounds 1 to 7 and 16 of the grounds of appeal).
3. Whether the trial judge was right to exclude some of the evidence led on behalf of the appellant upon the basis that it was irrelevant or otherwise inadmissible (grounds 2, 8, 9 and 21 and pars 3, 4 and 5 of the respondent's notice of contention).
4. Whether the trial judge erred in his assessment of the development potential of the Mount Lawley land (grounds 10 to 13 of the grounds of appeal, pars 1 and 2 of the respondent's notice of contention, grounds 1 to 3 of the cross-appeal and pars 3 to 5 of the appellant's (cross-respondent's) notice of contention in respect of the cross-appeal).
5. Whether the trial judge was right to rely upon valuation evidence that had been led on behalf of the respondent (ground 17).
6. Whether the costs orders made by the trial judge were appropriate (grounds 22 to 24).

12 During the course of argument on the appeal, there was some debate concerning the question whether, if the appellant should succeed in one or more of its grounds of appeal, this court would be in a position to make the necessary findings or whether there should be a retrial. The parties agreed that that question was best left over until it had become apparent whether, and if so upon what basis, the appellant had succeeded. It was also agreed that the costs issues should be put to one side until all other issues have been dealt with. We will consequently deal with the issues raised by the appeal and cross-appeal only so far as is necessary to determine whether the trial judge erred in fact or law. The remaining issues will be dealt with by way of further submissions once the former questions have been decided.

13 Before turning to the material evidence that was led at the retrial, to the judgment of the trial judge and to the detail of the grounds of appeal and cross-appeal, we will deal with the first of the principal issues, being the construction of s 36(2b) of the Scheme Act.

14 In the first appeal, the approach required by s 36(2b) was said to be similar to that required at common law by the so-called 'Pointe Gourde principle' [70]. That is a reference to what was said in Pointe Gourde Quarrying and Transport Co Ltd v Sub-Intendent of Crown Lands [1947] AC 565 as follows (572):

It is well settled that compensation for the compulsory acquisition of land cannot include an increase in value which is entirely due to the scheme underlying the acquisition.

The principle (the application of which is discussed in the reasons given in the first appeal ([62] - [72]) has been discussed in a number of Australian cases. These include The Crown v Murphy [1990] HCA 42; (1990) 64 ALJR 593, where the High Court said (595):

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.

15 The cases considering the Pointe Gourde principle and various statutory emanations of it are helpful. However, it is the statutory embodiment of that principle as it appears in s 36(2b) of the Scheme Act to which effect must be given in this case (see the first appeal reasons at [65]).

16 The starting point, when considering the application of s 36(2b), is to identify 'the Scheme'. We have mentioned that, in this case, the components of the Scheme have been agreed by the parties. For present purposes, the Scheme is to be regarded as comprising Amendments 879/33 and 950/33 to the MRS. This agreement as regards the components of the Scheme is consistent with what was decided in the first appeal: see [140] - [141] and [331]. There was no challenge to that decision.

17 Next, it is relevant to determine what increases or decreases in the value of the land are 'attributable wholly or in part to the Scheme', so that these may be disregarded. Just when the effect on value is so attributable can be a difficult question to answer. That kind of question has frequently arisen in other contexts. A well-known example is provided by Housing Commission of New South Wales v San Sebastian Pty Ltd [1978] HCA 28; (1978) 140 CLR 196. That case dealt with s 124 of the Public Works Act 1912 (NSW). That section provided that compensation for land compulsorily acquired should be assessed without regard to any alteration to the value of the land arising from the establishment of any public works upon or for which the land was resumed. Jacobs J (with whom the other judges agreed) said that this provision was a statutory form of the Pointe Gourde principle (205). He went on to say (205 - 206):

A difficulty which arises in the application of this principle is that valuation is in the ordinary case based on market value and, if the proposed public purpose and the possibility or likelihood of resumption therefore has become known prior to the date of resumption, the market value at the time of resumption will probably reflect by way of increase or decrease the possibility or likelihood of resumption for that public purpose. Therefore that value cannot be accepted. Yet it is inevitably in most cases the starting point of the process of valuation. With the actual market value at the time of resumption as the starting point it is then necessary to determine whether that value has been depressed or elevated by the market's foreknowledge of the possible or likely public purpose and consequent resumption. It is therefore inevitable in such circumstances that the public purpose has to be taken into account in the process of valuation but it can be taken into account only for that purpose.

18 Jacobs J saw no difficulty in applying s 124 of the Public Works Act in cases in which there is 'a direct relationship' between a restriction on land use (decreasing its value) and the proposed establishment of the public works in question. He said that in such a case the effect on value of the zoning or restriction ought to be ignored (206). However, he added that there are many situations where the relation between the zoning and the proposed public works is not clear cut. He provided the following example (206 - 207):

Assume an area of land on the outskirts of existing settlement, and assume a planning authority concerned to designate land uses in a planning scheme. The land is designated open space. Thereafter it is resumed for the purpose of a public reserve. The fact that the land was zoned as open space may have depreciated its value. Does the resuming authority pay compensation at the depreciated value of open space or at some other value? The question cannot be correctly answered without knowing whether there was any connexion between the zoning as open space and the subsequent resumption. If the zoning was done with the intent or in anticipation that the land should be resumed for a purpose such as a public reserve or if the zoning was proposed or dictated by the resuming authority then s 124 requires that the zoning be ignored. It is only a step in the process of subsequent resumption. But in other circumstances the resumption may be unconnected with the act of zoning. It may be that the resuming authority selects the land for resumption as a public reserve because it is zoned open space; if it does so it is doing no more than ensuring that it, as well as others, conforms to the planning scheme. In those circumstances there is no relevant relationship between the zoning and the public purpose. No public purpose, existing or anticipated, intended, or urged by the zoning authority, leads to the zoning; rather, the zoning leads to the public purpose and consequent resumption.

19 Similar difficulties can arise under s 36(2b). What constitutes a 'step in the process' for the purposes of that section (if, as both parties accepted, the words 'attributable ... to the Scheme' encompass steps in the process of the Scheme) is a matter of some controversy between the parties. During the appeal, both adopted a very wide view of the notion of a 'step'. The appellant did so because it was constrained by the manner in which it had conducted the retrial. The respondent did so because it takes the view that 'steps' comprise not only acts performed in order to facilitate a Scheme, but also what it referred to as 'portents of the Scheme' (a phrase that raises more questions than it answers). We will return, in more detail, to the respective approaches of the parties in this respect later in these reasons.

20 The question of what is a 'step in the process' in this kind of context has since been discussed in a number of cases. Relatively recently, in Sydney Harbour Foreshore Authority v Walker Corporation Pty Ltd [2005] NSWCA 251; (2005) 63 NSWLR 407 [85] (Walker No 1) Basten JA (with whom Beazley JA and Stein AJA agreed), said that the 'lesson of ... San Sebastian ... is that no narrow view should be taken of steps which may affect the value of land'. However, he added that 'it is necessary to distinguish between conduct which constitutes a proper exercise of planning powers irrespective of the ultimate resumption and a use of planning powers in pursuit of a proposed resumption'.

21 We have said that in this appeal we are required by the agreement of the parties, taken with their decision not to challenge the determination in the first appeal, to treat the Scheme as comprising Amendment 950/33 in addition to Amendment 879/33. The Scheme is consequently to be taken (as it was at the retrial) as including both the reservation of part of the Mount Lawley land and the upzoning of the Ellenbrook land. It also follows from the agreement of the parties in this respect, consistently with the approach adopted by the court in the first appeal, that they accept that the Scheme is the particular amendments (879/33 and 950/33) and that it is only the effect on value of those amendments that must be disregarded and not that of those amendments and any other amendments to the same effect that might, absent the particular amendments, have been made to the MRS. This means that this court is not required to ignore the reservation of the Mount Lawley land and/or the upzoning of the Ellenbrook land as an available planning option (which, if there had been such a requirement, would have precluded a finding that part of the Mount Lawley land would or might in any event have been reserved or that the Ellenbrook land would or might in any event have been upzoned).

22 It is important to mention, in this respect, that the appellant's case, at the retrial and in this appeal, was that the Ellenbrook land would have been zoned urban by the valuation date. This was important because there was evidence that the upzoning of Ellenbrook was a necessary, but not determinative, factor in any upzoning of the Mount Lawley land (neither party contended that the value of the Mount Lawley land was less than its rural value).

23 However, it does not follow that, because the Scheme is the particular amendments, it is open to the court to make a finding on the balance of probabilities that the same planning decision or decisions would have been made and given effect to (that is, the Mount Lawley land reserved or the Ellenbrook land upzoned) prior to the valuation date. The amendments giving effect to the reservation of part of the Mount Lawley land and the upzoning of the Ellenbrook land amount to the Scheme itself, not to a step in the Scheme. This materially distinguishes s 36(2b) from the New South Wales statutory scheme considered in the New South Wales cases relied on by the appellant including Smith v Roads and Traffic Authority of New South Wales [2005] NSWLEC 438 and Sydney Harbour Foreshore Authority v Walker Corporation Pty Ltd (No 2) [2006] NSWCA 386; (2006) 151 LGERA 186 (discussed later in these reasons). As we shall explain, under the New South Wales legislation the zoning of the relevant land can be a neutral planning decision which is not a step in the Scheme and the zoning is never the equivalent of the Scheme under s 36(2b).

24 Section 36(2b) requires that the value of the Mount Lawley land is to be determined as at the valuation date without regard to any increase or decrease in value attributable wholly or in part to the amendments that constitute the Scheme. That is to be done by ignoring, as at the valuation date, the reservation and upzoning given effect to by those amendments. Ignoring the effect on value of the amendments as at the valuation date has the consequence of reviving the pre-amendment rural zoning for both the Mount Lawley land and the Ellenbrook land. Accordingly, consistently with what was held in the first appeal ([141], [162], [185]), we are required to ignore the fact of the upzoning (and reservation) and the issue to be determined is what, if any, premium the hypothetical purchaser would be prepared to pay over and above the rural value in order to reflect the urban development potential of the Mount Lawley land.

25 Returning to the issue of what will be regarded as 'steps' that may affect the value of land, this will necessarily depend upon the construction of the statutory provision under consideration. For example, in San Sebastian Jacobs J construed the words 'establishment of public works' in s 124 of the Public Works Act 1912 (NSW) as being 'wide enough to cover the whole subject matter of the establishment of the particular public work - proposal or requirement by the relevant authority, intention of the planning authority by such zoning to induce the establishment of the public work, even urging by outside bodies that the public work should be established' (213). (See also, in this last respect, Walker No 1 [58] - [59]; and Walker No 2 [17].) In the two Walker Corporation cases the court was concerned with the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) s 56(1)(a), which required an assessment of the market value of land to be made which disregarded 'any increase or decrease in the value of the land caused by the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired' (our emphasis). Those provisions (and the provision considered by Jacobs J in San Sebastian) are, on the face of it, wider in scope than s 36(2b) of the Scheme Act.

26 In considering what is, or is not, a 'step' in the context of s 36(2b), the question to be answered is, as we have said, whether or not an increase or decrease in the value of the land to be acquired by the respondent is 'attributable to' the Scheme. Any number of events having an effect on the value of land, including political, scientific, social or commercial occurrences, might be precursors to, or lead up to or have some relation to, a Scheme, but that is not to say that those changes in value are necessarily attributable to the Scheme itself. They may or may not be so.

27 The difficulty is most acute when considering 'steps' that precede the Scheme. On the face of it, they will have an impact on value attributable to the Scheme only if that impact is attributable in whole or in part to the proposed Scheme itself as, for example, the advertising of the Scheme or a publication of some other kind that is a prerequisite to the coming into effect of the Scheme. However, proposed Schemes may alter as they develop and foreknowledge of their likely occurrence can be obtained by the property market during the development stage. In Wilson v Liverpool Corporation [1971] 1 All ER 628 Lord Denning said:

A scheme is a progressive thing. It starts vague and known to few. It becomes more precise and better known as time goes on. Eventually it becomes precise and definite, and known to all. Correspondingly, its impact has a progressive effect on values. At first it has little effect because it is so vague and uncertain. As it becomes more precise and better known, so its impact increases until it has an important effect. It is this increase, whether big or small, which is to be disregarded as at the time when the value is to be assessed. (634)

Just when this effect on value is attributable to a step in 'the Scheme' (as opposed to something less than or different from the Scheme) raises difficult questions in the application of s 36(2b).

28 These questions were given some attention in the first appeal. The court held ([66]; and see also [70], [71]), following Murphy, that a reservation could not be isolated from the circumstances in which it was created and that it was 'necessary to identify the entirety of the process which led to the reservation and then to exclude the effect of that process in the valuation exercise'. While the court did not say what was comprehended by 'the entirety of the process', it is plain enough from this that the effect on value of statutory steps in that process, such as advertising an intention to amend the MRS, calling for submissions in respect of the proposed amendment and the like, must be disregarded. The Full Court also said [70] that s 36(2b) of the Scheme Act should be approached in a manner similar to the approach adopted in San Sebastian in respect of s 124 of the Public Works Act 1912 (NSW). It said that it was necessary to disregard, not only the effect on value of the Scheme itself, but also the effect on value of 'the steps taken towards it as it evolves' [71]. The court did not expand upon the meaning of that phrase. Finally, in this respect, the court, using language which, with the benefit of hindsight, was rather too broadly expressed said that 'it is the Scheme that is ignored (including all that led up to it)' [180]. However, that was a reference back to what had earlier been drawn from Murphy and San Sebastian as to what constitutes a step and was intended to be understood in that context.

29 It is true that a Scheme is 'a progressive thing'. However, as we have said, the step or occurrence affecting value must be 'attributable' to the Scheme itself and not (as we understand s 36(2b)) to some different, or as yet unformed, notion that ultimately led to the creation of the Scheme. A step must be attributable to the Scheme, not the Scheme to a step. That is to say, the step must have been taken in order to bring about the Scheme itself, or a variant of it that is not materially different. As to this last proposition, it seems to us that a step may be attributable to a Scheme even if the form which the proposed Scheme then took differed from that which the Scheme ultimately took, so long as the difference is not such as to lead to the conclusion that the Scheme ultimately created was not substantially that which had been proposed. It also seems to us that the step must be taken with the intention of facilitating the Scheme or for the purpose of creating it, if it is to be attributable to the Scheme. So, for example, some proposed general planning consideration that may or may not lead to a Scheme of the kind ultimately implemented could not be said to be attributable to the Scheme merely because, as matters turned out, a Scheme which adopted that planning consideration was subsequently implemented (cp the approach taken in respect of the different legislation in San Sebastian (213)).

30 Also, the words 'attributable to the Scheme' plainly have the consequence that the effect on value of characteristics or location of the land, or other factors affecting the land (such as population pressures), which always had the capacity to enhance, or reduce, its prospects of development and hence its value are not to be disregarded merely because they led, ultimately, to the Scheme. That is so even if they are specifically identified, or otherwise referred to, by the Scheme: see in this respect the approach adopted (albeit in the context of different legislation) by Basten JA in Walker No 1 [63]. The same is true of inherent characteristics of, or other factors affecting, land that is adjacent to the subject land, so far as those characteristics or factors are capable, independently of the Scheme (and its steps), of affecting the development potential, and hence the value, of the subject land. Regard to characteristics and factors of either kind might lead a hypothetical, informed purchaser to anticipate, independently of the Scheme and its steps, an outcome similar to that which in fact happened as a result of the Scheme. In such a case the Scheme (or knowledge of steps leading to it) may have no impact on the value of the land.

31 Murphy provides an example of this. In that case the subject land was zoned rural. An application to have it rezoned as residential land was refused by a local council, partly because that zoning would threaten a neighbouring turtle rookery. The Queensland State Government later resumed the land for an environmental park. The question arose whether, in valuing the land, a premium should be allowed for the prospect of future urban development. The Land Appeal Court refused to allow any premium above rural value upon the basis that a prudent purchaser would have made no allowance for the possibility of future subdivisions. The Full Court of the Supreme Court of Queensland reversed the decision, holding that the refusal to rezone was a 'step' in the sense in which that word is used in San Sebastian. The court consequently disregarded the rural zoning and valued the land on a notional residential zoning. The appeal to the High Court succeeded. Mason CJ, Brennan, Deane, Gaudron and McHugh JJ said that a characteristic or attribute of the land which affects its value must be taken into account in the assessment of compensation even if the planning restriction which is a step in the process of resumption is dependent upon or directed to that characteristic or attribute (595). It is accordingly plain that inherent characteristics of the land will be relevant to any valuation of it, even if those characteristics prompted a step leading to acquisition and the effect on value of the step itself must be disregarded.

32 Of course, the fact that the change in value is only partly brought about by an event attributable to a Scheme will not, on that account, result in it falling outside the ambit of s 36(2b). That is apparent from the use of the words 'in whole or in part'. However, only that part of the increase or decrease in value that is attributable to the Scheme is to be disregarded.

33 That brings us to the evidence that was led at the retrial, and to the approach that was taken by the parties to that evidence.

34 As in the appeal, at the retrial both parties gave to the words 'attributable ... to the Scheme' a very wide meaning. This influenced their submissions as regards the use to which particular evidence could (or more importantly, could not) be put. We will return to this topic later, when examining some of the events which were said by both parties to have been 'steps' that were attributable to the Scheme.

35 As in the first trial, a good deal of evidence was led during the retrial. However, we propose to refer only to so much of it as is material to the issues to be decided at this stage. That evidence falls into three broad categories. The first concerns the background to, and development of, the Scheme, encompassing evidence of events that were said by one or both of the parties to amount to 'steps' attributable to the Scheme. The second category comprises evidence given as regards the likely zoning of the Mount Lawley land if there had been no Scheme. The third category consists of the evidence of the valuers. We will deal with each in turn.

36 The events leading up to Amendment 879/33 are conveniently summarised in the judgment of the trial judge [112] - [241]. Because much of that summary is uncontested, we will draw from it in outlining relevant events in the background to and development of the Scheme.

37 The trial judge took, as his starting point, the 'Stephenson-Hepburn' plan of 1955, prepared by Professor Gordon Stephenson and Mr Alistair Hepburn, the then town planning commissioner. That plan, which was conceptual in nature, had no statutory effect. However, it subsequently formed the basis for the MRS. At the time of the creation of the plan, the Mount Lawley land (which was not identified in the plan) was designated as general rural land. The Mount Lawley land was zoned rural in 1963, when the MRS was gazetted. The MRS, as amended from time to time, is given statutory force by Pt III of the Scheme Act. Section 34 of the Scheme Act provides that no local authority planning scheme is to be made unless it is 'in accordance with and consistent with' the MRS.

38 The Scheme Act established an authority known as the Metropolitan Region Planning Authority (MRPA). In 1970 the MRPA produced what was described as a 'Corridor Plan' (exhibit 2105) for the expansion of Perth over the next 20 years. Its purpose, as the name suggests, was to direct urban expansion along corridors or 'strong communication routes' between 'large areas of countryside ... for non-urban uses'. The plan was conceptual in nature. It proposed only four corridors, being to the north-west, east, south-east and south-west of Perth. The Mount Lawley land was not in any of these corridors. It lay between the north-western and eastern corridors in an area proposed for non-urban use in town planning schemes gazetted on 19 June 1974 (Shire of Swan Town Planning Scheme No 1) and 9 December 1985 (Shire of Swan Town Planning Scheme No 9).

39 In October 1987 the Corridor Plan was reviewed by a body described as the 'Review Group to the State Planning Commission' (Review Group). That group produced a report entitled 'Planning for the Future of the Perth Metropolitan Region' (exhibit 2231) (Corridor Plan Review). The terms of reference for the preparation of the report required its authors to consider how the Corridor Plan might best be amended in order to serve as a strategy for the rapid expansion of Perth. The report forecast a need for a substantial number of dwellings in order to house the rapidly expanding population. It also assessed the 'likely' implications for the MRS of the forecast expansion. It was divided into three parts. The first was devoted to demographic and economic forecasts. The second set out a revised set of planning objectives and strategies. The third involved the choice of a preferred strategy.

40 The report noted that the supply of available land in the fastest-growing urban areas, such as the north-west corridor, would be exhausted by 1991 (page 40) and that, while high-density housing in inner suburbs was an option (page 44), it was not a complete solution (page 5). The protection of coastal wetlands remained a high priority. The report referred, in this respect, to the existence of natural vegetation and wetlands in the area of the Mount Lawley land (pages 69 - 71).

41 The report identified a number of new areas as being suitable for development. These included areas north of Midland. A diagram titled 'The Preferred Strategy' (page 10 of the report) showed land to the south of the Mount Lawley land as 'proposed future urban' (the northern most extremity of this land appears from the diagram to be less than two kilometres south of the southern boundary of the Mount Lawley land). The Mount Lawley land fell within an area identified as 'metropolitan park system'. The diagram was schematic and did not identify cadastral boundaries. The authors of the report acknowledged that land would have to be rezoned from rural to urban in order to achieve the objectives discussed. However, they warned landowners and prospective developers not to 'anticipate the outcome until public consultations and amendments ... [were] complete' (page 11 and see also pages 74 - 75).

42 The report noted that the Perth coastal plain was 'a delicately balanced environment' and that the coastal wetlands system was 'under the greatest pressure from both use and development'. It considered that the protection of the coastal wetlands system 'should continue to be a high priority in a revised strategy' (page 7). The wetlands referred to included a system encompassing the Mount Lawley land. The report also mentioned the increasing importance of groundwater resources, in particular the Gnangara Mound which extended, in part, below the Mount Lawley land. There is a map, on page 89 of the report, which identifies the level of constraint to urban development in the area there depicted. While it is difficult to identify the Mount Lawley land on that map with any precision, that land appears to be in an area in which the constraints on urban development are 'Extremely High' or 'High'.

43 The Corridor Plan Review was published in conjunction with a comprehensive assessment of bushland and wetlands described as 'Working Paper 17' (exhibit 2221). The purpose of this document was said to be that of explaining 'the thinking behind the recommendations for the Metropolitan Open Space system'. It classified natural resources into various categories, including bushland and wetlands. Wetlands were said to be 'a principal focus of community concern with the region's environment'. The paper suggested that many wetland environments were being incorporated into new reserves. The importance of the wetlands to the region's ecology was explained in considerable detail. Their function as waterfowl habitats and summer refuges for inland and migratory birds was said to be recognised internationally.

44 One of the authors of the working paper was Mr James Singleton, who was then the 'Director, Sustainability' at the Department of Planning and Infrastructure (DPI). He was also a member of the Review Group. The trial judge said, in the course of discussing the Working Paper and Mr Singleton's evidence [132] - [135]:

The Mount Lawley land is situated on the infertile Bassendean Sands. However, the Working Paper noted the importance of the northern banksia woodlands on the Bassendean Sands.

Reference was made also to the importance of groundwater in the Swan Coastal Plain, and in particular, the superficial or unconfined aquifer mentioned above: the Gnangara Mound:

'The larger Gnangara Mound to the north has a north south ridge rising to 70 metres AHD, a total volume of 65,000 million cubic metres and volume of stored water estimated at 13,000 million cubic metres. The southern, smaller Jandakot Mound has an elevation of 25 to 30 metres only and a storage capacity estimated at 5000 million cubic metres.

These two water bodies are not only principal sources of water for the urban population, but are essential components of the region's ecology. The vegetation and animals of the region are directly dependent upon the groundwater. They are also a dominant feature of the water balance of the region. Without their existence the coastal plain would be barely habitable.

Seepage from the aquifers supplies water into the few surface water courses that exist, and where the water table is exposed at the ground surface there occur the distinctive swamps and lakes of the plain.'

James Philip Singleton was a co-author of the Working Paper (although it bears only his name) and a member of the Corridor Review team, on secondment from the State Planning Commission, where he was a Senior Planning Officer (exhibit 4031). Mr Singleton gave evidence at the trial and the retrial.

Mr Singleton's evidence, all of which I accept, was that one purpose of the Working Paper was to explain succinctly how an 'opportunity constraints analysis' was undertaken. This involved, ultimately, the preparation of a 'constraints map' on which environmental, social and engineering factors were combined, so that their composite effect on urban development could be assessed. In this way, it would be possible to devise a planning strategy for the Metropolitan Region.

45 After referring to this evidence, the trial judge remarked that it was common ground between the parties, albeit for different reasons, that 1987 was the 'appropriate starting point for the identification of "the Scheme" in s 36(2b) of the Scheme Act' [141]. He said, in this respect [141] - [144]:

The WAPC contends that the conservation significance of the Mount Lawley land was recognised in 1987: and that the steps taken then and subsequently to reserve it simply gave effect to its characteristics. The reservation was not driven by a desire to acquire the Mount Lawley land. It is therefore submitted that this is not a step which falls within the San Sebastian principle.

WAPC contends further that, insofar as the identification of the north-east corridor increased the value of the Mount Lawley land by creating a potential for development, it was a step in that part of the Scheme of amendment 879/33 which involved a rezoning of rural land to urban deferred.

The WAPC submits that the step should be ignored because the process resulted from the desire to create an urban corridor.

For reasons which appear below, I accept the submissions of the WAPC.

46 In August 1989 Mr Ronald Sokolowski, a senior technical officer with the Department of Conservation and Land Management (CALM) was asked to undertake a general appraisal of location 45 Maralla Road (encompassing part of the Mount Lawley land), seemingly for the purpose of considering the creation of a possible nature reserve. The title to the report that he prepared pursuant to this request makes it plain that it was a preliminary assessment. The report (exhibit 2095) was prepared for Dr David Coates, a senior research scientist employed by CALM. Mr Sokolowski recommended that the 'commendable' floristic diversity and richness of the land appraised by him made it worthy of protection and proper management.

47 In his evidence at the retrial (accepted by the trial judge), Mr Sokolowski said that his opinion in August 1989 had been that the land should be acquired and managed by a state instrumentality such as CALM. However, he emphasised that this was only a preliminary assessment. He accepted that there was nothing unusual or extraordinary about the area appraised by him, to the extent that it comprised banksia woodlands, other than the general health of those woodlands. He said that banksia woodlands are a fairly common feature of the Swan Coastal Plain.

48 In May 1990 the Department of Planning and Urban Development (DPUD) released a 'Draft Urban Expansion Policy Statement for Metropolitan Perth' (1990 draft DPUD Statement). This document (exhibit 2232) referred to extensive submissions that had been made in respect of the earlier proposals for urban expansion. It reassessed those earlier proposals. It lists many of the general planning considerations that had previously been set out in the Corridor Plan Review. The foreword to the report, written by Mr David Hatt, who was then the chief executive officer of DPUD, records that:

The Department of Planning and Urban Development will soon be proposing a new Metropolitan Strategic Plan, which will outline future directions for a wide range of metropolitan planning issues. It will also stress the need for reducing the demand for outward expansion by increasing development opportunities in the established urban areas, and improving the efficiency of land development in new urban areas. Identification of the areas most suitable for urban growth will be central to the proposals of the Strategic Plan.

The Metropolitan Strategic Plan will be released later this year and will provide the framework and direction for the long-term planning of the Region. Its strategic policy recommendations will be supported by separate, more detailed policy statements of which the Urban Expansion Policy Statement is one.

49 Paragraph 2.3.3 of the 1990 draft DPUD Statement referred to 'the establishment of a major new urban growth area in the north-east, extending between Midland and Upper Swan on each side of the Swan Valley'.

50 Two categories of potential new urban land were identified for the purposes of the policy statement. These were respectively referred to as 'Category A' and 'Category B'. Category A included those areas most likely to be urbanised in the normal course of development within the next 30 years. Category B included those areas that were currently constrained by major issues that would need to be resolved to enable urbanisation to occur within the next 30 years. Three thousand hectares of land in the West Swan area were identified as Category A land. As far as this can be discerned from the plan showing the location of these categories, the Mount Lawley land was not included in either of Category A or Category B. It remained in an area designated as rural. This led to a complaint by the appellant, made by letter dated 31 July 1990. The complaint was that the Mount Lawley land had been omitted from any urban category, 'despite its suitability for that purpose'. The letter said that detailed surveys had shown that there were only 70 hectares of wetland in the total area of 320 hectares and that the balance was 'high, dry banksia covered sandhills which are perfectly suited to urban development'.

51 Feilman Planning Consultants (Feilmans) had been retained to assist with the Ellenbrook Project, of which Mount Lawley was then still a proponent. In July 1990 Feilmans made a submission to DPUD in respect of the 1990 draft DPUD Statement. It noted that, although much of the Ellenbrook land had been included in Category A, the Mount Lawley land had not, 'presumably ... because of the presence of some areas of wetland'. It recommended the inclusion of the Mount Lawley land and an area of State forest. It suggested that the State forest land should be exchanged for wetlands on the Mount Lawley land.

52 In November 1990 the final version of the 1990 draft DPUD Statement was released (1990 final DPUD Statement). The foreword to that document (exhibit 2228), again written by Mr Hatt, records that the 'growth options' for the region had been described in the Corridor Plan Review. Mr Hatt goes on to say that the current Statement 'identifies the land considered suitable for urban development'.

53 Map 1 of the 1990 final DPUD Statement (page 3) is titled 'Perth Metropolitan Region Future Urban Form Concept'. This map shows a north-eastern corridor which has at its northern end a black arrow which, according to the legend, denotes 'Future Urban Growth Option'.

54 Page 4 of the 1990 final DPUD Statement highlights the fact that population pressures have placed the original Corridor Plan under strain, with a high demand for housing in the 'new urban fringe suburbs'. Paragraph 2.21 (page 5) refers to the Corridor Plan Review and says of it, amongst other things, that, 'The semblance of a north-east corridor north of Midland was introduced as a new growth area'. Paragraph 2.3.3 (pages 6 and 7) records that the 1990 final DPUD Statement 'provides for continued growth, with emphasis on', amongst other things, 'the establishment of a major new urban growth area in the north-east, extending between Midland and Upper Swan on each side of the Swan Valley'. Once again, the areas identified as potential urban areas were categorised. The Middle Swan and West Swan areas in the north-eastern corridor fell within Category A. The Middle Swan land and land identified as 'Wexcombe' (also in the north-eastern corridor) were categorised A1, being the principal sources of new housing land in the next five to 10 years. Page 15 of the 1990 final DPUD Statement refers to Category A2 land, being land likely to be developed in the medium to long term. That includes land in the north-eastern corridor identified as Belhus, Henley Brook, Beechboro, Millendon and Herne Hill.

