George Quaid Holdings Pty Ltd v The State of Queensland

[2001] QLC 53

LAND COURT

BRISBANE

8 JUNE 2001

Re: A97-29
Determination of Compensation -
Resumption by The State of Queensland
Starcke Pastoral Holdings Acquisition Act 1994
George Quaid Holdings Pty Ltd

Claimant

v.

The State of Queensland

Respondent

(Hearing at Cairns)

J U D G M E N T

The property aggregation known as "Starcke" covered an area of 190,464 ha of which 24,464 ha had been converted to freehold tenure in 1989. The balance 166,000 ha comprising Pastoral Development Holding 14/2498 (the "PDH") was granted under the provisions of the Land Act 1962 on 1 October 1971. Following extensions of the term of the lease in 1986 and 1987 the PDH was due to expire on 30 September 2031. The claimant acquired the aggregation in 1972. An additional area of 9,583 ha, in the form of Occupation Licences (the "OLs") issued under the Land Act 1962. The combined holding of leasehold, freehold and OL lands, was until March 1994 utilised for cattle-grazing purposes.
The "Starcke" aggregation, including the OLs, is to be found on the east coast of the Cape York Peninsula, northerly from Cooktown and lying to the south of Cape Melville. The relevant local government is the Cook Shire Council ("CSC"). The OLs lie mainly to the south of the main aggregation. The freehold land has an elongated shape, which broadens to the north. It was carved out of the south-east sector of the original PDH, leaving leasehold lands of irregular shape to its west and severed areas to the east with the main body of the reduced PDH area in the north-west being of more even and expansive shape.
The Starcke Pastoral Holdings Acquisition Act 1994 (the Starcke Act) was proclaimed to commence on 11 March 1994. That statute provides (s.4) for so much of the "Starcke" lands as would be prescribed by regulation to become "unallocated State land" within the meaning of the Land Act 1994, though in the original Starcke Act this was referred to as Crown land within the meaning of the Land Act 1962, a statute which was largely replaced by the Land Act 1994. The Starcke Act also provides for the termination of the OLs. A regulation under the Act was also published on 11 March 1994, the effect of which was to extinguish all private interests in the "Starcke" lands from that date. In effect this constituted a compulsory acquisition of the claimant's property described above: or a "resumption" in the language of this area of law. I will generally refer to 11 March 1994 as the "relevant date".
Section 5 of the Starcke Act provides for compensation for any dispossessed owner:-
"5.(1)     The State must pay to each person who held an interest in the acquired land immediately before the commencement of the regulation the reasonable compensation agreed between the state and the person.
(2)     If the State and the person cannot agree on compensation, any compensation payable to the person is to be decided under -
(a)in the case of freehold land - the Acquisition of Land Act 1967; or
(b)     in the case of other land - the Land Act 1994."
The reference in this provision to the Land Act 1994 had in the original Starcke Act been expressed as a reference to the Land Act 1962. I can discern no substantive difference between these two statutes with respect of the relevant subject matter and will make reference henceforth in these reasons only to the Land Act 1994 on the matter of compensation. Section 221(1) of the Land Act 1994 refers to Part IV of the Acquisition of Land Act 1967 (the Acquisition of Land Act) as providing the statutory basis for the assessment of compensation for a "Land Act" lease resumed under Division 1 Part 3 of the Land Act 1994. Part IV of the Acquisition of Land Act includes s.20, which is relevantly expressed thus:
"20. Assessment of compensation. (1) In assessing the compensation to be paid, regard shall in every case be had not only to the value of land taken but also to the damage, if any, caused by either or both of the following, namely -
(a)the severing of the land taken from other land of the claimant;
(b)the exercise of any statutory powers by the constructing authority otherwise injuriously affecting such other land.
(2) Compensation shall be assessed according to the value of the estate or interest of the claimant in the land taken on the date when it was taken."
This provision also applies to compensation flowing from the resumption of freehold land (s.5(2)(a) Starcke Act). Compensation for the loss of both the freehold and leasehold "Starcke" lands is, therefore, to be determined in accordance with the provisions of s.20 the Acquisition of Land Act. I am of the view that the words "decided under" in s.5(2) of the Starcke Act are sufficiently broad to enliven the jurisdiction of this Court under s.26 of the Acquisition of Land Act which should be read together with other provisions of that Act relevant to the exercise of that jurisdiction.
The OLs utilised in conjunction with the "Starcke" aggregation were identified in the Starcke Act (s.3) as Nos. 14/471, 14/485, 14/487 and 14/573 Cooktown. The evidence is that the last-mentioned OL had been included in the PDH by 11 March 1994. It follows that the loss of that area of land is a matter that, for the purposes of assessing compensation, falls for determination as an integral part of the assessment of compensation for the loss of the PDH. The parties informed me that they had reached agreement concerning compensation with respect to the remaining OLs. Accordingly, compensation for those licences is not a matter which I need to consider further.
Witnesses
The following witnesses were called by the claimant:
George Quaid is a director and secretary of the claimant company and Southedge Daintree Pastoral Co Ltd, a company concerned with a development and subdivision project known as the Daintree Rainforest Freehold (the "Daintree"). Mr Quaid is also a registered valuer and provided his opinion as to the value of the resumed lands. He also gave evidence concerning the "Daintree" project and the "Starcke" aggregation. I will often refer to Mr Quaid in these reasons as the human agent through whom the two companies mentioned above generally operated.
Ian Samuel Beattie also gave evidence concerning the "Daintree" project, particularly the marketing of the lots produced there. He provided his opinion as to how the "Starcke" freehold land could be marketed in subdivision in the form of 240 x 100 ha lots, and his view of the expected prices and selling rate for lots produced there. Mr Beattie is a licensed real estate agent, auctioneer and a registered valuer. Through his management company he is a part-owner of Quaid Real Estate, an agency originally started by Mr Quaid, with whom Mr Beattie has worked for 28 years.
Timothy Donnelly Nevard describes himself as a "consultant specialising in environmental matters, particularly in the context of habitat creation and environmental enhancement." He holds a Bachelor of Science in Rural Environment Studies and a Master of Science in Agricultural Economics, both from the University of London. He provided evidence on "circumstances where high environmental values have been a principal reason for purchase of land by private sector and non-government organisations" and associated matters.
Kim Elizabeth Campbell is a qualified town planner and was at the relevant date for the assessment of compensation retained under contract as a consultant planner to the CSC. She had earlier (1990-91) been employed by CSC as the director of planning. She is presently employed by the "C & B Group". Her curriculum vitae refers to her authorship of certain reports as part of the Cape York Peninsula Land Use Strategy (CYPLUS). I understand CYPLUS to have been an expansive Government project concerned with the collection and synthesis of data and opinions that could provide a basis for resource and land use planning in Cape York. Mrs Campbell also holds a degree of Master of Science (Environmental Management). She gave evidence concerning the prospects of CSC approving the subdivision of the freehold "Starcke" land, a potential use which forms the basis of the claimant's claim for compensation for that land.
Lance David Dodds provided evidence concerning the design, construction and costing of the works that would be required in a subdivision of the "Starcke" freehold land into 240 x 100 ha lots. Mr Dodds is a member of a firm described as "planning consultants" and though experienced over a period of about 20 years in matters of road construction and such like, holds no relevant formal qualifications. He therefore utilised the services of a Mr Roy Garden, a civil engineer, to check his designs and workings. Mr Garden was not called.
Murray Alan Clive Bartsch, an engineer by profession, provided evidence concerning advices that he had provided to Mr Dodds concerning engineering requirements for the suggested subdivision of the "Starcke" freehold land. Mr Bartsch had been the Shire Engineer for the Cook Shire during the period 1990 to April 1999 and had been responsible for the assessment and determination of relevant and reasonable engineering conditions for subdivision applications within the Shire.
Greg Williams was relied upon by Mr Dodds to provide costings for the engineering works involved in the suggested subdivision of the "Starcke" freehold. Mr Williams is an associate member of the Institute of Municipal Engineering (Australia) and a qualified safety officer and is employed as the operations manager of the firm North Queensland Civil Engineering Contracting Pty Ltd. He has worked in the Cape York and Gulf of Carpentaria region for in excess of 20 years, having been involved in some substantial projects there in recent years.
David Hubert Finney provided an environmental report concerning the "Starcke" freehold land and the potential impact of a subdivision of that land on the natural environment. Mr Finney is the Manager of Environmental Services with the C & B Group and holds a Bachelor of Science Degree and a Master of Agricultural Studies (Land Resource Management).
Terence Joseph Gould, a registered valuer, provided valuation evidence concerning the "Starcke" PDH, such evidence proceeding on the assumption that the PDH would be disposed of independently of the freehold.
Rodney Louis Brett, also a registered valuer, provided valuation evidence concerning the "Starcke" freehold, that valuation proceeding on the basis that that land had a highest and best use for subdivision into 240 x 100 ha lots. Whilst Mr Brett relied on the expertise of other witnesses called by the claimant, a particular point of interest is that he adopted the expected prices and selling rate for lots in the proposed subdivision as provided by Mr Beattie.
The following witnesses were called by the respondent:
Jeffrey Ross Humphreys, a qualified town planner, was a consultant to the Douglas Shire Council for the period of 1991-94. Douglas Shire adjoins Cook Shire to the south. He was involved in the preparation of the Development Control Plan for the Daintree/Bloomfield area and was the leader of the consultancy team that prepared the Daintree Planning Package (also referred to as the Daintree Rescue Package), which I describe in further detail later in these reasons. Mr Humphreys gave evidence concerning the prospect of subdivisional approval being given over the freehold "Starcke" land.
Anthony Brian Symonds was, for the period 1992 to 1999, the Regional Manager of the Queensland Parks and Wildlife Service for the Far North Region, which region includes "Starcke". He was employed at the time of the hearing as a Policy Officer on State environmental issues with the Tenure Resolution Group, Department of the Premier and Cabinet. He gave evidence largely concerning the requirements of a Voluntary Conservation Agreement (VCA) under the Nature Conservation Act 1992 (the Nature Conservation Act").
James Peter Stanton, Environmental Consultant, was called to provide evidence concerning the environmental values of the "Starcke" lands. Mr Stanton had in 1993 been an employee of the State agency responsible for environmental matters and had at that time provided advice to the Government concerning the "Starcke" lands.
Lyndon Henry Schneiders, who is employed as a campaign organiser with the Wilderness Society Incorporated, gave evidence concerning that society's interest in the "Starcke" lands.
Paul Christopher Memmott is an anthropologist by profession and was called to provide evidence concerning Aboriginal interest in the "Starcke" freehold land and the manner in which such interest might arise as an issue in the case of any proposed subdivision of that land. Dr Memmott holds both a Bachelor Degree in Architecture with Honours and a Doctor of Philosophy in Anthropology and is a Fellow of both the Royal Institute of Architects and the Australian Anthropological Society. In 1996 he was engaged by the Cape York Land Council (CYLC) to carry out a scoping study with respect to the Indigenous Cultural Heritage Values of Cape York. The "Starcke" aggregation fell within that study area.
David Edward Byrne, a company director, cattle breeder and consultant to the CYLC, gave evidence concerning the interest of certain Aboriginal organisations and groups: in Cape York lands generally and in the "Starcke" lands in particular. Mr Byrne had between the years 1983 to 1993 been an adviser to the Injinoo Community Council in Far North Queensland; had from 1994 to 1999 been the Deputy Director of the CYLC and is currently an executive member of the Cape York Peninsula Development Association and a consultant to the CYLC.
Tony Alan Potter, a civil engineer and previously the Shire Engineer for the CSC for the period July 1980 to April 1990, provided evidence concerning the engineering requirements for a subdivision of the "Starcke" freehold into 240 x 100 ha lots. He also provided design and construction requirements for those works. Apart from a two-year period of his role as Shire Engineer, the Shire was under the control of an administrator appointed by the State. He acted as the Local Government engineer in the capacity of a consultant between 1976 and 1980. Mr Potter was an employee of the firm Sinclair Knight Merz (SKM) at the time of the preparation of his report. He had, as an independent consultant not employed by SKM, provided comments on engineering reports prepared by John Russell of SKM in June and November 1997. These reports were concerned with engineering requirements and costings for a 238-lot subdivision of the "Starcke" freehold.
Robert Wilfred Grigg, a senior estimator and Information Technology Manager for the firm CEC Construction provided evidence of the costings of the engineering works included in Mr Potter's evidence. Mr Grigg holds Certificates in Civil Engineering - Design Office Technician and Construction Technician. Whilst Mr Grigg's firm had tendered for a number of projects in Cape York, it has not been successful in winning any.
Keith Rodley Bryars, a civil engineer, provided evidence concerning the relevant standard of the so-called "Southedge Road" in whose construction Mr Dodds had played an important role.
Leo Joseph Watts, a surveyor by profession and Queensland Manager of QASCO, a company concerned particularly with aerial photography, aerial surveying and aerial mapping, provided evidence in relation to the use of photogrammetry, a technique relied upon by Mr Dodds in his calculation of quantities of earthworks and in the dimension of catchment areas: two important topics involved in the engineering costs dispute between the parties.
Rodney Gordon Blomfield, a registered valuer in the employ of the Department of Natural Resources (DNR), provided a valuation of the resumed "Starcke" aggregation; that is, both the PDH and the freehold. His valuation approach did not include an assumption that the highest and best use of the freehold involved subdivision, but included the continued use of the PDH for grazing purposes with the prospect of a higher eco-tourism use on the freehold land in conjunction with grazing.
Michael Joseph Slater, a registered valuer, provided evidence intended to point to the lack of viability of subdivision and sale of the "Starcke" freehold land as 240 x 100 ha lots. The bulk of his evidence was concerned with a critique of Mr Brett's and Mr Beattie's evidence.
Purpose of Resumption
The Acquisition of Land Act provides in s.9(6) that land acquired under that Act must, in the proclamation effecting the taking, mention the purpose of the acquisition. There is, scheduled to the Act, a list of relevant purposes. The Starcke Act did not include a provision similar to s.9(6) of the Acquisition of Land Act. There is, however, in the explanatory note to the "Starcke Bill" a stated reason for the legislation:
"The Starcke Pastoral Holdings have been identified as having significant environmental values that should be preserved for posterity."

