Arcus Shopfitters Pty Ltd v Western Australian Planning Commission - [2004] WASC 85

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION: ARCUS SHOPFITTERS PTY LTD -v- WESTERN AUSTRALIAN PLANNING COMMISSION [2004] WASC 85

CORAM: PULLIN J

HEARD: 2, 5 & 6 APRIL 2004

DELIVERED : 13 MAY 2004

FILE NO/S: CIV 1377 of 1998

BETWEEN: ARCUS SHOPFITTERS PTY LTD
Applicant
AND
WESTERN AUSTRALIAN PLANNING COMMISSION
Respondent

Catchwords:

Resumption and acquisition of land - Compensation - Valuation of land - Comparable sales method - Determination of value "in the light of" judgment of Full Court - Difficulties arising - No point of principle - Turns on own facts

Legislation:

Nil

Result:

Compensation awarded

Category: B

Representation:

Counsel:

Applicant: Mrs L E Rowley
Respondent: Mr C B Edmonds SC & Ms L E Christian

Solicitors:

Applicant: McLeods
Respondent: State Solicitor

Case(s) referred to in judgment(s):

Arcus Shopfitters Pty Ltd v Western Australian Planning Commission [2002] WASC 174
Arcus Shopfitters Pty Ltd v Western Australian Planning Commission [2004] WASC 84
Duffy v Minister for Planning [2002] WASC 201
Duffy v Minister for Planning [2003] WASCA 294
Minister of Works v Robinson (1965) 13 LGRA 390
Players Pty Ltd v Corporation of the City of Adelaide [2001] SASC 369
Western Australian Planning Commission v Arcus Shopfitters Pty Ltd [2003] WASCA 295

Case(s) also cited:

Brewarrana Pty Ltd v Commissioner of Highways (No 2) [1973] 6 SASR 541
Commonwealth v Milledge (1953) 90 CLR 157
Crompton v Commissioner of Highways (1973) 5 SASR 301
Maurici v Chief Commissioner of State Revenue (2003) 77 ALJR 727
Merivale Motel Investments v Brisbane Expo Authority (1987) 64 LGRA 108
Minister of Environment v Petroccia (1982) 30 SASR 333
Pointe Gourde Quarrying & Transport Co Ltd v SubIntendent of Crown Lands [1947] AC 565
RK Morgan Holdings Pty Ltd v Melbourne & Metropolitan Board of Works (1992) 77 LGRA 102
Sharp v Western Australian Planning Commission [1999] WASC 223
Wong v Minister of Water Resources (1985) 55 LGRA 431
Woollams v Minister (1957) 2 LGRA 338
Yates Property Corp Pty Ltd v Darling Harbour Authority (1990) 70 LGRA 187

PULLIN J: In Arcus Shopfitters Pty Ltd v Western Australian Planning Commission [2002] WASC 174, I awarded compensation to the applicant, Arcus Shopfitters Pty Ltd, for the resumption of the subject land. The land was resumed on 27 October 1995.
This judgment was set aside by the Full Court for the reasons set out in Western Australian Planning Commission v Arcus Shopfitters Pty Ltd [2003] WASCA 295. The Full Court set aside the judgment and remitted the matter for determination "in light of the judgment of the Full Court".
On 25 February 2004, the respondent sought orders granting it leave to reopen its case to lead further evidence. I disallowed the application. See my reasons in Arcus Shopfitters Pty Ltd v Western Australian Planning Commission [2004] WASC 84.
The particular aspect of the case which I am required to reconsider is the finding I made that the value of the resumed land was $6,570,890 on the date of resumption. The rest of the amount awarded in my judgment related to interest and other components.
Because I have been directed to re‑determine the matter in light of the judgment (and the reasons) of the Full Court, it is important that I give close consideration to what it is that the Full Court decided.
The Full Court dismissed some complaints about some of the findings which came under attack on appeal and expressly approved some other findings which were attacked. Many findings I made in my first reasons for decision were not considered at all and which therefore remain undisturbed.
In my reasons for decision, I rejected the opinions of three of the four valuers, namely Mr McMahon, Mr Spencer, and Mr Elliott, about the value of the land. In its reasons for judgment, the Full Court said that the respondent did not argue that I should have accepted the evidence of Mr Spencer or Mr Elliott (the valuers called by the respondent) and affirmed my decision to accord little weight to the evidence of Mr McMahon (who was called by the applicant): see [83] and [84].
As to the fourth valuer, Mr Dix, the Full Court noted that it was not contended that I should have accepted the evidence of Mr Spencer or Mr Elliott in lieu of Mr Dix [83]. This does not mean that I was directed to accept Mr Dix's evidence - indeed, the Full Court questioned some aspects of Mr Dix's evidence - but I was not directed to reject the evidence of Mr Dix.

