BETWEEN : WESTERN AUSTRALIAN PLANNING COMMISSION

Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA

Citation : KELLY -v- WESTERN AUSTRALIAN PLANNING COMMISSION [2006] WASC 208

Real property - Determination of market value - Applicability of "before and after" method - Applicability of summation method - Turns on own facts

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

Town Planning and Development Act 1928 (WA), s 11

2 McLURE JA: This is an appeal from the decision of Simmonds J as to the value of land acquired by the appellant under s 36(2b) of the Metropolitan Region Town Planning Scheme Act 1959 (WA) ("the Act").

3 The respondent is the registered proprietor of Lot 37 Wanneroo Road, Neerabup which comprises 4.0974 hectares ("the Land"), approximately 1 hectare of which is within the boundary of Lake Neerabup. The Land is zoned rural. On 3 November 1994, 1.4784 hectares of the Land was reserved for the purposes of parks and recreation ("the Reserve Land") under Pt II of the Metropolitan Region Scheme ("MRS"). The Reserve Land is landlocked and approximately 1 hectare of it is inundated with water in winter. The remainder of the Land is 2.6190 hectares ("the Balance Land").

4 In May 1999 the respondent applied for approval to commence development on the Land which development extended onto the Reserve Land. The application was refused. That refusal gave the respondent the right to claim compensation for injurious affection under s 11 of the Town Planning and Development Act 1928 (WA). He made a claim for compensation and that enlivened the appellant's right under s 36(2) of the Act to elect to acquire the Reserve Land. The appellant so elected on 18 July 2000. Section 36(2b) of the Act materially provided:

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

(a) ...

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

(i) ...

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

or

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."

The Scheme is Amendment 948/33 to the MRS which included a parks and recreation reservation of Lake Neerabup and its surrounds, including the Reserve Land.

5 The trial Judge used the "before and after" method of valuation to assist in determining the value of the Reserve Land. That is, he determined the value of the Land according to its highest and best use; he then valued the Balance Land at its highest and best use; and finally, determined the value of the Reserve Land by subtracting the value of the Balance Land from the value of the Land. The trial Judge relied on comparable sales to determine the value of each of the Land and the Balance Land.

6 The trial Judge held that the highest and best use for the Land and the Balance Land was for "lifestyle" purposes rather than subdivision or commercial purposes. As to the highest and best use of the Reserve Land he said (at [95]):

"The evidence was less clear on the highest and best use of the [Reserve Land] considered apart from the rest of the Land. On the evidence of the irregular shape and landlocked character of the [Reserve Land], and the testimony of the valuers ... it seems to me, however, that the [Reserve Land] would only be of interest to an adjoining owner, whether of the Balance [Land] or one of the lots bordering Lot 37, to its north or its south, putting aside a sale to the [appellant] itself ... This would then in my view mean that the highest and best use of the [Reserve Land] must be considered as identified with the highest and best use of the Land and the [Balance Land]."

7 The trial Judge found in effect that a house could not be constructed on the Reserve Land. Applying the before and after method the trial Judge concluded that the (before) value of the Land was $449,000 ($10.96 per square metre); the (after) value of the Balance Land was $276,000 ($10.55 per square metre); and the maximum value of the Reserve Land, determined by deducting the value of the Balance Land from the value of the Land, was $173,000 ($11.74 per square metre). Surprisingly, (even bearing in mind the expert evidence that ordinarily a smaller parcel of land will have a higher value per square metre than a larger parcel) the rate per square metre of the Reserve Land is significantly higher than the rate for the Balance Land notwithstanding that over 67 per cent of the Reserve Land is under water for a significant period.

8 The trial Judge also held that the likely hypothetical purchaser of the Reserve Land would be a hypothetical owner of the Balance Land (other than the respondent) who would be prepared to pay a premium for it. However, he concluded that he should not take the before and after value as the market value on the basis that market value would be expected to be some lesser figure "if the purchaser was not anxious but desirous to buy, after allowing for a seller not anxious but not unwilling to sell" (at [485]). He discounted the before and after value of the Reserve Land by approximately 19 per cent to $140,000 ($9.50 per square metre). Mindful that the before and after method of valuation may not be appropriate, the trial Judge used what he said were comparable sales as a check of his determination of value.