The explanatory note also said:
"Objectives of the Legislation
The objectives of the Bill are to acquire environmentally significant lands comprising certain freehold parcels, Starcke Pastoral Development Holding and four Occupation Licences being the Starcke Pastoral Holdings in Cape York and to provide for the payment of compensation."

When the then Premier, Mr W Goss, foreshadowed the introduction of the Bill which was to become the Starcke Act in a speech to Parliament on 14 September 1993, the justification for the legislation outlined by him included the environmental values of the land and the Premier also mentioned that the land "encompasses the traditional Crown estates of two separate Aboriginal language groups". In addition, he said that whilst the Government was committed to acquiring the "relevant coastal section of the property", Cabinet's preferred position was to acquire all of the aggregation, given the "various regimes associated with freehold title, leases and occupational licences".
Mr Blomfield suggested that the purpose of the resumption also included mining, however, he did not elaborate on that and it was not a matter pursued by either side. For his part Mr Quaid saw the resumption as being the result of a "pact" between the Federal Government, the Aboriginal and Torres Strait Islander Commission (ATSIC) and the State Government to acquire the land, as I understand it, for the benefit of interested Aboriginal persons or groups.
It is often useful to have an understanding of the purpose of a resumption, particularly where issues of either injurious affection or enhancement flowing from the purpose of the acquisition of part only of a parcel of land are raised. No such issues arise in this case, so with respect to those matters I am not at any loss in not having placed before me, in formal terms, the actual purpose or purposes of the resumption. There is, according to the claimant, a correlation between the resumption of the land for environmental purposes and the highest and best use of the land, however, that is a matter that I found myself able to deal with later in these reasons without needing to decide the full ambit of the purposes for the resumption. Only Cabinet would know that full ambit. I am, however, of the view that given what the Premier had to say to Parliament (a theme reflected in the Second Reading Speech of the then Minister for Lands who introduced the Bill) and the explanatory note to the Bill, the environmental values of the "Starcke" aggregation, or at least the coastal part of it (however far that might extend), was a motivating factor in the resumption of the claimant's land. It is sufficient that I know that one of the purposes of acquiring the "Starcke" lands was associated with its environmental values - using the term "values" in a non-monetary sense.
Claim for Compensation

The claimant, by a letter dated 26 May 1994 to the Director-General of the then Department of Lands sought compensation for the resumption in these terms:
"Prior to acquisition date, my company was offering the subject property for sale both Nationally and Internationally at a set price of $US18,000,000.
Please accept this letter as a formal request for payment of the Australian dollar equivalent of the marketing price, plus interest calculated at the rate of 12.5% per annum from the date of acquisition.
In the event this compulsory acquisition has created a circumstance in which capital gains tax not applicable to free market sale proceeds becomes applicable, my Company reserves the right to seek from the Queensland Government, full reimbursement of the tax assessment in addition to the market price."
That claim was confirmed in a letter dated 5 December 1994 from the claimant's solicitor. On the third day of the hearing of the matter a document (Exhibit 22A) was tendered and was described by Senior Counsel for the claimant as providing the "details of our claim":
"(Brett)        Market Valuation of Freehold Land                  $15,000,000
(Gould)      Market Valuation of Leasehold Land                  $1,285,000
Disturbance
(i)        Tax advantage of Land  $6,840,000*
(ii)       Plus:                Acquisition Costs of new property        $600,000*
(iii)      Plus:                Legal and Valuation for Claim
  with Land Court            (To be supplied or agreed)
(iv)      Plus:                Negotiation Costs pre
  Land Court Claim        (To be supplied or agreed)"
On the twelfth day of the hearing Mr Quaid provided a supplementary statement (Exhibit 55B) which included reference to a figure of $25,000,000, that figure apparently being the Australian dollar equivalent at the relevant date of the originally claimed $US18,000,000. In due course that figure was included in a further document (Exhibit 22B) and the claim for compensation was amended, with leave, to the following:
"
(          Freehold Land  [$]25,000,000
(          Leasehold Land
(calculation in accordance with Ex. 55B)
And Legal & Valuation fees on negotiations
  (details supplied to Crown and negotiations proceeding)
And Legal & Valuation fees on claim
(details supplied to Crown and negotiations proceeding)"
        (Note: dollar sign [$] supplied by me)
It will be noticed that the claim as amended makes no reference to the items of "tax advantage of land" nor "acquisition costs of new property", both of which were included in the "details of our claim" document (Exhibit 22A). Senior Counsel for the claimant confirmed that these items were not part of the amended claim. Notwithstanding this, evidence was led concerning these two matters and the claimant made submissions in support of the matter of acquisition costs, though did not make submissions concerning the matter of tax advantage. I consider these issues further, later in these reasons.
It may be useful if I point out at this stage that the figure of $25,000,000 is not the product of adding the valuation figures of Mr Gould and Mr Brett, but is a figure settled upon by Mr Quaid independently. I will in these reasons, however, consider the Gould and Brett valuations before turning to the evidence on that matter provided by Mr Quaid.
The parties settled the disturbance items described above as legal and valuation fees "on negotiations" and "on claim". In addition I was advised that the State had acquired by agreement with the claimant, the cattle located on the resumed lands at the date of resumption. Apart from those matters, the State's figure for compensation was $4,150,000. That figure is the product of Mr Blomfield's valuation of the PDH and freehold lands including improvements. These improvements included "plant and equipment" ($4,800). As there was no debate concerning the legal nature of these items, I will treat them as fixtures and include them with other improvements as the State did. Mr Blomfield's valuation report also said that legal and valuation fees and "other items of disturbance" should be allowed. Advances against compensation in the amounts of $4,150,000 and $276,287.67 were paid on 6 December 1994 and 26 May 1999, respectively
Approach to Compensation Assessment
The claimant valued the freehold land and the PDH land components of the "Starcke" lands separately on the assumption of different highest and best uses for each. Mr Gould valued the PDH as a grazing property with potential for some tourism use and settled on a figure of $1,285,000. Mr Brett placed a value of $15,000,000 on the freehold land on the basis that this land at the date of resumption "had the immediate potential to be profitably subdivided into 240 small sites each of about 100 hectares". Mr Slater provided evidence to the effect that the subdivision of the freehold land, as envisaged by Mr Brett, was not economically viable.
Mr Blomfield prepared his valuation of the resumed lands on the basis of the PDH and freehold lands together having a highest and best use of the grazing of cattle, but with the freehold portion having some potential for a higher use, probably an eco-tourism use in his view. His valuation comes to $4,150,000. Whilst there were many issues which separated the parties, the primary difference related to the matter of the highest and best use of the freehold land. The respondent's view is that this land should not be valued as land suited to subdivision for two main reasons:
1.A hypothetical prudent purchaser would entertain serious doubts that the CSC acting properly and guided by its Planning Scheme and relevant principles of town planning would approve the subdivision of the land.