55 Page 15 of the 1990 final DPUD Statement records that it is 'now necessary to undertake more detailed structure planning in each of the corridors to resolve regional and local issues'. It also records that:

The structure planning will provide the most detailed assessment of land suitability for development and more closely define the boundaries of future urban areas. Public participation will be encouraged in the process to ensure the real needs of the community are being met.

56 When the next planning policy statement emerged in December 1990 (exhibit 2233, described as 'Metroplan'), it did not include the Mount Lawley land in the proposed urban expansion areas. Rather, the configuration of the north-eastern corridor was equivalent to that which had been contained in the 1990 draft DPUD Statement. Metroplan expressly recorded that it was 'not a statutory plan' and that, instead, it provided 'a framework within which more detailed policies and programmes will be progressively refined' (page 93). It said that 'the most significant new growth [in areas other than the north-west and south-west of Perth] will be to the north-east - north of Midland, on either side of the Swan Valley'. It also pointed out that there was a need to protect natural wetlands, important wildlife habitats, areas containing significant flora or landscapes and the Gnangara underground water mounds (page 10).

57 The document recorded that urban expansion would be accommodated by widening existing corridors 'and by the development of a new north-east corridor north of Midland' (page 20). It referred specifically to the proposal for the development of Ellenbrook, as a 'major new urban settlement which will house up to 70,000 people' (page 36).

58 A map of proposed urban expansion areas (page 37), appears (as best we can make it out) to include only part of the Mount Lawley land as potential urban land, with the balance of that land being shown as additional open space (see also figure 9 on page 83 of the report).

59 In February 1991 Mr Garry Middle prepared a report (exhibit 2864) for the Water Authority of Western Australia and the Shire of Swan titled, 'Evaluating the Lentic Wetlands on the Swan Coastal Plain in the Shire of Swan'. This report refers to DPUD's intention to build new housing in the Shire of Swan. The report suggests that it will provide the Shire 'with an important planning tool to help with wetland protection' (page 5). It refers to the Lexia wetlands (extending over part of the Mount Lawley land). Mr Middle said, of these wetlands (page 18):

The Lexia wetlands are, most likely, a link system, both hydrological and as a wildlife habitat, and as such may well be unique as a largely intact wetland/dryland system. Given that this area may be developed for housing, it is important that this 'system' nature of this area is studied in more detail. Further, given the C [conservation] rating of these wetlands, any development will need to be carried out in a way that maintains their important natural values.

60 In July 1991 Feilmans submitted, on behalf of Ellenbrook Management, a draft document titled 'Ellenbrook Public Environmental Review Report' (exhibit 0873) to the EPA. The trial judge considered this report (draft Ellenbrook PER) to be significant because it recognised the conservation significance of 400 hectares of the Mount Lawley land. Page 4 of the draft Ellenbrook PER reads as follows:

A detailed analysis of the wetlands was conducted to establish the nature of the vegetation. It was found that the vegetation associations and assemblages, while not being particularly significant in themselves, have considerable conservation value because of the small number of remaining wetlands on the Coastal Plain. The management issues involved in retaining all or some of the wetland area have been assessed and the conclusion reached that the best approach will be to preserve an area of approximately 100 ha by reservation under the Metropolitan Region Scheme. This is the portion of the total wetland area which exhibits the greatest diversity of characteristics and is best suited to long-term management. The total area which embraces the wetlands exceeds 400 ha and it has been concluded, following discussions with Officers from CALM that resources would not be available to effectively manage such a large area. Without adequate management the area would quickly deteriorate due to feral animal and weed intrusion.

61 The trial judge also took into account the fact that the report mentioned that the total area, 'which embraces the wetlands', included banksia woodlands which, while not 'particularly unusual', varied considerably in both physiognomy and species composition (page 31).

62 In September 1991 Mr Eugene Ferraro, a senior planning officer with DPUD, produced a file note (exhibit 1219) in which he discussed current issues relating to the Ellenbrook Project. The note reveals that the EPA had determined that the level of assessment required to evaluate the Ellenbrook Project was a Public Environmental Review (PER) and that the PER was currently being prepared. The file note recorded that, while the State Planning Commission would normally await the findings of the PER before deciding 'on the processing of an amendment', it had been agreed that the PER should be advertised concurrently with 'the MRS amendment'. Under the heading 'Regional Open Space', the note reads as follows:

One of the major landholdings (Mt Lawley) is affected by a wetland system which is considered to be of high environmental significance. The PER will recommend that the most important lake should be protected via a Regional Open Space Reservation. The amendment as submitted reflects the preservation requirements and proposes to rezone approximately 80 ha of land to Parks and Recreation.

This action will require the Commission to either purchase the land or pay compensation for injurious affection. The Commission has four options regarding this land.

1. Proceed with the amendment as submitted and commence negotiations to purchase the land affected.
2. Proceed with a modified environment which proposes to reserve only the land required for the reservation, with the balance remaining Rural, thus ensuring lower 'next best use' value.
3. Delete the whole of the Mt Lawley landholding from the amendment.
4. Include the whole of the Mt Lawley landholding within the Urban Deferred zone.

63 Mr Ferraro's note concluded by recording that the issues mentioned by him were not significant enough to warrant the amendment being delayed. He said that a decision could be made on the proposed zoning or reservation of the Mount Lawley land based on financial considerations, given that that land was 'not necessary to be included within the amendment to make the Ellenbrook Project viable'.

64 In October 1991 DPUD published a brochure entitled 'The North-East Corridor, Planning Issues and Growth Options' (exhibit 2238). The purpose of this brochure (DPUD brochure) was that of eliciting public response to two possible development options for the north-eastern corridor. The brochure described its 'main aim' as being 'to start people talking about the issues and get feedback from the local community'. The options identified (which were broad in concept) were respectively a 'linear option' and a 'cellular option'. Drawings in the brochure reflecting these options appear to show that a little less than half of the Mount Lawley land would become urban, with the remainder being designated as 'rural, conservation and open space'. However, as the trial judge pointed out, the possible urban areas are different in the case of each option and neither drawing reflects the proposed reservation then under consideration [182]. Moreover, the brochure recorded that 'it will be important to make sure that the whole range of environmental factors is taken into account and important landscape and environmental features are preserved'.

65 In a letter dated 23 October 1991 (exhibit 2396) addressed by him to the executive director of the EPA, Mr A D Briggs, who was the district manager for the Perth district of CALM, commented on the draft Ellenbrook PER. He made two comments of significance for present purposes. The first was that, because of the significance accorded by the draft Ellenbrook PER to the wetlands, 'the north-west wetlands should be reserved to include the surrounding sand dune ridge'. He said that this would provide a buffer against the possible introduction of die-back and preserve a natural vegetation filter and ecosystem supporting the wetland. The second comment of significance was that he took exception to the inference that CALM's resources would be inadequate to justify reservation of more than 90 hectares of the 400 hectares identified as having wetland conservation value.

Meetings of the Metropolitan Planning Council in November and December 1991 and approval of the amended plan

66 On 6 November 1991 the Metropolitan Planning Council resolved to advertise the proposed Amendment 879/33. This was so notwithstanding that there remained many outstanding issues. The minutes of the meeting (exhibit 2120) record that:

The ... discussion focussed on the various issues which had not yet been fully resolved, and in respect of which it may be considered premature to proceed with the proposed amendment at this time. Such issues included the proportion of the wetland areas which should be included in the Parks and Recreation Reservation and the feasibility of managing a large reserved area; drainage and nutrient management requirement; the effects of high levels of traffic over the groundwater mound; the need to ensure that all servicing requirements have been fully considered; the need to examine employment creation initiatives which might be pursued; the possibility that the draft Public Environmental Review report may require further work to reach an acceptable form, and that changes to the area presently proposed for Urban Deferred zoning could result; and the need to make provision for approval of the relevant authorities and any special arrangements which may be required to facilitate inclusion of the State Forest land in the Amendment.

67 At its next meeting, on 4 December 1991, the Metropolitan Planning Council noted that the Minister for the Environment had decided that State forest land should not be included in the proposed amendment and that this required a modification of the plan. Concern was expressed, at that meeting, that the rezoning of the Ellenbrook land was premature. The minutes of the meeting reveal that the proponents of the Ellenbrook Project were to be told that, before the amendment was finalised, various issues were to be addressed, including:

Resolution of Environmental Issues including the identification of all land to be set aside for wetland protection, and preparation of a drainage and water resource management plan including land within or which may be affected by the proposed amendment.

The minutes also recorded that the State Planning Commission considered that the proposed urban deferred boundary might require further modification to reflect the findings of the PER.

68 Mr Raymond Stokes, the urban development coordinator of the metropolitan branch of the Planning Services Division of the DPUD, attended the meeting of the Metropolitan Planning Council on 6 November 1991. He gave evidence at the retrial. He had been employed by the DPUD (and its successor body, the DPI) for some 27 years. In his evidence, he said that the advertisement of the proposed amendment and the postponement of outstanding issues was 'very, very unusual'. Notwithstanding this, the amended plan was approved by the Minister for Planning, Mr David Smith, on 9 January 1992, albeit with some misgivings. Mr Smith said, in the course of his evidence at the retrial, that at the time he had thought that the reservation of 90 hectares of the Mount Lawley land would be inadequate and that the amount of land reserved should have been 'somewhere between 250 and 450 ha'.

69 The proposed Amendment 879/33 was gazetted on 31 January 1992 (exhibit 0815). It was publicly advertised between February and May 1992. The gazette reveals that the effect of the proposed amendment on the MRS was to exclude various lots in the Shire of Swan from the 'Rural' zone and to include them in the 'Urban Deferred' zone and the 'Parks and Recreation Reserve' as shown on State Planning Commission Plan No 2.0686/5. This plan shows the Ellenbrook land as being zoned urban. The vast majority of Mount Lawley Lot 46 is shown as falling within an urban zone. Two-thirds of Lot 47 and the remaining portion of Lot 46 is shown as being reserved for parks and recreation. The balance of Lot 47 is shown as being zoned urban.

70 It is apparent from a letter dated 4 February 1992 written by DPUD to Mount Lawley and a briefing note prepared by Mr Hatt for the Minister of Planning on 11 March 1992 that a number of issues remained outstanding at that time. These included the resolution of environmental issues, including the identification of the land to be set aside for wetland protection, the preparation of a drainage and water resource management plan and the prospect of further changes to the proposed urban deferred boundary depending upon the findings of the PER. The draft Ellenbrook PER that had been prepared by Feilmans was regarded as unsatisfactory. Also, the EPA then still had a number of concerns that required to be addressed, which were set out in a letter to Feilmans from Mr Rob Sippe of the EPA (exhibit 2405). One of these related to its belief that nothing had been done, or was proposed to be done, to evaluate, fully, the banksia woodlands between the wetlands. The EPA considered that an evaluation was required which would examine not only the wetlands as a functional habitat, but also their interaction with the woodlands within which they were found. Similar concerns had been raised by a group of local land owners known as the Ellenbrook Conservation Group.

71 On 10 April 1992 Mr Syd Shea, the executive director of CALM, wrote to DPUD with respect to the proposed amendment to the Scheme. The letter (exhibit 2447) complains that the plan to reserve only 90 hectares is based on an overly pessimistic view of CALM's resources. Mr Shea asked that the date for submissions on the Amendment be deferred until the PER had been published.

72 On 14 April 1992 a revised and enlarged version of the draft Ellenbrook PER prepared by Feilmans (revised Ellenbrook PER) was approved for publication by the EPA (exhibit 2213). This identified a number of wetlands and some areas of vegetation as having conservation significance. It noted that the total area of wetlands within the Ellenbrook Project area was about 410 hectares. However, notwithstanding what had been said by CALM, it reiterated that only some 90 hectares should be preserved by reservation under the Scheme because there would be inadequate resources to manage a larger area over the long term. The report identified the following four scenarios:

Scenario 1 includes the complete Lexia wetland system and covers about 410 ha of the proponents' land as well as about 90ha immediately to the north which is owned by others who are not a party to the proposed development. The northern portion is substantially bushland with some degraded farmland, and includes 4 wetlands. The proponents' land in this scenario is all bushland with several large and small wetland areas.

Scenario 2 is similar to Scenario 1, but limited to those wetlands which have been identified as 'lakes' under the EPA Draft Environmental Protection [Swan Coastal Plain Wetlands] Policy.

Scenario 3 is similar to scenario 2 but includes only those 'lakes' within the proponents' land.

Scenario 4 involves the preservation of a 90ha area which has been identified as containing most of the conservation values of the total system, and is of a manageable size and shape which will allow its conservation in the long term.

73 The report recommended the adoption of scenario 4. This was because it offered 'the opportunity for more intensive management and therefore greatly increases the likelihood of long-term maintenance of the conservation values in this area'. Scenario 1 was said to be 'not practicable in management or financial terms, or in terms of overall community cost'. The report argued that the 90 hectares exhibited most of the characteristics worth preserving.

74 On 4 May 1992 Mount Lawley lodged with DPUD a submission notifying DPUD that it had been unable to 'resolve equitable terms and conditions' with adjoining land owners and that it no longer supported the proposed Amendment 879/33. It asked that the Mount Lawley land be withdrawn from the Ellenbrook proposal. This submission was one of 183 received by the State Planning Commission in response to its advertisement. There were 175 objections, four supporting submissions and two submissions in which no clear position was stated.

75 On 2 June 1992 a report (exhibit 2097) was prepared by G J Keighery and A Burbidge, on behalf of CALM, in respect of the revised Ellenbrook PER. The report suggested that, despite the 'impressive size' of the PER, it was 'almost devoid of useful biological data'. The authors went on to say:

An area of such importance should be subject to a detailed fauna survey before any development is allowed to proceed. However, no fauna work has been carried out. Furthermore, there are no data from which to confidently extrapolate, despite claims to the contrary in the PER. However, two points are worth noting. Various amateur herpetologists have apparently recently recorded over 40 reptiles and amphibians in the study area during a very brief survey. This compares very favourably with the number (44) known from Yanchep National Park (the nearest comparable area for which data exist), and for which there is a long history of data collection including two detailed surveys. The Ellenbrook area is therefore of significance well above that claimed in the PER. It is likely that the area is also of considerable significance for other animal groups.

After making a number of other comments to similar effect, the authors of the report suggested that inadequate measures were proposed for reservation of all significant wetland types. They reached the following conclusion:

In summary, the document is entirely inadequate on which to make an informed assessment of conservation value of the area and expected impact of the development proposal. It is likely that the proposal would have a very significant detrimental environmental impact, and therefore should not be allowed to proceed.

76 On 28 August 1992 the EPA prepared a report (Bulletin 642) and recommendations to the Minister in respect of the Ellenbrook Project, pursuant to s 44 of the Environmental Protection Act 1986 (WA). Bulletin 642 (exhibit 0635) mentioned that 734 submissions had been received and that the principal issues raised had related, effectively, to conservation issues, and noted a growing view in the community that the remaining wetlands of the Swan Coastal Plain were essential for the maintenance of ecological systems and that strong action was needed in order to protect them. Recommendation 2 of Bulletin 642 was that the proponents should set aside approximately 450 hectares in order to protect the Lexia wetlands in the north-west corner of the proposal area, encompassing three quarters of the Mount Lawley land. The EPA advised the Minister to approve the proposal subject to the various recommendations made by it.

77 On 4 August 1992 a report (August 1992 DPUD report) on the submissions that had been received by the State Planning Commission in response to its advertisement was produced for the Metropolitan Planning Council by a regional manager of DPUD. This report (exhibit 2125) recommended that Amendment 879/33 be modified in accordance with plan 2.0686/6, referred to earlier in their reasons. It mentioned that objections in respect of 'the natural conservation of that land in the north portion of the amendment site' had 'dominated the public hearings'. Particular reference was made to a submission from the Australian Conservation Council to the effect that:

[P]resent research indicates that the wetland areas of the north of the site were high in conservation value due to the diversity of flora and fauna in the vegetated areas of the site ... further study needs to be completed of [sic] this area, however, [they] were able to identify the north-western corner of the amendment area as a priority for conservation; this being an area of over 400 ha containing wetlands and high quality banksia woodland.

Mr Hatt's letter and the revised amendment

78 On 1 September 1992 Mr Hatt wrote to the Minister for the Environment, commenting on the EPA's recommendation dated 1 August 1992. In his letter (exhibit 2539), he said that the Metropolitan Planning Council considered that the amendment 'now adequately reflects regional conservation interests by increased reservation for Parks and Recreation'.

79 On the same day Amendment 879/33 was revised (exhibit 2127). It reserved almost all of the Mount Lawley land for parks and recreation. The reservation coincided almost exactly with that recommended by the EPA in Bulletin 642.

80 On 13 October 1992 the Minister published a 'statement that a proposal may be implemented' (exhibit 0163) pursuant to s 45(5) of the Environmental Protection Act. The statement approved the Ellenbrook development, subject to conditions. One of these was that 'an area of approximately 450 hectares in the north-west corner of the site as indicated in Figure 4 in Environmental Protection Authority Bulletin 642 ... should be set aside to be reserved and subsequently vested in the National Parks and Nature Conservation Authority, the final boundary of which shall be to the requirements of the Minister for the Environment on the advice of the Department of Conservation and Land Management and the Department of Planning and Urban Development'.

81 In October 1992 the V & C Semeniuk Research Group prepared a draft report (exhibit 2224) on behalf of DPUD in respect of 'the northeast corridor study'. The objectives of the study were:

1. to provide preliminary guidance to DPUD on the protection of environmental, wildlife and landscape conservation values associated with urban development proposals for the Northwest, Southwest, Northeast and Southeast corridors, and the Foothills Area; and
2. to develop indicative parameters that ensure that the design of urban areas, drainage systems and management of water resources is consistent with the protection of designated environmental and wildlife values.

82 The report 'strongly recommended' that the Ellenbrook wetlands be conserved. The area recommended to be reserved encompassed all of the Mount Lawley land as well as other land in the northern half of the proposed Ellenbrook development. The report was never finalised because of a 'falling out' with DPUD. The proposal to reserve the land identified was never seriously considered by DPUD.

83 On 16 October 1992 the Scheme was amended in accordance with the gazettal on 1 September 1992 and the vast majority of the Mount Lawley land was excluded from the 'Rural Zone' and included in 'Parks & Recreation Reservation'.

Evidence accepted by the trial judge concerning the suitability of the Mount Lawley land for development

84 After a careful analysis of much of the evidence, the trial judge reached a number of conclusions in relation to the suitability of the Mount Lawley land for development. These are expressed in [624] of his reasons and summarise the effect of the evidence to which he referred. That paragraph reads as follows:

In my view, it may be assumed that the hypothetical prospective purchaser of the reserved Mount Lawley land in May 1996 would have made enquiries which established the following facts:

(1) Some 75 ha of the land constituted wetlands which were protected under the Lakes EPP.

(2) It could be argued that the boundaries of the wetlands on plan 1815 had been mapped inaccurately in 1991, or had changed subsequently due to changes in the level of the water table. However, there would be little prospect of persuading the EPA to amend the Lakes EPP.

(3) Although the Lakes EPP did not prohibit development of wetlands, there was a presumption against it: and the EPA was likely to oppose development in this case, having regard to its view that the Lexia wetlands generally were of high conservation value. The EPA's view was arguable, but it was justifiable on the evidence: in particular, the unique combination on the Swan Coastal Plain of the size and pristine quality of the wetlands and their proximity to each other.

(4) The upland areas surrounding the wetland basins were well suited for urban development, being elevated and well drained.

(5) The vegetation on the upland areas was banksia woodland in very good condition.

(6) Large areas of woodland of that kind, containing the Heddle vegetation complexes to be found on the reserved Mount Lawley land were present in secure reserves elsewhere, but not in association with such a substantial group of wetlands in such pristine condition.

(7) There were no priority flora on the Mount Lawley land.

(8) The wetland areas provided a habitat for the Southern Brown Bandicoot, which was a protected species. This would not preclude development, but it would be necessary in any development to ensure that the habitat was preserved, and adequate corridors provided, to ensure free movement of the Bandicoots.

(9) It would be a requirement of any development that vegetation buffers be provided round the wetlands. Although the width of the buffers might be a matter for negotiation, the EPA's usual practice was to require the minimum width of 50 metres when wetlands were included in an urban development. This would involve some 50 ha of land.

(10) Other agencies - and CALM in particular - were more conservation inclined than the EPA, but only the EPA was empowered to prevent development, or to impose onerous conditions.

(11) Before any development could proceed, it would be necessary for a full environmental assessment to be carried out. This would enable all interested authorities, organisations and individuals to make submissions, which the EPA would take into account in considering its attitude to development.

(12) Subject to these matters (which amounted to a considerable qualification), some 195 ha of the Mount Lawley land would be suitable for development.

85 None of what is said in subpars (1) to (11) is challenged. As to subpar (12), it is common cause that the reference to 195 ha of the Mount Lawley land should be one to 175 ha of that land. It is consequently common ground between the parties that there were 175 ha of dryland that were suitable for development (if looked at in isolation). We have said that it is also common cause that 75 ha of wetlands could not be used for development and that there would have to be a 'buffer' zone of at least 50 hectares (any greater amount would have to be drawn from the 175 ha of dryland that were otherwise suitable for development). However, the appellant relies upon what was said by its experts at the trial in support of the proposition that it was not correct to suggest, as the trial judge did in subpar (12), that the matters raised in (1) to (11) amounted to 'a considerable qualification'. We will return to this last issue later in these reasons.

86 The trial judge dealt with some of the evidence that had been given with respect to the suitability of the reserved Mount Lawley land for development [361] - [369]. He accepted that the reserved land was suitable for development ([361] of his reasons). Evidence to that effect had been given by Mr Timothy Auret, an experienced town planning consultant who had practised in that discipline for over 35 years. The trial judge said [363]:

Mr Auret's evidence at trial was that at the time, while he recognised that there was significant remnant vegetation on the site of the proposed Ellenbrook project (including the Mount Lawley land), the land was elevated and was 'superb urban land' (TS 4065): absent any conservation factors, it would have been responsible planning to zone the land urban or urban deferred. In his evidence at the retrial, Mr Auret said he would have to qualify this opinion, but only to the extent that it would be subject to there being no other strategic reason not to develop the land (TS 9113). I accept this evidence, which is consistent with the policy of the State Government in wanting to expedite development in the north-east corridor.

87 The trial judge went on to refer to evidence that had been given by Mr Ian Weaver, an experienced civil engineer and hydrologist. His evidence supported the proposition that the Mount Lawley land was capable of supporting development. He had said that, through the adoption of appropriate management methods, the Mount Lawley land was 'readily developable for urban residential purposes, albeit at a cost that is likely to be higher than the median broad-acre cost for Perth residential lots'. The trial judge accepted Mr Weaver's evidence [368].

88 Then, having considered other evidence led at the trial, the trial judge concluded that the hypothetical prospective purchaser of the Mount Lawley land in May 1996 would not have regarded the wetlands on that land as having any potential for development [460]. No issue is taken with that conclusion for the purposes of this appeal.

89 A number of witnesses gave evidence at the retrial concerning the likely zoning of the Mount Lawley land were it not for the Scheme. We propose, at this stage, to refer briefly to the more pertinent of these. We will return to their evidence in more detail later in these reasons.

90 As we have mentioned, at the time of the retrial Mr Stokes was the urban development co-ordinator at DPI. He gave evidence on behalf of the respondent. He took into account a number of considerations, including the Corridor Plan Review conducted in 1987, the 1990 draft and final DPUD Statements, Metroplan and a North East Corridor Structure Plan that was published in March 1994 (1994 Structure Plan). He concluded (par 216 of his statement) that, if the Mount Lawley land had not been reserved by Amendment 879/33 in 1992, it would, in any event, have been reserved for parks and recreation by a subsequent amendment to the MRS. He also said in the course of re-examination (ts 9213 - 9214) that, if the Mount Lawley amendment had not been initiated, it was likely that the respondent would itself have initiated a similar amendment after 1994.

91 Mr Stokes said that, if the Ellenbrook land had not been rezoned, it was highly unlikely that the State Planning Commission would have contemplated rezoning of the Mount Lawley land in isolation (assuming that it would have contemplated the rezoning of that land at all).

92 Mr Peter Goff, a town planner, prepared a report dated 31 May 2005 (exhibit 3008) that was tendered at the trial on behalf of the appellants. In his report (par 1.0) he identified reports to which he had had regard concerning the environmental characteristics of the Mount Lawley land (we will return to this aspect of his report later in these reasons). He set out his understanding of 'The Form of Perth's Development' (par 4.0), in the course of which he referred, amongst other things, to the Corridor Plan Review. He referred (par 5.0) to the zoning of what he regarded as being similar land. He also summarised the planning history of the north-eastern corridor, in the course of which he again referred to the Corridor Plan Review. He also referred to the 1990 draft and final DPUD Statements, to Metroplan and, amongst other documents, to the DPUD brochure. He expressed his opinions in par 7.0 of his report. His ultimate conclusion (in par 7.5) reads as follows:

Having regard to the general suitability of Lots 46 and 47 in terms of the lack of impact from 'global' constraints, the change in planning philosophy recognisable in the Review of the Corridor Plan in 1987 onwards containing the extension of the city's urban corridors and introducing a North-East corridor, I conclude that Lot 46 and the subject portions of Lot 47 would in all probability have been zoned 'Urban' at the relevant dates of 12 February and 9 May 1996. Urban development in the form of housing with associated retail centres, schools and open spaces, in my opinion, represents the highest and best use of the land at 1996.

93 In his oral evidence (TS 9041), the following exchange took place during the course of cross-examination:

In paragraph 7.5 of your report ... you venture the opinion that in all probability ... lot 46 and the subject part of lot 47 would ... have been zoned urban at the relevant date of 12 February and 9 May 1996. Mr Goff, from what you've told us, does that assume a relatively smooth progress of Ellenbrook?---Well, again, the assumption I made was that the MRS amendments that had gone through and rezoned Ellenbrook and reserved the Mount Lawley land had not in fact gone through. My view was that the imperatus that led to those amendments being initiated in the first place would still have been there and that there would have been another amendment process commenced at around about the same time leading to the land being rezoned at those dates.

94 Mr Auret, in the course of his oral evidence at the retrial, referred (ts 9112 - 9113) to and effectively adopted what he had said at the first trial, to the effect that, were it not for the conservation factors of which he had given evidence, it would have been responsible planning to allow the Mount Lawley land to become urban or urban deferred. He had said, in this respect, that this was because the land was 'broadly within the context of the urban corridor that we had been planning ... ' (ts 4067 at the first trial). However, as we have mentioned, in his evidence at the retrial he said that he should have qualified that evidence by saying that it was correct, 'in the absence of any other strategic reason'.

95 We have said that Mr Singleton was the 'Director, Sustainability' at DPI. He had held that office since 2004. When cross-examined during the retrial (ts 9083), he accepted that the Mount Lawley land was deliberately excluded from consideration as a possible location for future urban development. He said that this was because of his recommendation, made as a result of the opportunity constraints exercise (referred to earlier in these reasons) that had been conducted prior to the Corridor Plan Review, that it should be included within a regional park. He also accepted that, if that recommendation had not been made, the land might possibly have been considered as a possible location for future urban development. He added that the area around the Mount Lawley land did not 'actually get heavily considered for a major growth area for urbanisation' in the Corridor Plan Review. He acknowledged that he was aware that consideration was given to the urbanisation of the land in the vicinity of the Mount Lawley land a few years later but said that he had, by then, moved into a different area of work.

96 Mr Smith, who, as we have said, had been the Minister for Planning (he held this office in 1991 and 1992), adopted evidence given by him at the first trial. That evidence (ts 912 - 913) was essentially to the effect that the wetland significance of the Mount Lawley land led to its reservation, that no serious thought was given to leaving the land zoned rural and that, if the land had no conservation value (contrary to his opinion that it had a 'very high conservation value') then it could have been zoned for urban purposes.

Evidence given by Dr Davies, Dr Tingay, Mr Bowman and Mr Goff

97 Five valuers gave evidence at the retrial. Three of them gave evidence on behalf of the appellant. These were Brian Zucal, Ian Rae and Philip Logan. Two of them gave evidence on behalf of the respondent. These were Keith Wilson and Bradley Carey.

98 The reports of each of Messrs Zucal, Rae and Logan were rejected by the trial judge. He regarded them as having been untenable and inadmissible. He said that they were inadmissible because, when considering the characteristics of the land, each had relied exclusively on opinions expressed by a consultant hydrologist, Dr James Davies, two environmental scientists, Dr Alan Tingay and Mr Martin Bowman, and Mr Goff. We will refer to the evidence of each of these witnesses before returning to the valuers and to the approach taken by the trial judge in respect of their evidence.

99 Dr Davies had been engaged by the appellant in order to assess the area of surface water in the wetlands on the Mount Lawley land. He concluded that only two wetlands were covered by more than 1000 square metres of water on 1 December 1991. Consequently, in his opinion these were the only wetlands that satisfied the criteria for classification as lakes set by the Lakes EPP. For reasons given at [374] - [381], the trial judge concluded that it would not have been reasonable for a hypothetical purchaser to commission the kind of investigation that had been carried out by Dr Davies. He accordingly found that Dr Davies' evidence was irrelevant and therefore inadmissible. He added that the potential for error in the modelling process conducted by Dr Davies was such that he could place no weight on it in any event [383] - [401]. There is no challenge to his findings in this respect. However, given that the appellant now concedes that the trial judge was right in his conclusion, referred to above, that 75 hectares of the Mount Lawley land constituted wetlands which were protected under the Lakes EPP, nothing now turns on this.

100 Dr Tingay produced a report (exhibit 31) on behalf of the appellant in September 1999. This contained an environmental analysis of the land use potential of the Mount Lawley land. In his report, Dr Tingay suggested that proposals which incorporated Environmental Protection Policy wetlands (EPP wetlands) within urban developments might be approved, if appropriate provisions were made for management. He considered three urban development options for the Mount Lawley land. The first did not allocate any wetlands for conservation purposes. The second allocated some representative wetlands for conservation purposes (Dr Tingay relied upon Dr Davies' conclusions in calculating how much of the wetlands should be set aside). The third assumed the existence of the Ellenbrook development and of the parks and recreation reserve within it and, on that account, was regarded by the trial judge as irrelevant. We will return to his reasoning in that respect later in these reasons.