9 The trial Judge rejected the applicability of the direct comparison valuation method (also called the comparable sales method) used by the expert called by the appellant who applied different values to the dry and wetland portions of the Reserve Land.

10 Each of the parties called a valuer. Mr Vincent, called by the respondent, prepared a number of reports. In his initial report (exhibit 12) he concluded that the highest and best use of the Land and the Balance Land was to subdivide each into two lots. He adopted the before and after method of valuation and determined, by reference to comparable sales, that as at 9 November 1999 the value of the Land (before value) was $512,000, the value of the Balance Land (after value) was $341,000 and the difference between the two, being the value of the Reserve Land, was $171,000.

11 In his second and third reports (exhibits 13 and 14) Mr Vincent used the correct valuation date (18 July 2000) and proceeded on the basis that the Land had no subdivision potential. He valued the Land at $450,000 ($10.84 per square metre), the Balance Land at $277,000 ($10.40 per square metre) and the Reserve Land at $173,000.

12 The appellant called Mr Paterson. He stated in his report (exhibit 32) that the most accurate method to value the Reserve Land was the before and after method. He concluded there was no readily available subdivision potential for the Land or the Balance Land and using comparable sales, determined that the (before) value of the Land was $375,000 ($90,000 per hectare / $9 per square metre), the (after) value of the Balance Land was $293,000 ($110,000 per hectare / $11 per square metre) and the difference, reflecting the value of the Reserve Land, was $85,000 (presumably rounded up).

13 Mr Paterson used a second method of valuation which he described as "direct comparison" in which he broke up the Reserve Land into dry land (0.4784 hectares at $9 per square metre) and wetland (1 hectare at $3 per square metre) resulting in a total value of $73,056 which he rounded up to $75,000 ($5.07 per square metre). Mr Paterson recommended the higher value of $85,000 ($5.75 per square metre).

14 After the expert reports had been exchanged but before trial, the decision of this Court in Mount Lawley Pty Ltd v Western Australian Planning Commission [2004] WASCA 149; (2004) 29 WAR 273 was delivered. It was held in that case that "value" under s 36(2b) of the Act is market value which does not include compensation to the owner for what he or she had lost as a result of the appellant's election to purchase. Injurious affection and severance are forms of damage flowing from a resumption or compulsory purchase of land and both are in respect of land retained by the claimant. That is, injurious affection and severance are damage to the retained land, reflected in a diminution in its value. If there is any injurious affection or severance damage affecting retained land, it will be captured, together with the market value of the acquired land, by the before and after method of valuation.

15 In his examination-in-chief, Mr Vincent explained that his approach to applying the before and after method to the Land had changed since his original report. It had been drawn to his attention that the relevant exercise was to value the Reserve Land which required him to reconsider the applicability of the before and after method. He said in examination-in-chief (T 188):

"What was the result of that reconsideration?---My finding is that the before and after valuation can still be used to determine the actual value of the reserved portion.

How is that?---You approach it from the point of view that the reserved portion, if it's to be treated as a stand-alone entity, then it must be treated as a lot that is capable of being sold in the marketplace. If it's put into the marketplace, there are no buyers for that particular lot. It doesn't have a road frontage. It's landlocked. The reserved area is mostly contained within part of the Neerabup Lake. There are no buyers for that property other than an adjoining owner and the only adjoining owner in this particular case is Mr Kelly, so my approach to the matter was to hypothetically put that entity into the marketplace, who would buy it, and the answer is Mr Kelly. No one else can buy it. The [appellant] [has] to be ignored as the purchaser."

"When you speak of Mr Kelly or the adjoining owner are you speaking of Mr Kelly as a person or - - -?---No. Sorry. I'm hypothetically saying that Mr Kelly is the owner of the residue of lot 37. It doesn't matter who owns it. It could be Joe Bloggs. But the owner of lot 37 is the only buyer for the residual area, for the reserved area.

I see. So are you converting Mr Kelly to - - -?---I can depersonalise.

- - -a hypothetical purchaser?---Yes.

A notional purchaser. Is that right?---Yes.

...

... putting myself standing in the shoes of Mr Kelly, the reserved area becomes available as a separate entity that can be purchased by me. I would then consider what my property was worth without the reserved portion. Then I would consider what the whole of the property would be worth including the reserved portion. In effect it's a before and after in reverse.