Ground 2 of the Appeal

As a result of ground 2 of the appeal, the Full Court determined that I had wrongly directed myself on the law in one aspect. The Full Court held that I had directed myself that the comparable sales method involved a search for the "single most comparable sale on which to determine value" [51] and "to assume … that the sale price reflects market value" [51], and that in accordance with that wrong direction, I set about to, and did, identify a single sale as the basis for the valuation.
The position is most clearly stated in [45] and [52] of the Full Court's reasons for decision. McLure J, with whom the other members of the Court agreed, said at [45]:
"It is clear from this statement of principle and the trial Judge's approach to the expert valuers' evidence that he asked … which was the most important comparable sale and based his valuation of the Arcus land on that sale albeit 'confirmed' by other evidence."
At [52] her Honour said:
"In my view, there is no requirement that a valuer identify the most important comparable sale. There is a requirement that a sufficient sample of comparable sales be collected and analysed collectively and individually."
I have added some underlying for emphasis.
When deciding the case, I had in mind that the search was for comparable sales and not a single comparable sale. There are references throughout my reasons for decision referring to comparable sales. However, in the judgment of the Full Court, what I meant was unfortunately not what I said at a critical stage of my reasons.
I said - and this was quoted by her Honour:
"It is not satisfactory, in my opinion, for a valuer who values land using the comparable sales method, to list a number of comparable sales, each one suggesting a different value for the subject land and each of which requires some adjustment, and then simply to state an opinion about the value of the subject land. Such an opinion will only have any value if the valuer explains which is the most important of the comparable sales, why that is so, and what adjustments have been made to reach a conclusion about the value of the subject land."
The word "is" which I have used, is the use of the verb in its singular form. If the plural had been used, the phrase would have read "which are the most important of the comparable sales".
I accept, as I must, that other references I made to "comparable sales" were not sufficient to overcome the effect of the passage to which I have just referred.
Later in my reasons for decision, I did identify one comparable sale as the most important, because I accepted Mr Dix's evidence that it was the most important of all the sales evidence. That conclusion, along with the impugned passage in my reasons, led the Full Court to conclude I had used one sale, not because on the particular facts of this case it was the most important sale, but because I had directed myself to find one sale and one sale only.
Thus, in accordance with the Full Court's direction to determine the case "in light of the judgment of the Full Court", I direct myself that when employing the comparable sales method, a valuer must not assume, and nor should the court direct itself, that it is necessary to find one, and only one, comparable sale and infer from that the value of the subject land. There is no requirement at law that the valuer identify the single most important sale. I direct myself more fully by quoting from the Full Court's reasons where McLure J said:
"… a core requirement of the comparable sales method is that the comparable sales be sufficient in volume to justify a deduction or inference as to value. What is sufficient in volume will vary from case to case. Generally, it will require multiple (more than two) sales."
See [51] of the Full Court's reasons for decision.
It will be observed that McLure J stated that "generally" multiple sales are required. It is not the law that there is an irreducible minimum of two comparable sales before the comparable sales method has any validity. I interpret the quoted passage as meaning that it is desirable to have multiple comparable sales. The more arms length sales of land with attributes similar to the subject land, occurring at about the same time, the more confident the valuer can be, and the court can be, that the value of the subject land, based on those sales, is the correct one. However, sometimes such sales evidence is hard to find. Sales in a particular area may be few in number. Sometimes the temporal aspect eliminates sales of land with similar attributes to the subject land; sometimes the attributes of the land will eliminate some sales; and sometimes factors in relation to a sale reveal it not to be an arms length sale. This case and the case of Duffy v Minister for Planning [2002] WASC 201 afford examples. In this case, although this is central city land, there were (with one exception) no sales of other comparable land within a year of the resumption. As a result, the experts ranged over a long period of time searching for comparable sales. For example, Mr McMahon selected sales spread over a seven‑year period and Mr Dix over a six‑year period.
The valuers also searched around over a wide area to find sales to rely on. Mr Spencer and Mr Elliott tried to bring in for comparison, sales in the suburban area. I found, and the Full Court agreed that it was open for me to find, that the sales from this area were not sufficiently comparable to use.
Mr Dix listed 12 possible sales as candidates for comparable sales, and by permitted process he assessed and rejected many of these sales which at first may have seemed to be comparable but which were not so on closer analysis. As the Full Court said at [24]:
"Mr Dix's opinion was that the Arcus land was ripe for development, that sales of land with improvements of economic value were not comparable because of the difficulty in ascertaining the value of the improvements, that sales of larger areas of land should not be discounted in comparison with smaller areas of land and that land in the Suburban Area was not comparable because of the different development controls. Having regard to these matters, Mr Dix's focus was on locating sales as close as possible to the relevant date involving vacant land or land with obsolete buildings with no economic value standing upon it and facing, or in very close proximity to, Russell Square. He said the sale that came closest to these parameters was of Lot Y104 James Street in September 1994."
The process of elimination which identified sales within the parameters that Mr Dix set, as the quotation reveals, left Mr Dix with Lot Y104 James Street. Because the process left him with one sale, and because this was clearly undesirable, Mr Dix looked for other information to test the value suggested by the adoption of that adjusted sale price as the foundation for his opinion as to the value of the resumed land. I should add that there is no suggestion that Mr Dix considered that the law obliged him to identify a single sale to represent the value of the subject land.
The process that Mr Dix went through in eliminating possible comparable sales was similar to the process that McLure J went through in her reasons for decision in Duffy v Minister for Planning [2003] WASCA 294. The Duffy decision was handed down by the same coram of the Full Court as in this case ([2003] WASCA 295), and on the same day. The Duffy case related to the resumption of land on the same day as the resumption of the Arcus land. Similar expert witnesses were involved in the Duffy case. The decision of the trial Judge in the Duffy case was the subject of an appeal. McLure J, who wrote the reasons in the Duffy case, considered the evidence of the preferred witness in that case and assessed the comparable evidence that he identified. McLure J ended up with one sale (sale 10), which was said to be the most important of the sales as an indicator of value.
So, to revert to the point that I have been addressing, it is not a matter of law that a valuer must end up with a minimum of two sales before the comparable sales method can be employed; it is desirable, but not always practically possible.