101 Dr Tingay produced a second report dated 1 September 1999 (exhibit 32), in the form of a PER of the kind that might have been required had there been a proposal to develop the Mount Lawley land in 1996. He concluded that the wetlands on the Mount Lawley land:

(1) represent a very small proportion of wetlands within the Jandakot Suite which occur over a large geographic area on the Swan Coastal Plain;

(2) have relatively low conservation values compared to many other wetlands in the Jandakot Suite;

(3) are of types which are well represented in reserves or on land owned by the Commonwealth or State Governments;

(4) are of types which are well represented in the nearby Melaleuca Park;

(5) in only two cases satisfy the criteria for inclusion in the Environmental Protection (Swan Coastal Plain Lakes) Policy, 1992; and

(6) are not of national or regional conservation significance.

(The paragraph numbers were not in the report but were added by the trial judge for ease of reference.)

102 The trial judge was critical of each of these conclusions [442] - [449]. For present purposes, it is necessary to refer only to his comments in respect of conclusions (3) and (4). These were as follows [446] - [447]:

As I have noted above, Dr Tingay appears to have taken into account the fact that some of the Lexia wetlands have been preserved in the Ellenbrook development. This, of course, is irrelevant for present purposes: the Mount Lawley land is to be valued on the basis that Ellenbrook did not exist.

The fact that Jandakot suite wetlands have been preserved in Melaleuca Park says nothing about the quality of those wetlands.

103 Dr Tingay produced a third report in January 2005 (exhibit 3005) which repeated much of what had been previously said by him. However, conclusion (6) of the earlier report was replaced by a conclusion to the effect that the wetlands on the Mount Lawley land exhibited 'a high degree of similarity in terms of vegetation types associated with the different wetland types across the properties'.

104 It is obvious from the trial judge's comments in respect of Dr Tingay's evidence that he placed little reliance on it. More importantly, he regarded exhibit 32 (the second report, in the form of a PER) as being inadmissible. He said (in an appendix to his reasons) that this was because the report was based on a false premise. In par 1.3 of the report Dr Tingay had set out two assumptions that he had made in the preparation of his environmental assessment, being that:

• The rezoning of Lots 46 and 47, and the submission of this report, would have occurred prior to 7 May 1996, the date on which the Western Australian Planning Commission (WAPC) elected to purchase the properties, and
• The properties had not been reserved as Parks and Recreation.

It seems, from the introduction to the report, that the rezoning to which Dr Tingay referred was one to urban (par 1.1 of his report) and, as we have said, that the report was of a kind that would be submitted to the EPA for its assessment of a proposal for urban development. The trial judge found that this was a false premise 'because the valuation must be carried out on the basis that as at May 1996, the reserved Mount Lawley land was zoned rural' (p 160). He also said that, because the hypothetical PER was based on the assumption that Ellenbrook and a nearby area known as Egerton had already been developed, this supported the contention (which had not been advanced on behalf of the respondent) that the report was inadmissible, as this assumption was 'impermissible'.

105 The trial judge said that, even if he was wrong in his hypothesis that the hypothetical PER was inadmissible, the environmental assessment contained within it was irrelevant, 'having regard to the extent and quality of the wetlands on the Mount Lawley land' as he had found them to be.

106 Mr Bowman, like Dr Tingay, expressed the opinion that in May 1996 the EPA would have been unlikely to approve a proposal to develop the whole of the Mount Lawley land. He said that a purchaser would consequently have expected to set aside some of the wetlands for conservation purposes. In considering how much of the wetlands should be set aside for that purpose, Mr Bowman, again like Dr Tingay, answered that question on the basis of Dr Davies' opinion that only two wetlands had satisfied the Lakes EPP criteria in December 1991. We have said that Dr Davies' opinion in this respect was found to be untenable by the trial judge. However, nothing now turns upon this, given that the trial judge's finding as regards the area of wetlands that meets the Lakes EPP criteria is not challenged.

107 Mr Bowman regarded Ellenbrook as having had environmental features that were reasonably comparable to those on the Mount Lawley land. He said that, in the Ellenbrook development, 22% of the land was proposed to be reserved for the purpose of protecting fauna linkages and wetlands. He considered that a similar percentage of the Mount Lawley land might appropriately be reserved. The trial judge could see no justification for that approach [458]. Moreover, he found that Mr Bowman's approach overlooked the fact that the Ellenbrook land fell within Amendment 879/33 and could consequently not be used as a comparable for the Mount Lawley land (also [458]). For these reasons he placed no weight on Mr Bowman's opinion.

108 We have earlier referred to Mr Goff's evidence (dealt with more fully later in these reasons). Because the trial judge considered (for reasons that we will later explain) that the development potential of the Mount Lawley land should be assessed as at May 1996 'on the assumption that the planning considerations of 1987 were still applicable' ([631] of the reasons), he regarded as irrelevant Mr Goff's evidence that, by May 1996, at the latest, the Mount Lawley land would have been rezoned so as to implement the north-eastern corridor structure plan.

109 In the appendix to his reasons, the trial judge said that Mr Goff's evidence was produced in order to assess 'the likely zoning of the (Mount Lawley) land as at 12 February and 9 May 1996' and, because of a direction given by the Full Court in the first appeal, this was an irrelevant consideration which rendered Mr Goff's report inadmissible. The direction to which he referred was seemingly that mentioned at [627] of his reasons, being what was said by the Full Court at [141] of the reasons given in the first appeal, as follows:

[W]hen the reserved Mount Lawley land is valued, as it must be, 'without regard to any increase or decrease, if any, in value attributable wholly or in part to the Scheme', it must be valued without regard to the fact that a substantial area of land was zoned Urban Deferred and, subsequently, developed.

We will return to this direction, and to the approach adopted by the trial judge in respect of it, later in these reasons.

110 The trial judge also concluded that, because Mr Goff's report dated 31 May 2005 was based on the opinions of Dr Tingay and Mr Bowman 'without regard to any evidence expressing contrary views', 'relevant matters' had not been addressed in that report. He said that it was consequently 'largely irrelevant' and hence inadmissible for this reason also.

111 That brings us to the evidence of the valuers. We will start with those called on behalf of the appellant. At this stage, it is necessary to mention only the principal assumption under which each of them operated. We will return to their evidence in more detail later in these reasons.

112 Mr Zucal valued the Mount Lawley land on the assumption that 260 hectares of that land had an urban zoning and was suitable for residential development, with 41.105 hectares comprising wetlands.

113 Mr Rae regarded the 'Urban Deferred' category as having been the most appropriate zoning of the Mount Lawley land, absent the Scheme. Based on Dr Tingay's report, he assumed that only 41.31 hectares should be set aside for wetland and appropriate buffers, leaving 259.795 hectares of land with urban potential.

114 Mr Logan valued 182.909 hectares of banksia woodland on the basis that it was suitable for urban or urban deferred zoning, 67.9473 hectares as comprising 'confirmed' conservation areas and 58.0906 hectares as representing lakes which did not qualify for inclusion in the Lakes EPP.

115 We have mentioned that the trial judge found that each of these valuation reports was inadmissible because reliance was placed by the respective valuers only on the opinions of Dr Davies, Dr Tingay, Mr Bowman and Mr Goff. However, he also said [656] that each of the appellant's valuers had adopted a position which he regarded as untenable, having regard both to his findings in respect of the development potential of the Mount Lawley land and to the direction given by the Full Court. As we have said, his findings in respect of the development potential of the Mount Lawley land were influenced by his opinion that this should be assessed on the assumption that the planning considerations that prevailed in 1987 were still applicable as at May 1996. One of the consequences of this, expressed at [640] of the trial judge's reasons, was that he relied upon the then preferred strategy that the north-east corridor should end some distance south of the Mount Lawley land and that the Homeswest and Sanwa lands should remain within a rural zone (exhibit 2110). We will return to these issues later in these reasons.

116 That brings us to the valuers who gave evidence on behalf of the respondent.

117 In his report dated 3 October 2005 (exhibit 2925), Mr Wilson said (par 61):

By disregarding MRS Amendment 879/33 there was no Ellenbrook New Town. Hence, a purchaser of the subject land would have purchased rural land with perhaps the prospect of urban potential, but with an expectation of having very high servicing costs to bring services to the land, or perhaps share those costs with an adjoining land owner, or alternatively wait until development had been established in the northeast corridor to bring services closer.

The trial judge found that Mr Wilson erred in taking the north-east corridor into account because this was a 'step' in the Scheme which he was obliged to disregard. However, because Mr Wilson had not placed much weight on that factor (in par 135 of his report he had concluded that an informed purchaser would have considered the property as having 'only a slim chance of achieving an Urban Deferred/Urban Rezoning'), the trial judge was prepared nevertheless to rely upon his valuation.

118 Mr Wilson relied on a number of potentially comparable sales identified by him. He applied a rate of $10,000 per hectare to the wetlands and surrounding buffers (which, he said, comprised 126.0649 hectares), based on the highest rural values applicable in the locality at the material time. Because he regarded the dryland areas (comprising 175.0401 hectares) as having some, albeit relatively remote, prospect of achieving urban development, he adopted a land value of $15,000 per hectare in that respect. This provided a total value of $3,886,251, which he rounded up to $4 million.

119 Mr Carey, too, took the existence of the north-east corridor into account. However, he regarded it as having no influence on the value of the Mount Lawley land. His recollection was that developers had regarded that corridor as one of the inferior strategic areas in which to invest. He said that, in 1996, developers would not have bought large areas of rural land unless its urban potential was clear. He expressed the opinion that, if the Mount Lawley land had no development potential, its value was somewhere between $8000 to $10,000 per hectare. However, he considered that a buyer would be prepared to pay a small premium against the possibility of future development. On this basis, he was prepared to adopt a value of $12,500 per hectare. This gave a rounded up value of $3,750,000.

120 The trial judge commented that Messrs Wilson and Carey, acting independently and approaching the valuation exercise on what he considered to be close to the appropriate basis, had reached remarkably similar conclusions as regards the value of the reserved land [688]. He considered it appropriate to adopt Mr Wilson's valuation because he thought that the valuation prepared by Mr Carey 'might have been a little too pessimistic in relation to access' to the Mount Lawley land [689]. He went on to say that, even if he was wrong in his opinion that the valuers ought not to have had regard to the north-eastern corridor, he would not have reached a different conclusion [691]. This was because the existence of the corridor had appeared to have little, if any, influence on their valuations.

The approach adopted by the trial judge in respect of the issue of valuation

121 We have already dealt with a number of aspects of the trial judge's judgment. However, it is necessary to give further attention to the approach adopted by him in respect of the issue of valuation. At [39] he said (rightly, with respect):

On whatever basis the value of the Mount Lawley land is assessed, it is the 'market value' which must be determined. As the Full Court said in the ... [first appeal] at [281], that is a convenient way of referring to the value to be determined by applying the principle derived from the decision of the High Court in Spencer v The Commonwealth of Australia [1907] HCA 82; (1907) 5 CLR 418. There, Griffith CJ held (at 432) that the value would be the price which would be paid by a man desiring to buy the land, to a vendor willing to sell for a fair price but not desirous to sell. Isaacs J added that the hypothetical purchaser should be prudent: and that both parties must be regarded as being 'perfectly acquainted with the land, and, cognisant of all circumstances which might affect its value, either advantageously or prejudicially ... ' (at 440 - 441).

122 He then proceeded to consider the basis upon which the land should be valued. He said, in that respect [48] - [51]:

The reserved Mount Lawley land must be valued in accordance with s 36(2b) of the Scheme Act. This requires the value to be determined without regard to any increase or decrease in value attributable wholly or in part to the Scheme.

The WAPC emphasises that s 36(2b) does not require or authorise the Scheme itself to be ignored: only the effect on value of the Scheme.

This construction leads to the submission that if the Scheme is not to be ignored, it is not permissible to inquire what the zoning of the relevant land might have been, had there been no Scheme. Hence the further submission that the Full Court was correct to direct that the value of the reserved Mount Lawley land should be determined by assessing the loss of potential resulting from the Scheme.

There is nothing novel in that approach. It reflects the judgment in Royal Sydney Golf Club v Federal Commissioner of Taxation [1957] HCA 31; (1957) 97 CLR 379, in which Kitto J was required to determine the value of land in the context of an appeal against a land tax assessment. The land was subject to 'restrictions on its use and enjoyment'.

123 Then he said that this approach to valuation should cause no difficulty if 'the Scheme' could be precisely identified, but that that was not always the case [53]. He referred at [54] - [64] to Wilson and San Sebastian and at [65] to the judgment of McClellan J in Smith v Roads and Traffic Authority of New South Wales [2005] NSWLEC 438. He went on to say [66]:

At [63] of his reasons, McClellan J set out his understanding of the 'traditional approach' to the application of the relevant principles. This involved the following steps:

'1 Identify the zoning of the land at the date of acquisition.

1. Determine whether that zoning was imposed or retained in order to facilitate the implementation of the public purpose for which the land was acquired.
2. If the answer to question 2 is yes, that zoning is notionally set aside, and the potential of the land and ultimately its market value is assessed by determining how the land would have been zoned, at the date of acquisition, but for the proposal to carry out the public purpose.' (my emphasis).

124 After mentioning that the then leading counsel for the appellant had submitted that the approach of McClellan J should be taken in the present case [72], he said [77]:

It is not clear from McClellan J's statement of the 'traditional approach', how the Court is to proceed if the answer to the question is 'no', and the zoning was (for example) imposed to ensure that the planning process recognised some feature or characteristic of the land. However, it could not then be appropriate to ask how the land would have been zoned, 'but for the proposal to carry out the public purpose'. That is because there would not have been a rezoning in those circumstances.

125 The trial judge went on to analyse a number of the cases concerning the approach to be adopted in establishing the development potential of land. Having done so, he effectively divided the possible cases into three categories. The first, which he said was illustrated by Murphy and by Fidler v Port Stephens Council [1998] NSWLEC 193 ([104] of the reasons), is one in which the subject land has no development potential because of its unique characteristics. The second is one in which land that was ideally suited for development was acquired for a public purpose, thereby destroying a potential which would otherwise have been realised [105]. The third is a category falling between those two extremes, being one in which land suitable for development from a planning perspective is acquired for public purposes because it also has (for example) some environmental attribute which warrants its conservation [106]. The trial judge went on to say that land falling within the first category cannot be valued on the basis of a zoning which would never have been permitted but that, in the second category of cases, it is appropriate to consider what the zoning would have been, but for the acquisition [107]. He added that in both cases the objective is to establish the development potential of the subject land, and value it accordingly [108]. This approach is, with respect, plainly correct and no issue has been taken with it.

In the present case, I think the question as to the correct approach may well be academic. Even if (as Mount Lawley contends) its reserved land should be valued on the basis that it would have been rezoned urban by 7 May 1996, that alone will not determine its value. The hypothetical purchaser would still want to be satisfied that the reserved land could be developed. And that (it is agreed between the parties) would require 'a formal environmental assessment' (exhibit 4025).

It follows, that even if the land is to be regarded as having some urban zoning, the environmental characteristics of the land are likely to be the crucial factors in the determination of its value. It is therefore necessary to consider these characteristics, in the context of the events leading to amendment 879/33.

127 He went on to consider events leading up to the gazettal of Amendment 879/33, before saying [242]:

In my view, the evidence summarised thus far relating to the history of amendment 879/33, leads to the conclusion that the part of the Mount Lawley land which was reserved for Parks and Recreation by amendment 879/33 was selected for reservation and subsequent acquisition because of its environmental characteristics, not simply because the State Planning Commission wanted to create or extend a park. Indeed, it is clear that the Commission had no such desire: at all material times, it was pressing to urbanise the Ellenbrook area to the maximum extent possible, and as quickly as possible.

It is equally clear that the reserved Mount Lawley land did not have some 'ineluctable quality' (to use the expression coined by the Full Court in the Mount Lawley appeal) akin to the turtle rookery in Murphy. That is to say, the land had no single feature or characteristic such that its development was either impossible to achieve or contemplate. I accept that if the reserved land did have some such quality, the proposed amendment which included only 90 ha of reserved land would not have been advertised.

129 Finally, in this respect, he said [247] - [250]:

'any conclusion that the reserved Mount Lawley land possessed no prior ineluctable quality which would have prevented its development does not establish that it would, absent the Scheme, have achieved Urban status ... on any view, the reserved Mount Lawley land was possessed of environmentally significant characteristics, even if not of the prior ineluctable quality previously referred to.' [2004] WASCA 149; (29 WAR 273 at [155] - [156])

Thus, the reservation recognises qualities having environmental significance, but does not exclude the possibility that the reserved land had some development potential. To that extent, the reservation affected its value. Equally, the rezoning of part of the Mount Lawley land and adjacent land could also have had an effect on its value.

It follows, that the Mount Lawley land should be valued on the basis that both the rezoning and the reservation (and the steps leading to them) are to be disregarded. That was the direction given by the Full Court: and in my view, the more recent decisions in Walker and Smith cast no doubt on the validity of that approach. This is not a case in which the second of the questions identified by McClellan J in Smith should be answered 'yes'.

Further, as the Full Court held, the reserved Mount Lawley land:

'must be valued without regard to the fact that a substantial area of land was zoned Urban Deferred and, subsequently, developed ... Put another way, the land must be valued on the basis that Amendment 879/33 and what followed from it never occurred.' [2004] WASCA 149; (29 WAR 273 at [141] - [142]).

130 The trial judge then turned to the question of what would have been known by the hypothetical vendor and purchaser. He concluded, first that the hypothetical prospective purchaser of the Mount Lawley land in May 1996 would have regarded the wetlands on that land as having no potential for development [460]. He said that this purchaser would also have assumed that there should be a protective buffer between the wetlands and the development, if any, on the remaining part of the land [487]. He said that, on this basis, the total area to be reserved would be 125 hectares (comprising 75 hectares of wetlands and 50 hectares of buffer) [602]. Having considered a great deal of evidence concerning the dryland areas, the trial judge went on to conclude that, subject to the matters to which he had referred, some 195 hectares of the Mount Lawley land was suitable for development [624]. That figure was, as we have earlier mentioned, presumably intended to be a reference to 175 hectares (unless it was intended to include in that figure the CAH land and the unreserved land).

131 The trial judge then turned to planning issues. After referring to what had been said by the Full Court in the first appeal (at [141], quoted above) he said [628] - [631]:

In my view, it is implicit in this direction that those steps which led to the amendment and which affected the value of the Mount Lawley land must be disregarded also, on the Pointe Gourde principle.

Those steps clearly included Metroplan, published in 1990, which both identified the north-east corridor and apparently excluded the Mount Lawley land from it. The Corridor Review Plan of 1987 should also be disregarded, because it gave an indication that the whole of the Mount Lawley land might be reserved.

As I have noted above, it is common ground that 1987 is the appropriate starting point for the identification of 'the Scheme' for the purposes of s 36(2b) of the Scheme Act. That, I think, is as it should be: although the parties have different reasons for adopting that position.

In my view, therefore, the development potential of the Mount Lawley land should be assessed as at May 1996, but on the assumption that the planning considerations of 1987 were still applicable.

132 We have earlier mentioned that the trial judge then went on to disregard, for the reason given by him in [631], the evidence of Mr Stokes concerning the likely rezoning of the Mount Lawley land and also that given by Messrs Goff, Auret, Singleton and Smith [632]. Then, after mentioning that the preferred strategy in 1987 was that urbanisation along the north-east corridor would end some distance south of the Mount Lawley zone [640], he said [641]:

In these circumstances, I consider that the hypothetical purchaser would be only cautiously optimistic that there was some potential for development of part of the Mount Lawley land, in conjunction with neighbouring landowners at some indeterminate time, which might be well into the future. Such optimism would no doubt reflect the knowledge that Perth was a rapidly expanding city, but would be tempered by the knowledge that the planning strategy then in place, involved expansion into urban corridors some distance away.

133 Finally, the trial judge turned to the valuation evidence, in respect of which he arrived at the conclusions to which we have earlier referred.

134 That brings us to the grounds of appeal and cross-appeal and also to the respective notices of contention, to the extent that they need to be considered at this stage. Grounds 4, 15, 18, 19 and 20 have been abandoned, as have parts of grounds 5, 14 and 21. As we have mentioned, it is unnecessary to consider grounds 22 to 24 at this stage. It is also unnecessary to consider the cross-appeal and the notice of contention lodged in respect of it at this stage, as these relate to valuation issues (where there is any overlap, this will be dealt with in the course of dealing with the grounds of appeal). The same is true of contention 2 in the respondent's notice of contention. However, we should set out the terms of contentions 1, 3, 4 and 5 in that document. These read as follows:

(1) The trial judge's finding at [624] [being the findings to which we have referred concerning the facts that would have been known to the hypothetical prospective purchaser of the reserved Mount Lawley land in May 1996] should be upheld on the additional/alternative bases:

(a) the consistency of earlier reviews of the land's environmental value;

(b) the unusual number of floristic community types on the land;

(c) the width of buffers should be 100 m to ensure sustainability; and

(d) the existence on the land of vegetation at the extremes of habitats.

...

(3) The trial judge's findings on the evidence of Logan,

Rae and Zucal: [656]; Goff: p 154 [where he found that Mr Goff's report dated 31 May 2005 was inadmissible] should be upheld on the additional ground that each made assumptions inconsistent with the Pointe Gourde/San Sebastian cases, and hence also inconsistent with the Full Court in Mount Lawley.

(4) The trial judge's findings on the evidence of Goff: p 154 should be upheld on the additional ground that his evidence was directed at showing, as a matter of fact, that the land would have been rezoned by May 1996.

(5) The trial judge's findings at [249] [quoted above] and [632] [rejecting the evidence of Messrs Stokes, Goff, Auret, Singleton and Smith concerning the likely rezoning of the Mount Lawley land so as to implement the north-eastern corridor structure plan], relying on [627] [the direction given by the Full Court], should be upheld on the additional ground that any alternative finding would be inconsistent with the Full Court's reasons in general.

Planning considerations (grounds of appeal 1, 3 and 16)

135 We propose to deal, together, with grounds 1, 3 and 16 of the grounds of appeal. The gravamen of these grounds is as follows.

136 Ground 1 contends that the trial judge erred in holding that the development potential of the Mount Lawley land should be assessed as at 7 May 1996 (the valuation date), on the assumption that the 1987 planning considerations were still applicable. The appellant contends that he should have assessed the development potential of the land at the valuation date on the basis of the planning considerations prevailing at that date and upon the hypothetical state of affairs which would have existed at that date 'while ignoring the Scheme ... and its steps'.

137 Ground 3 contends that the trial judge made inconsistent findings and engaged in inconsistent reasoning in assuming that the 1987 planning considerations were still applicable, but taking into consideration 'restrictive planning considerations which arose or applied only after 1987', some of which he was not entitled to take into account because these were 'steps in the Scheme or relating to such steps'.

138 Ground 16 contends that the trial judge erred, and made inconsistent findings, 'in finding that the identification by the government in 1987 of the north-east development corridor was a step in the process of the reservation of the subject land' and that it should consequently be ignored. That ground also contends (somewhat opaquely) that the trial judge should have found that the only elements of the north-eastern development corridor to be ignored 'were all acts and representations by the planning authorities which dealt with the inclusion of the subject land in a metropolitan region park, where the acts or representations were made in connection with the north-east corridor plan or in documents dealing with the corridor'. The appellant also contends that the trial judge erred in holding that Metroplan, in the course of identifying the north-eastern corridor in 1990, apparently excluded the Mount Lawley land from it when, in fact, that document showed the land within the corridor or within the immediate northerly extension of the corridor. Next, the ground contends that the trial judge should have found that the identification of the north-eastern development corridor provided 'cogent admissible evidence of the urban development potential of the subject land at the valuation date'.

139 Finally, ground 16 contends that the trial judge erred in holding that the brochure published by the DPUD in October 1991 (exhibit 2238) was not directed at the identification of urban and other areas within the corridor but was only a means of asking if the community would prefer to live in a linear or cellular form of development. The appellant contends, in this respect, that the trial judge should have found that the brochure 'showed DPUD's ambivalence of approach to identifying areas which would become urban and those which would be conserved', that the State Planning Commission recognised the significant development potential of the land and that DPUD was contemplating urban development of the land.

140 We have said that it was common cause between the parties at the retrial that the 'steps' leading to the Scheme commenced during 1987. The then senior counsel for the appellant submitted (ts 9516) that 'the Scheme more or less relevantly commenced in 1987 with the planning document which identified the relevant land for inclusion in a regional park'. It seems to us that that proposition is highly debatable, for reasons that will become apparent. However, because the trial was fought upon this basis, we will deal with these grounds upon the assumption that the proposition is correct.

141 The most relevant document in 1987 is exhibit 2231, the Corridor Plan Review. We have earlier summarised the material contents of that document. On the face of it, it is difficult to see how any increase or decrease in the value of the Mount Lawley land that was attributable to that document can be regarded as being attributable, whether wholly or in part, to the Scheme. As we have earlier said, the authors of the Corridor Plan Review were invited to consider how the Corridor Plan could best be amended in order to serve as a strategy for developing Perth. While it also assessed the likely implications for the MRS, it was not a proposal to amend the MRS. It was no more than a general proposal, or a canvassing of options, that might, depending upon what strategy was adopted, ultimately lead to amendments to the MRS. Consequently, while the Scheme (gazetted some five years later) was attributable to this general proposal (and its nature as such is apparent, for example, from the warning to developers not to try to anticipate the outcomes of the review until the consultation process was complete), the reverse seems to us not to be true. Similarly, the fact that the review 'gave an indication that the whole of the Mount Lawley land might be reserved' (our italics) was not, in our respectful opinion, a sufficient reason for disregarding it, contrary to the conclusion arrived at by the trial judge at [629].

142 However, the appellant ran its case at the retrial upon the basis that any effect that this review had on the value of the Mount Lawley land was attributable to the Scheme. That was presumably a consequence of the fact that it identified the Mount Lawley land as falling within a proposed 'metropolitan park system'. The respondent contended that it was a step in the rezoning of the Ellenbrook land but not a step in the reservation of the Mount Lawley land. Whatever may have influenced each party in urging the trial judge to disregard this review, or part or parts of it, the fact that its effect on value had to be disregarded (or, in the respondent's view, disregarded only to the extent that it increased the value of the Mount Lawley land) did not mean that all factual information contained within it, obtainable from other sources, could not be taken into account. So, for example, the forecast that Perth would need 171,000 new dwellings by 2001 could be taken into account. So, too, could the recorded fact of the need for additional vacant land for building purposes. Regard could also be had to the fact that the protection of coastal wetlands then remained a high priority.

143 Also, even if the Corridor Plan Review was rightly regarded as the first step leading to the Scheme, that does not mean that planning considerations were frozen as from that date. While any subsequent step having an effect on value that was attributable to the Scheme had to be disregarded, other planning considerations that arose after 1987 and which could not be categorised in that way were not required to be disregarded. Consequently, if considerations of the latter kind led to the conclusion that, absent the Scheme and its steps, the zoning of the land which ultimately became subject to the Scheme would or might, in any event, have been changed, then this is a factor which should be taken into account in valuing the land. There is nothing to the contrary in the reasons of the Full Court in the first appeal. So, for example, it suggested at [140] that changes in value attributable to the Scheme should be disregarded, but said nothing in that paragraph (or anywhere else in the reasons) which should be taken as supporting the proposition that, once the first step in the Scheme had been identified, any subsequent considerations that affected, or might have affected, planning should necessarily be disregarded. Rather, what is said in each of pars [137], [156], [157], [159], [160], [162], [164], [165], [167], [185], [206], [212] and [223] appears to us directly to contradict that proposition.

144 Consequently, what was said in [631] of the trial judge's reasons, to the effect that the development potential of the Mount Lawley land should be assessed as at May 1996 on the assumption that the planning considerations of 1987 were still applicable, could only have been correct if those considerations had not altered since that time, putting to one side the Scheme itself and any steps in the Scheme, or its implementation, that affected the value of the land. We should say, in this respect, that, while the trial judge did not explain what he meant by the use of the term 'planning considerations', we infer from what he said that he referred to all authoritative reviews, plans and policies, or other objective factors influencing planning, in those documents identified by the parties that affected the zoning, or likely zoning, of the Mount Lawley land and the Ellenbrook land and/or the use or uses which might be permitted on those parcels of land.

145 When considering how planning considerations of this kind may have developed or altered after 1987 in such a way as to affect market perceptions of the value of the Mount Lawley land in respects which might be taken into account, it is self-evidently necessary to do two things. The first is to identify planning policies or other planning considerations that had an effect on the value of the land and that pre-existed the valuation date. The second is to isolate, and disregard, those effects on value that are attributable to the Scheme. That, in turn, requires consideration of a number of the documents that we have earlier referred to when discussing the background to, and development of, the Scheme.

The approach taken by the parties to the identification of steps in the Scheme

146 Before dealing with these documents, we should return to the way in which the parties respectively approached the question, at the retrial, of what were or were not steps in the Scheme.

147 We have said that both parties took a wide approach to the documents that were required to be disregarded. The appellant's approach is best reflected by what was said in pars 25 and 26 of its written outline of closing submissions at the retrial. These read as follows:

In the present case, prior to the reservation of the subject land in December 1992, from 1987 onwards there had been a multifaceted process involving steps and actions by many agencies of Government, all of which contributed to or formed part of the progressive scheme which culminated in reservation.

Those steps and actions included: reports of planning considerations of the proposed north-eastern development of the metropolitan region including the proposed metropolitan park scheme; identification of and investigations into the subject land for the purpose of its inclusion in the proposed metropolitan park scheme; and, administrative actions taken in the process of reservation of the subject land for Parks and Recreation. Each of these investigations and actions is directly or indirectly a step in the scheme by which the subject land was reserved and, accordingly, each of those steps must be disregarded for the purposes of determining the market value of the subject land as at the date of election to acquire. Steps taken after the date of reservation but which were affected by the fact of the reservation must be similarly excluded from consideration.

148 Documents were then listed that were said to amount to steps that should be disregarded. The list was said not to be exhaustive. It encompassed many of the documents to which we have already referred, including the Corridor Plan Review prepared in October 1987 (exhibit 2231) (but not the 1990 draft DPUD Statement released in May 1990 or the 1990 final DPUD Statement), Mr Sokolowski's appraisal (exhibit 2095), Metroplan (exhibit 2233), Mr Middle's report (exhibit 2864), Mr Briggs's letter (exhibit 2396), the gazettal of proposed amendment 879/33 (exhibit 0815), Mr Shea's letter (exhibit 2447), the revised Ellenbrook PER (exhibit 2213), the Keighery & Burbidge report (exhibit 2097), Bulletin 642 (exhibit 0635), the revised Amendment 879/33 (exhibit 2127), the Minister's Statement (exhibit 0163), the Semeniuk report (exhibit 2224) and the gazettal of Amendment 879/33.