2.On the assumption that subdivisional approval would be forthcoming, the subdivision would not be economically viable, particularly having regard to: the expected sale prices of the lots; the period over which such sales would be expected to occur; the costs of development; and the prospect of delay in receiving CSC approval.

Before dealing with those issues, it will be useful if I provide some relevant detail concerning the subject land, focusing particularly but not exclusively on the freehold portion at this stage; together with some relevant historical and background matters.
The "Starcke" Lands
Cape York is a sparsely settled part of Australia which has often held the fascination of many Australians for its remoteness, rugged beauty and harsh environment and which invites the more intrepid amongst us to travel to the "tip" - the northernmost point on the Australian mainland. "The Cape", as it is called, has major towns at Cooktown and Weipa and smaller communities at Lakeland Downs, Laura, Coen and various Aboriginal communities dotted around the coastline. The Cape is served by a microwave telephone network, weekly aerial mail services, has Royal Flying Doctor Service coverage and amenities for travellers at roadhouses and camping grounds scattered along the Peninsula Development Road which provides vehicular access to the "tip". That road is of gravel construction except where it goes through some towns where it is sealed. A variety of structures provide for stream crossings. The road is commonly impassable during the wet season. The Cape has two quite distinct seasons: the "wet", which occurs during the period December to April and the "dry", which occurs during the balance of the year. The length and intensity of these two seasons varies somewhat, there being evidence that the wet season is becoming longer as a result of global warming, however, there is no prospect of even a casual visitor failing to recognise the prevailing season. Rain periods during the wet season are often long and intense, causing large parts of the Cape to become inundated, streams to flow fast and deep and coastal lagoons to fill and become populated by bird life, wild pigs and crocodiles. During the dry many streams cease to flow, lagoons retreat into saltpans, the birds emigrate and the crocodiles return to their lairs. The seasonal influences and the location of the Cape in the tropical region means that temperatures and relative humidity are often high leading to personal discomfort and a propensity for people to move about a little more slowly than those in the south and only when required. The "Starcke" freehold and PDH are part of this geographic region.
The Deed of Grant for the freehold land issued in 1989 following a process which traversed some 14 years commencing with the grant of a Special Lease over the relevant area. At the time of freeholding and at the relevant date for present purposes, the "Starcke" freehold land was undoubtedly the largest freehold parcel of land in Cape York. Freehold tenure may be generally contrasted with leases granted under the Land Acts 1962 or 1994 which may be for limited terms and subject to Ministeral control as to use, management, disposal and subdivision with the nature and extent of that control, depending on the type of lease. The shape of the freehold land was probably determined in 1975 or earlier, having regard largely to the view at the time as to the land which should be excluded from freeholding because of its environmental values. The result is a freehold parcel of "Irregular shape extending for a distance of about 52 km from south to north. Maximum width is 10 km reducing to 500 metres at the narrowest" (per Mr Brett). The elongated narrow section to the south might usefully be called the "tail", whilst the wider section to the north might be called the "body".
The freehold land is bordered in the north by the Jeannie River, whilst the Morgan River adjoins part of the southern boundary. The Starcke River is located just north of where the body and the tail meet. This river comprises the central drainage system and is said by Mr Brett to be "of sufficient size to provide ocean access". There is a reserve for landing purposes on the Starcke River to the east of the subject lands, though it was not suggested that access via the Starcke River added any measurable value to the lands. The eastern boundary of the body of the freehold includes ocean esplanade frontage land commencing with elevated dunes running south from the mouth of the Jeannie River. The Coral Sea is to the east and some distance offshore is Lizard Island, the site of an upmarket tourist resort.
To the west of the freehold tail is an escarpment and the Starcke National Park. There is also a small part of the PDH land which was, in the south, reduced to a quite poor shape for grazing purposes, if considered separately from the freehold land. To the east of the tail lie further parts of the PDH land in poorly shaped and isolated parcels: again, if the PDH is viewed separately. The PDH extends northerly from the Jeannie River in a manner that provides some coastal frontage to the east, but with that frontage reduced by the presence of the Cape Melville National Park. That park was in two portions; one at Cape Melville and the other at the Altanmoui Range, about midway between the mouth of the Jeannie River and Cape Melville. The PDH has a small frontage to Bathurst Bay, then the western boundary travels south and east in a series of steps which abut the eastern boundary of "Kalpowar" aggregation of pastoral holdings to the west, which separate "Starcke" from the Lakefield National Park. In the result, the shape of the "Starcke" aggregation overall is quite irregular and elongated rather than compact. I deal more particularly with the class of country on the PDH when I consider the valuation of that interest.
The type and quality of the country in the freehold land will be considered in due course, however, might generally be described as "undulating open coastal forest interspersed with east flowing drainage systems", the bulk of it "unspectacular" in the description of the presenter of "The World Around Us" video tendered in evidence. These drainage systems often support areas of heavy vegetation including palms (livistona muelleri) and there are small, isolated pockets of rainforest. There is a higher range section towards the south of the body and some individual hills. One of these, "Round Hill", is quite prominent. It is located towards the east of the freehold land, to the south of the Starcke River.
Mt Webb National Park is to be found surrounded by the southern end of the freehold tail. This small park exhibits a stand of vine rainforest on soils derived from basalt and was said by Mr Stanton to be a rare example of such vegetation. A small area of rainforest extends through the freehold land from Mt Webb to the south-west and to the Morgan River. To the east and north of Mt Webb one finds a better quality of red soil country, which could be cultivated to support, for example, tropical orchard crops. Various fixed improvements were on "Starcke" at the time of resumption, most on the freehold, such improvements being suited to the use of the land as a cattle-grazing enterprise. These improvements and their value are dealt with later in these reasons.
The "Starcke" aggregation contains vegetation and landform types of interest environmentally, however, it is both the nature of the property, (and in this regard I particularly mention the freehold) and the environment in which it is found, that are of interest for present purposes. To the east is the Coral Sea to which the "Starcke" freehold enjoys a beach esplanade frontage of about 9 km. To the south of the mouth of the Jeannie River parabolic dunes are to be found. To the west is the Starcke National Park, which contains an impressive topography and vegetation and a small waterfall, though access into this park is physically quite demanding. According to the presenter of "The World Around Us" video, it would take a minimum of a four-day hike from the nearest four-wheel drive track to get to the waterfall. I was fortunate enough to view it from a helicopter during a view arranged by the parties. Cape Melville National Park to the north contains a remarkable formation of volcanic boulders and stones, in striking dimension and form, particularly when viewed from a helicopter. This park is also noteworthy for its population of foxtail palms. Access to the vicinity of the park is possible by four-wheel drive vehicle during the dry season. From Cape Melville the coast sweeps to the west and through Bathurst Bay, then past Bathurst Heads, again to the south-west and then north around Princess Charlotte Bay. Offshore is the Flinders Island Group, which is quite prominent, whilst islands of lesser significance might be seen off the east coast of the PDH. To the east of the "Starcke" freehold and the small slither of PDH which runs along that eastern boundary is the Hopevale settlement contained in a Deed of Grant in Trust with an area of about 100,000 ha administered by an Aboriginal Community Council. At the eastern extremity of that land interest is Cape Flattery, the site of a silica mine. To the south of the "Starcke" lands is an area which includes the Endeavour Valley. This is more densely populated than other lands abutting the "Starcke" with some smaller agricultural, grazing and horticultural properties being found there. This area is drained by the McIvor River which runs roughly parallel to the Morgan River in this area. These smaller holdings which go down to about 32 ha can be readily contrasted with the larger holdings found in the Cape upon which cattle are grazed, though management of these herds might be said to be less proactive than in the more closely developed cattle grazing areas of the State.
My appreciation of the evidence concerning the "Starcke" lands and its surrounds was enhanced by the inspection by helicopter. Together with Counsel, Valuers Blomfield and Brett and Mr Beattie, I travelled from Cairns to Cooktown by fixed wing aircraft then by helicopter over the "Starcke" aggregation, Coen township, Cooktown and a property called "Silver Plains", which arises for discussion later in these reasons. We landed on a sand spit on the Nesbit River at the northern end of "Silver Plains", at the mouth of the Jeannie River and again on the "Starcke" freehold. I then travelled with Valuers Blomfield and Brett by road to the Cooktown Airstrip before returning to Cairns by air.
Location, Access and Services
Relevant estimates of distance provided by the various witnesses vary, however, not to the point of controversy. The freehold extends for a distance of about 52 km from the Morgan River north with the southern tip of the freehold being situated about 85 to 90 km by road north of Cooktown, or about 50 km radially. Road access is provided from Cooktown via the Endeavour Valley Road which divides and provides a choice of access to "Starcke" via either the Isabella-McIvor Road or the McIvor Valley Road which travels close to Hopevale. Hopevale is accessed via another short length of road. The road to the Hopevale turnoff is "generally reasonably well maintained with the road north of this point receiving less use and generally a lower level of maintenance" according to Mr Gould. The McIvor Valley route is the slower of the two routes, but more secure in the wet season as it benefits from a bridge over the McIvor River. Both routes converge near the McIvor River a few kilometres before entering "Starcke" and serve various established properties and communities in the area north of Cooktown. Driving time to the southern entrance to "Starcke" is 1 to 1½ hours from Cooktown, though access during the wet season may be cut at one or more of various stream crossings.
From "Starcke's" southern boundary a single constructed public road extends northwards through the freehold for a distance of about 40 km, then exits into the PDH and continues north to Cape Melville, passing through the abandoned "Starcke" outstation of "Wakooka". A track heads west through the adjoining "Kalpowar" property, then north-east to the coast or south-westerly to the Peninsula Development road - the main road connecting Cape York to points south. Access over the internal "Starcke" road is curtailed by the wet season which has a variable duration, though access is usually available May to December. Off-road access during the wet season is severely limited.
Evidence concerning access onto the "Starcke" land from the south was given by a range of witnesses, their evidence being largely influenced by their own experience in that regard or the experience of others whom they have consulted. The best understanding that I can gain is that during the wet season streams rise quickly following rain and fall at a rate dependent upon the length of time and the intensity of the rainfall event. The Morgan River at the southern boundary of the "Starcke" aggregation plays an important role in governing access to the land. The Morgan and the other "Starcke" rivers are not bridged, requiring crossing via the unimproved stream bed. Access into the stream is by way of cuttings in the banks. The Morgan River is a steep-banked stream and the soil type of the banks is such that when saturated it becomes boggy and untrafficable. Mr Bartsch said that he understood that the Morgan posed a barrier to traffic for a maximum period of seven days at a time during the wet season and evidence from Mr Dodds obtained from the "Starcke" Station manager tended to support that view, whilst Mr Stanton said that access would be denied for up to weeks at a time. I think it is safe to say that during the wet season access to "Starcke" would be denied for varying periods, but often for days at a time, dependent upon the severity of rainfall events. Similarly the Starcke and Jeannie Rivers would pose barriers for further internal movement on the "Starcke" property though the Jeannie does not come into play in access to the freehold.