Ground 3 of the Appeal

Ground 3 of the appeal involved a complaint about the use made of the 1994 sale of Lot Y104 James Street.
McLure J said at [26] and [27]:
"26The trial Judge confined his consideration of the sales in Mr Dix's list to Lot Y104 James Street, the International Food Hall, a check valuation of 'On the Park' and the sale in May 1994 of Lot Y51, 56 Francis Street. …
27I infer the trial Judge confined his consideration to these sales having regard to Mr Dix's evidence that the balance of the sales in his list were not comparable. They were not comparable, according to Mr Dix, because sales 8, 9, 10, 11 and 12 had improvements of some value on the land, sales 4 and 5 (although closer to the Arcus land than sales 1 and 2) were on the west side of Russell Square and sale 6 was below market value and had a different highest and best use."
The inference drawn was correct. Mr Dix said that the other sales were not "directly comparable".
The Full Court then went on to consider in detail the evidence and findings in relation to the sale of Lot Y104 James Street in September 1994.
At [54] her Honour said:
"The appellant relies on a number of grounds in support of its claim that the trial Judge erred in relying on the sale of Lot Y104 in September 1994. The primary ground is that the land (or more correctly a half interest in the land) was sold to an adjoining owner."
In the following [55] to [61] of the Full Court's reasons for decisions, a number of propositions emerge, and they are:
(a)The sale to an adjoining owner need not be excluded from consideration as a comparable sale, but it must be carefully analysed. This is uncontroversial: the same point was made in my original reasons. (I would add, by way of comment, that the reason why it is necessary to carefully analyse such a sale is to ensure that the vendor did not hold out for a premium which the purchaser was prepared to pay rather than lose acquiring land next door. This is a possibility if the adjoining owners negotiate with each other. The possibility that they will arrive at a price above market value must be examined. If they did, then the sale is not a reflection of the market value of that land.)
(b)A valuer who seeks to rely on a sale to an adjoining owner to justify an inference as to the value "… [is] required to satisfy himself or herself that the sale does not reflect any element of special value to the adjoining owner". Her Honour said that this may be done in a number of ways. One way for the valuer to be satisfied would be to consider whether the sale was out of line with a basket of other comparable sales. If such a sale was included in a basket of sales, it could be given appropriate weight having regard to the inferences that may be drawn from other comparable sales as to whether the sale price reflected market value. Another way would be to act on "positive evidence" that the sale price was unaffected by the purchaser's position as an adjoining owner. This would be necessary if there were no basket of other comparable sales evidence.
The Full Court then identified criticisms which could be directed to Mr Dix's conclusion that he should rely upon the sale of the interest in Lot Y104 in September 1994 as the sale which indicated the value of the subject land. In effect, these are criticisms which I must consider in deciding whether or not the sale of Lot Y104 in September 1994 can be used as a comparable sale.
The criticisms were as follows:
(a)The September 1994 sale price of Lot Y104 was higher than the sales in the more valuable East Northbridge area.
(b)The September 1994 sale price of Lot Y104 was significantly higher than the "adjusted" comparable sales closer to the Arcus land, sales 3, 4 and 5 and sales closer in time (ie sales 6, 9, 10, 11 and 12). (This reference to the adjusted comparable sales assumes a 10 per cent per annum adjustment to all sales from October 1995 back to 1991 and forward to 1998. It was a submission made by the respondent during the appeal that such an adjustment should be made. Her Honour did not expressly say that such adjustment was valid for sales as early as 1991 or 1992.)
(c)The September 1994 sale price of Lot Y104 was 70 per cent above the sale of the same land in June 1992, which was an annual increase of 34 per cent per annum which compared with the average annual increase in the relevant period of 10 per cent. (I again observe that the 10 percent annual increase in sales prices is merely a submission by the respondent. I made a finding about the increase between 1993 and 1998. I made no such finding about the years before 1993.)
(d)The reliance placed by Mr Dix on the 1997 sale of the International Food Hall as confirmation of the value of the subject land at $1,500 was "controversial" and was an off‑market sale between overseas parties. I infer from this that the Full Court considered that this Food Hall sale was unreliable and could not have been relied upon. I will proceed on that basis.
(e)The hypothetical development analysis of Lot Y104 did not provide an "independent and adequate" foundation for the valuation of Lot Y104.
I will deal first with the points of criticism referred to above.
The first point, (a), was that the 1994 sale of Lot Y104 was higher than the sales in the more valuable East Northbridge area. Mr Dix said that the retail attribute of land was likely to increase value in East Northbridge compared with more western parts, but there was no difference when looking at land for residential purposes. However, if both attributes exist, then the fact that there is one attribute which adds value, means that the land with that attribute is likely to be of higher value. That is why land in East Northbridge was generally more valuable. As the Full Court has said, this point does give rise to concern about the reliability of the September 1994 sale of Lot Y104. As to whether that concern should lead me to eliminate this sale as a comparable sale, I will consider later in these reasons. I should mention now, however, that there can be more attractive properties in a less desirable area. The subject land was an attractive development site.
As to the second point, (b), it is true that the sale price of Lot Y104 was significantly higher than the adjusted comparable sales in relation to sales 3, 4 and 5, and in relation to sales closer in time (sales 6, 9, 10, 11 and 12). I accept, as the Full Court says, that this would cause concern about the sale of the 1994 sale of Lot Y104. Whether this concern should result in the sale being eliminated, is a matter I will consider later. I mention now, however, that sales 6, 9, 10, 11 and 12 are all sales which the parties agree are not comparable.
The third point of criticism, (c), of the 1994 Lot Y104 sale is that the difference between the purchase price in June 1992 and September 1994, reveals an annual increase of about 34 per cent per annum, and that this would also lead to a concern about the September 1994 price. This point might cause initial concern about the 1994 Y104 sale, but it is to be noted that the 1992 sale occurred during a recession. It is not possible to say what adjustment had to be made once the recession ended in 1992.