149 No pattern is readily discernible from the excluded documents. At face value, the exclusion of the Corridor Plan Review and Metroplan is inconsistent with the failure to exclude the draft and final DPUD Statements, each of which referred to the north-eastern corridor. While that might be explained by the fact that the list was not exhaustive, it seems to us that the absence of the DPUD Statements from the list was deliberate. The approach which appears to have been adopted on behalf of the appellant at the retrial is one which sought to exclude any documents referring to the reservation of the Mount Lawley land but to take into account the existence, and likely extent, of the north-eastern corridor.

150 For the purposes of his opening address, the then senior counsel for the appellant prepared a schedule titled 'What is the Highest and Best Use of the Mt Lawley Land?'. The schedule provides a list of documents that were seemingly taken into account, including extracts from Metroplan, the DPUD brochure and other documents referring to the north-eastern corridor to which we have not previously referred. It seems plain, from that schedule, that the appellant sought to rely upon documents showing the urban potential of the Mount Lawley land (it expressly relied on the DPUD brochure) but sought to exclude anything showing the reservation of that land. That this was so is supported by the following extract from the then counsel for the appellant's opening address (ts 6595):

[J]ust as the Full Court said that one can go to the PER as a source of evidence of the underlying environmental condition of the land, one also goes to the conditions that existed at the time in a planning context without going to the amendment itself. One goes to conditions that existed at the time to ask oneself, 'But for the reservation what would the land have been used for?'

In other words you don't go to the amendment to the scheme but some evidence of the application of proper planning principle to the designation of the uses for which [the land] should be put is provided by what in fact happened, in other words just as you don't exclude the PER as evidence of underlying facts, nor do you exclude what has in fact happened as evidence of underlying facts, and you look for example, as we will see, at the pressure that was acknowledged at the time for the provision of new housing land to the metropolitan area.

151 Counsel for the appellant went on, a little later, to say (ts 6620; and see also ts 6627), after referring to par [4] of the reasons in the first appeal:

What is more significant about that paragraph, though, is the observation:

'It [the Mount Lawley land] is located in what has come to be known as Perth's north eastern corridor, this being one of the areas identified in the 80s for the expansion of the Perth Metropolitan area, and it's 25 kilometres north east of the City of Perth.'

That of course goes to what we might call the underlying planning considerations that would govern the highest and best use of the land.

152 There are many other references in the course of the then counsel's opening address to the north-eastern corridor (see, for example, ts 6636 - 6637, 6657, 6667, 6671 - 6673, 6738 - 6739). At no stage did he suggest that evidence concerning this corridor would have to be disregarded.

153 Counsel for the respondent, in the course of his written submissions in the appeal, suggested that the appellant's position at the retrial had been that the north-eastern corridor and the Scheme were one and the same thing. However, this is not borne out by the transcript, on our reading of it. Although the then counsel for the appellant was not always consistent in his approach to documents reflecting the existence of the north-eastern corridor (see, for example, ts 7050 where he appears to distinguish between the north-eastern corridor itself, on the one hand, and the circumstances that gave rise to it, on the other), it seems to us that the appellant relied upon the planning considerations that identified that corridor as a prospect and also on the circumstances that were likely to see it develop.

154 Counsel for the respondent particularly relied, in support of his contentions with respect to the appellant's position at the retrial, upon cross-examination by the then counsel for the appellant of Mr Stokes, as follows (ts 9168 - 9169):

But you didn't think that fact worthy of mention in your statement. Is that right?---I was advised and understood that I was to leave out of the statement events leading up to the MRS amendment.

But you've put in your statement the proposal in 1987 to reserve the land for a park, you have put in your statement the proposal in 1990 to reserve the land for a park, you've put in your statement all the planning documents that followed the reservation and reflect it. Why did you exclude the amendment in 1991?---I've answered the questions the best I can, that I was advised that I had to disregard the amendment for the purposes of my evidence, which is what I did. All the other documents stood independently of the amendment.

Mr Stokes, are you saying that the north east corridor structure plan that was published in March of 1994 and which showed this land as reserved for parks and recreation stood independently of the fact of its reservation in December 1992?---I didn't prepare the structure plan. As a document it stood independently. That may well have been that irrespective of the amendment, the land would have been reserved for parks and recreation anyway.

You didn't prepare the structure plan, did you?---No.

By then, it is the fact that the land had been reserved for parks and recreation, wasn't it?---Yes.

The structure plan could not possibly have done anything else than reflect that fact, could it?---Yes.

You can't possibly then maintain the proposition that the structure plan is independent of the amendment, can you?---I'm simply saying the documents were independent of the amendment. I'm not saying the train of events were independent.

Did somebody tell you that it was all right to put in your statements documents that depended upon and reflected the reservation but not the amendment proposed in 1991?---The advice I was given was to disregard the amendment, which is what I did.

But you weren't advised to disregard such things as the 1987 corridor review and the 1991 Metroplan [sic] that preceded the amendment?---No.

155 It seems to us, particularly from the words that we have emphasised, that this cross-examination was directed specifically at the use, by Mr Stokes, of planning documents that had shown the reservation of the Mount Lawley land. It provides no support for the suggestion that the then counsel for the appellant equated the north-eastern corridor with the Scheme.

156 We have referred to the appellant's written outline of closing submissions at the trial. As we have said, that document referred to the 'proposed north-eastern development of the metropolitan region including the proposed metropolitan park scheme' as a 'step in the scheme by which the subject land was reserved'. However, this seems to us once again to be intended to exclude references to the reservation and to the particular part of the proposed north-eastern development that encompassed it rather than to the existence, generally, of the north-eastern corridor and its likely direction.

157 The respondent's approach was, to some extent, the reverse side of the coin. At the retrial, counsel for the respondent suggested (ts 6751 and pars 19 to 20 of its closing submissions) that the trial judge was required to disregard the effect on the value of the Mount Lawley land of each of the following: the reservation of the Mount Lawley land; the rezoning of Ellenbrook to urban deferred in 1992 and to urban in 1994; the subsequent development of the Ellenbrook land; the reservation of some of the Sanwa land adjacent to the Mount Lawley land; and all of the steps in each of the preceding events. However, he appears not to have approached the issue by asking what were steps in the Scheme as a whole. Rather, he approached it by asking which events were steps affecting the value of the Mount Lawley land in the process of the reservation of that land, on the one hand, and which were steps affecting the value of that land in the process of rezoning the Ellenbrook land, on the other.

158 Counsel for the respondent also submitted, at the retrial, that only administrative acts performed by the relevant authority, or on its behalf, could be steps. He went on to submit (pars 151 - 152 of his closing submissions):

A step is something done or intimated by the authorities with a view to, in this case, reservation of some and urbanisation of other land.

It does not follow that everything done by the public sector (eg EPA or CALM) to publish environmental protection strategies and priorities is a relevant 'step' in the process towards reservation of certain parcels of land. Nor is it a step in the process to reservation that the market perceives that wetlands and pristine woodlands are unlikely to be developed, and devalues them accordingly. If the market devaluation is because of existing but generally expressed policy documents, nevertheless, the documents are not a step. (emphasis in original)

159 Upon this basis, the respondent identified the decision taken by it to adopt the EPA's recommendations made in Bulletin 642 dated August 1992 as the first step in the 'process of the reservation of the Mount Lawley land'. However it did not regard the Bulletin itself as having been a step in the 'reservation'. Surprisingly, the respondent contended that the revised Ellenbrook PER (exhibit 2213) was not a step in the 'reservation', notwithstanding that, in the first appeal, the Full Court had determined the contrary without any subsequent challenge by the respondent. The respondent also contended that the advertised revised Amendment 879/33 (exhibit 2121) was not a step in the 'reservation'. It is unnecessary to canvass its reasoning in that respect.

160 Next, the respondent submitted that indications in the 1987 planning documents of a proposed 'biological corridor' should not be considered steps in the reservation of the Mount Lawley land because that corridor 'did not eventuate'. These planning documents encompassed the Corridor Plan Review (including exhibit 2110, which was a figure in exhibit 2231 demonstrating the then preferred strategy in respect of the corridor plan) and Working Paper 17 (exhibit 2221). In the course of argument in the appeal the Corridor Plan Review was said by counsel for the respondent to have been one of the principal steps in the Scheme.

161 The DPUD brochure was also said by counsel for the respondent, at the retrial, not to have been a step in the 'reservation'. This was because it said nothing 'about the status' of the Mount Lawley land. However, in submissions made on behalf of the respondent in the appeal, the trial judge's view that this document was a step was accepted. So, too, were the 1990 draft DPUD Statement issued in May 1990, the final version of that document issued in November 1990 and Metroplan.

162 Counsel for the respondent also submitted, at the retrial, that a 'growing awareness' of the environmental importance of the wetlands on the Mount Lawley land was not a step in the 'reservation' (ts 6796 - 6797). He said that advice, views or stipulated requirements that were evidenced in particular documents in relation to the protection of wetlands were caused by consideration of environmental factors rather than by any desire to reserve the Mount Lawley land. He consequently submitted that none of Mr Sokolowski's appraisal, Mr Middle's report and the Keighery & Burbidge report was a step in the 'reservation'.

163 In contrast, he submitted at the retrial that the steps in the Scheme to rezone Ellenbrook from rural to urban deferred or urban went back to 1987, when the 'seeds' of the north-eastern corridor and the urbanisation of the district were first sown (ts 6780 - 6781, 6788). This approach seemingly equated the general plan for a north-eastern urban corridor with the Scheme, at least for the purposes of determining what were steps in it. So, for example, the respondent's counsel contended that, in 'convenient shorthand', the Scheme could be 'generally expressed as the urbanisation of the north-east corridor' (ts 9639). On this approach, the first step in the rezoning of the Ellenbrook land to urban deferred, and later urban, was said to be the Corridor Plan Review, as we have mentioned. Counsel for the respondent contended at the retrial that this review should be disregarded insofar as it elevated the value of the Mount Lawley land by informing the market that a north-eastern corridor was in prospect. Other documents that were said to be steps that should be disregarded so far as the rezoning of the Ellenbrook land was concerned were Working Paper No 17; Metroplan; the 1990 draft DPUD Statement; the 1990 final DPUD Statement; the DPUD brochure published in October 1991 and the first advertised proposed Amendment 879/33 (so far as it related to the proposal to urbanise Ellenbrook).

The appropriate approach to steps in the Scheme

164 That brings us back to what, in our opinion, is the appropriate approach to the more important of the documents to which we have referred (apart from the Corridor Plan Review, with which we have already dealt). We will deal with these in turn.

165 The first of these is exhibit 2221, Working Paper 17, published in November 1987, of which Mr Singleton was a co-author. We have said that its purpose was that of explaining the thinking behind the recommendations for the Metropolitan Open Space system and that Mr Singleton stressed the importance of wetlands and suggested that many wetland environments were being incorporated into new reserves.

166 This document was not a 'step' in the Scheme. As will be apparent from what we have earlier said, one of its purposes was that of identifying, generally, the constraints brought about by environmental, social and engineering factors, so that their composite effect on urban development could be assessed. That, in turn, made it possible to devise a more cohesive planning strategy for the metropolitan region. As is the case with the Corridor Plan Review, a document of that character might influence or lead to amendments to the MRS, but neither it, nor any impact which it might have had on the value of the Mount Lawley land, could sensibly be said to have been attributable to the Scheme, which, by then, did not exist as any form of definite proposal in respect of the land ultimately affected by it.

167 For similar reasons, the report prepared by Mr Sokolowski in August 1989 could not, in our opinion, be described as a 'step' in the Scheme (although, as we have said, the appellant contended that it should be so described), even if it could have affected the value of the Mount Lawley land. As its title made plain, this was only a preliminary assessment for the purpose of considering the creation of a possible nature reserve. While that document might have had some bearing on the ultimate form that the Scheme took, it could not be described as a step in the Scheme.

The 1990 draft and final DPUD Statements

168 The 1990 draft DPUD Statement released in May 1990 and the final version of that document released in November 1990 are important documents. We have said that these documents reassessed previous proposals in respect of urban expansion. We have mentioned that they listed many of the general planning considerations that had been set out in the 1987 Corridor Plan Review. We have said that they referred to 'the establishment of a major new urban growth area in the north-east'. We have also said that the trial judge accepted the respondent's submission that, insofar as the identification of the north-eastern corridor increased the value of the Mount Lawley land by creating a potential for development, it was a step in the Scheme and had consequently to be disregarded.

169 In our respectful opinion, that was an error (contributed to by the approach adopted, at the retrial, by the then counsel for the appellant in respect of the 1987 Corridor Plan Review and also by the approach adopted by counsel for the respondent to that document and to the two DPUD Statements). The Statements effectively did no more than reveal developments in the thinking that had attached to the Corridor Plan, in particular as regards the development of a north-eastern corridor. It consequently seems to us that any impact that these Statements, or either of them, might have had on the value of the Mount Lawley land could not be said to be attributable to the Scheme. Once again, the Scheme might have been attributable, at least in part, to these Statements, but the reverse was not true. They were general planning framework documents that affected a potential area wider then that which was subsequently encompassed by the Scheme. Neither of the documents could be regarded as a Scheme and, given their nature as no more than a framework for the development of more detailed policies and programmes, neither could be described as a step in any particular Scheme.

170 The same appears to us to be true of 'Metroplan' that emerged in December 1990. We have said that this document expressly recorded that it was 'not a statutory plan' and that it merely provided a framework for the refinement of more detailed policies and programmes. It assumed that more detailed planning strategies would follow, and that these would eventually result in changes to the Scheme. However, as we have said, both parties contended at the retrial that Metroplan was a 'step' in the Scheme and the trial judge accepted that contention. It is accordingly necessary to disregard this document (although not the geographical and social factors which led to its formulation) for the purposes of the appeal.

171 The report prepared by Mr Middle in February 1991 with respect to the Lentic wetlands (stagnant water such as lakes and swamps), although regarded by its author as an 'important planning tool', does no more than raise considerations that planners would later have to take into account. It is not a step in the Scheme, contrary to the submission made on behalf of the appellant at the retrial and during the appeal. Counsel for the appellant also submitted that it was irrelevant and inadmissible. However, it seems to us that it was undoubtedly relevant and admissible because it raised considerations affecting the Mount Lawley land that planners would have to take into account.

172 The report prepared by Mr Ferraro merely identifies a number of options concerning the Mount Lawley land. It is not a step in the Scheme (and nor do we understand either of the parties to have contended otherwise). In any event, it could have had no impact on the value of the land. It was a purely internal document.

173 The DPUD brochure published in October 1991 was also not a step in the Scheme. We have said that its main aim was that of generating community discussion concerning the general options identified with respect to the north-eastern corridor. The trial judge did not regard it as a step in the Scheme. In our respectful opinion he was right in that conclusion [182]. It was a general (and preliminary) planning policy document that was not specifically related to the area subsequently covered by the Scheme. However, the trial judge appears to have regarded the brochure as having had little significance, notwithstanding that it shows that the DPUD then contemplated (albeit on a preliminary basis) that a significant part of the Mount Lawley land (just under half of it) might be zoned urban [184].

174 The letter from Mr Briggs dated 23 October 1991 seems to us not to have been a step in the Scheme (contrary to the submission made on behalf of the appellant at the retrial and during the appeal). It is merely a recommendation from one government body to another, neither of which is a planning authority. In any event, there is no suggestion that anyone outside these bodies saw the letter. It could consequently not have affected the value of the land.

Metropolitan Planning Council meetings in November and December 1991

175 The significance of the minutes of the Metropolitan Planning Council meetings held respectively on 6 November 1991 and 4 December 1991 is only that they reveal that there then still remained many outstanding issues that needed to be addressed before Amendment 879/33 could be finalised, notwithstanding that a decision was taken to advertise the amendment. They are not steps in the Scheme, even if they were capable of affecting the value of the Mount Lawley land.

176 The gazettal of the proposed amendment on 31 January 1992 was a step in the Scheme. Any effect that that document had on the value of the Mount Lawley land was attributable to the Scheme. The amendment was a proposal that was seriously entertained by the Planning Commission. While there is a significant difference between that document and the final form that Amendment 879/33 took, so far as the Mount Lawley land itself is concerned, the advertised document was substantially similar to the eventual amendment, looked at as a whole, and is attributable to it. Consequently, its effect on value must be disregarded.

177 It is unnecessary, in this context, to consider the letter dated 10 April 1992 from Mr Shea to DPUD with respect to the proposed amendment. The letter could not have affected the value of the land.

178 Nor is it necessary to give any consideration to the revised and enlarged version of the PER report prepared by Feilmans on 14 April 1992 (or the draft that preceded it). In the first appeal, the Full Court found that this was a 'step' in the Scheme and that finding has not been challenged [136]. The report examined the proposal that was ultimately adopted (albeit in a varied form) and it was developed in order to obtain a more favourable zoning through an amendment to the Scheme. However, while regard may not be had to any effect which it had on the value of the Mount Lawley land, it does not follow that it was irrelevant, as the court observed in the first appeal [137] - [138]. It (and the draft that preceded it) set out various characteristics of the land which were plainly relevant to its value, irrespective of the Scheme.

179 The report prepared by Keighery & Burbidge merely sets out CALM's position with respect to the PER. We doubt that it amounts to a step in the Scheme (contrary to the submission advanced on behalf of the appellant at the retrial). In any event, it is an internal document that could not have had any impact on the value of the Mount Lawley land.

180 The appellant does not now contend that this document was not a step.

181 The report dated 4 August 1992 seems to us also to have been a step in the Scheme. It is attributable to the Scheme and recommends a modification to the proposed amendment.

Mr Hatt's letter, the revised amendment and the Minister's Statement

182 The letter written by Mr Hatt to the Minister on 1 September 1992 need not be considered in this context, as it could not, of itself, have impacted on the value of the Mount Lawley land. The revision of proposed Amendment 879/33 on that day was a step in the Scheme. The same is true of the statement published by the Minister on 13 October 1992 pursuant to s 45(5) of the Environmental Protection Act. As to this last document, while the trial judge took it into account, he did so only for the purpose of noting that it made no reference to fauna [581]. That seems to have played no significant part in his ultimate conclusions. Similarly, while the trial judge referred, on a number of occasions, to the revision of proposed Amendment 879/33, he seems to have taken no account of it for the purpose of assessing the value of the reserved land.

183 The Semeniuk draft report prepared in October 1992 seems to us not to have been a step in the Scheme (contrary to the submission advanced on behalf of the appellant at the retrial and in the appeal). It does little more than express the views of the Semeniuk Research Group with respect to a proposal that was never seriously considered by DPUD. In any event, it is difficult to see how it could have affected the value of the Mount Lawley land.

184 That brings us to an analysis of the three grounds to which we have referred. As to ground 1, in our respectful opinion the trial judge erred in assessing the development potential of the Mount Lawley land on the assumption that the 1987 planning considerations were still applicable. Planning considerations had not remained static since 1987. However, the approach adopted by the trial judge led him not only to disregard the 'steps' in the Scheme, but also to treat the position immediately prior to the first of the steps as if it was the position at the date of valuation.

185 This error had a number of consequences. The most material of these was that the trial judge took out of account the prospect that the 1987 planning considerations might have altered, in particular, by way of the growth of the north-eastern corridor. That, of itself, was a significant exclusion. While the extent to which it would or should have affected his valuation of the Mount Lawley land might be a matter for debate, it was a factor which, in our respectful opinion, had to be weighed in the balance, together with all of the other admissible evidence, in considering what, absent the Scheme and its steps, the development potential of the land would have been at the valuation date.

186 The position in this respect is to some degree bedevilled by the approach that was adopted by the parties at the retrial. We have said that, in our opinion, the effect on value of the Corridor Plan Review of 1987 and the Metroplan, which identified the likely growth of the north-eastern corridor, did not fall within the concluding words of s 36(2b) of the Scheme Act. If that is right, then were it not for the approach of both parties at the retrial, these documents should have been taken into account for the purpose of assessing the development potential of the Mount Lawley land. They were significant because they indicated the possible reservation of the land and because they demonstrated the likely direction of urban expansion.

187 There was other evidence that indicated the likely growth of the north-eastern corridor.

188 We have said that the appellant did not include, in its list of steps at the retrial, the 1990 draft or final DPUD Statements or the DPUD brochure. That was so, notwithstanding that each of these appears to have relied, at least in part, on the Corridor Plan Review. We have also said that the trial judge, too, did not regard the DPUD brochure as being a step in the Scheme, although he regarded it as having had little significance.

189 In his evidence (to which we will return later in these reasons), Mr Goff made it clear that, even absent the documents which demonstrated advances in the thinking concerning the north-eastern corridor, he considered that, when regard is had for the basic geographical features of the metropolitan area and the facts that had led to the form of the city's growth (all of which had been referred to in the first section of his report), there was 'a clear indication that the area [of the Mount Lawley land] has urban potential from just that geographical point of view' (ts 9008). Mr Goff also said that the DPUD brochure was 'the first document produced by a government agency which indicated the exact potential of the land in the area' (ts 9008). He expressed the opinion that the zoning process had been rushed and badly managed and that a better managed process might have produced a different outcome (ts 9042). All of this evidence seems to us to have been admissible and of sufficient weight to justify it being taken into account. Although Mr Goff's opinions depended, to some degree, on his examination of documents that either were, or were accepted to be, steps, as we understood his evidence he would have arrived at his ultimate conclusion even without regard to the Corridor Plan Review and Metroplan. To what extent the weight of that conclusion is affected if these documents are disregarded was, in our opinion, a matter for assessment by the trial judge.

190 Counsel for the respondent contended, during the appeal, that a finding excluding any evidence dealing with the development of a north-eastern corridor was supported by the evidence, including that of Mr Goff, which, he said, was to the effect that the Corridor Plan Review was the origin of the Scheme. He relied, in particular, upon the following exchange in the course of cross-examination of Mr Goff at the retrial in respect of the Corridor Plan Review (ts 9001):

But this is the document which is really the seed of the idea of the north-east corridor?---Yes.

Once that seed, so to speak, was sown through this document, it took root and led directly within eight years or so to rezoning of Ellenbrook and Egerton?---Yes.

The announcement in this document of the possibility of a north-east corridor, commonsense would have told you that the value of land in that neck of the woods would be elevated?---That's what you would expect, yes.

191 However, the fact that the Corridor Plan Review was the 'seed of the idea of the north-east corridor' says nothing about the Scheme itself. The fact that the rezoning of Ellenbrook and Egerton grew out of this document does not make it a step in a Scheme. As we have stressed, the Scheme might have been attributable to this review, but the reverse is not true.

192 Counsel for the respondent also submitted that the north-eastern corridor and the Scheme 'were always one and the same' (appeal ts 152). He contended that it follows that, when that corridor was identified in 1987, this was, in effect, an identification of the Scheme itself and, for that reason, the trial judge was correct to regard the planning considerations as being frozen as from 1987. Later in his submissions, he amended that proposition by describing the north-eastern corridor as Amendment 879/33, to the extent that it reflected the urban zoning of the Ellenbrook land (appeal ts 156; and see also appeal ts 158).

193 However, that analysis is inconsistent with the conclusion arrived at by the trial judge at [640]. As we have mentioned, he said that the preferred strategy of 1987, which proposed the north-eastern corridor, indicated that urbanisation in that direction would end at some distance south of the Mount Lawley land and that the Homeswest and Sanwa lands would remain within a rural zone. While counsel for the respondent contended that the corridor grew into the Scheme, and hence was the Scheme, that proposition sits uneasily with the fact that, in 1987, that corridor did not even reach the land that later became the subject of the amendment.

194 The respondent's contention is unsustainable for a number of other reasons also. There is, first, nothing to suggest that, with the gazettal of the Scheme, the north-eastern corridor was complete. The evidence is to the contrary. The Corridor Plan Review prepared in October 1987 does not mention a north-eastern corridor, although it does, as we have said, propose future urban development in a north-easterly direction. The Middle Swan area is identified as being one of the 'general localities' for 'possible' future urban development. Figure 64 of that document, which depicts future urban development areas, shows areas to the north-east of Perth different from, and more extensive than, the area that became Ellenbrook. Also page 122 of that document speaks of a 'North-Eastern Sector' and recommends significant urban development in, amongst other areas, the Middle Swan area which is said to include land to the east of the Swan Valley policy area, with a capacity for approximately 60,000 people.

195 An examination of the 1990 draft and final DPUD Statements reveals, beyond argument, that the areas identified for development in the north-eastern corridor cannot be equated with the Ellenbrook land. They are far more extensive than the Ellenbrook land and, as we have mentioned, the corridor is depicted as being likely to extend in the future. Counsel for the appellant identified a good deal of other evidence in support of this last proposition, in a schedule prepared for that purpose. It is unnecessary to refer to any of that evidence. The documents to which we have already referred are more than sufficient to demonstrate the unsustainability of the respondent's proposition in this respect.

196 Next, counsel for the respondent sought to support his proposition by saying that, at the date of valuation of the Mount Lawley land, what was then referred to as 'the north-east corridor' was almost identical to the Scheme. If that is so, it is a matter of little significance. As we have said, the question is whether the various documents to which we have earlier referred reflected 'steps in the Scheme'. That requires an assessment of the documents as at the date of their publication. We have stressed that a step must be attributable to the Scheme, not the Scheme to a step.

197 Finally, in this context, counsel for the respondent contended that, in the first appeal, the Full Court held, at [4], [6], [20], [140] and [141], that the proposed north-eastern corridor became 'the Scheme'. It is enough to say, in this respect, that the paragraphs relied upon do not bear that contention out. Nowhere in its reasons does the Full Court suggest that the north-eastern corridor became the Scheme. All that it said, as part of its preliminary narrative, was that the proposal submitted in 1990 was one for the rezoning 'of a substantial part of the north-eastern corridor' ([6] of its reasons). Counsel for the respondent also suggested that the trial judge reached the same conclusion ([26] and [31] of his reasons). That, too, is not borne out by those paragraphs. All that he said is that 'The Ellenbrook proposal proceeded through to amendment 879/33 to the Scheme' [26].

198 Before leaving this issue we should mention, for the sake of completeness, that the appellant seemingly contends by ground 16 (although not in oral submissions before us) that the Corridor Plan Review should have been ignored only to the extent that it disclosed that the Mount Lawley land was to be included in an area designated as parkland. That submission is unsustainable. If that document (and any other useable document addressing the proposed north-eastern corridor) was not a step in the Scheme, then the whole of it was useable for the purpose of assessing the value of the Mount Lawley land. In any event, as we have said, given its attitude to this document at the retrial, it is not now open to the appellant to contend (and we did not understand its counsel to contend) that the Corridor Plan Review was not a step in the Scheme for all purposes.

199 Finally, so far as ground 1 is concerned, we have mentioned that the trial judge relied upon the 'direction' which, he said [627], was given by the Full Court at [141] of its judgment to the effect that the Mount Lawley land should be valued 'without regard to [the effect on value of] the fact that a substantial area of land [at Ellenbrook] was zoned Urban Deferred and, subsequently, developed'. He said that it was implicit in this direction that 'those steps which led to the amendment and which affected the value of the Mount Lawley land must be disregarded also' [628] and that [629]:

Those steps clearly included Metroplan, published in 1990, which both identified the north-east corridor and apparently excluded the Mount Lawley land from it. The Corridor Review Plan of 1987 should also be disregarded, because it gave an indication that the whole of the Mount Lawley land might be reserved.

We will return to this 'direction' below, when dealing with other grounds, and explain why, in our respectful opinion, it did not have the effect contended for or detract, in any way, from what we have said above.

201 As to ground 16, it will be apparent from what we have said that it seems to us that the trial judge was in error in finding that the identification of the north-eastern corridor in 1987 (we take this to be a reference to the Corridor Plan Review) was a step in the process of the 'reservation' of the Mount Lawley land and should be ignored on that account. However, as we have also said, this contention is not now open to the appellant having regard for the position taken by it at the retrial. Also, we have already rejected the contention (which we understand to be put forward by ground 16) that the Corridor Plan Review should have been ignored only to the extent that it disclosed that the Mount Lawley land was to be included in an area designated as parkland.

202 The appellant also contends, by ground 16 (par 45), that the trial judge erred in holding that the DPUD brochure published in October 1991 was not directed to the identification of urban and other areas within the north-eastern corridor and was merely a means of asking if the community would prefer to live in a linear or cellular form of development. We have mentioned that it was for this reason that he regarded it as having little significance. In our respectful opinion the document was of some significance in that it revealed that the department responsible for planning was at least prepared to contemplate, if only on an indicative basis, that the areas depicted (encompassing the Mount Lawley land) might be zoned urban.

203 As to the contention that the trial judge was factually incorrect in saying [629] that Metroplan apparently excluded the subject land from the north-eastern corridor, it seems to us that, in that document, some part of the Mount Lawley land is shown as falling within that corridor. However, nothing turns on that issue given that, as we have said, the case was conducted upon the basis, accepted by the trial judge, that Metroplan was required to be disregarded in this respect.

204 Because of the conclusion at which we have arrived in respect of ground 1, it is unnecessary for us to consider the various contentions, advanced under grounds 3 and 16, concerning what are said to be wrong or inconsistent findings by the trial judge as regards the use to which evidence of events subsequent to 1987 might be put. Notwithstanding this, we will deal very briefly with the principal contentions that were advanced in that respect but which have not already been dealt with when dealing with ground 1.

205 The appellant contended, first, that the trial judge was inconsistent in his treatment of Metroplan. This is because, although he assumed, for the purposes of the valuation, that the 1987 planning considerations were still applicable, he made use of this document, published in 1990, for the purpose of taking account of the fact that the north-eastern corridor was not then proposed to embrace the Mount Lawley land. If the trial judge was not entitled to take the Metroplan into account because it was a step in the Scheme (as both parties had submitted to him and as he accepted), then he was, in our respectful opinion, in error in taking into account the then boundaries of the north-eastern corridor depicted in that document.

206 Next, the trial judge is said to have had regard for the 1991 draft Ellenbrook PER, to the extent that it recognised the conservation significance of 400 hectares of the Mount Lawley land. This, too, was post-1987 material. However, as we understand his reasons, the trial judge relied upon this document essentially for the factual material contained within it. He was entitled to do so.