...

And insofar as he is in truth the owner of the reserved portion are you also depersonalising him as notional vendor?---Yes, I am, yes. I'm hypothetically putting that reserved portion into different ownership. Hypothetically."

17 The respondent referred to the approach explained by Mr Vincent as the "adapted before and after" method. Mr Vincent acknowledged in cross-examination that the amount the hypothetical adjoining owner would pay as a premium would equal the injurious affection. The cross-examination was as follows (T 206):

"When you use the before and after method then, the adjoining owner is going to pay the same premium for the land, if I could call it that, as would equal the injurious affection to the land if it was resumed?---It will work out that way, yes, it will, but it's a different approach to it."

18 As I understand the appellant's grounds they are in substance that the trial Judge erred in:

(1) concluding that he had to find a hypothetical purchaser of the Reserve Land and that the hypothetical purchaser could be the vendor of the Reserve Land who was also the owner of the Balance Land;

(2) adopting the before and after method of valuation which compensated the respondent for injurious affection, severance and value to the owner, each of which are excluded from value under s 36(2b) of the Act;

(3) failing to apply the direct comparison or summation method of valuation;

(4) finding a before value of $449,000 and a rate of $10.96 per square metre generally applicable for Lot 37 by:

(ii) the higher the proportion of land inundated the less the overall value;

(iii) the respective areas of dry land and wetland were approximately 0.48 hectares and 1 hectare respectively;

(v) there were good views of Lake Neerabup from the Balance Land;

(vi) there was access from the Balance Land to Lake Neerabup;

(b) failing to find and have regard to the facts that:

(i) the value of the wetland was $3 per square metre, or alternatively the value of the Reserve Land was $5.07 per square metre, or $5.75 per square metre;

(ii) the inability to develop the Reserve Land was a function of its environmental attributes, not a function of the reserve;

(iii) sales to the appellant were of relevance to value;

(c) failing to ensure that comparable sales evidence for the Reserve Land reflected the facts set out in (a) and (b)(i) and (ii); and

(d) failing to determine that the value of the Reserve Land was $75,000 or alternatively $85,000.

19 At the hearing of the appeal the appellant sought leave to add a further ground of appeal in the following terms:

"In assessing the value of the [Reserve Land], the learned trial Judge erred by taking into consideration the effects of the Scheme on the 'after value' [of the Balance Land], contrary to s 36(2b) [of the] Act."

The respondent opposed the application and the Court reserved its decision on the question.

20 The respondent cross-appealed on the ground that the trial Judge erred in holding that the before and after value of the Reserve Land should be discounted.

21 The appellant's case was in substance that the before and after method used by the trial Judge compensated the respondent for the market value of the Reserve Land and the diminution in the value of the Balance Land arising from injurious affection and severance. Allied to that submission was the claim that it was not open to hypothesise that the purchaser of the Reserve Land was someone other than the vendor of that land as well as the owner of the Balance Land.

22 The appellant relied on a number of passages in the trial Judge's reasons (including [72], [74], [493]) that implied the respondent was entitled to compensation for injurious affection under s 36(2b) of the Act. It is unnecessary to determine whether the trial Judge misunderstood the effect of Mount Lawley. I propose to focus on the valuation approach he adopted and its appropriateness.

23 The Court held in Mount Lawley that value under s 36(2b) of the Act is market value. The Court continued (at [281]):

"To say that the appropriate value of the reserved Mount Lawley land is its market value is not the end of the matter. The term 'market value' is a convenient way of referring to the value to be ascertained by applying the principle derived from the decision of the High Court in Spencer v The Commonwealth ... that is, by posing the question (put by Griffith CJ at 432): 'What would a man desiring to buy the land have had to pay for it ... to a vendor willing to sell it for a fair price but not desirous to sell?' As Callinan J pointed out in Boland v Yates ... Griffiths J was there referring to a vendor and purchaser who were 'conversant with the subject at the relevant time'. Isaacs J referred to the notional parties as being 'perfectly acquainted with the land, and, cognizant of all circumstances which might affect its value, either advantageously or prejudicially ... ' (at 441). In Boland v Yates both Callinan J and Gleeson CJ (with whom Gaudron and Gummow JJ agreed) referred to the fact that land might have a 'special value', reflecting 'a value to the owner over and above the price which a hypothetical purchaser may pay' ... "