The fourth point of criticism raised by the Full Court, (d), in relation to the International Food Hall sale, in [63] and [64] is that it does not provide any independent and adequate support for Mr Dix's opinion in relation to Lot Y104. I accept that to be so, and will disregard this altogether as a comparable sale.
As to the fifth point of criticism, (e), the Full Court said that the hypothetical development method is less reliable than the comparable sales method and noted that I did not regard this as an independent ground for deducing the value of Lot Y104 as at October 1995. It did not "otherwise", ie on its own, justify the finding that Lot Y104 was the "most important of the comparable sales". I should make two comments about this point. First, while the Full Court has said it does not prove Y104 was the most important of the sales, it did not say that it could not be used to show that the September 1994 sale price of Lot Y104 was a market value sale. Secondly, the respondent in its appeal to the Full Court challenged findings I made about the hypothetical development analysis of Y104. The respondent filed detailed written submissions with the Full Court, challenging my findings in this regard. However, no comment was made by the Full Court in their reasons about those submissions or the respondent's ground of appeal concerning the hypothetical development analysis of Y104. The only comment made by the Full Court was the general comment I have referred to. Then the Full Court said ([66]), for the reasons given, that ground 3 was upheld. That leaves it entirely unclear whether I should treat the findings I made about the hypothetical development analysis as undisturbed findings, or whether I should embark on an examination of the submissions made to the Full Court and not referred to, or commented upon, by the Full Court. In short, should I try and decide what, if the Full Court had written reasons concerning the respondent's complainants about my findings, the Full Court might have said? Alternatively, should I now sit in judgment on my own reasons for decision? These alternatives are both quite unsatisfactory. I think the safest course would be to ignore the evidence about hypothetical development.
The Full Court was apparently uncertain about whether Mr Dix did, in conclusion, end up with a basket of comparable sales. This is evident because the Full Court said that if the sales on Mr Dix's list were comparable, then the question of whether the sale of Lot Y104 was out of line was not addressed, but that if none of the other sales evidence was comparable, it would be unsafe to rely on the sale of Lot Y104 as the only comprable sale, in the absence of "positive evidence" that the sale price was unaffected. I need to address the second of the alternatives, because Mr Dix was of the view that other sales evidence was not directly comparable.
The question then arises as to what the Full Court meant by saying that the sale of Lot Y104 could not safely be relied upon, "at least in the absence of positive evidence".
The respondent submitted that this meant that if no further evidence was received when the matter came back before me, then that was the end of the matter and Lot Y104 should be rejected as evidence from which the value of the subject land could be inferred. On the other hand, the applicant said that there was "positive evidence" which was already before the court (and not referred to in my earlier reasons) and which established that the sale price of Lot Y104 in 1994 was not affected by a premium paid by an adjoining owner desperate to acquire the property next door. I have already noted that the Full Court referred the case back for consideration "in light of the Full Court's judgment". The Full Court did not order a retrial. In my view, if there is already evidence suggesting that the sale price was unaffected by the purchaser's position as an adjoining owner, then the Full Court intended that I could take that into account as "positive evidence" to show the sale was unaffected. Some of the evidence about this sale is recorded by the Full Court in [28] to [31]. I accept the direction of the Full Court that if this sale of Lot Y104 may be relied upon as relevant in relation to (or should not be excluded from) the valuation of the subject land, the onus in establishing this is on the applicant.
The first point to emerge from the evidence was the obvious one, namely that the sale in question was not, in fact, a sale by the owner to the adjoining owner. The Full Court makes the point that it was an "indirect" sale. As the Full Court has noted, Mr Graham Hardie, the controller of UTS, was an experienced developer. I take the reference to this evidence to be an acknowledgment that Mr Hardie was likely to be ruled by his head rather than by his heart, and that if he were to buy land next door, he would be likely to seek to avoid paying a premium over market value. The owner of Lot Y104 sold the land to Andrew Koh Nominees Pty Ltd. When the contract of sale was entered into between the owner and Andrew Koh Nominees, is not established on the evidence. What is known, however, is that Andrew Koh Nominees Pty Ltd (which was not an adjoining owner) then sold a half‑interest to Graham Hardie's company, UTS. The evidence establishes that Mr Hardie, through his company Pelworth Pty Ltd, had been the owner of the surrounding land since at least 1987. There had been a sale in 1991 of Lot Y104. Mr Hardie did not purchase the land in 1991. What then is to be made of the fact that Andrew Koh Nominees Pty Ltd purchased the land and then transferred a half‑interest to Mr Hardie's company? One inference is that Mr Hardie did not want the vendor to know that he was involved so that the vendor did not seek to extract a premium for the sale of the land. Another alternative is that Andrew Koh Nominees Pty Ltd bought the land and then looked around for a co‑owner, and then entered into a contract with Graham Hardie. It is speculation to say which of these alternatives might be the correct one. However, the point is that whichever of the alternatives is correct, the vendor sold to Andrew Koh Nominees Pty Ltd and not to UTS. The positive evidence that Graham Hardie's companies had long been owners of the adjoining land, had not purchased the land in 1991, and had, for whatever reason, not purchased by contracting with the vendor of the land, but instead purchased from Andrew Koh Nominees Pty Ltd, leads me to infer that UTS took steps to avoid paying a premium for the land.
Further, it is significant that Mr Elliott, the valuer advising the respondent after the resumption, originally took this sale into account when he prepared an earlier valuation dated 12 May 1995. The reason why he took it out of his basket of comparable sales is explained in two ways by Mr Elliott. The first was the one quoted by McLure J in [29], which makes it clear that Mr Elliott decided to exclude the evidence as unreliable because Mr Hardie "may" have been prepared to pay a premium, and the other is at ts 1767 and 1768. These pages of transcript record the answers given by Mr Elliott in oral testimony about why he included the sale in his 12 May 1995 valuation, and why he excluded it in his final opinion to be used in court. As to why he excluded it, he said at ts 1768:
"So if we go to number 13, which is lot Y104 James Street, you told us this morning that you have fairly detailed knowledge of this site, that your former firm acted for the owner in relation to the acquisition of lot 15 next door, which is James, Northbridge?---Yes.
So you had fairly detailed and intimate knowledge of the circumstances of this particular property?---Yes.
It appears to be very relevant. It's in the middle of, if you like, the development band that was going on in Russell Square. It's pretty contemporary?---Yes.
Why did you exclude it?---Because it was a sale to an adjoining owner, because we felt that that adjoining owner may have been prepared to pay a premium on the site. For that reason, and without knowledge of what that premium may or may not have been, we felt that if the sale, if there were other sales that were of more use and were not complicated by that element, then they were of better use.
But you knew it was a sale to an adjoining owner when you originally included it?---Yes.
You've got the information there?---Yes.
You put it in in that knowledge?---Yes, because it was one of those sales in Northbridge that was available to us and it was a sale of effectively vacant land. As I said earlier in this cross‑examination, we were trying to find as much uncomplicated evidence as we could and also evidence which went mostly to vacant land sales or sales on which the building improvements may have had a lesser economic life and so we could then determine land value."
At ts 1767, he explained why he later excluded the sale of Lot Y104 and three other sales which had been in his earlier valuation:
"I calculate four out of 17 you've dropped out. Can you explain why you have deleted those sales?---Yes, if we go to the start and come forward again, the former Pisconeri complex was developed subsequent to that date as a strataed property and we didn't feel that it was of much use as the others or of more use than the others in reaching a value for the subject property.
Why is that?---We took a view after the time just that - - -