The "Starcke" freehold had two unsealed light aircraft airstrips, one close to the original homestead at the property's southern extremity, the other centrally positioned north of the Starcke River. Both airstrips provided a means of direct access to Cooktown and Cairns. There is also an airstrip at the "Wakooka" outstation found in the northern part of the PDH, however that had fallen into disuse by the time of Mr Blomfield's inspection in 1994. It was capable of rejuvenation by grading and reclearing. Cooktown has daily commercial flight connection with Cairns, the flying time being about 40 minutes. Driving time Cairns to Cooktown is about 4½ hours. In 1994 the road between Cooktown and Cairns was bitumen sealed for about half its length. Electricity does not extend as far as the subject land. Mail service and microwave telephone service is available.
Cooktown is a well-established historic township providing a variety of local shopping facilities, hotels, schools, police station, commercial airport, hospital, community swimming pool and service and machinery maintenance facilities. For more comprehensive services it is necessary to travel to Cairns. Cooktown has a population of about 2,000 and has its origins as a port in the 1870's servicing the gold mining at the Palmer River. The town now relies mainly on tourism.
"Daintree", "Southedge" and "Starcke" - A Change of Plans
In 1971 Mr Quaid, through the Southedge Daintree Pastoral Co, acquired the Daintree Coastal Lowlands property, an aggregation of titles which I understand to have been mostly freehold, located on the northern side of the Daintree River and extending east to the coast. Part of this land was cleared and part was subject to rainforest regrowth. Much of it, however, was virgin rainforest and associated vegetation communities. Access to the land was by road from Cairns. The Daintree River was and remains unbridged with cross-river access being provided by ferry. That property was purchased for cattle fattening, with cattle to be produced on "Southedge", a leasehold pastoral holding purchased later that year. Mr Quaid acquired the "Starcke" aggregation in 1972 and said that he was involved in the purchase and development of other rural properties.
The year 1974 saw a substantial economic downturn in the beef cattle industry, generally referred to as a market "crash". As a result of this crash Mr Quaid ceased all development work on the abovementioned three properties and sold off surplus machinery, and cattle. It was during this time that Mr Quaid sought and was granted a Special Lease over that part of the "Starcke" aggregation which eventually became freehold pursuant to the terms of that lease. He said that freehold tenure provided a "safety net" in the event that cattle raising proved to be uneconomic. During the years 1975-78 he attempted to sell the "Daintree" lands to primary producers, but with limited success, a few individual titles only being disposed of. He had been seeking an overall price of $3,000,000 for the "Daintree" lands as a single parcel possibly for sugar-cane expansion, but said that there was no interest expressed in the whole parcel.
A decision was then taken to sell off the "Daintree" lands in subdivision. A profitable project ensued. Mr Quaid told me that he is not a land developer, but has had to resort to development and subdivision in order to dispose of properties: the first such project, as I understand it, being the "Daintree". I will return to discuss that project shortly. Some time after the purchase of "Southedge" and immediately following its freeholding, Mr Quaid became aware of the water storage potential of the property and constructed a large dam there which impounded about 150,000 megalitres of water on his estimate. I viewed part of that water body (Lake Mitchell) from a distance. A video tendered in evidence provided a more detailed understanding of the nature of the works involved. That construction was completed prior to 1989. At one stage Mr Quaid said that the dam was constructed for the purpose of irrigated farming but also said that the property is a potential "lakes resort city" site. "Southedge" is an inland property located just to the north of Mareeba township and about 100 km by road through Mareeba to Cairns. This distance and the indirect nature of the route disadvantaged the property for development purposes. Road access extending for about 32 km was therefore constructed by Mr Quaid from Wangetti on the coastal Cook Highway north of Cairns to provide direct access to "Southedge" from the coast, however, that road remains a private road. This road was generally referred to in evidence as the "Southedge" road. Its construction characteristics are discussed further under para 549 and following. Mr Quaid said that the road was built for the purpose of exposing "Southedge" as a viable "people place" of the future as it provided a direct connection between that property and the coast. That initiative was, it seems, successful as the property was subsequently designated as the Southedge Potential Urban Development Area by the Council. This private road was opened for public inspection on 30 November 1997 and Mr Bryars inspected the road on that occasion. The "commemorative brochure" publicising the public inspection event said in part:
"Your support has been invaluable in helping to demonstrate overwhelming community support for opening Southedge Road as an arterial highway."

Whilst the claimant preferred to characterise the road as a private road, as it is, it is apparent that it was constructed in order that it might become a public road. In a comment on the potential use of the "Southedge" property the commemorative brochure said:
"Around 25% of the entire surface area of Southedge can be utilised to form several large freshwater lakes. Two have already been created, the largest being Lake Mitchell which covers over 3,000 ha and has a 50 km shoreline.
Of the remaining 30,000 ha, half is ideally suited for elevated, lake-view residential development leaving the remainder available for Southedge 'greening' projects such as golf courses, sports grounds, tourist resorts, educational colleges, parks and reserves."
Whilst Mr Quaid said that he recognised the "remarkable similarities" between the "Starcke" and the "Daintree" lands (lands then in the process of subdivision and sale) in 1989 when freehold tenure over part of the "Starcke" property was granted by the State, he elected not to subdivide it nor to expend funds on "Starcke" in the substantial manner that he did with respect to "Southedge". Instead, he decided to offer the "Starcke" freehold and PDH for sale overseas, not as land with subdivision potential, but as a parcel whose freehold component had potential as a "frontier tourist development" and possibly a game park. His intention, he said, was to attempt to sell the land as a single parcel and he planned to market it that way for up to one year. He called that "phase one" of his plan to sell "Starcke". He said that after that period, had no sale eventuated, he intended, as phase two, to carry out a subdivision project on the freehold portion. At the conclusion of that project the PDH and OLs would be sold with an expectation that the subdivided freehold would enhance the value of the PDH.
The "Starcke" aggregation was advertised for sale in the "Wall Street Journal" appearing in the United States Edition on 26 February 1993 and in the European Edition on 12 March of that year. Advertising costs totalled $30,000. The asking price was $US18,000,000, which was then equivalent to $A25,000,000, according to Mr Quaid's calculations. Mr Nevard thought the wording of the advertisements to be suited to the American market, but thought it needed some adjustment for Europe. Mr Quaid received responses to his advertisements and also purchased a "prospect list" from Dalgety Real Estate in February 1993 for $5,000. In total he had collected a list of about 140 prospects and has since formed the view that the possibility of a successful sale was high. On 19 April 1993 the "Courier-Mail" published an article which referred to the Wall Street Journal advertisements. The article included comments attributed to the then Minister for Environment and to a spokesman for the Wilderness Society in which concern was raised about the prospect of "wilderness" land being sold overseas. Mr Quaid's solicitor counselled him against entering into sale negotiations with overseas prospects given the apparent State Government interest. No further advertisements were published, however, Mr Quaid persisted unfruitfully to promote the sale of "Starcke" to or through ATSIC, though there is no evidence of any asking price for such a sale.
The State's interest in the "Starcke" aggregation became clearer on 10 September 1993 when the Minister for Environment wrote to the claimant opening negotiations for the purchase of all or "a substantial part of 'Starcke' for National Park purposes". Mr Quaid responded by advising his asking price of $US18,000,000. Less than a week later on 16 September, the State Government tabled in Parliament the "Starcke Pastoral Holding Acquisition Bill", which lay on the table pending the outcome of negotiations between the State and the landholder. These negotiations took on the character of discussions about compensation instead of price, according to Mr Quaid. I will now return to a more detailed discussion of the "Daintree" project which followed from Mr Quaid's decision to sell those lands in subdivision.
The Daintree Project
Following the unsuccessful attempt to sell the "Daintree" land as a single holding, 34 existing rural titles south of the Alexandra Range were sold to individual buyers. In the late 1970's another 40 to 50 mostly cleared lots of 2 to 4 ha in the Forest Creek area just north of the Daintree River were sold. I assume that the uncleared lots were vegetated with either rainforest or rainforest regrowth. Mr Beattie said these later sales were priced at $10,000 to $17,500 though I note elsewhere in his evidence he said that sales in 1979-80 averaged about $34,300, whilst in 1980-81 prices averaged $19,000. Sales in 1979-80 (21 lots) and 1980-81 (25 lots) were mainly 1 to 2 ha lots sold to local buyers. Following these sales Mr Quaid decided to embark on a marketing campaign, which commenced in 1981-1982 and wound down during the 1989-90 financial year. At the time that decision was taken the State was initiating a project to construct a road from the Daintree River to Cape Tribulation to the north and there was well-publicised protest concerning that project and its suggested threat to the natural environment. Consequently, the name "Daintree" became nationally known as a significant tropical rainforest area. The marketing campaign was, therefore, able to capitalise on the momentum established by the recognition of the name "Daintree" and what it represented in the minds of interested persons in the Australian community. Mr Beattie was given the marketing and sales task. He decided to manage the marketing campaign himself but sought advice from Dr Peter Kenny, a Sydney-based market psychologist, that advice having as its central tenet the proposition that what might be perceived on first blush as negatives associated with the Daintree area, should be presented as positive features. Mr Beattie said that key aspects of the marketing campaign therefore featured these aspects of the "Daintree" property:-
·isolation - limited access by river ferry, need to use four-wheel drive vehicles;
·last frontier - chance to be a pioneer, virgin rainforest, unspoiled beaches;
·environment - responsibility of the individual;
·voluntary community - choice of lifestyle, a place that need only be shared with a few others.