207 Counsel for the appellant also pointed to what he identified as another inconsistency in the trial judge's approach. The trial judge concluded that, on the evidence, the part of the Mount Lawley land which was reserved for parks and recreation by Amendment 879/33 was selected for reservation and subsequent acquisition because of its environmental characteristics, not simply because the State Planning Commission wanted to create or extend a park [242]. Similar comments were made by him in [141] and [144] of his reasons, in which he accepts the submission that the reservation of the Mount Lawley land 'simply gave effect to its characteristics' and 'was not driven by a desire to acquire the ... land'. However, notwithstanding these findings, he went on to conclude that the land had some potential for development ([641] of his reasons).

208 There is a degree of inconsistency in this logic only if the trial judge's findings (at [141], [144] and [242]) are read as expressing the opinion that the environmental characteristics of the land made it inevitable that all of the land that was reserved would be reserved. As we understand him, the trial judge did not reach that conclusion. Rather, he concluded that the environmental characteristics were such as to make the reservation of the land almost inevitable, but that there remained some slight potential that part of it might be developed.

209 Counsel for the appellant next raised the fact that, because the trial judge took account of 'every authoritative assessment of the Lexia wetlands, including the wetlands on the Mount Lawley land' (see [468]), he necessarily took account of the Ellenbrook PER and the Semeniuk report published in October 1992, which, the trial judge said, 'was concerned with the north-east corridor, not only the Ellenbrook proposal' [469]. This is said to be inconsistent with the trial judge's conclusion that the proximity of the Mount Lawley land to the north-eastern corridor is not to be taken into account. However, it seems to us, once again, that the trial judge took account, primarily, of the factual content of the documents to which he referred, as shedding light on the physical and environmental characteristics of the Mount Lawley land. He was entitled to do so. We are not persuaded that, to the extent that he had regard to conclusions arrived at in the excluded document (we have said that the Ellenbrook PER fell within that category), these had any significant bearing on the outcome. There was never any realistic prospect that the wetlands would be developed and there is now no contest in that respect or as regards their extent and the need for a buffer zone around them.

210 The appellant also contends, by par 9(b) of ground 3, that the trial judge was not entitled to take into account evidence of Mr Stokes that it was 'highly unlikely that the (WAPC) would contemplate rezoning the Mount Lawley land in isolation' ([633] of the reasons). It is not clear what weight the trial judge placed on that evidence. However, because the appellant does not contend that the respondent would have contemplated rezoning the Mount Lawley land in isolation, this evidence seems to us to have been irrelevant to the outcome of the retrial.

211 Finally, we should mention that the appellant originally contended, by ground 3, that the trial judge was in error in taking Bulletin 642 into account ([465] of his reasons) as a consideration that was relevant to the development potential of the Mount Lawley land and, hence, as a consideration affecting its value. However, as we have said, that contention has since been withdrawn.

The zoning issue (grounds 5, 6, 7, 11, 12 and 17 and contention (1) of the respondent's notice of contention)

212 It is convenient to deal, together, with grounds 5, 6, 7, 11, 12 and 17 and contention (1) of the respondent's notice of contention. Each of these deals, in one way or another, with the issue of the likely zoning of the Mount Lawley land, absent the Scheme.

213 We will set out the principal contentions advanced in each of these grounds.

214 Ground 5 challenges the trial judge's ruling that it was impermissible to inquire what the zoning of the land might have been, had there been no Scheme.

215 Ground 6 contends that the trial judge erred (and engaged in inconsistent reasoning) by holding that the valuation of the Mount Lawley land must be carried out on the assumption that, but for the Scheme, it would have retained a rural zoning under the MRS and on the basis that it was zoned rural at the valuation date. The appellant contends that the valuation should have been carried out by determining the highest and best use of the land at the valuation date on the basis of its use and development potential. It submits that this should have been done by taking into account, as reasonable possibilities, what the zoning of the land would have been 'and/or whether a zoning sympathetic to the development potential of the land at or after the valuation date could have been obtained absent the Scheme and its steps'. The appellant contends that the highest and best use should have been found to be urban development in the dry land areas, with protective measures applying in respect of wetland and buffer areas.

216 Ground 7 contends that the trial judge erred in holding that the question of what zoning the Mount Lawley land would have had but for the Scheme might well be academic. The appellant contends that the questions of what the zoning of the land would have been, or what the prospects were of it achieving an urban zoning, but for the Scheme were material questions which should have been considered and decided. The appellant also contends that the trial judge engaged in inconsistent reasoning and made inconsistent findings in this respect because:

(a) he made other findings and rulings on the assumption that, at the valuation date, the Mount Lawley land would have retained a rural zoning but for the Scheme;

(b) inconsistently with the challenged ruling, he found, at [76], that it was necessary to ask the question what the zoning would have been, but for the reservation, in order to determine the basis for the valuation;

(c) his finding that the land was zoned rural at the valuation date led to the exclusion of evidence which should have been found admissible, as set out in ground 21; and

(d) on the basis of that incorrect finding, he wrongly concluded that the approach to valuation adopted by each of Messrs Wilson and Carey was correct.

217 Ground 11 essentially repeats other grounds. It contends that the trial judge erred in failing to determine, or determine properly, the highest and best use of the Mount Lawley land at the valuation date and to determine its value accordingly. In accordance with the position taken up by the parties as regards the approach to be taken in the appeal, we will leave that part of the ground which asserts what values should have been attributed to the land for later argument.

218 Ground 12 is also repetitive of other grounds. It contends that the trial judge erred, and made inconsistent findings, in relation to the development potential of the land. It asserts in particular that, while the trial judge excluded the opinion of Mr Stokes as regards the zoning that the land would have had after 1987 were it not for the Scheme, he relied on Mr Stokes' evidence, relating to the same period, to the effect that, if the Ellenbrook area had not been rezoned, it was highly unlikely that the WAPC would contemplate rezoning the Mount Lawley land in isolation. The appellant contends that the trial judge should have found that, having regarding to planning considerations prevailing at the valuation date, there was, absent the Scheme, a strong prospect that the Ellenbrook land would have been rezoned to urban, that it would have been developed and that the owners of the Homeswest and Sanwa land would, by the valuation date, have started to develop their land.

219 Ground 17 contends that the trial judge erred in holding that Messrs Wilson and Carey were correct in assuming, for the purposes of their valuations, that the Mount Lawley land was zoned rural at the date of valuation and also in holding that Mr Wilson's valuation of the land at $4 million was correct. We will deal with the first of those propositions but, consistently with the approach to which we have earlier referred, we will leave the second for later argument.

220 We have earlier set out the terms of contention (1) of the respondent's notice of contention.

221 Before dealing with these issues it is appropriate, first, to consider three factors that were addressed by the trial judge in the course of his reasoning, the first two of which were given a good deal of attention in the course of submissions during the appeal. The first is his understanding of the 'direction' that he had been given by the Full Court. The second is that, having been urged to do so by the then counsel for the appellant, he seems to have adopted the 'traditional' three stage approach mentioned by McLellan J in Smith [63]. The third is his construction of s 36(2b) of the Scheme Act and, in particular, his understanding that the section requires the effect on value attributable to the Scheme to be disregarded, rather than the Scheme itself. We will deal with each of these in turn before returning to the remaining issues.

222 We have earlier quoted par [141] of the Full Court's reasons in the first appeal. We have said that this paragraph was described by the trial judge as a direction. The relevant effect of what was said in that paragraph is that the Mount Lawley land must be valued without regard to the fact that the Ellenbrook land was zoned urban deferred and subsequently developed. We have mentioned that this led the trial judge to conclude [628] that steps leading to Amendments 879/33 and 950/33, to the extent that they rezoned the Ellenbrook land, must also be disregarded if they affected the value of the Mount Lawley land, with the result that the value of the land should be assessed on the assumption that the 1987 planning considerations were still applicable [631]. That, in turn, led him to disregard as irrelevant the evidence to which he referred at [632] of his reasons, and to disregard the evidence of the appellant's valuers upon the basis, amongst others, that they relied upon this evidence.

223 The conclusion that value should be assessed on the assumption that the 1987 planning considerations were still applicable is consistent with what was said by the Full Court only if the planning considerations that were not excluded by s 36(2b) of the Scheme Act remained unaltered since 1987 and, absent the Scheme, would have remained unaltered since then. However, if that was not the fact, as we have concluded above, there is nothing in [141] of the Full Court's reasoning, read in its context, that would support this conclusion.

224 For example, the Full Court said [164] - [165]:

Viewed objectively, it may be that in the hypothetical and artificial market which must be assumed for the purposes of the valuation exercise, the obstacles to rezoning of the reserved Mount Lawley land might have been regarded as so substantial that no premium would have been paid for its acquisition. Conversely, the reserved Mount Lawley land might have been regarded in the same market as being so suitable for urbanisation that its rezoning to Urban Deferred, and ultimately to Urban, would be a foregone conclusion.

Whether either of those extreme positions (or indeed any intermediate position) is correct can be determined only by reviewing and weighing the very considerable body of evidence adduced at trial and bearing on that issue. Without such an assessment of the evidence, leading to a final determination of the potential of the Mount Lawley land, including its future zoning, it would not be possible to say whether any of the valuers in fact proceeded on the correct basis.

225 The reference, there, to the need to make an assessment of the future zoning of the Mount Lawley land (absent the Scheme and its steps), based on the considerable body of evidence bearing on that issue, is inconsistent with the notion that the potential for rezoning of the Mount Lawley land and that of the Ellenbrook land, should be regarded as having been frozen as at 1987 (if it is accepted that planning considerations not excluded by s 36(2b) of the Scheme Act had altered after that date or might have done so, were it not for the Scheme).

226 We should also mention that, in [185] of the reasons, the Full Court said that, when carrying out a valuation, a valuer will take into account any potential the land might have for a higher and better use than that permitted by the current zoning and that, in so doing, the valuer should exercise an independent judgment about the likely perception of such matters in the market. In discussing the valuation evidence adduced on behalf of the appellant [189] - [223], the Full Court made no suggestion that any of that evidence was inadmissible. Indeed, when referring to a valuation that had been prepared for the purposes of the first trial by Mr Timothy Anderson on the basis that the Mount Lawley land had an urban zoning, the court repeated its view 'that it is not possible for us to determine whether or not it was appropriate to assume that the Mount Lawley land would be rezoned Urban' [212]. Moreover, there is a reference to evidence given by a Town Planning Consultant, Mr John Griffiths, to the effect that it was his 'clear and unequivocal opinion that the ... land would have been urban' [209]. There is nothing in the reasons to suggest that Mr Griffiths was precluded from arriving at that opinion.

227 It is consequently plain enough, in our opinion, that the Full Court intended only that the Mount Lawley land was to be valued without regard to the fact that the Ellenbrook land was 'zoned Urban Deferred and, subsequently, developed' (the words used in [141] of its reasons) and not that it should be valued upon the assumption that the rezoning and subsequent development would never have occurred, absent the Scheme.

228 As, indeed, the trial judge said at [107] and [108] of his reasons, when dealing with land that is ideally suited for development but which is acquired for a public purpose, it is appropriate to consider what the zoning would have been but for the acquisition and, in any case, it is necessary to establish the development potential of the subject land and to value it accordingly. That entails consideration of what was said in the documents that were tendered at the retrial (to the extent that they could be taken into account for this purpose) and in the other evidence concerning, not only the environmental attributes of the land, but also its location, the likely direction of the push for urbanisation and the physical characteristics of the land that rendered it suitable for development. That, in turn, involves consideration of expert evidence concerning the likely market perception of the development potential of the land. However, the trial judge did not weigh up all of the evidence in that respect. Instead, for the reasons that we have explained, he excluded much of that which was relied upon by the appellant.

229 The fact that the appellant's experts may have reached conclusions in relation to the timing of the upzoning that were inconsistent with the proper construction of s 36(2b) does not itself undermine the whole of their evidence. Further, that evidence should have been considered in the context of the relevant post-1987 planning considerations wrongly excluded by the trial judge.

The three stage approach suggested in Smith

230 We have said that the trial judge appears to have been influenced in his approach by the reliance placed by him on the 'traditional' approach identified in Smith (at the urging of the then counsel for the appellant). In that case McClellan CJ was required to assess the amount of compensation payable to a landowner whose land was compulsorily acquired by the Roads and Traffic Authority under the Land Acquisition (Just Terms Compensation) Act 1991 (NSW). We have earlier mentioned that s 56(1)(a) of that Act required compensation for the compulsory acquisition of land to reflect the market value of the land, defined in terms which disregarded:

any increase or decrease in the value of the land caused by the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired.

231 In the present case the trial judge referred, in particular, to [63] of McClellan CJ's reasons, where McClellan CJ set out his understanding of the traditional approach to the application of the relevant principles reflected in the Land Acquisition (Just Terms Compensation) Act. We have earlier mentioned that he said that this involved three steps, the first being to identify the zoning of the land at the date of acquisition and the second being to determine whether that zoning was imposed or retained in order to facilitate the implementation of the public purpose for which the land was acquired. The third step, which, as we have said, only arose if there was an affirmative answer to the question posed in step 2, involved the notional setting aside of the zoning identified in step 1 and the assessment of the potential of the land and ultimately its market value by determining how the land would have been zoned, at the date of acquisition, but for the proposal to carry out the public purpose.

232 We have also said that, in his reasons the trial judge emphasised the use of the words 'if the answer to question 2 is yes' at the start of step 3 [66]. His reason for doing so appears from [76] and [77] of his reasons. There, after referring to this proposition, he said:

It is not clear from McClellan J's statement of the 'traditional approach', how the Court is to proceed if the answer to the question is 'no', and the zoning was (for example) imposed to ensure that the planning process recognised some feature or characteristic of the land. However, it could not then be appropriate to ask how the land would have been zoned, 'but for the proposal to carry out the public purpose'. That is because there would not have been a rezoning in those circumstances.

As we have mentioned, he regarded this approach as being supported by what had been said by the Full Court in [162] of its reasons in the first appeal.

233 McClellan CJ's judgment in Smith was given subsequent to the reasons of the New South Wales Court of Appeal in Walker No 1, but prior to that in Walker No 2. Walker No 1 dealt with land that had been zoned industrial. Its owner wanted to have it rezoned for residential development. The local council opposed the rezoning, as it wanted the land to be rezoned as open space. Because it lacked the money to acquire the land the council ensured that the land continued to be zoned industrial. The state government supported residential development of the land but this was not achieved during its term of office. A later State government decided that the land should be open space and resumed it for that purpose in September 2002. The approach of the primary judge to the ensuing valuation is described in Walker No 1 as follows [69]:

[T]he primary judge expressly eschewed an approach which valued the land according to its actual zoning, but allowing for an additional factor to take account of the prospect, as assessed by the hypothetical purchaser, of the land being rezoned for residential use. Rather, his Honour treated the land as if it had been rezoned, the failure to do so being a matter which was to be 'disregarded'.

234 Basten JA (with whom, as we have said, the other members of the court agreed) said that the fact that there had been no certainty that the land could ever be used for residential development invited close attention to the reasoning by which the valuation 'was made on a counter-factual assumption' [70]. He went on to say [81]:

Instead of seeking to assess, from the perspective of the hypothetical purchaser, the chance of a rezoning, and noting any decline which could be attributed to the statutory considerations in s 56(1)(a), the trial judge valued the land on the assumption that the rezoning had in fact taken place. That assumption could only be justified if the refusal of the Council to rezone was itself part of the proposal to acquire the land for the public purpose for which it was acquired or a step in the carrying out of that public purpose. As a matter of principle, the approach adopted did not ask that question and is wrong.

235 Basten JA commented on the proper approach to valuation under the legislation with which he was concerned as follows [79]:

Accordingly, if the land had been acquired compulsorily in 1991, it would have been appropriate to assess compensation by reference to the value of the site with its then current industrial zoning, but with an allowance for increased value referable to the prospect that approval might be obtained for residential use. That is the approach adopted by Kitto J in Royal Sydney Golf Club v Federal Commissioner of Taxation (at 391).

The existence of the two separate limbs of s 56(1)(a) [the first being the effect on value caused by the carrying out of the public purpose for which the land was acquired and the second being that of the proposal to carry it out] does, however, affect the operation of that provision in two significant ways. First, where the effect to be disregarded is the failure to change an existing zoning, rather than the imposition of a zoning consistent with the public purpose, the value of the land to the hypothetical purchaser is likely to depend upon an assessment of the prospect of rezoning: in most cases it will be inappropriate to treat the land as having been rezoned, on the basis that this would have happened on the probabilities. That exercise is to substitute a view of the court for the view of the hypothetical purchaser. That approach may have been required under [previous legislation] but it is not the correct approach under s 56(1)(a).

237 In Smith, although McClellan J set out the traditional approach to which we have earlier referred, the applicable questions were rephrased by agreement between the parties 'out of concern that the decision in Walker Corporation required consideration of questions different from previous approaches to these matters' [11].

238 After Walker No 1 had been decided, the issue that arose in that case was remitted to the Land and Environment Court. There, Talbot J held that the council's refusal to rezone the land was part of the proposal for its acquisition. He found that, but for the refusal, there was a 100% chance of a favourable rezoning. The Sydney Harbour Foreshore Authority appealed. One of the issues that arose on the appeal was whether the maintenance of the industrial zoning by the council formed part of 'the carrying out of or the proposal to carry out' the public purpose for which the land was acquired, in which event its effect on value was to be disregarded.

239 By a notice of contention, Walker Corporation sought to uphold the judgment of Talbot J on the basis that:

Market value is to be assessed, not upon the basis of what the hypothetical purchaser would consider to be the chance of a rezoning permitting residential development, but on the fact (as already found by the Court below) that a rezoning permitting residential development would have occurred by the date of compulsory acquisition but for the intention to carry out the public purpose for which the land was acquired.

240 Walker Corporation relied upon the traditional approach that had been identified in Smith. This contention was rejected because the council had not carried out the public purpose and its 'intention' did not constitute 'the proposal to carry out' the public purpose for which the land was acquired [56]. Also, the council had not acted in concert with the state government, which did not adopt the proposal prior to its announcement, on 19 February 2002, of its intention to acquire the site. Notwithstanding this, some consideration was given to what had been said in Smith. At [57] of the judgment (given by Handley, Beazley and Basten JJA) the court mentioned that the question identified in Smith at [7], was as follows:

The current proceedings raise for consideration the development potential of the acquired land and the other adjoining lands which it is claimed have been affected by the road proposal. At the original hearing the parties accepted that that potential depends upon whether or not, but for the proposal to construct ... [a] by-pass, the land acquired and the adjoining land would have been zoned for urban purposes.

However, following the decision of this Court on the first appeal [a reference to Walker No 1], it appears that the questions were reformulated as follows ... :

In determining the market value of the resumed land at the date of acquisition disregarding the increase or decrease in value, if any, caused by the carrying out of, or the proposal to carry out the development of the by-pass:

1. Was the zoning, or the failure to change the zoning, of ... the land ... caused by the proposal to carry out the development of the by-pass?
2. If so, what was the prospect of zoning or rezoning that land ... ?
3. Accepting that the zoning of that part of the resumed land zoned 9(a) (Main Roads Proposed) was a step in the proposal to carry out the development of the by-pass what was the prospect of zoning or rezoning that land to ... [a higher zoning], had it not been zoned 9(a)?

The first reformulated question set out at [57] above, although it does not follow the language of the statutory provision, appears to be directed to determining whether the zoning of the land at the date of acquisition formed part of the carrying out of or the proposal to carry out the public purpose for which the land was acquired. If it were, and it caused a change in the value of the land, that change needed to be disregarded. One method of achieving that result is for the Court to determine, on the probabilities, the zoning which would otherwise have applied and to assess value on that basis. That was the exercise undertaken in the present case in the first LEC judgment. The problem identified by this Court on the first appeal was that the antecedent question had not been properly addressed. If this had been done, the approach of the trial judge would have been legitimate. However the second and third questions in Smith (at [57] herein) seem to have reversed this reasoning, each apparently accepting a positive answer to the first question as a precondition for their relevance, although the scope of each is unclear.

In the steps of the 'traditional approach' identified in Smith and set out (at [58] of these reasons), the critical step is the second. Its language is further from the statutory language than that adopted by the parties in their first question. The second step in Smith would have been appropriate had it been formulated in the following terms, or something like them:

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

If the answer to that question were yes, for the reasons just noted, the approach in the third step would usually be legitimate. The suggestion in the judgment in Smith at [123] that what this Court said on the first appeal might be inconsistent with 'the traditional approach' fails to acknowledge that the reasoning in this Court was directed to the test in the second step and the need to make appropriate findings of fact.

243 It is apparent from this that, in Walker No 2, the court did not reject, as a general approach, the traditional steps formulated by McClellan CJ in Smith. Rather, it criticised the decision of Talbot J both because he had misunderstood what was intended to be conveyed by Walker No 1 and because he had not formulated the questions posed by him with close regard to the applicable statutory language. Although the decision in Walker No 2 has been the subject of an appeal to the High Court (which has yet to deliver judgment on the appeal), the issue in that appeal seems to be the question of what might constitute a 'proposal' to carry out a public purpose for the purposes of s 56(1)(a) of the Land Acquisition (Just Terms Compensation) Act (NSW).

244 In the present case the applicable legislation is, as we have said, different from that in New South Wales. Also, there was in this case no zoning 'imposed or retained in order to facilitate the implementation of the public purpose for which the land was acquired'. Rather, the land was resumed for the very purpose of its preservation. There could consequently be no doubt as regards the reason for the resumption, to the extent that that can be regarded as a 'zoning'. What was required to be determined was the development potential of the Mount Lawley land, absent the Scheme.

245 It follows from this that the questions posed by McClellan CJ in Smith were irrelevant and the appellant's reliance upon them misled the trial judge. As will be apparent from what we have said, those questions were directed to the statutory scheme in New South Wales, where the issue is always whether the zoning is a step in the relevant scheme. In this case the reservation and upzoning constituted the Scheme itself and its effect on value (and hence the Scheme itself) had to be ignored. The public purpose of a reservation is irrelevant under s 36(2b) of the Scheme Act. However we have concluded, later in these reasons, that in the end (notwithstanding this error), the trial judge correctly understood the way in which he was required to approach the issue of zoning for the purposes of the valuation. The error consequently does not lead to the conclusion that either of grounds 5 and 6 has been made out.

246 Finally, and before leaving this issue, we should mention that counsel for the appellant, although he accepted that the traditional approach identified in Smith is not that which should be followed in the present case, contended that this does not undermine the approach taken by Mr Goff and the appellant's valuers in their reports. He also contended that, in the retrial, the appellant did not rely solely upon Smith in support of its proposition that a determination should be made as to the likely zoning of the land in 1996. We will return to the first contention later in these reasons. As to the second contention, a reading of the appellant's outline of closing submissions at the retrial strongly suggests that the appellant did contend that the traditional approach adopted in Smith was that which should be taken in this case. However, it did so upon the assumption that the second of the questions posed would be answered 'Yes'. Also, its reliance on such cases as San Sebastian and Fletcher Estates (Harlescott) Ltd v Environment Secretary [2000] UKHL 10; [2000] 2 AC 307 indicates that, so far as the third question identified in Smith is concerned, it contended that that question should be approached 'upon a consideration of the state of affairs which would have existed if there had been no scheme', involving the making of 'assumptions about the planning permission, if any, which would have been granted for the development of the land if it were not proposed to be acquired compulsorily': Fletcher Estates 315 (Lord Hope). Even if, as the respondent contended, the assumptions about planning permission were made in absolute terms rather than by way of an assessment of the prospect of urban deferred or urban zoning being achieved, this does not have the consequence that the whole of the evidence of the appellant's experts in this respect was inadmissible. We will return to that issue below.

247 The trial judge appears to have accepted a submission to the effect that s 36(2b) of the Scheme Act does not require or authorise the Scheme itself to be ignored, but only the effect on value of the Scheme [49]. Then, he said that this construction led to the submission that, if the Scheme was not to be ignored, it was not permissible to inquire what the zoning of the relevant land might have been, had there been no Scheme [50]. If the effect on value is to be ignored, it will ordinarily be necessary, as it was in this case, to ask what would have been the market perception of the likely zoning in the absence of the Scheme, here the reservation of the Mount Lawley land and the upzoning of the neighbouring land. There is, consequently, no relevant distinction, at least for the purposes of this case, between ignoring the Scheme and ignoring its effect on value. However, it seems to us that this error had no consequence of any significance. It is apparent, from the judgment read as a whole, that the trial judge accepted that it was permissible to consider what was the prospect of upzoning of the Mount Lawley land as at the valuation date and that he regarded the issue of the likely zoning as being foreclosed only in the sense that he was required to assume, as at that date, that the land was still zoned rural.

248 We are not persuaded that the trial judge made any error by approaching the valuation issue upon the assumption that the Mount Lawley land would have been zoned rural at the valuation date. We have earlier said that the requirement that Amendments 879/33 and 950/33 be ignored had the result that, as at the valuation date, the reservation and upzoning given effect to by those amendments had to be ignored. That, in turn, had the effect of reviving the pre-amendment rural zoning of the Mount Lawley land. Consequently, as we have earlier said and as held in the first appeal [141], [162] and [185], the fact of the upzoning and reservation had to be ignored and the trial judge was required to determine what, if any, premium the hypothetical purchaser would be prepared to pay over and above the rural value in order to reflect the urban development potential of the Mount Lawley land. That is precisely the way in which the trial judge approached his task.

249 Grounds 5 and 6 have consequently not been made out.

250 We will deal first with the challenge to the trial judge's comment that the correct approach to valuation 'may well be academic' because an assumption of urban rezoning would not alone determine the value of the Mount Lawley land [110]. This comment was based upon the proposition (also enunciated at [110]) that the hypothetical purchaser would want to be satisfied that the land could be developed, and that this would require a formal environmental assessment. It is no doubt true that an assessment of that kind would be required. However the evidence to which we have referred establishes that there was, in this case, a correlation between the zoning and EPA approval for it, in the sense that the formal environmental assessment carried out in respect of a proposed residential development would be influenced by the same environmental considerations as had been taken into account in determining the zoning, presumably with the same outcome (although there was some evidence of relatively isolated instances in which the EPA had opposed the development of land that had been zoned urban: exhibit 2918, pars 122 - 124 (Middle); and ts 9202 (Stokes)).

251 However, as we read the judgment of the trial judge, his decision did not turn in any way upon this comment (which seems to us to fall short of a finding). We have already said that he approached his task correctly, by posing the question what, if any, premium would be paid, over and above the rural value of the Mount Lawley land, in order to reflect its urban development potential, which potential, if it existed, depended upon a zoning change.

252 That brings us to the contention that the trial judge engaged in inconsistent reasoning by assuming, on the one hand, that the Mount Lawley land was zoned rural at the valuation date and finding, on the other hand, (at [763]) that it was necessary to ask what the zoning would have been, but for the reservation, in order to determine the basis for the valuation. What the trial judge said, at [76], was that, adopting the approach urged on behalf of the appellant, being that taken by McClellan J in Smith, it was necessary to ask how the land would have been zoned at the date of acquisition, absent the Scheme, only if the zoning implemented by the Scheme was imposed in order to facilitate the public purpose for which the land was acquired. We have already said that the questions posed in Smith were irrelevant to s 36(2b) of the Scheme Act. Moreover, as we have said, it is plain that the trial judge did, in fact, assume a rural zoning as his starting point for valuation purposes. We have said that he was right to do so.

253 As to the contention that the trial judge's 'error' in assuming a rural zoning led, wrongly, to the exclusion of relevant evidence and to the acceptance of the respondent's valuation evidence, it is enough to repeat that we are not persuaded that he made any such error. However, we will return to the exclusion of evidence and to the valuation evidence later in these reasons, where we have identified other errors on the part of the trial judge.

254 Grounds 11 and 12 are essentially repetitive of other grounds with which we have dealt. It is unnecessary to give them separate attention.

255 Ground 17, to the extent that it contends that the trial judge erred in holding that the respondent's valuers were correct in assuming, for the purposes of their valuations, that the Mount Lawley land was zoned rural at the valuation date, has also been dealt with by our finding that the correct approach was adopted by the trial judge, and hence by the respondent's valuers, so far as they adopted a rural zoning as their starting point. It is unnecessary to say anything further in respect of this contention. As we have earlier said, to the extent that this ground addresses Mr Wilson's valuation of the land at $4 million, it should be stood over for later argument.

256 Notice of contention (1) should also be stood over for later argument. Whether it can be dealt with will depend upon the answer to the question whether or not it is open to this court to reach any conclusion in respect of the evidence there relied upon, having had none of the advantages enjoyed by a trial judge in that respect.

The excluded evidence and the development potential of the Mount Lawley land - (grounds 2, 8, 9, 10, 13 and 21 and contentions (3), (4) and (5))

257 Ground 2 contends that the trial judge erred in excluding, as irrelevant, evidence respectively given by Messrs Stokes, Goff, Auret, Singleton and Smith in respect of the probable zoning of the Mount Lawley land as urban or urban deferred if the Scheme and its 'steps' were ignored. The appellant also contends that, had that evidence not been excluded, the trial judge would have arrived at a conclusion similar to that arrived at in the excluded evidence and that, for that reason, he would also have found that it was unlikely that the EPA would have opposed urban development of the land, subject to the exclusion of the areas of wetlands that were the subject of the Lakes EPP and related buffer zones.

258 Ground 8 challenges the exclusion by the trial judge of the planning report prepared by Mr Goff on 31 May 2005 (exhibit 3008) upon the two grounds specified by him. As will be apparent, these were that the expression of an opinion on the likely zoning of the Mount Lawley land was contrary to a direction given by the Full Court in the first appeal and that Mr Goff's report was based on the evidence of Dr Tingay and Mr Bowman, without regard to any evidence expressing contrary views.

259 Ground 9 challenges the exclusion by the trial judge of the valuation reports prepared respectively by Messrs Logan, Rae and Zucal (exhibits 3010, 3012 and 3011) for the three reasons identified by him. The first was because he had reached a different conclusion as regards the development potential of the Mount Lawley land. The second was because he regarded what had been done by these valuers as being contrary to a direction given by the Full Court in the first appeal. The third was because each of these valuers had, in his opinion, produced their reports on too restricted a basis, having relied only upon the opinions of Dr Davies, Dr Tingay, Mr Bowman and Mr Goff.

260 Ground 10 challenges the trial judge's conclusion that, to the extent that the Mount Lawley land was suitable for development, its suitability was subject to matters which amounted to a considerable qualification. The appellant contends that the trial judge should have found that there was no, or very limited, qualification to the suitability of the land for development and that it should have been valued as land with full urban development potential. It argues, in this respect, that the conclusion reached by the trial judge is anyway inconsistent with other findings made by him.