I just want to know why it's not as much use because you clearly know here in this narrative that it's developed with strata title units, so why as that knowledge was within your possession would you later say that it makes you throw it out of the basket?---Not so much thrown out. What we were asked to do by the Crown Solicitor's Office was to prepare, if we could, a sales schedule for the purposes of use in this case of those sales that we found most useful and to try and reduce that list to a relatively small number. Our response to that was to say that we felt that the original basket, since it was the basket of sales that we relied on, was the most appropriate but we would be prepared to look at some of the sales to see if they could be removed."
Counsel for the respondent complained about the applicant's submissions on this point, I suspect out of concern that the Crown Solicitor's Office was being criticised. I should make it clear that I see nothing that the respondent's solicitors should be concerned about. The request by the Crown Solicitor's Office was a perfectly reasonable request that Mr Elliott prepare a sales schedule identifying sales which were most useful. There was nothing in that request which could be made the subject of criticism. What is important, however, is Mr Elliott's reaction to that request, which is that he felt, even with knowledge of the transaction, that the original basket of sales which he had relied upon "was the most appropriate" in determining the value of the subject land. Included in that basket was the September 1994 sale of Lot Y104.
What Mr Elliott did was to respond to the request which was made of him by the Crown Solicitor's Office. He looked for reasons to justify the exclusion of the sale of Lot Y104. Even though, as he said, he had fairly detailed knowledge of the site and had included it in his original basket of comparable sales, he decided, following the request, to exclude it for reasons that were already known to him when he included it in his original basket of sales. That opinion is another piece of information which leads me to conclude that this is not a sale which should be excluded from consideration. In saying this, I am very conscious of the fact that it is not for the respondent's witnesses, including Mr Elliott, to establish the unreliability of the transaction, but for the applicant to prove that it should be taken into account as comparable. I am satisfied that all of the above evidence amounts to positive evidence that while this was an indirect transfer from an adjoining owner to Mr Hardie's company, all the circumstances suggest that this is a sale which may be taken into account as a comparable sale in determining the value of the subject land. Mr Dix regarded it as such, and so did Mr Elliott. Both of them knew of the circumstances of the sale.
It is important to note that the Full Court has not directed me to exclude the sale as a comparable sale. The direction given to me is that a valuer who seeks to rely on a sale to an adjoining owner, must satisfy himself or herself that the sale does not reflect any element of special value to the adjoining owner. That applies also to me, ie, I must be satisfied that there was no element of special value to UTS when it purchased the half‑interest in Lot Y104. Mr Dix thought the sale was safe to use. So did Mr Elliott. The circumstances surrounding the sale set out above, provide "positive" evidence that it should be used as a comparable sale containing no element of special value. I will use the sale as one of a basket of comparable sales. As the Full Court said at [66]:
"It may be the case that, approached correctly, significant weight could be accorded to the sale of Lot Y104".
I do consider that it is a comparable sale. As to the weight to be given to the sale, I will refer to that issue below.
The question then is what is the basket of sales to be used? The Full Court has accepted ([72]) that Messrs Spencer, Elliott, and McMahon did not reveal the process of reasoning which would enable the Court to evaluate their evidence and their conclusions. As a result, the Full Court held that my criticism of those three valuers was "entirely justified". At [83], the Full Court noted that the appellant had not contended that I should have accepted the evidence of Mr Spencer or Mr Elliott in lieu of that of Mr Dix.
However, the Full Court has identified flaws in Mr Dix's reasoning, which means that the foundation for his opinion cannot be accepted. Therefore, my earlier acceptance of Mr Dix's opinion can no longer stand, and I cannot start with the opinion and make adjustments to it.
The position I therefore find myself in is that I have no valuer left whose evidence I can rely upon to reach a decision. The Full Court did not direct a new trial. The matter was remitted to me to deal with in the light of the Full Court's judgment.
As the respondent correctly says, as a matter of principle, it is doubtful whether a trial Judge may himself "make up" a basket of sales from the evidence before him, to attribute a value to the subject land.
In Players Pty Ltd v Corporation of the City of Adelaide [2001] SASC 369 at [81], Debelle J dealt with a case where he felt that he could not rely on the valuation of either of the valuers called by the parties. He said:
"Thus, I am not prepared to rely on the valuation of either Ms Carolan or Mr Christodoulou. In the limited state of the evidence, what can the court do? This appeal has been marked by a failure of the parties to present all relevant evidence on the issues relating to an assessment of annual value on the footing that the premises were licensed and to test the evidence in each valuation. The problem is not new: see Toohey's Ltd v Valuer-General (supra) at 11 where Pike J noted that neither party in that case had put before the court as full evidence as it might have. I am especially conscious of the fact that, although the duty of the court is to determine whether it is proper to set aside the assessment and then determine what the annual value is, the judge must never allow himself to be cast in the role of a third valuer: Bronzel v State Planning Authority (1979) 21 SASR 513; Brewarrana Pty Ltd v Commissioner of Highways (No 2) (1973) 6 SASR 541 at 544 - 546. But the court is not bound to accept either valuation and may make such adjustments as are required by the evidence: Minister for the Environment v Florence (1979) 21 SASR 108 at 111, 116 - 117, and Balquhidder Pty Ltd v Minister for Environment and Planning (1986) 40 SASR 63. The court's duty of determining this appeal is appropriately discharged by deciding which of the two valuations is to be preferred and making whatever adjustments are required by the evidence. For the reasons already expressed, I prefer Mr Christodoulou's cross-valuation but believe it must be adjusted to reflect the criticisms required of it by the evidence. I think the most satisfactory course is to make a modest adjustment to increase the rent of the subject premises in terms of a rate per square metre to a level above that of the Newmarket Hotel. As the area of the subject premises is considerably larger than all of the hotels other than the Newmarket Hotel and as it lies outside the popular east end of Adelaide, it must be a rate per square metre less than the East End hotels. I would increase the rent of the subject premises to $150 per square metre. This is necessarily arbitrary, but the incomplete state of the evidence allows no other approach. As the area of the subject premises is 2500 square metres, this approach produces a gross rental of $375,000. That is a substantial increase on the rental of the Stag Hotel."
In this case, I am in a much more difficult position. As mentioned above, the reasons which led me to not rely upon the evidence of Messrs Spencer, Elliott, and McMahon mean that it would be inappropriate to take one of their valuations and make adjustments. On the other hand, important foundations for Mr Dix's opinion have disappeared, so it would not be appropriate to take his valuation and adjust it.
Each party has proposed a basket of comparable sales which I should use to derive value. The baskets selected by the parties do not correspond. Neither basket selected is a basket selected by any of the valuers. In effect, counsel for both parties proposed themselves as valuers, making a selection of the sales that they consider to be most comparable and proposing that I should rely upon the basket they proffer and from which I should infer the value of the subject land.
As Mr Edmonds SC, appearing for the respondent, said, this process:
"… has the danger of some error of principle which might be unavoidable in the particular circumstances of this case. The danger is, as I say, you're opening up what [Mr Dix] said weren't comparable and calling them comparable and you're also attributing a value that he never gave, but it might be necessary - and we can understand the force of a submission that says that that's the only sensible and practical way to proceed in the particular circumstances.
So having reached that point, we have also undertaken the exercise of looking at Mr Dix's comparable sales, winnowing out those that we think are, mostly in his own language, obviously not comparable and deriving what we called a core group of comparable sales." (ts 2178‑2179)
Counsel for the applicant has similarly identified her own basket of sales and submitted that I should prefer it as the foundation for my opinion. The parties are therefore both of the view that I should select the basket of sales to be used, even though it will not be a selection made by any valuer. I will proceed accordingly.
The two baskets proffered by the parties do have the merit that they are drawn from Mr Dix's list of 12 sales which he referred to in his report. The applicant's list of proposed comparable sales is:

No	Date of Sale	Description	Area of Land	Sale Price per Square Metre adjusted to 27.10.95
1(2)	9/94	Lot Y104 James Street	1113m²	$1,443
2(2)	3/97	Lot Y130 and Y131 Parker St (International Food Hall)	1638²	$2,085
3(2)	8/93	Lot 5 Cnr James and Parker Streets ("On the Park")	531m²	$1,146
4(1)	10/98	43 Shenton Street	678m²	$939
5(2)	6 (or) 12/97	45 Shenton Street	306m²	$1,116
8	10/93	Lot Y107, cnr of Roe and Milligan Streets	1206m²	$1,493

The numbers in the first column (not in brackets) correspond with the numbers in the table reproduced in the Full Court's reasons for decision [23]. The numbers in brackets in the first column identify the sales in relation to those pieces of land as either being the first or second sale. In the case of 45 Shenton Street, the Full Court's table only refers to one sale, whereas, in fact, there were two, one in 1992 and one in 1997. Similarly, there are two sales of "On the Park", one in July 1991 and one in August 1993. The "adjusted" sale price in the last column is an adjustment to the actual sale price by assuming a 10 per cent change in value for each and every year between 1991 and 1998. No such finding has been made.
The respondent's proposed basket of sales is:

No	Date of Sale	Description	Area of Land	Sale Price per Square Metre adjusted to 27.10.95
1(1)	June 1992	Lot Y104 James Street	1113m²	$1,030
2(1)	July 1991	Lot Y130 and Y131 Parker St (International Food Hall)	1638²	$861
3(1)	September 1991	Lot 5 Cnr James and Parker Streets ("On the Park")	531m²	$994
4(1)	10/98	43 Shenton Street	678m²	$939
5(1)	February 1992	45 Shenton Street	306m²	$987
5(2)	6 (or) 12/97	45 Shenton Street	306m²	$1,116