The subdivision was titled "Daintree Freehold Rainforest" and the product was described in the marketing campaign as "a few acres of rainforest near beaches and creeks". Such words as title, lots, estate, properties and such like were jettisoned, as they might conjure up the stereotypical rural residential subdivision which most people would know about - the so-called "Beaudesert type" rural residential subdivision, in the language of Senior Counsel for the claimant.
The actual product was typically a 1 to 2 ha rainforest block, fronting a gravel road. Some had creeks, some had been cleared, many were populated with regrown rainforest, a few had views and some were near the beach, particularly at the picturesque Cow Bay. A few sites had outstanding features. I will return to discuss them below, but will record here that the marketing campaign was not directed to the sale of those blocks. It focused on the typical 1 to 2 ha product and targeted the local Cairns market as well as other parts of the State, the country, Papua New Guinea and New Zealand. The marketing campaign cost $5,823,444 of which $2,553,279 comprised commissions and bonuses. This leaves $3,270,165 as having been spent on actual marketing. A total of 860 lots were sold during the main marketing period. If, for the sake of simplicity, I disregard the marketing expenditure spent outside this period, the cost per lot would be about $3,802. Expressed as a cost per lot for the whole of "Daintree", the cost is around $3,540 per lot.
The marketing campaign:
·Advertisements appeared in newspapers, usually timed to coincide with money flows; for example, following crop harvests in a particular area.
·Video promotions were sent to prospective purchasers. I viewed such a video which was put into evidence.
·A salesperson was placed in the area where advertising was carried out in order that there might be immediate and personal follow-up to any sales inquiries.
·Contracts were usually entered into subject to satisfactory inspection.
·Prospective purchasers were flown to Cairns to enable an inspection. The cost of airfares was charged to these individuals only in circumstances when a sale did not eventuate.
·Potential purchasers were required to undertake an inspection of the relevant "Daintree" lots in which they had expressed an interest. That inspection involved the prospect sitting with a sales person on the 1½ hour drive from Cairns to the Daintree River, followed by the inspection and the trip back to Cairns.
·Attractive vendor finance was made available to facilitate the immediate conclusion of sales.
·In addition to the promotional video mentioned above, there were visual promotion products in the form of a brochure which included high-quality photography depicting a "coastal paradise"; a poster; mail cards and an agent's newsletter.
In appealing to those who might be attracted to the relative isolation and natural environment of the "Daintree" blocks, Mr Beattie said that the marketing campaign emphasised the absence of certain improvements which added to the perception of isolation:
·no bridge across the river - ferry access only (initially it carried only six vehicles at a time and operated for limited hours);
·the roads are sometimes impassable;
·no electricity;
·no town water;
·no shops;
·no school;
·no houses;
·no employment.
The evidence showed, however, that the marketers of the "Daintree" equivocated in painting the area as a rugged pioneering destination. Sales brochures that were tendered noted that a kiosk, a restaurant and a general store with fuel outlets were in the area and would keep residents "comfortably supplied with essentials". I understand that these facilities were not available when the land was first introduced to the market, but that such features were, as they became available, included in any new editions of the brochure. Mr Beattie said that it was important that intending buyers were not misled by a brochure - that they saw what they were expecting to see, on inspection. That version of the brochure in evidence advised that the town of Mossman was a 45-minute drive away with a high school, hospital and shops - 15 minutes further on was Port Douglas and Cairns with its international airport was less than a 2-hour drive. This information was included in all brochures from the outset. Roads were described in brochures as all-weather between Mossman, Port Douglas and Cairns and with well-formed country roads throughout the Daintree area. It was also said that electric power would eventually reach the area.
The marketing campaign bore fruit increasing the sales from the earlier levels to the following:

Year	No of Sales	Gross Realisation	Average Price	Marketing Expenditure * (including commissions and bonuses)
1981-82	48 sales	$841,997	$17,542
1982-83	143 sales	$3,446,000	$24,097	$389,379 1983
1983-84	65 sales	$1,756,642	$27,025	$365,873 1984
1984-85	115 sales	$3,301,916	$28,712	$647,294 1985
1985-86	123 sales	$4,089,125	$33,245	$720,582 1986
1986-87	96 sales	$5,229,475	$54,474	$761,106 1987
1987-88	99 sales	$4,589,225	$46,356	$720,231 1988
1988-89	116 sales	$5,473,473	$47,185	$989,441 1989
1989-90	55 sales	$5,017,525	$91,228	$491,086 1990
* This expenditure was apparently recorded for calendar years. No figures were provided for the 1982 year apart from commission and bonuses of $84,200.

Further sales took place up to 1996-97 when the State purchased the 24 remaining lots for a total of $5,700,000. Mr Blomfield had provided an indicative valuation of those lots at $4,912,000. following negotiations this figure was increased to take into account commercial timber on some lots, interest and Mr Quaid's stated view that the initial valuation was conservative.
In addition to those 24 lots the State purchased eight lots held by the developer as mortgagee in possession. State purchases were part of a combined State/Commonwealth "buy back" program discussed at para 72 and following. The number of "Daintree" lots sold by the developer totalled 943, including the 24 lots sold to the State. The sales for the intervening years were as follows:

Year	No of Sales	Gross Realisation	Average Price	Marketing Expenditure * (including commissions and bonuses)
1990-91	5 sales	$581,500	$116,300	$249,974 1991
1992-93	5 sales	$435,000	$87,000	$65,806 1992
1993-94	2 sales	$140,000	$70,000	$60,435 1993-94
1995-96	1 sale	$575,000	$575,000	$230,447 1996
* This expenditure was apparently recorded for calendar years except for 1993-94.

I note that the last year of promotional advertising expenditure was 1992, however, advertising costs for 1991 ($1,632) and 1992 ($3,767) were nominal compared with the previous years of:

1983  $34,286
1984                  $127,596
1985                  $189,059
1986                  $151,006
1987                  $163,903
1988  $96,825
1989                  $177,483
1990  $55,000

Daintree Planning Package

In September 1994 a report entitled "Daintree Planning Package - Final Report" under the authorship of Mr Humphreys' firm was submitted to the Douglas Shire Council. That report resulted from a study conducted into an area of approximately 30,000 ha of land extending north of the Daintree River and incorporating the majority of freehold properties and tourist sites central to the issues raised and addressed in the report. Those issues were concerned with Aboriginal values, access, traffic patterns, tourist trends, the needs and attitudes of the residential community and for the purposes of present discussion I mention, in particular, environmental values.

The study was undertaken to identify actions needed to preserve the study areas environmental assets, provide for a sustainable and prosperous eco-tourism industry primarily based on the Wet Tropics World Heritage Area (WTWHA)and to address the needs and rights of local residents and landowners.
The following quotations, which deal with environmental issues in the study area, are taken from pages 2 and 3 of the Final Report:
"The wet tropical rainforests of North Queensland are of outstanding universal significance being a relic of the Cretaceous rainforests, a formerly widespread vegetation type which has been reduced through climatic change to occupy only a fraction of the Australian continent (Russell 1985). Through the impact of land development, only 20,000 km² remains in Australia, over one-third of which is in the WTWHA. The Daintree-Cape Tribulation area is the last extensive area of lowland rainforest in the wet tropics still linked a continuum with the main upland rainforest massive (Werren, 1993).
Not all of the valuable rainforest in the study area is included in the WTWHA. Due to the inherent difficulties in government management of privately owned lands, the WTWHA largely excludes freehold lands. Significant forest areas lie on the remaining 7,500 ha approx. of the study area, mostly freehold allotments, outside of the WTWHA. These forests are recognised as exhibiting environmental values equal to, and in particular cases, surpassing those of the World Heritage listed forests.
These forests have in places already been degraded through agriculture, tourism and residential development. At present there are no comprehensive controls on vegetation clearing and development rights exist to erect dwellings. So, there is the potential for further widespread degradation to the extent that all of the remaining rainforest on these properties may be cleared and such clearing impacts the forest beyond the boundaries of these properties in what may be termed a 'shadow effect', whereby forest on the new edges created by clearing and exposed to unfavourable conditions, degenerates, forest beyond this is then exposed, the edge regresses further, and so on. Residential settlement may effect further direct detrimental impacts on the environment through domestic animals, fencing, erosion, pollution and weed infestation, as well as indirect impacts through increasing the demand for facilities and services, the development of which would further impact upon the environment.
To a lesser degree, growing tourism and a lack of facilities and regulation of tourist activities are also resulting in environmental degradation.
Thus, there exists a very real threat for significant immediate loss of biological and scenic values, and conceivably devastating flow-on impacts on the wider environment. Action is necessary to protect the area's environmental assets."