261 Ground 13 is repetitive. It contends that the trial judge erred in holding that, at the valuation date, a hypothetical purchaser would only have been cautiously optimistic, absent the Scheme, that there was potential for development of the Mount Lawley land in conjunction with neighbouring landowners at some indeterminate time, which might be well into the future.

262 Ground 21 challenges the exclusion of specified evidence contained in reports and statements prepared respectively by Mr Bowman, Mr Goff and Dr Tingay.

263 We have, earlier in these reasons, set out contentions (3), (4) and (5) of the respondent's notice of contention. It is unnecessary to repeat them here.

264 In the course of considering the issues raised by these grounds, we propose to refer to the principal features of the excluded evidence in respect of the probable zoning of the Mount Lawley land absent the Scheme and also of the excluded evidence bearing upon the value of the land. We will then address the approach taken by the trial judge to this evidence, and his reasons for excluding it or declining to place any reliance upon it as the case may be, before returning to the individual grounds of appeal.

Evidence of probable zoning absent the Scheme

265 The evidence, disregarded by the trial judge at [632] of his reasons, that bears upon the issue of what might have been the zoning of the Mount Lawley land absent the Scheme, was, as we have said, given by Messrs Stokes, Singleton, Goff, Auret and Smith. We have also said that the trial judge saw his task as being that of assessing the development potential of the Mount Lawley land from the perspective of a hypothetical purchaser on the assumption that, at the valuation date, the 1987 planning considerations were still applicable. That, in turn, meant that any plan, since 1987, for a north-eastern corridor, or for the reservation of the Mount Lawley land was excluded from consideration. Because he found that each of Messrs Stokes, Singleton, Goff, Auret and Smith had taken a plan or plans of that kind into account, he regarded their evidence as irrelevant, to the extent recorded in the transcript pages identified in [632] of his reasons. We will deal with the evidence of each of these witnesses.

266 We have said that Mr Stokes was the urban development co-ordinator at DPI (previously DPUD). Until 6 February 2006 he had been the acting executive director of statutory planning at DPI. He has had experience in town planning work since 1970. He prepared a statement dated 3 October 2005 on behalf of the respondent. This was tendered at the trial (exhibit 2922). In his statement, he set out his opinion in relation to the probable planning status of the Mount Lawley land 'as at 7 May 1996'. He said that this was based on the following:

1. The fact that amendments numbered 879/33 and 950/33 to the MRS occurred in 1992 but have been disregarded in determining my opinion.
2. However, nothing in a) above means that I have disregarded the circumstances concerning the land which were relevant to the planning status or likely status of the land. In particular, I have taken into consideration:-

(i) all attributes of the land (including both environmental attributes on the one hand, and potential for urban development on the other hand); and

(ii) the attitude or likely attitude of the State and Local Government authorities to those attributes.

267 In making an assessment of the development potential and probable zoning of the land as at 7 May 1996 (par 103), Mr Stokes took as his starting point the fact that the land was zoned rural in the MRS and General Rural in Shire of Swan Town Planning Scheme 9. In forming his opinion, he took a number of considerations into account, including the 'relevant policies and strategies of the [respondent]'. We have earlier mentioned that his statement discusses, amongst other policies, the Corridor Plan Review conducted in 1987 and Metroplan and that he also discussed the 1994 Structure Plan published in March of that year, more than a year after Amendment 879/33 was made to the MRS. As we have mentioned, the 1994 Structure Plan was published in order to provide the framework for the development of the north-eastern corridor and the associated amendment to the MRS. It shows the Mount Lawley land as an existing regional open space (figure 17) and refers to the land as the 'Lexia Wetlands' regional reserve. Having discussed the contents of that plan, Mr Stokes concluded (as we have earlier mentioned) that, due to the 'environmental significance of the land, the most likely outcome would have been that, had that part of the subject land reserved for parks and recreation in Amendment 879/33 in 1992 not been so reserved, then the land would have been reserved for Parks and Recreation by a subsequent MRS amendment' (par 216 of his statement).

268 When cross-examined at the retrial, Mr Stokes was asked (ts 9168) whether he was saying that the 1994 Structure Plan 'stood independently of the fact of [the] reservation [of the Mount Lawley land] in December 1992'. He replied:

As a document it stood independently. That [sic] may well have been that irrespective of the amendment, the land would have been reserved for Parks and Recreation anyway.

269 When re-examined (ts 9213 - 9214), Mr Stokes said that, although a land owner could ask that land be rezoned, it was 'quite usual' for the respondent to initiate a rezoning without any request from a land owner. We have earlier mentioned that he said that, if 'the Mount Lawley amendment had not been initiated', it was 'quite likely' that the respondent would itself have initiated an amendment after 1994 to implement the 1994 Structure Plan.

270 As we understand the reasons of the trial judge, it was this last evidence that he found it necessary to disregard [632]. We have said that he considered that evidence to be irrelevant to the extent that it indicated that, by May 1996 at the latest, the Mount Lawley land would have been rezoned so as to implement the 1994 Structure Plan. The basis for the trial judge's decision in this respect (expressed at [631]) was, as we have said, that the development potential of the land should be assessed on the assumption that the 1987 planning considerations were still applicable. We have already concluded that that assumption should not have been made. However, it seems that the excluded evidence relied, to a substantial degree, on the fact of the 1994 Structure Plan which, in turn, relies upon Amendment 879/33. It consequently seems to us that any effect on value of the Mount Lawley land that was attributable to the 1994 Structure Plan is, in turn, attributable to the Scheme. Notwithstanding this, if, as his evidence appears to indicate, Mr Stokes considered that, even in the absence of Amendment 879/33 and the 1994 Structure Plan, a structure plan that included the Mount Lawley land as planned regional open space would still have been initiated, the excluded opinion may not have been based upon an impermissible assumption. Whatever may be the position in that respect, Mr Stokes' opinion seems to us to be of no assistance to the appellant and, indeed, its exclusion may have benefited the appellant. While he did say (ts 9203) that there 'was a period [between November 1991 and August 1992] when some interpretation could have been reached that the Mount Lawley land could have been zoned for urban deferred, at least part of it', he added (also ts 9203) that the plans and policies of the respondent had consistently shown that it was unsuitable for urban purposes (see also ts 9216).

271 We have said that Mr Singleton was the 'Director, Sustainability' at DPI and that he had held that office since 2004. He had previously practised as an environmental geographer and regional planner and as a consultant environmental planner. His statement dated 3 October 2003 was tendered at the retrial (exhibit 2923).

272 Mr Singleton was involved in the preparation of the Lakes EPP. We have said that he was also a member of the Review Group whose research and investigations led to the preparation of the Corridor Plan Review. We have also said that he was a co-author of Working Paper No 17.

273 We have mentioned that, in the course of cross-examination at the retrial (ts 9083), Mr Singleton said that the Mount Lawley land was deliberately excluded from consideration as a possible location for future urban development because of his recommendation, through the 'opportunity constraints exercise' conducted before the Corridor Plan Review, that it should be included within a regional park. He said that it was possible that the Mount Lawley land would have been considered as a possible location for future urban development if an opportunity constraints analysis had not been done. However, (as we have said above) he said that the area around the Mount Lawley land did not get 'heavily considered' as a major growth area for urbanisation in the 1987 study. He agreed (as we have also mentioned, earlier in these reasons) that he was aware that land in the vicinity of the Mount Lawley land was considered for urbanisation a few years later, but said that he had, by then, moved into a different area of work.

274 It was the oral evidence referred to in the previous paragraph that was disregarded by the trial judge because he considered it to be irrelevant [632]. In our respectful opinion, he erred in that categorisation as a result of his error, dealt with earlier in these reasons, in assuming that the 1987 planning considerations were still applicable (assuming, of course, that Mr Singleton's evidence in this respect did not rely entirely upon steps in the Scheme affecting the value of the Mount Lawley land). However, we should mention, once again, that this evidence seems to us to lend no assistance to the appellant's case.

275 We have earlier touched upon the evidence of Mr Goff and referred to the planning report prepared by him on 31 May 2005 (exhibit 3008). We have said that, in preparing his report, Mr Goff relied upon what had been said by Dr Tingay and Mr Bowman in respect of the environmental characteristics of the Mount Lawley land.

276 In his report, Mr Goff analysed the form of Perth's development and the primary or global constraints (as he called them) which had dictated the form of Perth's urban growth. He summarised the primary constraints as 'the relatively steep and less suitable soils of the Darling Scarp on the east, the river beds and flood plains themselves and the 'non-urban'/groundwater resources generally midway between the coast and the Scarp to the north and south of the City's urban core'. He also mentioned the influence on development of the fact that a high proportion of residents preferred the amenity of a coastal location over a more inland environment. He said that this development pattern resulted in Perth being a sprawling city relative to its population. He regarded containment of urban sprawl as being a planning issue. He suggested that the Corridor Plan Review led to the addition of the north-eastern corridor of urban development to assist in containing the extension of the north-west and south-west corridors. He said (par 4.14):

Having regard to the primary constraints on urban development of the Darling Scarp and the non-urban/water-mound belts as well as having regard to the extent of urban sprawl along the coastal corridors, the urban potential of the Lots 46 & 47 becomes apparent. It is approximately 24 km from Perth compared with the development front in the north-west corridor which is now nearly 40km from the city.

277 Mr Goff proffered the opinion that Ellenbrook and other areas adjacent to the Swan Valley were not developed earlier because of a desire to protect the heritage, amenity and horticultural values of the Swan Valley. He also summarised what he called the planning history of the north-eastern corridor. We have said that he referred in this respect to the Corridor Plan Review. He said that this document suggested 'a fifth, north-eastern corridor with urban areas to either side of the Swan Valley'. He also said (par 6.5) that perhaps the most significant aspect of the review was 'the recognition of the potential for urban development at Ellenbrook combined with predicted demands for housing land'. We have mentioned that Mr Goff then referred to a number of other documents in the general sequence. These included the draft and final versions of the 1990 DPUD Statement, Metroplan, the DPUD brochure published in 1991, the Shire of Swan 'Recommended Draft Structure Plan - North-East Corridor' published in 1992 and the 1994 Structure Plan. In relation to each document, he noted the zoning indicated for the approximate location of the Mount Lawley land. In the case of the DPUD brochure, he approximated the number of hectares of Mount Lawley land shown as urban in each of the diagrams that respectively depicted the linear and cellular options for growth in the area.

278 Mr Goff said that the Mount Lawley land itself is 'relatively unconstrained' in terms of the 'global' constraints defining the urban geography of Perth. He went on to say (par 7.1):

They [Lots 46 and 47] are not located on the steep, plastic soils of the Darling Scarp and neither are they located within river floodplain. The Lots are on the eastern side of the Gnangara Groundwater Mound but, because of this fact, the thickness of the groundwater lens is diminishing and the hydraulic gradient is away from the main body of the mound. The Gnangara Water Mound would therefore not have been a factor preventing Urban zoning in my opinion. The Lots are also comparatively close to the CBD. Based on this geographical assessment, it is my view that Lots 46 and 47 are generally suited to urbanisation and that this situation existed at 1996.

279 Mr Goff also considered that the particular difficulties associated with draining or filling the land were not so severe as to prevent urban zoning (par 7.2). He identified a series of MRS amendments that had zoned land urban where the land in question was contained within the Bassendean Dunes system and was affected by wetlands.

280 Mr Goff recognised that the conservation values of the wetland on the Mount Lawley land identified by Dr Tingay and Mr Bowman 'would have been a constraint on the development of those portions'. He said that these areas may have been protected by a reservation for parks and recreation under the MRS or included in the urban zone with the wetland being protected by a condition of development approval (par 7.3). After discussing the various proportions of land required to be set aside on the approaches of Dr Tingay and Mr Bowman respectively, Mr Goff arrived at the conclusion, set out in par 7.5 of his report (quoted earlier in these reasons), to the effect that 'Lot 46 and the subject portions of Lot 47 would in all probability have been zoned 'Urban' at the relevant dates of 12 February and 9 May 1996'. It will be apparent from what we have earlier said that this conclusion relied primarily upon the lack of impact on the land of 'global' constraints and upon the planning philosophy recognisable in the Corridor Plan Review (particularly the introduction of a north-eastern corridor).

281 In the course of cross-examination, Mr Goff was asked to explain the instructions that he had been given for the preparation of his report (ts 8991). He said that he was asked to take 'an overview of the form of the metropolitan area's development and essentially what the major guiding principles for that are ... and to, in effect, ignore the Metropolitan Region Scheme insofar as it reserved or zoned land in the area of Ellenbrook'. He was also asked whether he had been instructed by the lawyers for the appellant in relation to consideration of the steps leading up to the reservation (ts 9016). He replied that he understood that 'there would be various documents that would be regarded, in effect, as part of the amendment', but that it seemed to him that 'it was an area of grey as to which ones of those documents would be considered as part of the amendment' and which would not.

282 We have said that, when Mr Goff was cross-examined in relation to the Corridor Plan Review (ts 9001), he acknowledged that this had been 'the seed of the idea of the north-east corridor' and that this led, ultimately, to the rezoning of Ellenbrook and Egerton. He also accepted that the north-eastern corridor was possibly the most significant aspect of the Corridor Plan Review for the purposes of the trial.

283 Mr Goff was also cross-examined in relation to his reference to the later planning documents mentioned in his report. He was questioned, in particular, in relation to the 1991 DPUD brochure. He agreed that this was the first occasion on which there had been some intimation that parts of the Mount Lawley land might be zoned urban (ts 9003). It was put to him that the two plans depicted in that brochure were not designed to indicate where specific areas of land fell in the growth options. In the course of his response, he said that the brochure had had a degree of credence beyond what one might otherwise imagine because it was the only document released by the authorities prior to initiating Amendment 879/33, that having been done before a structure plan had been prepared (ts 9003, 9015). He said that he thought that the brochure showed that the Mount Lawley land had urban potential, at least in the eyes of the planning agencies at the time (ts 9005).

284 We have earlier mentioned that, as we understand Mr Goff's evidence, he would have reached the conclusion arrived at by him concerning the likelihood that, absent the Scheme, the Mount Lawley land had urban potential even if he had disregarded documents concerning the north-eastern corridor. It was put to him in this respect that the DPUD brochure (which, as we have said, was not regarded by the trial judge as a document falling within the concluding words of s 36(2b) of the Scheme Act) was the sole basis for his opinion that the land had urban potential. He replied (ts 9008):

No. I think if you go through the first section of my report where I discuss the basic geographical features of the metropolitan area and the facts that have led to the form of the city's growth, I think when you take into account those basic geographical circumstances, there is a clear indication that the area has urban potential from just that geographical point of view.

Put aside that earlier documents might have shown a more general potential in the north-east corridor for urbanisation. My question is in respect of 46 and 47 alone. Your view that those lots had some urban potential is based entirely upon this document?---As I said before, no, that is not the case. This is certainly the first document produced by a government agency which indicated the exact potential of the land in the area but I think one also has to have regard to the basic geographical features of the area as well and that's what ... helped to form my opinion.

And the environmental features?---Yes.

286 Mr Goff accepted, in cross-examination, that he had not addressed issues such as access, power, water and sewerage in his report in relation to the Mount Lawley land because he viewed it as part of the overall development of Ellenbrook (ts 9041). He said that there would have been greater scrutiny of access and servicing arrangements by planning authorities if Mount Lawley had requested rezoning of its land independently of that owned by Homeswest, Multiplex and Sanwa (ts 9040).

287 We have said that Mr Goff was later asked whether his opinion that most of the Mount Lawley land would probably have been zoned urban on 9 May 1996 assumed 'a relatively smooth progress of Ellenbrook' (ts 9041). We have also said that he responded by saying that, absent the Scheme, 'the imperatus that led to those amendments being initiated in the first place would still have been there and that there would have been another amendment process commenced at around about the same time leading to the land being rezoned at those dates'. His view was consequently that, in the early to mid-1990s, there would have been some other form of amendment to the MRS in order to bring the Ellenbrook land into urbanisation. We have mentioned that he said that, given the additional time, he thought that it would have been a much better managed process (ts 9042). We have also mentioned that he said that public opposition to the proposal had been aggravated because the zoning amendment had been initiated before the structure planning exercise had been completed and that he went on to say (ts 9042):

[I]n my view, the way that the process was rushed was very badly managed and a totally different zoning pattern could have been achieved in a much better managed process which involved greater consultation with the public and groups in the area and presented a more rational picture as to why things should happen or why they shouldn't.

288 The following exchange then took place in cross-examination (ts 9043):

[L]et me try and capture what you have said. You tell me if this is right or wrong. You have notionally set aside the rezoning and the development of Ellenbrook, but you have assumed that even if that hadn't occurred as it did, in fact, it would have reoccurred but much more efficiently than it did?---Yes.

You assume therefore that different people would be at the department, or the same people, just a bit more sensible this time around?---No, I think if they had their time again, I think they would approach it differently ...

Knowing the mistakes they have made?---Well, yes. I mean, they are the ones who outlined the process and they were the ones who didn't follow it.

289 Mr Goff later clarified this by saying (ts 9058):

What I was saying was that, if you disregarded the MRS amendments that actually led to the zoning and reservations in Ellenbrook, at some time around the same period I would have expected not that particular amendment but another amendment to have been initiated to the Region Scheme and for the land to have been zoned or reserved or whatever was the case by 1996 because the same imperatives applied even if you ignore those particular MRS amendments.

290 It was Mr Goff's evidence in relation to the likely urban zoning of the Mount Lawley land by May 1996 (ts 9041) that the trial judge ruled as being irrelevant, at [632] of his reasons. However, as we have mentioned, in the appendix to his reasons he also ruled that the whole of Mr Goff's report was inadmissible.

291 We have said that Mr Auret is a town planning consultant. He has extensive experience as a land use planner for local authorities. He prepared a statement dated 30 September 2005 on behalf of the respondent. This was tendered at the trial (exhibit 2915). Mr Auret also prepared a responsive statement dated 30 November 2005 (exhibit 2956). It responded to the report of Mr Goff.

292 Mr Auret was involved in the production of both Metroplan and the 1994 Structure Plan. He, and the then manager of the Parks Branch in the Ministry of Planning, determined the boundary of the reservation of the Mount Lawley land which, after being accepted by the State Planning Commission in July 1992, was ultimately implemented by Amendment 879/33 to the MRS.

293 In his statement dated 30 September 2005, Mr Auret said (pars 33 - 38):

Whilst the proposal under 879/33 originally proposed only 90 hectares for [Parks and Recreation], which reflected the position of the proponents, the subsequent assessment in the structure planning process by me established that a greater area in the north-west should be preserved. In my opinion, these factors predicated against any proposed urban rezoning ... coming into effect.

The identification of the environmental value of the Mount Lawley land has a fundamental bearing on its suitability for alternative uses such as urban development. It is a powerful factor that in my opinion would have led the WAPC or the local authority in 1996 to oppose any request to rezone the land for urban purposes.

As at 7 May 1996, had not Lot 46 and part of Lot 47 been reserved for Parks and Recreation in the Metropolitan Region Scheme, the Mount Lawley land, subject of this case, would have comprised two severely constrained broadacre rural land holdings of very limited agricultural potential.

...

To my knowledge as at 7 May 1996 neither the Council nor the Western Australian Planning Commission were supporting subdivision of broadacre rural land to more intensive forms of land use such as small hobby farms or rural residential in this part of the North East Corridor.

Given the severe environmental constraints that had been identified prior to 7 May 1996, it is my opinion that the land was unsuitable for urban development and furthermore that approval would not have been given to subdivide the Mount Lawley land for a more intensive form of rural land use at that time.

294 The trial judge ruled that the first of the quoted paragraphs (par 33) was inadmissible as it expressed a conclusion and was irrelevant (appendix p 130). However, he found that the subsequent paragraphs were admissible as they expressed opinions within Mr Auret's expertise or, in the case of par 37 (the second last of the quoted paragraphs), recorded a statement of knowledge that would have come to him in the course of his duties (appendix p 131).

295 We have earlier touched upon the fact that, in the course of cross-examination (ts 9112), Mr Auret was referred to evidence he had given at the first trial (exhibit 9034), as follows:

If it was not for the conservation factors that you have been speaking of, would it have been responsible planning to allow that [the Mount Lawley land and some adjacent Sanwa land] to become urban or urban deferred?---Without question.

Why is that?---Because it was broadly within the context of the urban corridor that we had been planning, which basically ran up the western boundary or the eastern boundary of the state forest.

Yes?---It was about the highest and best drained land.

296 We have also mentioned that Mr Auret said that the answers that he had given at the first trial were true, subject to one qualification. He expressed this as follows (ts 9112 - 9113):

I was basically a strategic planner that took on board strategic plans developed for me and I merely interpreted them. If we assume that the strategic plans before me had excluded the subject land and a little wider area which I refer to as the Lexia for non-environmental reasons, hypothetically, I would have still had to have taken account of whatever those strategic reasons were. I can only assume that were it not for the environmental issues, the exclusion of that area would not have happened in the urban expansion policy or Metro Plan [sic] but seeing that it had, technically my answer should have been there, 'In the absence of any other strategic reason.'

297 Mr Auret was re-examined in this respect. He said that if there had been no environmental aspects in relation to the Mount Lawley land, he thought that it would have become urbanised, although the corridor would have been planned 'in a significantly different way' (ts 9129). However, when asked to put out of his mind the fact that there was any proposal for urbanisation of the Ellenbrook land belonging to Sanwa, Homeswest and Multiplex, he said (ts 9129):

If you're saying would Mount Lawley in isolation have been zoned urban as a strategic land use planning decision, I think that's obviously not. Its only basis, if it had no environmental constraints for urbanisation, was part of a larger urban corridor.

298 The trial judge said the following about Mr Auret's evidence [363]:

Mr Auret's evidence at trial was that at the time, while he recognised that there was significant remnant vegetation on the site of the proposed Ellenbrook project (including the Mount Lawley land), the land was elevated and was 'superb urban land' (TS 4065): absent any conservation factors, it would have been responsible planning to zone the land urban or urban deferred. In his evidence at the retrial, Mr Auret said he would have to qualify this opinion, but only to the extent that it would be subject to there being no other strategic reason not to develop the land (TS 9113). I accept this evidence, which is consistent with the policy of the State Government in wanting to expedite development in the north-east corridor.

(See also [489].) However, the trial judge referred to some of Mr Auret's evidence (ts 9112 - 9113) as being irrelevant and inadmissible [632]. We assume that the evidence to which he referred was that given by Mr Auret in relation to the urban potential of the Mount Lawley land as a result of its location in relation to the planned north-eastern corridor.

299 We have said that Mr Smith was the Minister for Planning in 1991 and 1992. At that time, he had responsibility for approving any amendments to the Metropolitan Region Scheme. The Ellenbrook proposal had already assumed importance by the time he became Minister.

300 Mr Smith was called at the retrial as a witness for the appellant. In his evidence he said (ts 6895) that there was, in early 1991, a shortage of land available for residential development and that he was 'looking to add to the supply'. Similar evidence was given by Mr Hatt at the first trial (ts 798, 809 of exhibit 9002) and by Mr Auret at the retrial (ts 9108) (see also the evidence of Mr McNamara at ts 8135 - 8136).

301 The transcript of evidence that Mr Smith had given at the first trial was tendered as an exhibit at the retrial (exhibit 9001). In his evidence in chief at the first trial (ts 911 of exhibit 9001), he was asked whether the presence of an EPP wetland on the Mount Lawley land would, in 1996, have been enough to determine the outcome of a planning decision about rezoning or developing that land. He said:

It would depend upon ... the legal status of the policy document [the Lakes EPP] ... [I]n my view environmental considerations are just one aspect of the planning process and, subject to what has happened since I was Minister, you still have the power to disregard conservation values for appropriate reasons.

302 He was asked, and answered, another question as follows (ts 912 of exhibit 9001):

Just coming back to the factors which were being considered by the Planning Commission in 1991 and 92, what was it that led to the reservation of the Mount Lawley land for parks and recreation?- - - In my view it was primarily its wetland significance.

His evidence continued as follows (ts 912 - 913 of exhibit 9001):

So what was the purpose of the parks and recreation reserve?---It was to conserve it as part of the head waters for the Ellen Brook ... and as a wetland in its own right of course.

At that stage, the land was already zoned rural?---Yes.

Would continuation of the rural zoning have secured that objective?---It wouldn't have secured it from clearing or other things that were necessary consistent with its use as a rural use, and it really needed a conservation zoning of some description that would give it complete protection rather than be left to the vagaries of what was permitted under a particular use.

So was there any serious thought given to leaving the Mount Lawley land zoned simply rural?---No, not really, the questions really were how much of it should be zoned for conservation purposes and then what you do with the remainder if there was any, and the only considerations that were sort of given to any special considerations was the question of whether or not it could be left in private ownership and managed privately. I certainly don't think anyone wanted it from a planning perspective to stay as rural.

303 He then said (ts 913 of exhibit 9001) that, if the land had not had any conservation value, it could ultimately have been zoned for urban purposes. However, he added that in his view it had 'very high conservation value'.

304 It is Mr Smith's evidence on pages 911 - 912 of the transcript of the first trial, in which he spoke of the potential future zoning of the Mount Lawley land, that the trial judge ruled irrelevant and inadmissible [632].

Basis for the exclusion of evidence given by Messrs Goff, Auret, Singleton, Stokes and Smith

305 We have said what was the expressed basis for the exclusion, by the trial judge, of the evidence of Messrs Goff, Auret, Singleton, Stokes and Smith referred to at [632]. We have also concluded that that basis is not sustainable. However, counsel for the respondent suggested that this evidence was also found by the trial judge to be inadmissible because each of the witnesses referred to had worked upon the basis that the zoning of the Mount Lawley land would, absent the Scheme, have been urban only because each had been invited to disregard the environmental features of the land. We do not read the trial judge's reasons in that way. Nowhere does any finding to that effect appear in his reasons. His basis for the exclusion is set out in clear terms [632]. The evidence to which he referred was disregarded as irrelevant only for the reason that the development potential of the Mount Lawley land was to be assessed on the assumption that the 1987 planning considerations were still applicable. That this is so is reinforced (if any reinforcement is needed) by what was said by the trial judge in the appendix to his reasons at page 154, when dealing with Mr Goff's report dated 31 May 2005. This was as follows:

Mr Goff's evidence is produced in order to assess 'the likely zoning of the (Mount Lawley) land as at 12 February and 9 May 1996'. Having regard to the direction given by the Full Court in the Mount Lawley appeal, that is an irrelevant consideration which renders Mr Goff's report inadmissible.

We will not repeat what we have earlier said concerning the direction to which the trial judge referred.

306 Counsel for the respondent also contended that, because of the mistaken view which counsel for the appellant at the trial had adopted in urging compliance with the traditional approach identified in Smith, he had invited each of Messrs Stokes, Goff, Auret, Singleton and Smith to assume one or both of the propositions that the Ellenbrook development was already in place and that the Mount Lawley land had no environmental characteristics worth preserving. Counsel for the respondent suggested that this led the trial judge to conclude that their evidence concerning likely zoning, absent the Scheme, was irrelevant. He said that this is apparent from what was said by the trial judge (at [633]) to the effect that he regarded 'as relevant, Mr Stokes' evidence that if the Ellenbrook area had not been rezoned, it was "highly unlikely that the [respondent] would contemplate rezoning the Mount Lawley land in isolation"'.

307 Even assuming that these witnesses were making the assumptions referred to (which is not clear: see, for example, Mr Goff's evidence at ts 9041), we are unable to distil any ruling of the kind contended for from what was said by the trial judge [633]. Rather, as we have said, his ruling in this respect was based solely upon the reason mentioned by him at [632] of his judgment. In any event, as we have said, there was no suggestion on behalf of the appellant that the Mount Lawley land would be rezoned in isolation. What was suggested was that it would be caught up in urban growth reaching the Mount Lawley land and other areas. We have also said that the actual rezoning and development of the Ellenbrook land was required to be disregarded and not the prospect, absent the Scheme and its steps, that this would happen.

308 Next, counsel for the respondent contended that Mr Goff's opinion was found to be inadmissible on the additional ground that it was produced in disregard of the Full Court's 'direction' contained within [162] of its reasons. This was to the effect that the valuation should be conducted by assuming a rural value and then determining what premium a hypothetical purchaser would be prepared to pay over and above that value in order to reflect the development potential of the land (a so-called 'bottom up' approach to valuation). This form of valuation is traditionally adopted in a case in which it is probable that there will be no upzoning, but in which a premium is allowed for that possibility to the extent that it exists. Counsel for the respondent contends that, instead, Mr Goff adopted a 'top down' approach. That form of valuation is traditionally adopted in a case in which, for example, urban zoning appears to be the most likely prospect, in which event the land is valued upon that assumption, with a discount being made to allow for the fact that zoning of that kind may not be achieved: see, as regards these options, Wattle Park Pty Ltd v Commissioner of Highways (1973) 6 SASR 69, 93 - 94 (Wells J).

309 While, for the reasons that we have given, it was correct to value the Mount Lawley land from a starting point that assumes a rural zoning, this provides no basis for the exclusion of Mr Goff's evidence. He was not performing a valuation. He was giving evidence of the likely outcome (absent the Scheme) of the planning considerations to which he had referred as regards the zoning of the land. The fact that he concluded that an urban zoning was the probable outcome provided no basis for treating his evidence as inadmissible. Of course, the weight to be given to that evidence was a matter for the trial judge, having regard for the whole of the admissible evidence.

310 Counsel for the respondent next contended that Mr Goff had, in any event, merely come to a conclusion on a balance of probabilities (Mr Goff used the words 'in all probability') with respect to the likely zoning of the Mount Lawley land and that, because of the then counsel for the appellant's mistaken reliance upon Smith, this was converted into 'an all or nothing approach' in which an urban zoning was simply assumed. He suggested that this rendered his evidence valueless.

311 Even if it was so that Mr Goff had adopted an 'all or nothing approach' of the kind suggested, that does not, of itself, render his evidence inadmissible (and the trial judge did not find it to be so on that basis). It remained open to the trial judge to consider that evidence and to form his own conclusion as regards the degree of probability of achieving an urban zoning for the Mount Lawley land, based upon Mr Goff's evidence and all other relevant evidence. It was obvious from Mr Goff's report that he considered that there was at least a 51% prospect of securing a rezoning to urban deferred or urban (he also said, in his oral evidence, that the Mount Lawley land 'definitely had urban potential': ts 9008). It was open to the trial judge to have regard for his evidence to that extent at least. Indeed, it is apparent from the trial judge's reasons that he did make some allowance for the prospect of urban zoning. It seems to us, with respect, that, in the course of doing so, he should have taken into account the evidence of Mr Goff, and of the valuers who had relied upon him, subject to any limitations that he found that evidence to have.