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

25 As noted in Mount Lawley, the concept of "special value" stems from the opinion of the Privy Council in Pastoral Finance Association Ltd v The Minister (NSW) [1914] UKPC 77; [1914] AC 1083. In that case the appellants claimed compensation in respect of land owned by them in Darling Harbour that had been resumed for a public purpose. The appellants had purchased the land with the object of transferring their expanding business to that site. Evidence was given at trial as to the savings and additional profits the appellants would make if the business had been transferred as intended. The question in issue was whether the appellants could be compensated for a capital amount representing those savings and profits in addition to the market value of the land. The Privy Council in answering that question in the negative said (at 1088):

"That which the appellants were entitled to receive was compensation not for the business profits or savings which they expected to make from the use of the land, but for the value of the land to them. No doubt the suitability of the land for the purpose of their special business affected the value of the land to them, and the prospective savings and additional profits which it could be shewn would probably attend the use of the land in their business furnished material for estimating what was the real value of the land to them. But that is a very different thing from saying that they were entitled to have the capitalized value of these savings and additional profits added to the market value of the land in estimating their compensation. They were only entitled to have them taken into consideration so far as they might fairly be said to increase the value of the land. Probably the most practical form in which the matter can be put is that they were entitled to that which a prudent man in their position would have been willing to give for the land sooner than fail to obtain it."

26 I see no relevant distinction between "value" and "special value" to the owner. The respondent did not put his case on the basis of value or special value of the Reserve Land to himself. To the contrary, the success of the respondent's case depends upon the owner of the Reserve Land being someone other than the owner of the Balance Land.

27 The purpose and effect of the before and after method is helpfully summarised by Hemmings J in Carson v Minister for Environment and Planning (1990) 70 LGRA 215 at 220 - 221:

"The subject resumption involved the compulsory acquisition of only part of an unsubdivided parcel of land. The 'before and after' valuation method is an acceptable tool, often employed by a valuer in such circumstances as one way of taking into account all elements of compensation to which the dispossessed owner is entitled. It is often the most appropriate method of valuation when the excised parcel is of unusual size or shape, or if other reasons make it likely to be difficult to sell or even unmarketable."

28 The respondent accepts that the before and after method captures, inter alia, any injurious affection and severance damage to the Balance Land but relies on the fact that the adapted before and after method captures the gain to the hypothetical purchaser, being the hypothetical owner of the Balance Land, the quantum of which gain equates to the consequential diminution in value of the Balance Land to its actual owner.

29 The respondent claimed that the Reserve Land was unmarketable or had a restricted market as a result of which it was appropriate to rely on the adapted before and after method, relying on Geita Sebea v The Territory of Papua [1941] HCA 37; (1941) 67 CLR 544; Collins v Council of the Shire of Livingston [1972] HCA 35; (1972) 127 CLR 477; Inland Revenue Commissioners v Clay [1914] 3 KB 466; Raja Vyricherla Narayana Gajapatiraju v Revenue Divisional Officer, Vizagapatam [1939] AC 302 ("Raja's case") and CSR Ltd v Valuer-General (1977) 42 LGRA 52.

30 In Geita Sebea the Commonwealth leased land from the plaintiffs for a period of 10 years during which term the Commonwealth constructed an aerodrome and associated works and buildings on the land. Subsequently, the land was compulsorily acquired by the Commonwealth. In an action for compensation, the High Court held that the plaintiffs were entitled to the value of the acquired land with such improvements as the Commonwealth was not entitled to remove at the end of the term less the value of the Commonwealth's leasehold interests. Starke J said (at [554]):

"The question remains how the land should be valued, if these improvements and structures or any portion thereof form part of the land. It is useless to consider what the land with the improvements and structures upon it would bring in the open or any market, for there was no market. Some artificial method must be adopted, and the most satisfactory, to my mind, is to take the agricultural value of the land ... plus an addition measured by what it would cost to make or establish the improvements and structures existing upon and forming part of the land at the date of valuation ... "

31 In Collins, the acquiring authority was a local council that had constructed a reservoir partly on privately-owned land without the owners' consent. After the council compulsorily acquired the land the owners claimed compensation on the basis of the value of the land in its unimproved state together with the cost of erecting that portion of the reservoir. The High Court held that compensation was to be assessed for the land and all its improvements including the structure of the partially completed reservoir but without regard to the section of the reservoir constructed on the council land. The cost of construction of the section of the reservoir on the private land was a relevant consideration in determining value.