At page 69 of the Final Report the consultant authors discuss strategies and record the following:
"It is imperative that an effective scheme be tailored to address the problem of the continued degradation of the highly significant biophysical values of the Daintree-Cape Tribulation area. Ideally, conservation of the natural values of the study area would be best achieved by a phasing out of incompatible area-demanding landuses such as pastoral and other agricultural activities. Low density residential landuse, at a scale promised by the existing cadastral boundaries, is also inimical to the protection of landscape quality, the preservation of biodiversity and antagonistic to the tourist industry which these sustain."

The report then goes on to introduce the proposition of returning identified lands to public ownership and placing them under protected tenure. In due course this action was endorsed and became known as the "Daintree Buy-back Scheme", a scheme authorised and financed by a combined State/Commonwealth initiative. The purchases from the "Daintree" developer in 1996-97 took place as part of this scheme. In addition, landowners were invited to express interest in selling land to the State as part of the scheme. Lands offered under that arrangement were evaluated and, if they satisfied the main criterion as being of significant environmental value, negotiations were entered into and sales effected in the manner that might usually take place in the marketplace. Mr Blomfield was involved in the valuing of the lands offered for sale, as well as those sought from the developer by the State.
The Market and Marketing
The experience of the "Daintree" project is important in the claimant's view. First, it was said that a lot of the marketing goodwill at the "Daintree" would have carried forward to a new campaign of marketing the proposed 240 lots produced from the "Starcke" freehold. More importantly, it was said by Mr Beattie that the "Daintree" campaign served as "both a precedent and a blue print" for the marketing of what was called the "Starcke Freehold Wilderness".   Before considering the merits of that proposition, there are preliminary matters that invite discussion:
·to what extent was the "Daintree" project successful?
·To what extent was success owed to the marketing campaign?
-     did the buoyancy of the market play a role?
-     was there a market for the "Daintree" lots in existence before the marketing campaign started?
I will consider these questions in the above order. Before I do, however, I will mention that Mr Blomfield and Mr Slater acknowledged that benefits did flow from the marketing campaign. Mr Slater thought that both prices and rate of sale at "Daintree" would have benefited, whilst Mr Blomfield thought that the effect would have been confined to the rate of sale there. Notwithstanding these views, the question remains as to the extent of the effect of the Beattie marketing campaign with the claimant placing that effect higher than did the respondent.
The profitability of the "Daintree" project is important in the claimant's case for a number of reasons. In particular, it is said to demonstrate the success of the Beattie marketing campaign. It was suggested by the claimant that the "Daintree" project generated a substantial profit for the developer, that profit said to have been in the order of $31,000,000. It was the claimant's case that the sale prices and rate of sale achieved at the "Daintree" during the period of the marketing campaign were attributable to that marketing campaign, managed by Mr Beattie.
The claimant, through Mr Beattie, referred to the profitability of the "Daintree" project in simplistic terms as follows:
Total gross realisation  $42,373,528
Costs:
                 Surveys and engineering  415,959
                 Road construction, external
                 Contributions and maintenance               3,810,146
                 Rates and land tax  858,552
                 Legal Costs  181,742
Plus:
                 Marketing  5,823,444    $11,089,843
Net realisation  $31,283,685

This net figure is not, however, all profit as it does not take into account the cost of land nor interest on funds invested. Mr Slater provided a discounted cash flow (DCF) exercise, which purported to reveal the profitability of the "Daintree" over its full 18-year period. That exercise assumed a land cost of $3,000,000 which was the price Mr Quaid had placed on the land as cane expansion land. Assuming a highest and best use of subdivision, the land cost ought to have been higher with a consequential reduction in profit. Mr Slater also assumed an average sale rate throughout the full 18 years of the project, whereas the more expensive lots sold later in the process. He also assumed development costs were spread throughout the project, whereas the larger component of such costs would ordinarily be expended towards the start of the project. He assumed no "lost" sales through mortgagee action. His exercise employed an interest rate of 9.65% which was the opportunity cost rate not the applicable commercial rate. Mr Slater said that each of the above assumptions favoured the claimant in terms of maximising the calculated profit. On the basis of these figures he calculated an internal rate of return (IRR) after interest of 40.4%, but said that this would have been lower had less favourable assumptions been made. His profit and risk rate as calculated was 297.6%. His calculated profit was $27,137,369.
The claimant's view is that Mr Slater's exercise reveals a very profitable undertaking even disregarding its criticisms of the exercise, the most important of which was that the exercise does not portray the peculiar aspects of the "Daintree" project. Two of these aspects are said to be important. First, the project did not have the benefit of the Beattie marketing campaign until after the initial two to three years of selling had taken place. Second, after the conclusion of the marketing exercise, selling was confined to what Mr Quaid referred to as the "scraps". Whereas Mr Slater's DCF was prepared on the basis of the full 18 years of the "Daintree" project, it was the claimant's view that a more accurate representation of the real potential of the marketing campaign would have been achieved were Mr Slater's exercise confined to the period of the project which coincided with the marketing campaign.
The "scraps" referred to by Mr Quaid included some lots with special features that Mr Quaid said he intended to hold, then sell after the year 2000, though one of these blocks did sell during the post-marketing period for $575,000. His asking price was $750,000 for this lot. There were 24 other lots totalling 500 ha which Mr Quaid's organisation priced at a total of $13,000,000. Mr Quaid said that it would not have been practicable to mount a marketing campaign for these few lots. That seems sensible to me.
The State Government embarked upon the "Daintree" buy-back plan in 1996. The purpose of that plan was to purchase individual subdivided lots at the "Daintree" in order to protect the environmental values of those blocks. The outcome of that plan was that the 24 lots covering 500 ha priced by Mr Quaid at $13,000,000 were purchased by the State for a total of $5,700,000 during 1996-97. There was a substantial number of other purchases from individuals. Mr Quaid said that he accepted the $5,700,000 price because he was concerned at facing another "Starcke Act", the suggestion being that the final figure was lower than market value. Mr Blomfield carried out the valuation of the "Daintree" lands for the State and expressed the view that sales included in the 24-lot State purchase were priced in accordance with the market. The evidence referred to by him tends to support that view. In addition, there is the fact that Mr Quaid was able to sell 24 lots in bulk to the one purchaser - an occurrence which will often attract a price discount, though there was no suggestion from either side in this case that this explained the difference between asking price and the final price. The highest and best use of these lots probably would not have been in contention. Given this and the fact that there were over 900 other sales in the "Daintree" project on which to rely, for the purpose of valuation, Mr Quaid's view that these lots really had a value of $13,000,000 ought to have been capable of support by valuation evidence being provided in the usual manner.
Mr Slater's DCF exercise of the "Daintree" appropriately reflects the profitability of the project, based on its actual history but on the assumptions made. The profit shown by the DCF exercise is clearly high, showing an average return after interest for each year of the project at 40%. Nothing from the respondent's side suggests that the project was anything but profitable. The pointed question is, however, the extent to which that level of profit is attributable to Mr Beattie's marketing campaign. I turn now to consider the question of the market conditions.
Mr Blomfield gave evidence of the relevant real estate market in North Queensland enjoying boom conditions during the 1980s and suggested that this would have contributed to the success of the "Daintree". He saw March 1994 as being a flatter market period. Mr Brett said in reference to the Australia-wide market that the buoyant period would have been more in the mid to late 1980's and even into 1991. He thought it fell after that but that by 1994 was in the middle of a period of substantial growth. I understand Mr Blomfield's view of the market to be more pertinent to the issue of market conditions that were encountered at "Daintree" and would have been encountered in marketing the "Starcke" freehold lots. I note Mr Brett's opinion that the middle to late 1980's were the more buoyant part of the "Daintree" marketing period. Whilst I accept this evidence, this does not lead to a conclusion that the input of Mr Quaid and Mr Beattie to the "Daintree" success ought to be totally discounted. The level of sales was lower before and after the campaign, a coincidence arguably attributable to the effect of the campaign, if not exclusively.
Mr Blomfield expressed an opinion that a market of the type exploited by the "Daintree" project was emerging before and together with the marketing campaign there. He referred to Camelot Close at Cape Tribulation as a subdivision project which he said revealed the existence of the relevant market. Cape Tribulation is about 33 km north of the Daintree River ferry and about 13 km north of the northern end of the "Daintree" development. Camelot Close was the name of one of the roads in the subdivision, others being named Nicole Drive and Zena Close. However, the parties generally referred to the subdivision as "Camelot". The subdivision in this area was being undertaken, on Mr Blomfield's understanding, at around the time the initial "Daintree" lots were sold into the local market. Camelot was preceded by a small subdivision at the beachfront of Cape Tribulation and to the north of that. Mr Blomfield said that lots developed and sold there and in Camelot were 1 to 2 ha and were very comparable with the main product in the "Daintree" project. He said that the Cape Tribulation and Camelot lots were not supported by a marketing program such as that undertaken for "Daintree" , where the size of the project was substantially larger. Prices started in Camelot Close at $12,400 in 1978 and the highest price paid was $150,000. This is far short of the highest priced lots at "Daintree", however, no comparison on a lot to lot basis was provided to me. I might mention here that I had the advantage of a driving inspection of the "Daintree" subdivision and those sale properties referred to as Camelot. This inspection was carried out in the company of counsel and Mr Beattie. It assisted me in my understanding and appreciation of the evidence. My inspection led me to the view that the higher priced "Daintree" lots were substantially superior to the Camelot lots.
In response to that evidence it was suggested that Mr Blomfield may have simply had the advantage of hindsight. He had arrived in North Queensland in 1988 towards the end of the "Daintree" marketing program, therefore saw the successful project, not the raw land that Mr Quaid had available in 1979, with even fewer facilities than later became available. It was also submitted that Camelot was a quite different project from the "Daintree", as is demonstrated by the fact that there were 12 sales only from the Camelot project during the period 1978-82, with the later sales levels indicating some benefit being derived from the publicity flowing from both the protest activity and the "Daintree" marketing campaign. A perusal of the evidence of Camelot transactions provided to me supports the view that values there increased substantially between 1978 and 1991.
I think it undeniable that Camelot sales did demonstrate that a market existed for the type of product available at "Daintree", though one not aggressively pursued by the Camelot developer. In addition, I note that buyers were found for the "Daintree" product with the sale of 34 existing rural titles south of the Alexander Range in the mid-1970's and the sale of lots during the period when marketing expenditure was low (up to 1981-82). The original "Daintree" sales were not all rainforest blocks, but I understand that they were broadly comparable with lots sold after the marketing campaign started in that post-marketing lots included predominantly rainforest lots but with some which included clearing and some with regrowth. This also appears to be the case with the Camelot lots which sold before and after the "Daintree" marketing campaign. I note also that Mr Beattie said that the sale of lots to the local market during 1979-1981 prompted a significant number of inquiries for the purchase of small acreage virgin rainforest before the marketing program was undertaken. Before drawing a conclusion on the question of the benefit of the Beattie marketing campaign at "Daintree", there is some other evidence to which I will refer.
I have earlier set out schedules showing sales rates and income achieved at "Daintree" and marketing expenditure costs. I have analysed those schedules further to reveal the following:

Year	Average Cost per Sale	Cost as a % of Income
1982-83	$2,722	11.30%
1983-84	$5,628	20.83%
1984-85	$5,628	19.60%
1985-86	$5,858	17.62%
1986-87	$7,928	14.55%
1987-88	$7,275	15.69%
1988-89	$8,529	18.08%
1989-90	$8,928	9.79%

It can be seen that the cost of sales generally increased during the main marketing period there, but the cost expressed as a percentage of income from sales shows a quite uneven performance. If I consider promotion and advertising costs alone the trend is even less clear in the case of costs per sale, but appears to show a fairly consistently reducing cost when expressed as a percentage of income:-

Year	Average Cost per Sale	Cost as a % of Income
1983	$239.76	.995%
1984	$1,963.01	7.26%
1985	$1,643.99	5.73%
1986	$1,227.69	3.69%
1987	$1,707.32	3.13%
1988	$978.03	2.11%
1989	$1,530.02	3.2%
1990	$1,000.00	1.1%

The cost of advertising and promotion expressed as a percentage of income tends to indicate the recognition and acceptance in the marketplace of the produce at "Daintree". What it may also reveal is that in spite of the focusing of the campaign on the 1 to 2 ha sites, it was also attracting purchasers to the larger more expensive sites. The rate also supports the view put by Mr Slater and Mr Blomfield that the more expensive sites tended to sell later in the campaign.
Given the above discussion, I cannot accept that the marketing campaign at "Daintree" had the effect of taking a totally disinterested market and transposing it into a successful outcome. It is my conclusion that the existence of the relevant market and the prevailing market conditions contributed substantially to the project's outcomes. I am prepared to accept, however, that the marketing campaign played a significant role in the success of the "Daintree" project. The weight of the evidence also leads me to conclude that the campaign contributed to both the rate of sale and sale prices. I provide further reasons for this last-mentioned conclusion under the heading "Lot Pricing and Rate of Sale".
The "Daintree" Marketing Plan as a Blueprint for "Starcke"?
The suitability of applying a marketing campaign at "Starcke" which was based on that employed at "Daintree" was not a matter that I understand to have been seriously challenged by the respondent. Differences in the application of the campaign at "Starcke" were not spelled out in detail, however no better blueprint than that provided by "Daintree" was put into evidence. Both Mr Blomfield and Mr Slater were of the view that the "Daintree" marketing exercise was a special feature of that project and effective in its outcome. This is not to say that they agreed that it could be applied to a project at "Starcke" to similar effect - far from it - but the marketing plan, as a plan, was well regarded.

This central principle of the Sri Raja case needs to be distinguished from the principle that the value to the acquiring authority is not the proper measure of value (ReLucas and Chesterfield Gas and Water Board (1909) 1 KB 16): a proposition made clear in Sri Raja itself. Rather, this central principle, as I have called it, is to do with some economic value in the land. Thus, for example, an acquisition of land by the State to add to a poorly shaped parcel of land it owned and to therefore improve its shape so that it could be sold for shopping centre purposes would lead to compensation based on the potential of the acquired land to become part of that larger shopping centre site - not its value based on its previous use as a house; that is unless that previous use yields a higher value.
An acquisition by the State for sewerage farm purposes, to cite another example, would not fall into this category as this would be a service/utility use, not a commercial or economic use. I confess some concern at the issues that might arise in borderline cases - cases produced by the privatisation of what have traditionally been State or public services or by the movement of entrepreneurs into previous State monopolies; however, such cases can, I think, be addressed and do not fall for consideration here.
The question that arises, given the submissions of the claimant, is whether the State, having acquired the claimant's land for environmental purposes, should pay compensation based on that particular aspect. The first part of my answer is: to the extent that the claimant could have put the land to a use based on its environmental values the answer must be "yes". That is, of course, part of the enquiry which I have undertaken with respect to the highest and best use of the land.
To the extent, however, that the environmental values of the land are of value to the State because of the public value of such attributes the answer must be "no". In such a case it is Re Lucas and Chesterfield Gas and Water Board that provides the answer.
Claim for Compensation - Mr Quaid's Approach
Mr Quaid said that he intended to dispose of the "Starcke" property by way of a two-phase program. Phase one was to involve an attempt to market the property overseas. The advertisements in the "Wall Street Journal" were part of this phase. He said that he had 40 or 50 responses to those advertisements but had about 140 prospects, overall. Phase two would comprise a subdivision and sale of the freehold if phase one had not resulted in success after a period of one year. Following the completion of the subdivision project, the PDH and OLs would be sold. There was no evidence of any initiative having been taken with respect to phase two before the resumption took place. Mr Quaid's asking price for the "Starcke" aggregation as a parcel was based on his appreciation of its value as subdivision land, not its value based on the uses which appeared in the "Wall Street Journal" advertisements. He had no evidence of the value of such uses so, as I understand it, considered subdivision value as a surrogate. He assessed the subdivision value at $US300 per acre for 60,000 acres (about 24,300 ha). That calculates to $US18,000,000, though he provided no market basis for these figures. He also said that he placed some value on the PDH, OLs and livestock, however, this is difficult to reconcile with his view that 24,300 ha (almost the area of the freehold alone) was worth $US18,000,000, his asking price for the whole aggregation.
He also provided me with what he described as a "commercial assessment" of the "Starcke" capital realisation program that is, in effect, phase two of the marketing program that he said he had in mind. The exercise presented by Mr Quaid accepts the correctness of the gross realisation from the sale of the 240 subdivided lots, as estimated by Mr Beattie ($45,570,000) and assumes a development and selling period of 2½ years. It assumes that the PDH area would appreciate in value during that period of development and sale owing to the improved access and other facilities provided by the subdivision of the freehold and would reach a value of $3,000,000. No basis is provided for that figure which is substantially higher than the value Mr Gould placed on the PDH. Apart from this, there is a question as to whether the value of the PDH would in fact be enhanced by the assumed subdivision of the freehold area into 240 x 100 ha lots.
Mr Quaid then deducted the cost of development and marketing, as estimated by the various experts called by the claimant, and his estimate of land value at $25,000,000 (which he says was the $A equivalent of $US18,000,000), to reveal a surplus of $14,000,000. He thought that surplus adequately represented the "use of funds", (which I take to be the equivalent of interest); and allowances to cover the delay in the receipt of sale proceeds, as well as to cover the risk of realisation. I was presented with no details of the amount of interest that would apply to his calculation, nor does the exercise as presented include the costs of purchase of the land. This is an edited version of Mr Quaid's exercise:-
Gross realisation of freehold  $45,570,000
           Leasehold value after freehold developed and sold  $3,000,000
  $48,570,000
           Less development and selling costs  $9,570,000
  $39,000,000
           Less in globo value  $25,000,000
           Surplus  $14,000,000
It was submitted by Mr Gallagher QC that whereas the values struck by Mr Brett and Mr Gould should be described as "market" values, it is only Mr Quaid's figure of $25,000,000 which satisfies the notion of "reasonable compensation" provided for in s.5(1) of the Starcke Act.
It will usually be the case that the value of resumed land and therefore compensation for its loss will be assessed in accordance with the market value test supplied by Spencer (see the judgments of Griffith CJ at 432 and Isaacs J at 441 in particular). Circumstances will sometimes arise where a value struck by reliance on the market value test will be less than the value of the land to the owner, thus something additional to market value will be assessed to reflect this so-called "special value" (discussed most recently in Boland). No evidence was led nor submissions made to support a conclusion that the figure of $25,000,000 included a component of special value. It seems then that the claimant bases its claim for loss of land on the proposition that the term "reasonable compensation" found in the Starcke Act (but not defined there) is something different from "compensation" as provided for in s.20 of the Acquisition of Land Act and, on the facts of this case, equate with the dollar equivalent of what the claimant's asking price for the land was in 1993. Such a view suffers from an absence of logic and authority, in my view, and disregards the requirement that compensation be decided in accordance with s.20 of the Acquisition of Land Act. Senior Counsel for the claimant commended to me the judgment of Barton J in Spencer. I take him to have had in mind what His Honour said at p.436-437:
"And I should say, in view of the many authorities cited and upon the sense of the matter, that a claimant is entitled to have for his land what it is worth to a man of ordinary prudence and foresight, not holding his land for merely speculative purposes, nor, on the other hand, anxious to sell for any compelling or private reason, but willing to sell as a business man would be to another such person, both of them alike uninfluenced by any consideration of sentiment or need."

I do not think that those words provide any support to the proposition put to me by the claimant. His Honour was clearly discussing an objective test. In Commonwealth v. Reeve (1949) 78 CLR 410 at p.418 Latham CJ said:

"… the value of land to the owner is what he can get for it. He can never get for it more than other people will give for it. But what other people will give for it is not unaffected by what the owner is prepared to take for it …" (my emphasis)

That might be understood as suggesting a subjective test, however, read as a whole his Honour's reasoning clearly proposes an objective test.