312 As to Mr Goff's report dated 31 May 2005 (exhibit 3008), the trial judge ruled this inadmissible upon two bases. The first (page 154 of the appendix to his reasons) was that the likely zoning of the Mount Lawley land as at 12 February and 9 May 1996 was irrelevant, having regard for the direction given by the Full Court in the first appeal. We have already said that, in our respectful opinion, the fact that Mr Goff concluded that an urban zoning was probable should not have resulted in the exclusion of his evidence. While he was wrong, in our opinion, to work upon the basis that the land would have been zoned urban by the time of the valuation date, it seems to us that his opinions were deserving of consideration notwithstanding this error. These opinions, if they were valid, were no less valid merely because Mr Goff proceeded upon the basis that an urban zoning had been achieved by 9 May 1996 rather than shortly thereafter. The second (also page 154 of the appendix) was that, because Mr Goff's report was based on the opinions of Dr Tingay and Mr Bowman without regard to any evidence expressing contrary views, it was 'largely irrelevant' and, for that reason, inadmissible.

313 However, at the time that Mr Goff produced his report, the respondent's environmental and planning experts had yet to produce their reports. Mr Goff could consequently not have had regard to them at that stage. Also, Mr Goff produced a responsive statement (exhibit 3015) in which he responded to the reports of the respondent's experts. In that statement he refers to the statement dated 30 September 2005 that had been prepared by Mr Auret; to a statement dated 29 September 2005 prepared by Mr Kieran McNamara, the chief executive officer of CALM (who referred to a number of internal reports prepared by CALM); to a statement dated 3 October 2005 prepared by Mr Eric Lumsden, the chief executive officer of the Shire of Swan; to a statement signed by Mr Stokes on 3 October 2005; and to Mr Singleton's statement dated 3 October 2005. All of these statements referred to, and relied upon, a large quantity of material that had not previously been taken into account by Mr Goff. Mr Goff also referred to Mr Wilson's valuation report dated 3 October 2005. Section 7.3 of that report was headed 'Various Consultants Reports'. It included summaries of a number of reports, including reports by Dr Semeniuk, Mr Malcolm Trudgen (an environmental expert) and Mr Stokes. It also set out, very briefly, what Mr Wilson took to be the principal conclusion arrived at by, amongst others, Mr Middle.

314 Mr Goff's responsive statement concluded by saying that, as required under Practice Direction No 1 of 1999 of the Rules of the Supreme Court 1971 (WA) he declared that he had made all inquiries which he believed to be desirable and appropriate and that no matters of significance which he regarded as relevant had, to his knowledge, been withheld from the court.

315 In all of these circumstances, it seems to us that Mr Goff's report was admissible. He was entitled to prepare it upon the basis of the information that had been examined and accepted by him. When other information was drawn to his attention it seems, from his responsive statement, that he had regard to it, to the extent that we have mentioned. Moreover, he gave evidence at the trial and it was open to counsel for the respondent to put to him, in cross-examination, anything that he considered relevant. By the time he gave evidence, Mr Goff was presumably aware of the respondent's evidence bearing upon the opinions given by him. There is no reason to think that, if any of this had caused him to change his initial opinions, he would not have informed the court accordingly. In any event, if Mr Goff overlooked any material considerations this was a matter going to weight rather than to admissibility.

316 Counsel for the respondent next contended that Mr Goff's report was inadmissible because he had relied upon the documents to which we have earlier referred, which were, or were accepted to be, steps in the Scheme. While it is true that he did refer to, and rely upon, documents which we have concluded could not be taken into account, it is apparent from what we have already said concerning his evidence that he also reached the conclusion, independently of these documents, that the area encompassing the Mount Lawley land would, in all probability, ultimately be zoned urban. If the exclusion of the documents to which we have referred weakened that opinion, even if substantially so, that was a matter to be taken into account in assessing its weight. It was not a basis for excluding the evidence altogether.

317 We have said that, the trial judge regarded Dr Tingay's second report (exhibit 32) as being inadmissible (page 160 of the reasons, also forming part of the appendix), because it was found to have been based on a false premise. This was because he had not worked upon the basis that as at May 1996 the reserved Mount Lawley land was zoned rural. While that was an error on the part of Dr Tingay, for reasons that we have explained, there was no reason, as a matter of law, why it was not open to the appellant's experts to express an opinion that the Mount Lawley land, or a part or parts of it, would inevitably, or would probably or possibly, have been rezoned urban, absent the Scheme, at some time in the future. It was for the trial judge to assess what, if any, weight he accorded those opinions in the light of the failure to assume a rural zoning, and then consider urban potential, as at May 1996. In our respectful opinion this error was not a sufficient basis for the conclusion that Dr Tingay's report was inadmissible.

Exclusion of other evidence given by Mr Goff, Dr Tingay and Mr Bowman

318 We do not propose to give separate consideration to the exclusion of other evidence complained of in ground 21. We have dealt, above, with two of the matters principally relied upon by the appellant in its submissions, being the exclusion of Mr Goff's report and the exclusion of Dr Tingay's report. The other matters referred to were not the subject of any submissions in the appeal, other than a generalised statement that the relevant rulings and errors have been fully set out under ground 21. Moreover, the appellant has said, in its written submissions, that, for the purposes of the appeal, it 'specifically' relies upon the exclusion of Mr Goff's report and statement (exhibits 3008 and 3015) and Dr Tingay's report (exhibit 32). Should it be necessary to deal with any of the other rulings, this can be done when addressing other matters left open for further discussion.

The contention that the exclusion of the written evidence of Mr Goff and Dr Tingay had no consequence

319 Counsel for the respondent advanced a number of propositions in support of a submission that the rulings made by the trial judge excluding written evidence from Mr Goff and Dr Tingay was of no significance. The first of these was that each of these witnesses had given oral evidence to which no objection had been taken, making the exclusion of their written reports academic. Secondly, he advanced the proposition that the trial judge had 'plainly read all of those reports and took into consideration those things which were admissible' (appeal ts 165). He added that the exclusion 'was after having considered all the evidence' (appeal ts 167). He also tendered a schedule, by way of elaboration of his submissions, in which he pointed to the fact that many of the considerations relied upon by Mr Goff had been taken into account by the respondent's experts and, hence, found their way into evidence.

320 These contentions are not sustainable. There is no doubt that the trial judge entirely excluded from consideration the whole of the reports to which we have referred. Nor is there any doubt that the opinions contained in the reports were the critical features of those reports. It cannot sensibly be suggested that similar opinions expressed by those experts, for similar reasons, in the course of their oral evidence were taken into account. Plainly, the trial judge excluded their opinions, wherever expressed. Counsel for the respondent did not take us to any oral evidence, consistent with the opinions expressed in the excluded reports, that could be regarded as having been taken into account by the trial judge. Indeed, it is difficult to see how he could have done so given the reason expressly given by the trial judge for the exclusion of the evidence. That reason was no less applicable to the oral evidence than it was to the written evidence.

321 As to the submission that the trial judge must have considered the material giving rise to the opinions because he ruled on the admissibility of those opinions, that is, to use the words adopted by counsel for the appellant, a 'legally mysterious' proposition. If the reports were ruled inadmissible, it necessarily followed that anything in them was not taken into account unless proved by other, admissible evidence.

322 Nor can it be said that the trial judge took general planning considerations mentioned by the experts into account, even though he excluded their opinions, in such a way as to undo any prejudice to the appellant resulting from the exclusion. It is enough to refer, in that respect, to the trial judge's conclusion that any optimism that a hypothetical purchaser might have as regards the potential for development of the Mount Lawley land 'would be tempered by the knowledge that the planning strategy then in place [assumed by him to be that which existed in 1987] involved expansion into urban corridors some distance away' [641].

323 That brings us to the appellant's valuers. We will deal with each in turn.

324 Mr Rae, a licensed valuer with 25 years experience, prepared a report dated 3 June 2005 (exhibit 3012). He said that the basis for his valuation was to be

an assessment of the market value of the land as it would have appeared to a hypothetical vendor and purchaser, both perfectly acquainted with the land and all its characteristics including its potential for development, in May 1996, assuming that:

(1) The land had not been reserved for Parks and Recreation ...

(2) There had been no re-zoning of adjacent property under the Scheme represented by MRS Amendment 879/33 and 950/33.

325 He recorded that he was instructed to disregard 'the surrounding developments of Ellenbrook and Egerton insofar as they are part of the MRS' and, in particular, to disregard the effects on market value of the revised Ellenbrook PER and the relevant MRS amendments. Mr Rae said that, to the extent that environmental factors should be taken into account, he had had due regard to the contents of the expert environmental reports prepared by Dr Tingay and Mr Bowman. He also said that he had been provided with the expert planning report prepared by Mr Goff.

326 On page 9 of his report Mr Rae refers to Mr Goff's report. He mentions that Mr Goff's report suggests that the areas reserved may have been protected by reservation under the MRS or may have been included in the urban zone, with the wetland being protected by a condition of development approval. Mr Rae also mentions that Mr Goff had concluded that Lot 46 and the subject portions of Lot 47 would in all probability have been zoned urban at the relevant dates. He then said (also at page 9):

[T]he expert planning [report] identified above [has] concluded that the highest and best use of the subject land would have been 'Urban' and in particular 'Residential Development'. The Goff Report in fact concludes that 'the subject land would in all probability have been zoned Urban as at 9 May 1996'.

Following my own study and analysis of the Environmental and Planning reports identified above, I agree that at the effective dates for valuation the subject land had obvious 'Urban' potential and I have assessed the market value of the landholding on this basis.

327 In cross-examination, Mr Rae was asked whether he had assumed that the land had been rezoned by the valuation date and had assessed its value in light of what he thought was its potential for development. He replied (ts 9353):

My understanding of ... my instruction ... [was] to ignore the rezoning of adjacent land and anything to do with the MRS and the relevant amendments. My understanding was that the reports prepared by Bowman ... and Goff, presented a case to suggest that regardless of what had happened ... it would have happened anyway, and that was the basis for me arriving.

Later in cross-examination (ts 9355 - 9356), the following exchange took place:

[Y]ou would agree with me that your valuation for the Mount Lawley land is based on an MRS urban residential development zoning?---Well, based on my understanding of those reports prepared for me by the experts, it's my understanding that the land had obvious urban potential as at 1996.

Yes. You have assumed - let's be clear about it ... you have assumed an MRS urban zoning for the purposes of a full residential development?---Yes.

With lot sizes between 500 and 700 square metres?---Perhaps, yes.

328 On page 2 of his report, Mr Rae had written that the property valued by him forms part of the developing Ellenbrook community. In cross-examination, he said (ts 9354) that this was just a statement of fact, not part of what he had taken into account. Later, in cross-examination, he was referred to his comment on page 5 of his report that the 'nearest services were provided within the existing Ellenbrook development, the front of which was some three kilometres to the south of the subject landholding' at the effective date of valuation (ts 9356). He was cross-examined in relation to this comment as follows:

Does that reflect your understanding of Mr Goff; namely that although we are all to disregard the actual rezonings which occurred in 92 and 94, in fact something similar would have happened all over again?---That's my understanding basically, yes.

So you have assumed that because the ... services ... were in fact about three kilometres to the south within Ellenbrook in May 1996, something akin to that would have happened even if we ignore the reservation?---That's my assumption, yes.

329 Mr Rae was also cross-examined in relation to an earlier valuation of the Mount Lawley land which he had prepared for the Ministry for Planning in June and July 1996. The earlier valuation report dated 7 May 1996 (although prepared after this date) was tendered at the trial as exhibit 427. Mr Rae agreed that he had used the same comparable sales, that he had reached an identical rate in both valuation reports and that the only difference in the total amount was that on the earlier occasion he had accorded full value to the wetlands and included the area of controlled access highway (ts 9357 - 9358). In the earlier valuation, he had assumed the land was zoned rural but had obvious urban potential (ts 9358). He had also assumed on this occasion, in the absence of any information to the contrary, that there were no environmental constraints on development (ts 9361). The earlier 1996 valuation report had included information in relation to the Ellenbrook development. Similar passages about the Ellenbrook development were included in his 2005 report. Mr Rae agreed, in cross-examination, that he had used this information as a basis for his 1996 valuation, but not as a basis for his later 2005 report, which only outlined the information as a matter of fact (ts 9359). Mr Rae agreed that the reason his two reports have identical outcomes was largely because in the 2005 report he assumed, relying on Mr Goff and Dr Tingay, that what he was to disregard would have happened anyway (ts 9360).

330 In his 2005 report, Mr Rae compiled a list of comparable sales of en globo landholdings in the metropolitan region between the years 1992 and 1996. In the list, he noted the suburb, price, size of area, date of sale and price per hectare for each landholding sale. He also made very brief comments about each sale. Sometimes, these comments indicated the land's zoning such as, for example, 'Virgin scrub zoned rural', 'Future residential land zoned rural/urban' and 'Proposed 98 special residential lots (up to 150 lots potential), at date of sale zoned Rural X/General Rural'. Generally, the comments briefly addressed the prospects or stage of development of the landholdings sold. Some examples are: 'This property has single residential potential'; 'Future urban land subject to rezoning sewer water & drainage constraints'; 'This property was purchased by Homeswest with an anticipated lot yield of 700; currently being developed as the Norfolk estate'; and 'Land sold prior to approvals, medium to long term potential'.

331 In his report, Mr Rae said that the listed sales could be put into three categories: land which was 'zoned and ready for urban development'; land which had 'a deferred urban status in the Metropolitan Region Scheme'; and 'land which was zoned for rural use but may have had potential for urban development at some time in the future'. He worked out a range of values per hectare for each category from his analysis of the properties. However, he did not outline which listed sales he placed in which category in working out these ranges.

332 Mr Rae said that he relied essentially on evidence of market activity in the 'deferred urban' category in assessing the value of the Mount Lawley land. He summarised the value of the landholdings in this category as being between $30,000 to $70,000 per hectare. He identified six sales which he considered had particular relevance. The prices for the landholdings in these six cases ranged between $31,757 per hectare and $78,120 per hectare. The comments he made in the list in relation to these particular landholdings included: 'Currently zoned Rural X future residential development purchased by Peet'; 'Purchased by Landcorp from BankWest. Five year potential'; 'This property was estimated to yield 560 residential lots, shopping centre site, community centre and primary school'; and 'Property purchased by Summit from Homewest. Only some 16 ha not utilisable due to influence of Bennett Brook. Approvals in place for 357 lots, commercial site and 8 group housing sites, Summit to return 33 lots, and 4 group housing sites to Homeswest'. Mr Rae said, in respect of these specifically identified landholdings (page 10 of his report):

In each case, these landholdings have the potential for urban development in the short to medium term, depending primarily on the availability of servicing infrastructure.

The best estimates available at the time that each of these sales was negotiated would suggest that the landholdings could be expected to realise their respective development potential in the subsequent 3 to 5 years period.

Discussions in July 1996 with the consulting engineers engaged by the developers of Ellenbrook suggest that, at the prevailing rate of lot production, the front of urban development could be expected to reach the subject landholding in the following 3 to 5 years. They have also confirmed that the servicing of the subject landholding could comfortably be accommodated by the then existing and proposed infrastructure planned for the development of Ellenbrook.

333 In cross-examination, Mr Rae agreed that all except one of the landholdings that were identified as having specific relevance were zoned urban, not urban deferred, at the date of sale (ts 9346). Mr Rae said that his use of the words 'urban' and 'deferred' in the report did not 'refer to specific individual zoning classifications'. He explained (ts 9346):

I think in categorising those value ranges or analysing the sales, what I have attempted to do is demonstrate that the value of urban land-holdings which are immediately available for development is 90,000 to 250,000 dollars per hectare, whereas ... landholdings regardless of their zoning which are short to medium term prospects for development had a value of between 30,000 and 70,000 dollars per hectare.

334 He confirmed that the specific landholding sales used as comparables could have been expected to realise their respective development potential in the subsequent three to five years (ts 9346 - 9347).

335 Mr Rae valued the Mount Lawley land by applying a rate of between $45,000 per hectare and $50,000 per hectare. This rate, he said, represented 'a fair and reasonable estimation of the market value of the land with urban potential'. He elected to apply a discount of between 30% and 40% in 'deriving a rate of $30,000 per hectare to be applied to the wetlands'. Mr Rae's opinion was that it was likely that a number of the comparative sale landholdings may also have contained areas of significance that might not be available for full urban development and that the 'dollar rate per hectare derived by analysis of the sales evidence may well reflect both known and unknown development constraints'. However, he said that, 'notwithstanding this likelihood', he had elected to discount the value of the wetlands contained with the Mount Lawley land. He said 'I believe that a prudent prospective purchaser with similar knowledge [to the environmental and planning report writers] at the effective dates would have applied a lesser rate to the sensitive land than that which was likely to be applied to the land with urban potential' (page 11).

336 Mr Rae applied the lower wetlands rate to 41.31 hectares of the Mount Lawley land and the higher rate to the remaining 259.795 hectares. The total value given to the Mount Lawley land reserved for parks and recreation as at May 1996 was accordingly calculated as $13,580,000.

337 Mr Logan prepared a valuation report dated 13 June 2005 (exhibit 3010). He also gave evidence at the retrial.

338 Mr Logan recorded the instructions given to him in regard to the preparation of his report. He said that he was told to 'disregard the effects on valuation of' MRS Amendments 879/33 and 950/33. He referred to the Full Court's summary of its conclusions at [331] of its reasons in the first appeal as providing guidance for his valuation.

339 Mr Logan's report contains significant discussion of planning documents, particularly the 1990 DPUD Statement and Metroplan, and their effect on the apparent development potential of the Mount Lawley land. He also discussed, at some length, the factors that he considered would have demonstrated or diminished the development potential of the Mount Lawley land to a developer or purchaser in 1996. His summary, in this respect, was as follows (page 13 of his report):

In respect of Lots 46 & 47, the positive factors included:

• population pressures in Perth and an urgent requirement for an increase of urban land supply,
• the potential and preference for a substantial North East Urban Corridor and market expectation of a dynamic corridor for production of residential lots,
• part of a large land-holding assembly north of the regional thoroughfare of Gnangara Road and beyond the Swan Valley agricultural protection area,
• the start of residential development north of Gnangara Road, with The Vines development a short distance to the east,
• good proximity to Perth, less than 25 kilometres from the City and 12 to 15 kilometres from the Midland Regional Centre.

The negative factors to be considered in respect of Lots 46 & 47 were:

• no clear forward planning statement about urban land use from the UEPS however this appears compromised by steps to ultimately reserve the land 'Parks and Recreation' [this statement reflects his understanding that any indication in planning documents since 1987 that the Mount Lawley land would be excluded from the future urban areas and included in a biological corridor had to be ignored because it constituted a step in the reservation of the land],
• wetland boundaries proclaimed over an approximate area of 75 hectares in 1992, which by regulation required protection and the establishment of a buffer of some 50 hectares,
• no immediate or short term servicing being apparent for the urbanisation of Lots 46 & 47 although services were nearby at The Vines.

In his evidence at the retrial Mr Logan said that these were matters which he thought would weigh on a vendor and purchaser's mind in 1996 (ts 9374).

340 Mr Logan's opinion was that, given these factors, the buyer of the Mount Lawley land would have sought advice from 'a multi-disciplined' team of consultants experienced in assessing land of this nature and that the market value of the Mount Lawley land would have been dependent on the advice received. He said (page 14):

Although portion of the land was categorised as a 'lake', there were other examples in an expanding Perth urban area that at the relevant time also included wetland areas zoned 'Urban' or 'Urban Deferred'. It is therefore considered likely that a buyer of 301 hectares of the subject land ... on 9 May 1996 would make a decision on value that took into account the nature and quality of information provided by consultants and it is clear from [advice] received from Goff ... that [this expert] had every confidence that the characteristics of land was [sic] suitable for urban development. This confidence also follows the environmental advice that considers the EPP lake boundaries require redefining and under Goff's interpretation of Tingay and Bowman, a likely conservation area (inclusive of lakes and buffers) of between 37.03 hectares and 67.9743 hectares.

341 Mr Logan agreed in cross-examination that Mr Goff's view was 'one of the pillars' of his report (ts 9368) and that he had adopted Mr Goff's opinion that the Mount Lawley land would in all likelihood have been rezoned to urban by May 1996 (ts 9369). He also agreed that his view that the land had full development potential was dependent on the opinions of Mr Goff, Dr Tingay and Mr Bowman (ts 9369). In this respect, he said, 'I have formed my own opinion from other reasons as well, but fundamentally without their opinion, my opinion may have changed'.

342 Mr Logan said that he had also come to his own view about planning matters, although Mr Goff's opinion was 'very supportive' of his own opinion (ts 9370). Mr Logan's opinion was that the Mount Lawley land 'had definite Urban potential in 1996, but that there were risks in assuming the likely extent of urban development across the total land-holding'. He agreed, in cross-examination, that the 1990 DPUD Statement was one of the factors that led him to the view that the land had potential to be developed for urban purposes. This was because it indicated the north-eastern corridor and was the 'starting point of a lot of land getting up-zoned to Urban to meet the future needs of Perth's growing population' (ts 9371 - 9372). However, he had disregarded the statement's identification of the Mount Lawley land in a park area because he considered this to be a step in the reservation of the land (ts 9372). Mr Logan also acknowledged that he looked to Metroplan to indicate an official desire to rezone the north-eastern corridor (ts 9373), but disregarded the fact that it treated the Mount Lawley land as falling within a park (ts 9374).

It is ... relevant to observe that market value levels tend to track parallel to the risk associated with the investment. It is therefore to be expected that land with subdivision approval will be purchased at a higher value than the same land zoned and without subdivision approval. Stepping to a lower value level would be expected for the same parcel not zoned and likewise if the land was indicated to have potential for up-zoning to urban, this would be expected to have a higher value than the same parcel with no indicated potential from forward planning documents but having potential emanating from further studies of the characteristics of the land which indicate a suitability for an application to seek an urban rezoning.

344 He was cross-examined in relation to these comments. He accepted Mr Goff's opinion that the Mount Lawley land was likely to have been zoned urban at the date of valuation, but he did not assume that the land had subdivision and development approval as at 1996 (ts 9379). Accordingly he placed the Mount Lawley land in the second category of 'land zoned and without subdivision approval' in the hierarchy that he had identified (ts 9379). Mr Logan said that if he was to dismiss Mr Goff's opinion, he would have thought that the Mount Lawley land lay in the lower category in the hierarchy of 'rural with urban potential' at the relevant date. He was cross-examined as follows (ts 9380):

But being in the third category depends upon, according to you, the land having indicated urban potential from forward planning documents such as Metroplan, [the DPUD Statement] and so on?---Yes.

Hypothetically, if we did not have any of those official intimations from 1987 through to 1996 [including the 1987 Corridor Plan Review, the 1990 DPUD Statements and Metroplan] ... if we were to disregard all those then the Mount Lawley land would be in the fourth category?---Yes, it would. Well, I mean, what you're sort of saying is you're ignoring everything. You're ignoring all forward planning. And that would be the same for all corridors, so you're left with rural land and a question mark about potential because you've got no forward planning to direct you, so everything would have been in the same basket.

345 In his report, Mr Logan included a section comparing the Mount Lawley land to 'broad hectare sales evidence'. He separated the sales evidence into 'prime evidence' and 'secondary evidence'.

346 The prime evidence consisted of about 20 broad hectare land sales which he considered 'the most comparable sales to broadly compare to the subject land on an Urban or Urban Deferred basis'. In cross-examination, he said that these reflected 'the full urban rates generally of sales that can be compared to the banksia woodland area of' the Mount Lawley land (ts 9400). He said that land sales were included in the prime evidence if they were sold 'in anticipation that there may be some urban potential' and if their size was 'significant' (ts 9401). Mr Logan gave a short description of each landholding sale, indicating the intended use or development potential of the land and, usually, its current zoning. Two were zoned rural, one 'Rural X' and the rest were zoned urban in the MRS (ts 9401 - 9402).

347 Mr Logan commented on these 'prime evidence' landholdings and compared them to the Mount Lawley land in his report. His commentary addressed, selectively, matters such as comparative land size and relative distance from the ocean, city or urban services. He considered that some sales in the list indicated 'urban values for stronger locations at the relevant date of valuation'. He considered that others were, at the date of valuation, in 'less dynamic' or weaker urban corridors than the north-eastern corridor.

348 Mr Logan treated another eight broad hectare land sales as secondary evidence. Six of these were parcels of land with conservation values that had been sold to the government. Most were reserved for parks and recreation. He said that these government purchases demonstrated that 'at that time in the marketplace the government were paying alternate value, or value for land required for conservation on an alternate use basis reflecting the surrounding land uses' (ts 9400). The other two sales showed a lower rate for a 'less intense use' of the land than 'full urban' (ts 9400 - 9401).

349 Mr Logan was cross-examined in detail in relation to particular comparisons he had made from this sales evidence.

350 In cross-examination, Mr Logan provided other general indications of how he had used the comparable sales in arriving at his valuation. He said, for example (ts 9403), that, '[I]f I am showing sales in stronger locations and weaker locations, I am getting parameters of value to make my judgment'. Later, he said (ts 9404), '[T]he best yardstick of comparison is to try and find land that's got similar characteristics, similar location attributes, similar ability to develop at the same pace with similar lot prices to be generated and it's a similar size and the project period is going to be similar'. After he had been cross-examined in relation to the particular sales constituting his primary evidence, the following exchange took place in the course of cross-examination by counsel for the respondent (ts 9411):

From all of that evidence you distil a value of 50,000 for the Mount Lawley?---I do, yes.

You haven't explained, apart from setting out all these sales, how you actually got to the 50, have you, in your report?---No, probably not, no. It's a value judgment at the end of the day.

351 In arriving at his valuation, Mr Logan divided the Mount Lawley land into three categories: the 'confirmed' conservation area of 67.9743 hectares; the 58.0906 hectares of land currently categorised as lakes and buffers, but considered by expert environmental consultants as suitable for reassessment by the relevant authorities; and the remaining land considered suitable for urban use.

352 Mr Logan considered that the land considered suitable for urban use should be accorded an urban value. He said that he considered this to be '50,000 per hectare after consideration of evidence prevailing in 1996 and consideration of the expected dynamics of this locality'.

353 He considered that a discounted value of $30,000 per hectare should be applied to the 58.0906 hectares of questionable wetland and buffers. He applied a discounted value to this land to 'account for uncertainties associated with negotiations with government'. His method of arriving at the 40% discount was questioned in cross-examination. He confirmed that he had arrived at a rate per hectare by examining the sales evidence. He was asked (ts 9386):

By 'sales evidence' you mean the sales of wetlands to the government elsewhere?---Not necessarily, but other lands that may not be zoned, other lands that have some longer term potential; a whole raft of reasons why they have got different values. Out of that basket of values, my judgment came to this portion of the land to have a value in the vicinity of $30,000 a hectare.

He had also considered, from his experience of looking at 'that sort of mixed raft of issues that come into the marketplace', that a discount in the range of 30% to 50% was a reasonable adjustment for the relevant risks. The rate of $30,000 per hectare derived by him from the sales evidence 'married' with a 40% discount, satisfying him that it was reasonable (ts 9387 - 9388). He was questioned further as follows (ts 9388):

Isn't it the case that your election of the 30 to 50 per cent discount ... is dictated in this case ... by the confidence expressed to you by Tingay and Bowman?---Yes, it is.

And if that confidence were reduced, if they were equivocal about it, you would increase the discount to substantially more?---Yes.

354 In respect of the 'confirmed' conservation area, Mr Logan said that the value would 'depend on the perceived "trade off" to gain approvals or whether such land would be ultimately reserved "Parks and Recreation" under the MRS, for protection, which would have inferred eventual government purchase'. He also said (page 16 of his report):

In essence, this portion of 67.9743 hectares adds value to the land-holding in an environmental context, by adding an amenity for land to be subdivided around it. I therefore conclude that a purchaser would recognise the attributes of this lower lying portion of the land-holding as adding some value to the balance.

355 He treated this land as rural land (ts 9388). He considered that a buyer would be prepared to pay 'at least equivalent to the prevailing General Rural rates being paid north of Maralla Road'. He adopted a rate of $10,000 per hectare.

356 Mr Logan accordingly assessed the total value of the 301.105 hectares of land, as at 9 May 1996, to have a market value of $11,174,500 (an average of $37,112 per hectare).

357 Mr Zucal has been a licensed valuer for about 40 years. His report dated 3 June 2005, setting out his valuation of the Mount Lawley land as at 9 May 1996, was admitted as exhibit 3011. He also gave evidence at the retrial.

358 His report records that his valuation 'is to reflect what a hypothetical vendor and purchaser, both perfectly acquainted with the land and all its characteristics including its potential for development, would take into consideration in the event of sale' (page 3). He says that his valuation is to 'exclude the effects' of MRS Amendments 879/33 and 950/33 and that, in doing so, he is required to assume that the land has not been reserved for parks and recreation. Mr Zucal says that his valuation is 'to be based primarily on comparison with en globo sales of similar land and to reflect the conclusions adopted by the landowner's town planning [expert]', being Mr Goff (page 4). He says that he has read the environmental reports of Mr Bowman and Dr Tingay.

359 Mr Zucal classified 260 hectares of the Mount Lawley land as 'urban land suited to residential development' and 41.105 hectares of that land as wetlands. He adopted this approach after outlining Mr Goff's summary of Dr Tingay's wetland protection options.

360 For the purposes of his valuation, Mr Zucal assumed that there would be a parks and recreation zoning in respect of 41.105 hectares of wetlands area and urban zoning of the remaining land. He accepted Mr Goff's opinion that the land would mainly have been zoned urban at the valuation date (ts 9275, 9280, 9281). In relation to his assumption with respect to the zoning of the wetlands, he said in his report (page 7):

I note Mr Goff ... states ' ... these areas may have been protected by a reservation for "Parks and Recreation" under the Metropolitan Region Scheme or alternatively the land may have been included in the "Urban" zone but the wetland protected by a condition of development approval.'

I have accordingly elected in my valuation to reflect the environmentally sensitive nature of the wetlands as being reserved under the Metropolitan Region Scheme as 'Parks and Recreation'.