32 Geita Sebea and Collins demonstrate the flexibility of approach where there is no market for the land (with its improvements) to be valued.

33 Clay and Raja's case deal with sales to adjoining landowners. The issue in Clay was the market value of a private residence. The evidence was that its value to persons wishing to use it as a private residence was 750 pounds. However, the house adjoined a nurses' home the trustees of which wanted to extend their premises and they purchased it for 1000 pounds. The trustees would have paid up to 1100 pounds. The appellant accepted that it was proper to take into account that one or more adjoining landowners are likely to offer more than the property would be worth to anyone else but that an adjoining owner would pay little more than what the property was worth to outside purchasers. That argument was rejected. Swinfen Eady LJ said (at 475):

"It scarcely needed evidence to inform us - it is common knowledge - that when the fact becomes known that one probable buyer desires to obtain any property, that raises the general price or value of the thing in the market. Not only is the probable buyer a competitor in the market, but other persons, such as property brokers, compete in the market for what they know another person wants, with a view to a resale to him at an enhanced price, so as to realize a profit."

34 In Raja's case, a harbour authority compulsorily acquired adjoining land owned by the appellant. The appellant was entitled to compensation for the land, in particular he was entitled to the market value of the land together with, inter alia, damages for injurious affection and severance. A natural spring was located on the appellant's land. The spring was of special value to the harbour authority which urgently needed to free the harbour from malaria which could be achieved by closing the existing water supply and diverting water from the spring. It was concluded that the harbour authority was the only possible purchaser capable of turning the potentiality of the spring to full account. On the issue of market value their Lordships said (at 312 - 313):

"In the case of land, its value in general can also be measured by a consideration of the prices that have been obtained in the past for land of similar quality and in similar positions, and this is what must be meant in general by 'the market value' ... But sometimes it happens that the land to be valued possesses some unusual, and it may be, unique features, as regards its position or its potentialities. In such a case, the arbitrator in determining its value will have no market value to guide him, and he will have to ascertain as best he may from the materials before him, what a willing vendor might reasonably expect to obtain from a willing purchaser, for the land in that particular position and with those particular potentialities."

35 The Court said (at 314) that if the owner of the land is the only person who can turn the potentiality to account, then in valuing the land as between him and a willing purchaser, the value to the owner of the potentiality would necessarily have to be included.

36 In CSR Ltd v Valuer-General, Wells J (at 56) construed the statutory definition of "capital value" to include the landowner as a potential buyer of the property to be valued.

37 There is no authority on the applicability of the adapted before and after valuation method and the assumption on which it is based, namely that the hypothetical owner of the Balance Land is different from the hypothetical vendor of the Reserve Land. However, I respectfully adopt the general observations of Wilcox J in Liverpool City Council v Commonwealth of Australia [1993] FCA 539; (1993) 46 FCR 67 at 76 where he said in a different context:

" ... if value is to be assessed by reference to market value, it is necessary to assume a sale; even though no sale took place on the relevant day. Otherwise, the facts should be taken as they are. There are enough complexities and artificialities in the assessment of value without including an assumption about the happening of another event, that did not happen and would never have happened."

38 According to the expert evidence preferred by the trial Judge, the value of the Balance Land was reduced as a result of the appellant's election to purchase the Reserve Land. That reduction reflects the severance damage and injurious affection suffered by the respondent which the trial Judge found to be the loss of the legal right of access to the Lake and the potentiality for the views from the Balance Land to the Lake to be wholly or partially obstructed as a result, for example, of tree-planting on the Reserve Land.