Description of compensation as "reasonable" does not in my view introduce a new category or test of value to the owner nor does it erect a statutory test which displaces s.20 of the Acquisition of Land Act. If it did, there would be no need for s.5(2) of the Starcke Act.
Furthermore, Mr Quaid's figure of $25,000,000 was based, as I understand it, solely on the original asking price of $US18,000,000. It is said by the claimant that because of this the figure is "reasonable" in terms of the Starcke Act. Now it may well be reasonable, subjectively, to Mr Quaid, but it is not a figure arrived at by acceptable valuation methodology. The asking price gains no cogency as a land value simply because it was said to be, or indeed was, a genuine attempt to sell at that price. It follows, also, from my conclusion with respect to the expected time of commencement of construction of the "Starcke" freehold subdivision, the expected selling prices, the rate of sale and the risks attendant on the project that I do not accept the foundation of individual figures included in Mr Quaid's exercise.
Acquisition Costs and Tax Advantage
The claimant included an amount of $600,000 for disturbance, described as "acquisition costs of new property" in the document said to provide "details of our claim". It also included an amount of $6,840,000 described as "tax advantage of land". A number of difficulties arise in my consideration of these items. First and foremost is that in the final amendment of its claim, the claimant did not include either of these two items. Nevertheless, there was evidence led with respect to each item and submissions for the claimant were made with respect to the matter of "acquisition costs", but not the matter of "tax advantage". The claimant's view was that compensation for loss of land ought to be determined in the amount of $25,000,000 as estimated by Mr Quaid and that on this basis the items of "tax advantage" and "acquisition costs" would merge with this sum. Given the following discussion, I can understand why "acquisition costs" would theoretically merge, however, fail to appreciate how the so-called "tax advantage" changes character. However, I need not embark on a discussion of that dilemma. I note in passing that in Exhibit 22A both of these items of claim are placed under the heading of "disturbance" not "special value", however this is not a fatal defect as my task is to determine compensation, not to maintain conceptual purity.
The claimant's view is that, should I not determine compensation with reference to Mr Quaid's figure of $25,000,000 but in accord with the Brett and Gould figures, the items of "tax advantage" and "acquisition costs" should be added in as items of compensation. Now whilst I have serious doubts that the claim as described in Exhibit 22A survived as an alternative claim, even if that is legally possible under the applicable statutory regime, the matters raised do merit a diversion. I will first consider the matter of the "acquisition costs of new property" which, it will soon will be found, was not an item concerned with a new property at all.
This item arises in this way: in his DCF exercise Mr Brett allowed, as part of the expenditure on the development, the acquisition costs at 4% of land value, which on a value of $15,000,000 as estimated by him, would amount to $600,000. In my adjusted DCF exercise that figure becomes $113,000. The claimant submits that it is appropriate for a developer looking at purchasing land such as the "Starcke" freehold for the purpose of subdivision, to make an allowance in his valuation exercise for the cost of purchasing the land. I accept this. Similarly, it is suggested an owner of in globo land, being a person not in a position to carry out the subdivision or development of that land would, in ascertaining the appropriate sale price, make allowance for the acquisition costs to the purchaser. The claimant's position was contrasted with this second scenario.
The claimant's argument is that Mr Quaid and his team of experts was in a position to carry out the development of the "Starcke" freehold and, therefore, would not allow for the acquisition costs in deciding the asking price for the land. It would make no difference, according to this submission, whether the claimant intended to carry out the development or to sell the land in globo. The reasoning is that if the claimant were to carry out the development himself, he would not have to incur acquisition costs. It was submitted that this feature is a characteristic of the land; namely, the land is in the ownership of the claimant rather than in the ownership of some other person from whom he would have to purchase it. Therefore, the argument is that the claimant has a "special value" in the land. Reference was made to a number of authorities including Pastoral Finance Limited v. The Minister [1914] AC 1083 (Pastoral Finance) at 1087-1088 which, put briefly, authorises a value in excess of market value where the claimant is in a position to economically take advantage of a feature in the land, though the general market could not so do. Such a "special value" in the "Starcke" freehold would not exist, according to this argument, in a person who did not have the ability to develop the land.
"Special value" gives a "value to the owner over and above its market value" - per Callinan J (Boland at 269). Having said this, His Honour then quoted, with approval, from the Australian Law Reform Commission Report No. 14 (1980) para. 239, which defined special value as "that additional economic advantage which the owner obtains, by reason of his ownership … and which is not reflected in market value". The claimant's argument appears to be that the claimant has a special value in the "Starcke" freehold land "by reason of its ownership" together with the fact that the claimant is capable of developing the land by subdivision in the manner proposed. Now whilst I have not found a value for the freehold land based upon it having a clear highest and best use for immediate subdivision, nevertheless the question raised by the claimant remains, given that I have recognised the prospect of some such potential emerging. I will now deal with each of the elements upon which I understand the claimant to rely.
The claimant's submission is that the claimant would pay more for the land because of the advantages of ownership, that is a saving of the cost of purchase. That view is both novel and untenable for a number of reasons. First, even in a special value case a sale must be assumed: that is the nature of the test of special value enunciated by Lord Moulton in the Pastoral Finance case at 1088:
"… that which a prudent man in their position would have been willing to give for the land sooner than fail to obtain it."
This test is similar to Spencer in that there is an assumed transaction. In Gollan v. Randwick Municipal Council (1960) 6 LGRA 275 at 278, it was made perfectly clear to my understanding that in determining value a sale must be assumed. If a sale were not to be assumed then all that a claimant could receive would be the equivalent of the land's historical cost to him. Exploration of such a proposition would be an arid undertaking, however, as there is no authority in support of it.
I do not think that the Law Reform Commission or Callinan J intended to convey that the fact of ownership comprised an element of special value. Certainly ownership, or having an interest in land, is a prerequisite to having a right to claim compensation (s.12(5) Acquisition of Land Act) but it cannot, in my view, sensibly be an element of value. All claimants have an interest in land; most are owners. The argument of the claimant must, therefore, rely more directly on the capacity of the claimant to develop the land in the manner proposed.
The qualifications of the claimant as a competent developer of land are not confined to the "Starcke" freehold. These are qualities that are transportable without loss and are therefore not qualities in the land, but qualities that are personal to the owner. The resumption has not destroyed those qualities, but has simply denied the claimant the opportunity to apply them to this land. Such qualities must, of course, be assumed to be present or available to any hypothetical prudent purchaser purchasing the land for its highest and best use or to any vendor of the land. Mr Brett said as much. Thus, a farm has full value as a farm, whether the present owner is able to operate the farm profitably or not. Spencer assumes a capacity to apply the land to its highest and best use and does not penalise the actual owner because of his lack of competence as a farmer. Land with a highest and best use for subdivision has a value based on that use, notwithstanding the qualities or capabilities of the owner, whatever they may be. If the fact of ownership together with the capacity of the owner to apply the land to its highest and best use combined to produce a special value in the land, then every residential parcel of land and most other types of land would have a special value, yet as Callinan J said (p.269), "There will in practice be few cases in which a property does have a special value for a particular owner". I would add that the present case is not one of those rare examples.
At this point, useful reference might be made to the words of Kitto J in Turner at 291-292:
"I must reiterate, however, that this is not a case where there is a difference between the value of the land in general and its value to the expropriated owner in particular. The suitability of the land for subdivision was one of its inherent characteristics; it was available to be exploited by the owner whoever he might be; the land had no special value for the appellants. But I cannot forbear to add that if the test of value which has been approved for cases where there is special value to the owner be applied here, the question must be asked in the familiar words of Lord Moulton in Pastoral Finance Association Ltd. v. The Minister: what would a prudent man in the position of the appellants have been willing to give for the land sooner than fail to obtain it? And the answer must be: precisely what any other prudent purchaser would have been willing to give for it."

This reasoning applies with equal force to the facts before me.

I will now turn to the matter of tax advantage, but will be brief if only because the claimant did not include in its final submissions any mention of this item of claim. The amount of $6,840,000 included in the "claim details" in Exhibit 22A was said to equate to the income tax that a developer company would pay on Mr Brett's assumed profit and risk allowance of $19,000,000. Interestingly, Mr Quaid's taxation advantage figure assumes a margin of $14,000,000 based on his own calculations. The argument is that the claimant was in a position to subdivide and sell the "Starcke" freehold land and sell the PDH without a requirement to pay any income tax for the same reasons that he was not required to pay tax on the proceeds of the subdivision of "Daintree". Mr Quaid understands that the Taxation Commissioner would treat a "Starcke" subdivision similarly, but he claims no expertise in taxation matters. Since the resumption denies the claimant the opportunity to subdivide and sell the land, it is said that the tax advantage of $6,840,000 interest in the land is lost to the claimant. Senior Counsel for the claimant acknowledged that the full loss would not be compensable given the test of special value and that a discounted figure based on the $6,840,000 would be provided to the Court. None was provided.

This item of claim must fail for a number of reasons:

no expert evidence was provided to show that the claimant:
ØWould not be required to pay income tax were it to have subdivided and sold the land, and
ØWould be required to pay income tax in the amount of $6,840,000 (or any other amount) as a consequence of the resumption.

No cogent reason was advanced as to why the measure of loss should be referable to an assumed development of the land rather than by reference to an assumed sale of the land in globo

This item of claim is therefore disallowed.
Compensation Determined

I have concluded that the value of the resumed land and improvements is as follows:
           Value of PDH  $1,130,000
           Value of freehold  $3,750,000
           Value of improvements  $806,700
           TOTAL  $5,686,700
Compensation for the resumption of the "Starcke" aggregation from the claimant is, therefore, determined in the amount of Five Million Six Hundred and Eighty-six Thousand Seven Hundred Dollars ($5,686,700).
Orders
(i) I ORDER that the respondent pay the claimant compensation in the amount of $5,686,700.
(ii) In the exercise of the discretion granted under s.28 of the Acquisition of Land Act 1967 I ORDER that interest be paid by the respondent to the claimant on the amount of $5,686,700 from 11 March 1994 up to 5 December 1994; then on the amount of $1,536,700 up to 25 May 1999; then on the amount of $1,260,413 up to and including the day immediately preceding the date of payment; interest in each case being paid at the rate of 7.00 per centum per annum.

RP SCOTT
MEMBER OF THE LAND COURT

[2001] QLC 53

8 June 2001