What is immediately noticeable about the two lists is that both parties are agreed that the land at Lot Y104 James Street, the land at the International Food Hall, the "Beyond the Park" land, and 43 and 45 Shenton Street, are all pieces of land which have attributes which compare with the subject land. What is in issue is the acceptability of some of the sales in relation to some of the land.
It will also be observed that, between them, the parties have proposed 12 sales. Only two sales appear on both lists. They are sale 4(1), the October 1998 sale of 43 Shenton Street, and sale 5(2), the December 1997 sale of 45 Shenton Street.
The applicant's list has the virtue of being the closest to the time of the resumption of the subject land, but the list includes within it the International Food Hall sale of March 1997, which is unreliable for the reason mentioned by the Full Court; ie it was a transaction off‑market between overseas parties. It was also a sale between parties who had some relationship, having at one stage common directors, and also at one stage having the same registered address. The "On the Park" sale of August 1993 was a sale of a half‑interest, and that also makes it, to some degree, suspect, but comparing it with other sales in the basket, it is not so far out of line that it should be removed as a relevant comparable sale. The sale of Y104 in September 1994 is included in the applicant's basket, but not in the respondent's basket.
The applicant also includes the sale of the property at Roe and Milligan Streets. The respondent submits it should not be included. Mr Dix, in his oral evidence, said (ts 1225) that not much value could be placed on this sale for a variety of reasons. In his first report, he said he did not rely "heavily" on this sale. I held in my earlier reasons [102] that this sale was not valuable (ie not of considerable use). I conclude that this sale should be included in the basket of sales, but given very little weight.
The respondent's list is notable because four of the six sales are sales which are oldest in time, occurring in 1991 and 1992 during the recession. The respondent's list has the virtue that it does not include the Food Hall sale of March 1997. It does not contain the Roe and Milligan Streets sale.
If I do decide that one or other sale should be accepted or rejected, I will be making adjustments, but not adjustments to a basket of sales selected by any valuer. The adjustments I make will be to the basket of sales proposed by counsel for one or other of the parties. That process has the problem, in principle, which Mr Edmonds identified in the passage from his submissions which I quoted above. Both parties, however, do not suggest any other way of dealing with the situation the parties find themselves in, and that I find myself in, following the Full Court's direction that the case be determined in the light of the Full Court's judgment. Both parties have proposed that I should arrive at a value after settling the appropriate basket of sales to be treated as comparable and giving appropriate weight to the sales in the basket selected. So that is what I will do.
In the result, I have decided that I should accept, and I do accept, that all of the sales proposed by both parties be included in the basket of comparables, save for the Food Hall sale of March 1997.
I must then consider the weight to be given to those sales. I begin by referring to the sales in 1991 and 1992. In my opinion, they must be given little weight because of the evidence about the condition of the market in the early 1990s. It was a thesis put by counsel for the respondent to several witnesses that there had been a recession between 1989 to about 1991‑1992. The following reveals some of that cross‑examination and the answers elicited.
In the cross‑examination of Mr R W Arcus at ts 218, the following question and answer appear:
"It's true to say also, isn't it, that in this period the recession of 1989 to about 1991‑92 badly affected your business?---Yes."
In the cross‑examination of Mr Dix at ts 1336 and 1337, the following exchanges occurred:
"All right. That would suggest, wouldn't it, that there was a recession in the period 89 to 91 and prices went down in Northbridge in that period and then there was an increase in prices up to their pre‑89 levels in about 1993 and then there was a reasonably constant increase between 93 and 95? Is that a fair summary or would you like to look at the graph?---No, I recall the graph. The problem with the graph is that I don't know the source of the information. I assume that it is either representing improved properties or, alternatively, somebody has removed the added value of the improvements. It may well be that the Valuer‑General's Office have supplied land values or their assessment of land values. I may agree or disagree with it, but I can't identify what they are trying to say. They are talking about - - -
All right, can I ask you this: you would accept, wouldn't you, that between 1989 and 1991 in what's generally been called a recession within Australia, there was a drop in property prices in the Northbridge area?---Yes."
Mr McMahon was cross‑examined by counsel for the respondent about the existence of a recession, but Mr McMahon would not accept that there was a recession in Northbridge: see ts 1105 and 1157.
I then turn to the evidence of Mr Spencer, who had a view that the recession went through to 1993. His evidence appears at ts 1509, when he was being cross‑examined by counsel for the applicant. The following exchange occurred:
"And in your view I think you said the recession was 1990 to 1993. Is that your view?---That's my view, yes.
That seems to be out of kilter with most other valuers' views which is that it was around the 90, 91 era?---The impact on the property market by the recession was most noticeable, in my view, in 90 to 93."
Although Mr McMahon would not agree that there was a recession in 1991 and 1992, he stated the obvious effect of a recession at ts 850, where he said:
"Certainly if the articles had reported that the market was in recession or in depression - hopefully not depression - as indeed it did in 1987 of course and again in 1990 with certain parts of the real estate market - it would have an adverse effect of people's desirability to spend, to invest, and prudent purchasers do take quite a deal of notice of market trends, particularly when you are planning developments or considering outlaying large sums of capital to acquire land for the purpose of developments. There's not much sense in acquiring it if the market is flat and the reports are doom and gloom. Certainly if there is some confidence in it it gives the prudent purchaser confidence to act on those general areas of market reporting. I think it's just the normal course that a valuer should take notice of. I do."
From this evidence, I would conclude that there was a recession in the market in 1991 and 1992. That makes sales in 1991 and 1992 unreliable. It might be suggested that if there was, in fact, a recession early in the 1990s, that a 10 per cent increase per annum allowed by the respondent in those two years, is overly favourable to the applicant. I would reject such submission. In my view, the evidence about the conditions in the early 1990s makes it impossible to know what a proper adjustment might be in relation to the sales in 1991 and 1992 following the end of the recession. Mr Spencer said in his report:
"Properties sold in a depressed market could have involved anxious vendors who may have had a different attitude to offers during improved market conditions 2 or 3 years later."
For all of those reasons, I consider that it is simply not appropriate to apply a constant 10 per cent per annum adjustment for sales in 1991 and 1992, through until the date on which the subject land was resumed. The jump in values after the recession may have been substantial, but the evidence leaves this aspect uncertain. All that can be said about the 1991 and 1992 sales is that they do provide evidence but that the evidence must be given little weight. The adjusted price for the 1991 and 1992 sales shown in the last column of the two baskets (the adjustment being proposed by the respondent) cannot be accepted as a reliable adjustment of the 1991 and 1992 sales. It merely shows what the position would be if a 10 per cent adjustment were made. The 10 per cent annual adjustment is only correct for sales between 1993 and 1998. The basket of comparables left for consideration is as follows:

No	Date of Sale	Description	Area of Land	Actual sale price per square metre	Sale Price per Square Metre adjusted to 27.10.95
1(1)	June 1992	Lot Y104 James Street	1113m²	$773	$1,030
1(2)	9/94	Lot Y104 James Street	1113m²	$1,312	$1,443
2(1)	July 1991	Lot Y130 and Y131 Parker St (International Food Hall)	1638m²	$601	$861
3(1)	September 1991	Lot 5 Cnr James and Parker Streets ("On the Park")	531m²	$706	$994
3(2)	8/93	Lot 5 Cnr James and Parker Streets ("On the Park")	531m²	$942	$1,146
4	10/98	43 Shenton Street	678m²	$1,342	$939
5(1)	February 1992	45 Shenton Street	306m²	$722	$987
5(2)	6 (or) 12/97	45 Shenton Street	306m²	$1,340	$1,116
8	10/93	Lot Y107 cnr Roe and Milligan Streets	1206m²	$1,244	$1,493

The sale of Lot Y104 in September 1994 is included in the basket. It is not the only comparable sale. It is, however, one of the basket of sales and, in my opinion, to be given much more weight than the 1992 sales, and even more weight again than the 1991 sales. I give least weight of all to the sales in 1991 and 1992. The sale of 45 Shenton Street, which is contended for by both parties, is only one year and eight months from the time of the resumption (this on the basis that the sale was in June rather than December 1997). In my earlier reasons at [103], in referring to this sale, I noted that Mr McMahon relied on it. I said that no other valuer was prepared to rely on it and that I accepted that it was not a comparable sale. I meant that it was not "directly" comparable, as Mr Dix says in his report (p 12) when speaking generally of the sales evidence other than the 1994 sale of LotY104. He did include this sale in his list of 12 sales but said that the subject land was better situated than this property. Both parties now want me to take it into account, and so I will do so. This sale should be given less weight than the sale of Lot Y104 because of Mr Dix's comment. The "On the Park" sale of August 1993 is to be given more weight than the 1991 and 1992 sales but less weight than the September 1994 sale of Lot Y104 (see my reasons at [140]) and less weight than the 1997 sale of 45 Shenton Street.
The respondent, in relation to its basket, submits that it shows a remarkable consistency of outcome, suggesting that land of this type should be valued at around $950 per square metre. That is so, however, only because the respondent has not included the September 1994 sale of Lot Y104, because the respondent has included sales back in 1991 and 1992 and has assumed that adjustments to sales in 1991 and 1992 should be made on the basis of a 10 per cent increase per annum through to the day of resumption. As I have said, that is not an assumption that can be made, given the evidence of recession in the early 1990s and the lack of satisfactory evidence about what adjustments should be made immediately following the end of the recession in 1991/1992, to make sales during the recession useful as comparable sales.
Both parties accept Mr Dix's evidence that Lot Y104 is a piece of land with attributes which are similar to the subject land. The 1992 sale of this land is included in the basket of sales I have selected, but it is to be given a low weighting because it is probably a recession‑affected sale. The later sale of this property is more reliable for temporal reasons.
Counsel for the respondent points out that Mr Dix said in oral evidence that the Shenton Street properties were more valuable than the subject land. However, in his 24 April 2002 report, he says that these properties "lack[ed] the corner position and flexibility of the subject land" and that "the subject land is better situated than" 45 Shenton Street, and that is the impression I gained from all of Mr Dix's evidence.
Having given weight to the comparable sales, it is then a matter of using the information to arrive at a value for the subject land. The range of the sales in the basket is considerable, as is the range of the sales occurring within three years of resumption and then adjusted. However, that reflects the difficulty all valuers had in locating what Mr Dix described as directly comparable sales. The task is more difficult in this case because of the way the parties have asked me to proceed. The sale prices per square metre of the basket of comparable land range from $601 to $1,342 (unadjusted). The sales closest in time to the resumption date (the 1994 sale and the 1997 sale) reveal sales adjusted to 27 October 1995 at $1,443 and $1,116.
Having arrived at a range of values, it is then appropriate to refer to Minister of Works v Robinson (1965) 13 LGRA 390 at 394, where Napier CJ said:
"I think that it follows that … valuation is like the assessment of damages for personal injuries, in that there must always be limits - upper and lower - within which the final figure is a matter of opinion …"
That applies with particular force in the circumstances which apply in this case.
The importance of the area of the subject land as a potential development site, its location in relation to Russell Square, and its corner location, which added to its flexibility as a development site, leads me to the conclusion, by reference to the sales evidence I have identified, weighted as I have indicated, that the value of the subject land was $1,200 per square metre. Thus, I determine the value of the subject land to be:
$1200 x 4553m² = $5,463,600