39 The central issue is whether it is appropriate to assume that the hypothetical owner of the Balance Land is someone other than the hypothetical owner of the Reserve Land. The unstated assumption in this scenario is that the hypothetical owner of the Balance Land would have paid the reduced market value for the Balance Land as a stand alone property and thus would be prepared to pay a price for the Reserve Land which reflected the consequential increase in value of the Balance Land. That reasoning does not apply if the hypothetical purchaser is in the position of the actual owner of the Balance Land. If the damage to the Balance Land is a factor that the owner would take into account in determining the price at which he would be prepared to sell the Reserve Land, that would be indirect compensation for injurious affection and severance which is not compensable under s 36(2b). But more importantly it would have the effect of inflating the stand-alone value of the Reserve Land above its actual market value. In other words, the recovery of damage to the remaining land cannot be value or special value to the owner that can affect the market value of the land to be sold. Value (or special value) to the owner is unrelated to matters affecting the value of the Balance Land.

40 The adapted before and after method is inappropriate for a number of reasons. First, the cases on which the respondent relies, Clay and Raja's case, do not rely on assumed facts about hypothetical purchasers as the basis for altering or stimulating market value. Both depended on evidence of actual demand to take the market value above the otherwise appropriate level. The Court's role is to determine actual market value on a particular date not what the market value would be if market value sensitive facts relating to demand were different. It is the case that where there is no market or the market is unduly restricted because of the nature or position of the compulsorily acquired land, the Court has flexibility to adapt its valuation approach or make assumptions that are contrary to the facts in order to ensure the dispossessed land owner receives appropriate compensation. Indeed, in both Geita Sebea and Collins the land owners were statutorily entitled to compensation. However, this is not a compensation case; the respondent is only entitled to the market value of the Reserve Land. It is inappropriate to rely on assumed facts for the purpose or effect of avoiding the reality which is that the actual owner of the Reserve Land would receive compensation for the resulting damage to the Balance Land. For these reasons the trial Judge erred in valuing the Reserve Land using the before and after method, whether adapted or not. I would uphold grounds of appeal 1 and 2. As a consequence, the appellant's challenge to the trial Judge's finding as to the before value of the Land (ground 4) falls away.

41 A remaining question is whether the resulting discounted valuation figure of $140,000 for the Reserve Land is wrong in circumstances where the trial Judge concluded that the discounted figure was consistent with comparable sales. That also raises for determination whether the trial Judge erred in using the direct comparison or summation method.

The check valuation and the summation method

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

43 The Reserve Land is landlocked but the appellant acknowledged in the appeal that the valuation should be based on an assumption to the contrary. Lot 51 is a rear lot in the same relative position as the Reserve Land and two lots to its north. It is 2.098 hectares and has access to a slip road in front of Wanneroo Road by a long battleaxe neck on the eastern side of Lot 50 which is the front lot. It has no wetlands but has good views to Lake Neerabup. Lot 51 was sold in May 1997. The trial Judge made a number of adjustments and determined that the adjusted rate per square metre for the unimproved value of Lot 51 was $10.62 per square metre. There was no challenge by the appellant to the trial Judge's determination of the adjusted value of Lot 51 or its use, in effect, as a comparable sale for the Reserve Land.

44 The trial Judge concluded that four sales to the appellant could also serve as a check on the discounted before and after value. Those sales were of Lot 800 on plan 31950, Lot 6 Lake Road, Lot 43 (or Lot 80) Wattle Avenue and Lot 38 Wanneroo Road.

45 Lot 800 (also landlocked) comprised 0.2901 hectares at the rear of the lot adjacent to the Land. A small portion in the corner of Lot 800 was inundated wetland. It was sold to the appellant in March 2002 for $28,000 at an unimproved value of $9.65 per square metre. Mr Vincent treated the rate of $9.65 per square metre as setting a minimum value for the Reserve Land (exhibit 14).

46 Lot 6 comprised 6.948 hectares most of which was wetland. Mr Vincent described Lot 6 as being virtually nothing more than swamp land. It was sold to the appellant in July 2001 for $140,000 representing $2.01 per square metre.

47 Lot 43 comprised 6.8145 hectares and is to the immediate north of Lot 6. It was almost totally involved in the Lake system. It was sold to the appellant for $210,000 in February 2002 representing $3.08 per square metre.

48 Lot 38 borders the Balance Land. It comprised 4.0496 hectares and was sold to the appellant in January 1996 for $250,000, representing $6.18 per square metre. The evidence was that "quite a bit of the lake system" was within Lot 38.