361 However, Mr Zucal did not rely solely on the opinion of Mr Goff. He appears to have put forward his own opinion in relation to the apparent potential of the land for urban development. On page 4 of his report, under the heading 'location', Mr Zucal said:

Ignoring the existing Ellenbrook Newtown residential development, the locality in 1996 was of a rural nature. The potential of the subject locality however for urban development was likely to have been apparent to the real estate market for the following reasons:

• Relatively close proximity to the Perth Central Business District compared to other development fronts such as Secret Harbour, Baldivis, Merriwa, Yanchep, and Stratton, etc
• Residential development in Ellenbrook was first proposed by Sanwa Vines and HomesWest, who received a statement from the Minister for the Environment for approval to implement urban rezoning and subdivision development of land in Ellenbrook on 13 October 1992, subject to legally binding environmental conditions.
• The prestigious Vines Resort and initial residential estates were built and opened at the end of 1989.

362 Mr Zucal was referred in cross-examination (ts 9281) to this passage of his report, as follows:

[Y]ou give three reasons ... The second one is that at Ellenbrook there had already been approval for urban rezoning and subdivision?---Yes

But in fact it has gone a step further than that in your report, hasn't it? You actually ... assume ... that the Mount Lawley land is zoned urban by 7 May 1996?---Yes.

And following on from what you have written here, you assume also that the Sanwa Vines land and the Homeswest land is also rezoned urban?---Yes. I'm assuming that Ellenbrook per se would have been zoned urban.

From that, you deduce that it had potential to take the next step which is development?---Yes, subject to normal conditions.

363 He later clarified the assumptions which he had made for the purposes of his valuation (ts 9304 - 9305). He assumed that the Mount Lawley land had in May 1996 been zoned urban together with the Ellenbrook land. Further, he assumed that there were no impediments to subdivision and development approvals for the Ellenbrook land. He then made the decision, on his inspection of the land, 'that the Mount Lawley land was similar to Ellenbrook land'. He consequently saw 'no impediment under normal circumstances to that land being zoned in a similar manner to the rest of Ellenbrook' and 'having the same development potential'.

364 Mr Zucal was further cross-examined in relation to the second of the reasons given by him in support of his conclusion concerning the urban potential of the Mount Lawley land, as follows (ts 9282):

You understand, of course, that the Minister for the Environment would be making any statement only because WAPC had already done something about rezoning Ellenbrook urban?---Yes, yes.

Yes, so it's really the attitude of WAPC, not the attitude of the Minister for Environment that you are relying on?---Yes.

... I am curious about why you referred to the Minister for the Environment rather than to the WAPC?---Because there is a publication. There is a paper put out which states that the Minister for the Environment has agreed on these matters ... it's called, 'Urban rezoning, subdivision and development, Ellenbrook, Shire of Swan.' It's bulletin 722 dated November 1993.

365 He was later cross-examined in relation to other matters that he had thought of at the time of his report that indicated that the Mount Lawley land had urban development potential (ts 9320). He referred, in response, to the 'general dialogue and the papers put forward by State Planning Commission as to the attributes of the area for urban development'. He was questioned in this respect (ts 9320) as follows:

Those are things you have read in Mr Goff's report?---No. No, things that I've discovered myself.

And you are talking about such things as the north-east corridor plan?---Or prior to the north-east corridor plan.

All planning matters?---They are commentary, commentary made by State Planning as to the potential of Ellenbrook for future urban development.

We have heard evidence from the planners that the first intimation, the seed of the north-east corridor was in 1987. Are you talking about that document?---No, I'm talking about the one in January 1992 which moved on from that obviously where State Planning Commission made the comment that Ellenbrook was perceived to have a population of 80,000 for the 2008 hectares of Ellenbrook land.

So as a fourth matter you have relied on on those sorts of figures?---Well, there's a host of things that I read up on.

All planning matters? All emanating out of State Planning Commission and WAPC?---General commentary.

From the WAPC?---Not only from the WAPC. I think that I probably perused some shire documents or something.

Shire planning documents?---Well, if you want to call them planning documents, I suppose they are planning documents. They are relating to the future potential of the area for urban use.

Nothing else?---My observations when I inspected the land, my thoughts on the geotechnical qualities of the land, the juxtaposition of the state forest next door, the mining activity that was going on around there. These are factors that suggested to me that the land had some potential for urban use.

366 Although Mr Zucal said, in cross-examination, that he shared Mr Goff's opinion that the Mount Lawley land would only be zoned urban on the basis that Ellenbrook was also rezoned, he appeared to suggest that the market would have perceived that the Mount Lawley land was of a sufficient size to be subdivided and developed on its own (ts 9275, 9305). It was put to Mr Zucal that Mr Goff's opinion was that the Mount Lawley land would not have achieved urban zoning if it had to have access along Maralla Road and not through Ellenbrook (ts 9305 - 9306). Mr Zucal said that he had come to his own opinion, not dependent on Mr Goff's opinion, about the prospects of the Mount Lawley land becoming zoned urban independently of the rest of Ellenbrook. He agreed that his own opinion in this respect had influenced his valuation (ts 9306).

367 It was put to Mr Zucal that, in assuming for the purposes of the valuation that the land had already achieved urban zoning, he 'effectively ruled out any discount of the value because of the risk involved in rezoning' (ts 9282). He replied:

Well, at a different day, a different era, the land would have been zoned rural with perhaps potential for urban development. That particular situation would reflect the en globo value of the realty based on urban use, potential urban use. I believe I wouldn't agree with what you are saying about the realisation of risk by the urban zoning if I've interpreted your question correctly.

368 It is not clear to us what Mr Zucal intended to convey by this last answer. However, he was not asked to clarify it.

369 The approach adopted by Mr Zucal in his report for the purpose of valuing the land was one of making comparisons between the Mount Lawley land and 'sales of en globo parcels of land with "Urban" and/or "Potential Urban" zoning' (page 10). He considered eight sales of en globo parcels of land in an appendix to his report. For each of these land sales, he noted the sale price, sale date, size of the land area sold and a price per hectare. He attached aerial photos and plans of the landholdings. He also commented on the zoning, locality, topography and accessibility of the land and its distance from the Perth CBD and from nearest infrastructure services. Only one of the parcels of land analysed had a rural zoning under the MRS. The rest were zoned either urban or urban deferred.

370 Mr Zucal also gave a 'time frame from sale date to subdivision' for each identified land sale and referred to any subdivisional concept in place. The majority of the land sales analysed by him were expected to be subdivided within 8 to 10 years from their respective sale dates. A few had anticipated time frames of up to 15 years. One property sold expected to be subdivided within a year. Mr Zucal was cross-examined in relation to how he determined the time frame from sale date to subdivision for one of the en globo land sales used as a comparable in his report. At one point in cross-examination, he appeared to agree that he may have taken an approach to coming up with a time frame by looking at the land in question in 2005, seeing whether it was still undeveloped and estimating how long it might still take to develop (ts 9269). However, he later said that this was 'not entirely' the approach he had taken (ts 9270). He explained that he also arrived at the time frame through his knowledge of the area and his knowledge of the particular constraints and considerations in relation to the land's development (ts 9270).

371 Under the locality heading for each land sale identified in the appendix to his report, Mr Zucal made comments, such as: 'developing, northern coastal residential precinct'; 'rural locality some 2 kilometres south of Settlers Hills'; and 'rural locality near Armadale tip'. He also made general comments in relation to each of the landholdings. A few examples of such general comments are: 'Well regarded subdivisional land with southern development front providing subdivisional services'; 'Purchased for landbanking, pending extension of Settlers Hills redevelopment front'; and 'At date of sale, land had immediate potential for subdivision with services available for extension from neighbouring subdivision'.

372 Mr Zucal also gave a value range in respect of the nearest single residential lots for each land sale. He explained how he used this information in assessing the value of the Mount Lawley land in his evidence in cross-examination. He said (ts 9326):

By looking at ... sales in ... [particular] suburbs, I've concluded, and obviously it's hypothetically, that at the date of valuation, land in Ellenbrook would have a subdivided lot value for a lot of 500 to 700 square metres of a value of $53,000 to $55,000 ... That's my conclusion from that evidence. I've looked at the selected en globo sales and I've posed the question that if that land was simultaneously subdivided as at the date of valuation, what would the lot values be in those particular sales ... and then I have gone through all the selected en globo sales and determined by comparison with sales of similar properties nearby what the en globo lot subdivision would produce in the event of a subdivision. That's how I have used that information ... I have concluded that Ellenbrook land is worth $53,000 to $55,000 per subdivided lot ... and I've compared that or that has been looked at in comparison with the subdivided lots essentially for the en globo land hypothetically.

373 In the text of his report, Mr Zucal gave fairly detailed explanations for his opinion concerning the comparative values of the identified landholdings and the Mount Lawley land. He was cross-examined in some detail in relation to these comparisons. He concluded that, as a result of the comparisons he made, the likely value of the Mount Lawley land at 9 May 1996 fell within a range of $52,500 to $60,000 per hectare. He adopted a value of $55,000 per hectare for the assumed urban land. He adopted a value of $30,000 per hectare for the 41.105 hectares of assumed parks and recreation land. This produced a total value of $15,533,000.

The basis for exclusion of the appellant's valuation reports

374 As we have said, the trial judge excluded the evidence of the appellant's valuers for three reasons. The first was that they had adopted a position that was untenable, having regard to the trial judge's 'findings as to the development potential of the Mount Lawley land'. However, the trial judge's finding as to the development potential is undermined by his errors in freezing the planning considerations as at 1987 and wrongfully excluding the evidence of Messrs Goff, Auret, Singleton, Stokes and Smith. The second was that their position was untenable by virtue of the 'direction' given by the Full Court. It follows from what we have earlier said that this conclusion cannot stand. As we have said, the trial judge also found that the reports prepared by the appellant's valuers were inadmissible because they relied on the opinions only of Dr Davies, Dr Tingay, Mr Bowman and Mr Goff [656]. However, as was the case with Mr Goff's report, these reports were produced in June 2005, in accordance with directions given by the court, before the expert environmental, planning and valuation evidence relied on by the respondent had been produced to the appellant (also in accordance with the court's directions). In the circumstances, Messrs Zucal, Rae and Logan could not have referred to this other evidence in their reports. Nor was it necessary, in our respectful opinion, that they should have done so in order to make their own reports admissible. Any failure to have regard for relevant opinions of others was a matter going only to weight. Moreover, before their reports were tendered at the retrial, each of Messrs Zucal and Logan produced responsive statements (exhibits 3017 and 3013) as a consequence of their receipt of the respondent's valuation reports which, in Mr Wilson's case, contained a summary of all environmental and planning evidence and reports produced by that date (3 October 2005). Also, as we have said, Mr Goff, on whom the appellant's experts placed some reliance, also produced a responsive statement dated 29 November 2005 (exhibit 3015), in which he responded to reports and statements produced for the respondent by Messrs Auret, McNamara, Lumsden, Stokes, Singleton and Wilson. We have also mentioned that all three of the appellant's experts gave evidence, and were cross-examined, at the retrial.

375 As with Mr Goff, there is no basis for supposing that, if any of the appellant's valuers had changed his view or their views in any material respect once having read the materials presented by the respondent's experts, he or they would not have made this known to the court.

Other bases advanced for the exclusion of the appellant's valuation evidence

376 Counsel for the respondent contended that each of the valuers had been instructed to treat the Mount Lawley land as if it had been zoned urban and that this, of itself, should render their reports inadmissible. In the case of each of Mr Rae and Mr Logan, their valuation reports attached the instructions that they had been given. In neither case does it appear that they had been instructed to treat the land as if it was zoned urban. Rather, each appears to have formed the opinion that urban zoning for the substantial portion of the land would have been achieved, based on the information made available to them, including Mr Goff's report.

377 In the case of Mr Rae's valuation, the instructions given to him appear as appendix 1 to his valuation report. The relevant part of those instructions (given by way of a letter from the appellant's solicitors dated 15 December 2004) reads as follows:

As a result of the findings of the Full Court the presentation of the valuation evidence at the re-trial will have a different emphasis from the approach taken at the original trial. The basis for the valuation is to be an assessment of the market value of the Land as it would have appeared to a hypothetical vendor and purchaser, both perfectly acquainted with the Land and all its characteristics including its potential for development in May 1996, assuming that -

(i) the Land had not been reserved for Parks and Recreation or the Controlled Access Highway, and

(ii) there had been no rezoning of adjacent property under the Scheme represented by MRS Amendment 879/33 and 950/33.

In preparing a new valuation report ... you will need to disregard the entire 'scheme' by which the Land was reserved including all the steps which led to the making of the 'scheme'. Similarly you will need to disregard the surrounding developments of Ellenbrook and Edgerton [sic] insofar as they are part of the 'scheme'.

In particular you will need to disregard the effects on market value of -

• Ellenbrook Urban Rezoning Subdivision and Development Proposal PER April 1992
• MRS Amendment 879/33 (12 December 1992)
• MRS Amendment 950/33 (23 December 1994).

It is plain from this that the respondent's contention is not supported.

378 Counsel for the respondent next contended that the approach adopted by the appellant during the course of the retrial, in urging the trial judge to apply the traditional approach identified in Smith, had the consequence that the risk assessment was converted into a 'Yes' or 'No' answer to the question whether urban zoning might ultimately be achieved, without making any assessment of the percentage value of that likelihood in order to quantify the lost 'chance'. He relied, in this respect, on such cases as Malec v J C Hutton Pty Ltd [1990] HCA 20; (1990) 169 CLR 638, 643 and Sellars v Adelaide Petroleum NL [1994] HCA 4; (1994) 179 CLR 332, 349, 350. He also contended that, because, absent the Scheme, the land would still have been zoned rural at the time of valuation, the value should be assessed by assuming a rural zoning and adding a premium for the potential for upzoning. He contended that the reservation of the land could not alter the fact that this was the appropriate way to approach the valuation and that the experts relied upon by the appellant (including Mr Goff) failed to follow that approach. Consequently, he submitted, their evidence was inadmissible or untenable for these reasons also. He contended, in this respect, that, absent any specification by the appellant's experts of a percentage discount, it was not practically open to the trial judge to make his own calculation in that respect.

379 However, in our respectful opinion, none of this provides a sufficient reason for declining to take any of this evidence into account. It is correct that what was to be taken into account in valuing the land was the 'possibility or likelihood' of obtaining an urban zoning: San Sebastian 211 - 212; Murphy 597. However, the trial judge was able to examine the language of the valuers and of Mr Goff, and the information upon which each relied, in making his own assessment of the degree of probability of upzoning as, indeed, he did in the case of the respondent's valuers. As was submitted by counsel for the appellant, valuations, whether determined by a judge or not, involve matters that are not scientifically measurable and which involve assessments, often expressed in ranges and with varying degrees of confidence. There was no requirement that any of the valuers should have expressed their opinions in percentages and nor, for that matter, was there a requirement that the trial judge should arrive at his conclusion as regards value on some mathematical basis. What was needed was a qualitative assessment, supported by the evidence, of the prospects of an improved zoning so that this, in turn, might inform the valuation process.

380 In fact, the trial judge did not express his conclusion in any percentage terms. Rather, as we have said, he found that the hypothetical purchaser would be 'only cautiously optimistic that there was some potential for development' [641]. Moreover, Mr Wilson's valuation was broadly similar in approach to that adopted by Messrs Rae and Logan, save that he based his valuation on a different assumption concerning the zoning and consequently considered the most comparable sale to be one of rural land with only a limited urban potential. When the trial judge referred to this valuation he was, as we have said, prepared to find (by his acceptance of Mr Wilson's valuation) that the Mount Lawley land had some limited urban potential, again without finding it necessary to specify any percentage (other than by mentioning that Mr Wilson put a value on the dryland areas of the reserved land at a premium of 50% to 100% above the prevailing rural values for much smaller lots in close proximity to the Mount Lawley land).

381 Much the same is true of the trial judge's approach to Mr Carey's valuation [674] - [686]. Mr Carey considered that a buyer would have paid 'rural value plus a small [unspecified] component for future urban potential'. He relied principally upon the same comparable sale as had been principally relied upon by Mr Wilson. In [686] of his reasons, the trial judge mentioned that Mr Carey 'felt that a buyer would take "a punt" on some possible development although this would be reflected in only a small increase above the worst case position'.

382 Counsel for the appellant contended that, even if the appellant's valuers had, for any practical purpose, valued the Mount Lawley land upon the basis of a 'top down' approach and concluded that no discount should be allowed (and he submitted in that respect that some discount was allowed in the process of selecting ranges of values and then selecting the appropriate sum within each range), the question whether they were right to arrive at this conclusion was a factual question which could only be determined after weighing up all of the evidence, including that which the trial judge had wrongly found to have been inadmissible. He suggested also that, if the trial judge considered that the appellant's valuers were wrong in failing to allow for a discount, then it was open to him, on the basis of all of the evidence, to conclude what discount should have been allowed for by them and to value the land accordingly. We agree with each of these contentions. The fact that the appellant's valuation evidence was presented in the way it was as a result of a mistaken reliance upon the traditional approach set out in Smith should not, of itself, result in its inadmissibility. The trial judge should still have been able to make an appropriate assessment of the worth, and weight, of that evidence in considering what, if any, allowance should be made for urban potential of the land as a factor to be taken into account in the course of valuing it. Moreover, when making his own assessment of the percentage probability of the Mount Lawley land obtaining, at least in part, an urban zoning and assessing its value on that basis (as he did), there was no reason why the trial judge should not have taken into account the urban value per hectare put upon the land by the appellant's experts, subject to whatever limitations he found to exist in their evidence.

383 There remains, in this respect, the respondent's contention that the trial judge's findings excluding the evidence of Messrs Logan, Rae and Zucal and the report prepared by Mr Goff should be upheld upon the basis that each took into account steps in the Scheme, rendering their evidence inadmissible upon that basis also.

384 It is apparent from what we have said when dealing with the evidence of the appellant's experts that they did take into account documents which are accepted by both parties, for the purposes of the appeal, to have been steps in the Scheme. However, as we have said when dealing with Mr Goff's report, this was not a basis for excluding their evidence in its entirety. None of Mr Rae, Mr Logan and Mr Zucal relied exclusively upon evidence that was accepted to be steps in the Scheme. To the extent that they did so, this was a matter to be taken into account in assessing the weight of the opinions expressed by them. In any event, we have mentioned that each of the three valuers identified ranges of values for different categories of land falling within the Mount Lawley land. There was no reason why the trial judge should not have had regard to that evidence in assessing the value of the wetlands (albeit the appellant's valuers had treated that area as a smaller area than that found, and now agreed, to have constituted the wetlands), and also the buffer zone and the potential urban areas. It was consequently open to the trial judge, having made his own assessment of these areas, and of the degree of potential for upzoning, to make some allowance that took into account the per hectare values arrived at by the experts in respect of each of these areas.

385 It follows from what we have said that, in our respectful opinion, the trial judge was wrong to exclude the evidence with respect to the likely zoning of the Mount Lawley land absent the Scheme and also the valuation evidence that was led on behalf of the appellant. Grounds 2, 8 and 9 are to that extent made out. The balance of the matters raised by ground 2 should be stood over for later argument. These relate only to issues concerning the conclusions that should have been reached by the trial judge if he had had regard to the excluded evidence (grounds 2.5 and 2.6).

386 As to grounds 10 and 13, it is plain that the trial judge regarded the 175 hectares of dry land as having had very limited development potential. We have said that, in the paragraphs challenged by these grounds, he found that the suitability of the dry land was subject to matters which amounted to a considerable qualification [624 (12)] and that the hypothetical purchaser would only be cautiously optimistic that there was potential for development [641]. These findings were made after wrongly excluding from consideration the evidence to which we have referred. Whether that error was such as would, or should, have had any significance to the outcome (Brown v Churchill [2006] WASCA 17; (2006) 31 WAR 246) is a question for further argument.

387 As to ground 21, as mentioned above, we have, in the course of dealing with other grounds, dealt with what we take to be the principal matters complained of by this ground, being the exclusion of the reports prepared by Mr Goff and Dr Tingay. We have said that, to the extent that the remaining issues raised by this ground remain pertinent (these relate to specified paragraphs in Mr Goff's statement (exhibit 3015): see pars 136 and 137 of the appellant's substituted submissions), they can be dealt with when dealing with other issues that have been left over for further submissions.

388 The issues raised by pars (3), (4) and (5) of the notice of contention have been dealt with in the course of dealing with the grounds of appeal.

The contention that the appellant has departed from the case run at the retrial

389 Finally, we should deal with a contention, advanced by counsel for the respondent during the course of argument in the appeal, that the appellant has departed from the case that it ran at the retrial and that it should not be permitted to do so. He also contended that the appellant had changed its case during the course of the appeal as regards the extent of the land with urban potential.

390 Counsel for the respondent contended, first, that, had it been known by him that the appellant would acknowledge (as it now has, but did not at trial) that 126 hectares of the Mount Lawley land should be preserved, he would, for example, have cross-examined Mr Goff with respect to that proposition so as to ask him whether, on that assumption, he considered that the rest of the land would have been urbanised. However, the fact that the appellant chose not to run arguments on appeal in respect of which it had been unsuccessful at the trial does not mean that it has changed its case. All that it means is that it no longer contends that the whole of the land would have been zoned urban. Its contentions in that respect are irrelevant to the opinion of Mr Goff, which was based upon his understanding of the evidence and his own experience and expertise. There is nothing to suggest that Mr Goff's conclusions in respect of the likely urban zoning were influenced in any way by the assumptions made by him concerning the likely area to be protected as wetlands. It is simply fanciful to suggest that 175 hectares of land might have been considered by Mr Goff to be too small a parcel to obtain an urban zoning in conjunction with that which might be obtained by adjoining land.

391 While the difference in the area of the land that was capable of urban use impacts upon the valuations prepared by the appellant's valuers, there is, as we have already said, no reason why their evidence concerning the per hectare value of the land, to the extent that it was likely to achieve an urban zoning, should not be taken into account. Also, if the appellant's valuers assumed an urban zoning (or relied on evidence making that assumption) instead of forming an opinion on the degree of urban potential that the Mount Lawley land had, the recognition that they should have formed such an opinion is not a change that prejudices the respondent. It was always open to counsel for the respondent to cross-examine the appellant's valuers on this basis, as indeed he did. Also, as we have earlier mentioned, the approach taken by the appellant's valuers in this respect is a matter going to weight, rather than admissibility. The trial judge was able to make his own assessment of the likelihood of urban zoning. Once he had done so, it was open to him to make use (subject to whatever adjustments he saw fit to make) of all of the evidence of value per hectare, including that given by the appellant's valuers, in valuing the land.

392 Counsel for the respondent also took issue with the suggestion, which he said was made for the first time during the appeal, that the buffer land had some greater 'amenity value' than the wetlands. It seems to us that this suggestion was put forward in evidence at the retrial. Mr Zucal said (ts 9256 - 9257) that the existence of the wetlands added to the desirability of the urban land and, it seems, he factored that into his valuation of the wetlands rather than exclusively into that of the urban land (see also ts 9314). (We have said that Mr Logan did something similar at page 16 of his report.) Although counsel for the respondent maintained his objection upon the basis that Mr Zucal did not specifically mention the buffer land in the course of his evidence, it is plain from his report that he was discussing the amenity value of all of the land that was not to be residential.

393 It consequently seems to us that there is nothing new in the appellant's contention that the non-urban portion of the land might have some amenity value. All that is new is that the contention, as it is now advanced, relates solely to the buffer land. We are unable to see how this could have prejudiced the respondent in any material sense (see, in this respect, Suttor v Gundowda Pty Ltd [1950] HCA 35; (1950) 81 CLR 418, 438). This is not a case of the kind referred to in University of Wollongong v Metwally (No 2) (1985) 59 ALJR 481, 483, relied upon by the respondent.

394 Finally, there is no substance to the suggestion that there has been a change of case in the course of the appeal as regards the amount of land having urban potential. The appellant's case on the appeal, as we understood it, was consistently conducted upon the basis that the valuation should have been conducted upon the assumption that 75 hectares of the Mount Lawley land comprised wetlands that could not be developed, that 50 hectares of the land comprised a buffer zone that could also not be developed and that the remaining 175 hectares of dry land was the only land likely to have been developed. There is, in any event, no challenge in the grounds of appeal to the trial judge's findings in that respect.

395 We have said that the question of costs is to be left over for later argument.

The cross-appeal and the cross-respondent's notice of contention

396 We have also said that, because the cross-appeal relates essentially to valuation issues (any overlap has been dealt with when dealing with the grounds of appeal), the cross-appeal and the contentions filed in response to it will be left over for later argument.

397 We would set aside the findings of the trial judge to the extent required by these reasons. Further submissions are necessary as regards what should now be done in the light of the conclusions at which we have arrived.

398 It may be helpful if we were to conclude by summarising our principal conclusions. These are as follows:

(1) We are obliged by the agreement of the parties, which in turn is consistent with the unchallenged decision in the first appeal, to regard the Scheme, for the purposes of s 36(2b) of the Scheme Act, as comprising Amendments 879/33 and 950/33 (which, amongst other things, reserved part of the Mount Lawley land and upzoned the Ellenbrook land).

(2) It follows from the agreement of the parties, consistently with the approach adopted by the Full Court in the first appeal, that it is the effect of Amendments 879/33 and 950/33 on the value of the Mount Lawley land that must be disregarded and not that of those amendments, or any other amendments, to the same effect that might have been made to the MRS, absent Amendments 879/33 and 950/33.

(3) Ignoring the effect on value of Amendments 879/33 and 950/33 as at the valuation date has the practical consequence of reviving the pre-amendment rural zoning for both the Mount Lawley land and the Ellenbrook land. Consequently, the fact of the reservation and upzoning must be ignored and the issue to be determined is what, if any, premium the hypothetical purchaser would be prepared to pay, as at the valuation date, over and above the rural value of the Mount Lawley land in order to reflect its urban development potential.

(4) 'The Scheme', for the purposes of s 36(2b), incorporates steps in the Scheme. However, an occurrence affecting value will be treated as a step only if it is attributable to the Scheme itself and not to some different, or as yet unformed, notion that ultimately led to the creation of the Scheme. A step must be attributable to the Scheme, not the Scheme to a step. That is to say, the step must have been taken in order to bring about the Scheme itself, or a variant of it that is not materially different. A step may be attributable to a Scheme even if the form which the proposed Scheme then took differed from that which the Scheme ultimately took, so long as the difference is not such as to lead to the conclusion that the Scheme ultimately created was not substantially that which had been proposed. The step must be taken with the intention of creating the Scheme or for the purpose of creating it, if it is to be attributable to the Scheme. The words 'attributable ... to the Scheme' in 36(2b) have the consequence that the effect on value of characteristics or location of the land, or other factors affecting the land (such as population pressures), which always had the capacity to enhance, or reduce, its prospects of development, and hence its value, are not to be disregarded merely because they led, ultimately, to the Scheme. The same is true of inherent characteristics of, or other factors affecting, land that is adjacent to the subject land, so far as those characteristics or factors are capable, independently of the Scheme (and its steps), of affecting the development potential, and hence the value, of the subject land.

(5) Neither party, in the course of the retrial, presented the trial judge with any principled definition of a 'step' in the Scheme.

(6) The trial judge erred, largely as a consequence of the approach adopted at the retrial by both parties, in his conclusion that the 1990 draft DPUD Statement released in May 1990 and the final version of that document released in November 1990 (which referred to 'the establishment of a major new urban growth area in the north-east') were steps in the Scheme.

(7) The trial judge erred in assessing the development potential of the Mount Lawley land on the assumption that the 1987 planning considerations were still applicable, with the consequence that he did not take account of the growth of the north-eastern corridor (putting to one side, of course, the development of the Ellenbrook land). Again, this error was contributed to by the approach taken up by the parties at the retrial.

(8) The trial judge, having been invited by the then counsel for the appellant to do so, was influenced in his approach to the valuation issue by the reliance placed by him on the 'traditional' approach identified in Smith. In adopting that approach, he was in error as it had no application to s 36(2b) of the Scheme Act. However, that error had no significant consequence. The trial judge approached the valuation issue upon the assumption that the Mount Lawley land would have been zoned rural at the valuation date, that the fact of the upzoning (of part of the Mount Lawley land and of the Ellenbrook land) and the reservation of the Mount Lawley land had to be ignored and that his task was that of determining what, if any, premium the hypothetical purchaser would be prepared to pay over and above the rural value in order to reflect the urban development potential of the Mount Lawley land. We have found that that was the correct approach.

(9) The trial judge's error in finding that the development potential of the Mount Lawley land should be assessed on the assumption that the 1987 planning considerations were still applicable led him to exclude evidence given by Messrs Stokes, Goff, Auret, Singleton and Smith that should not have been excluded.

(10) The trial judge also erred in finding that Mr Goff's report dated 31 May 2005 was inadmissible. That evidence was admissible and should have been taken into account. In reaching this conclusion (and that in (9) above) we say nothing concerning the weight that that evidence should have been accorded. The same comments are applicable to the second report of Dr Tingay, also erroneously regarded by the trial judge as having been inadmissible.

(11) The erroneous exclusion of the evidence referred to in (9) and (10) puts in question the trial judge's findings as to the development potential of the Mount Lawley land and, hence, on the issue of valuation.

(12) The trial judge was wrong to exclude the evidence given by the valuers who gave evidence on behalf of the appellant upon the basis that they had adopted a position that was untenable, having regard to the trial judge's findings as to the development potential of the Mount Lawley land (which, as we have said, took no account of the excluded evidence), and also on the ground that their position was untenable because they took account of planning considerations since 1987 (we have already found that planning considerations should not have been confined to that date). In arriving at that conclusion, we say nothing, once again, about the weight that should have been accorded to the appellant's valuation reports.

(13) We have also concluded that the trial judge was wrong to regard the appellant's valuation reports as having been inadmissible for the additional reason that they relied on the opinions only of Dr Davies, Dr Tingay, Mr Bowman and Mr Goff. We do not accept that any other basis existed for treating the appellant's valuation reports as inadmissible.

(14) We reject the contention, advanced on behalf of the respondent, that there was any material change of case by the appellant from that run at the retrial, or during the course of the appeal, as regards the extent of the Mount Lawley land that was likely to have been zoned urban, absent the Scheme. We also reject the contention that there was any material change of case regarding the 'amenity value' of the wetlands on the Mount Lawley land.