49 Thus, the trial Judge in effect applied the direct comparison (or comparable sales) method to check the discounted before and after valuation method. As already noted, the appellant did not directly challenge the trial Judge's conclusions or reasoning in that regard save to assert that the only proper course was to separately value the wetland and dry land portions of the Reserve Land and that the trial Judge should have accepted Mr Paterson's valuation based on the direct comparison method.

50 Mr Paterson was the only expert to provide direct evidence as to the value of the Reserve Land. He used the figure of $9 per square metre for the dry land portion of the Reserve Land, being the same rate as his before value of the Land notwithstanding that a significant proportion of the Land (24 per cent) was wetland. Mr Paterson said in evidence that he would support Mr Vincent's rate of $10.84 per square metre for the Land as appropriate for the dry land portion of the Reserve Land. Mr Paterson's report provides no explanation for his selection of the wetland rate of $3 per square metre. In oral evidence he said he took into account Lot 6 Lake Road in establishing the wetland value. Reference was also made to Lot 800 but the trial Judge concluded (at [440]) that Mr Paterson was relying on his general experience as a valuer rather than any particular comparable sales other than perhaps Lot 6.

51 The trial Judge rejected (at [444]) Mr Paterson's use of the direct comparison method on two grounds. First, Mr Paterson relied, with one exception, on sales to the appellant and secondly, his method involved no recognition of the "interdependence" between the dry and wetland. However, the trial Judge continued (at [447]):

"At the same time, however ... on the evidence a prudent purchaser would pay less for land that combined wetland and dry land where, other things being equal, that land contained a higher proportion of wetland."

52 The appellant accepts it was appropriate to treat the sales to the appellant with caution but contends the trial Judge wholly ignored those sales. There is no foundation for that assertion as the trial Judge's reasons relating to the check valuation demonstrate. The trial Judge accepted the evidence of Mr Vincent in rejecting the piecemeal or summation approach to the Reserve Land. There is no single correct way of presenting a conclusion as to the value of land that comprises components that have different, but interdependent, values. If the evidence demonstrates that all relevant factors affecting value are reflected in a total dollar value, that is sufficient. The identification of the average value per square metre based on that total dollar figure is not intended to suggest that the whole of the land is in effect interchangeable or of equal value. Further, the trial Judge recognised that the presence of the wetland would reduce the market value of the total land to be valued. The appellant has not demonstrated that the trial Judge erred in rejecting Mr Paterson's evidence.

53 When regard is had to Mr Vincent's evidence (which was generally preferred to that of Mr Paterson) concerning the sale of Lot 800 together with the other check sales relied on by the trial Judge, the appellant has not demonstrated that the discounted rate of $9.50 per square metre for the Reserve Land is outside the range of a sound valuation discretion.

54 An aspect of ground of appeal 4 was that the trial Judge should have found that there was no damage to the value of the Balance Land because access to, and the view of, Lake Neerabup would not be impaired as a result of the sale of the Reserve Land. That submission did not depend upon the Reserve Land being sold to the appellant rather than to a private owner. The appellant's submission was based on the fact that because of its intrinsic qualities and regardless of the Scheme, the Reserve Land could not be developed. Moreover, the fact that the land abutting the north-eastern boundary of the Reserve Land, being Lot 10, was also in private ownership did not intrude into the consideration of this issue. On that basis, it was open to the trial Judge to find, as he did, that after the sale of the Reserve Land the respondent would not continue to have a legal entitlement to access Lake Neerabup and that there was a possibility of the views from the Balance Land being impaired by the planting of trees on the Reserve Land.

55 Proposed ground 3A is to the effect that if there was injurious affection and severance damage that affected the value of the Balance Land (negatively or positively), that was attributable to the Scheme and thus had to be ignored under s 36(2b) of the Scheme. The appellant contends that the Scheme is Amendment 948/33 to the MRS which reserved the Reserve Land together with the taking (purchase) of the Reserve Land by the appellant. As it is unnecessary to determine that issue in this appeal, I would refuse leave to amend to include proposed ground 3A.

56 The cross-appeal only arises for determination if the trial Judge was correct to apply the before and after method of valuation. I have concluded that the trial Judge erred in applying that method.

57 I would uphold grounds of appeal 1 and 2. However, as they do not affect the outcome of the trial, the appeal must be dismissed. I would hear from the parties on costs.