Kelly v Western Australian Planning Commission - [2006] WASC 208

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

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

CORAM: SIMMONDS J

HEARD: 22-24 SEPTEMBER, 13 OCTOBER, 30 NOVEMBER 2004

DELIVERED : 18 SEPTEMBER 2006

FILE NO/S: CIV 2743 of 2001

BETWEEN: DENNIS HUGH KELLY
Plaintiff
AND
WESTERN AUSTRALIAN PLANNING COMMISSION
Respondent

Catchwords:

Town planning - Reservation for parks and recreation - Claim for compensation for injurious affection - Election to acquire instead of paying such compensation - Determination of price for such by determination of value of the land - Whether valuation of land could be by before and after method - Use of comparable sales - Use of sales to the acquiring authority - Whether recoverability of direct comparison method should be used - Legal and valuations costs - Recoverability of GST - Award of interest

Legislation:

Civil Judgments Enforcement Act 2004 (WA), s 8(1)(a)
Environmental Protection Act 1986 (WA), s 31(d)
Finance (1909-10) Act 1910 (Imp), s 25(1)
Local Government (Miscellaneous Provisions) Act 1960 (WA), s 374(1), s 374(1b)
Metropolitan Region Town Planning Scheme Act 1959 (WA), s 36(2a), s 36(2b), s 36(3)(b), s 36(6)(b)
Rules of the Supreme Court 1971 (WA), O 66
Supreme Court Act 1935 (WA), s 32, s 37, s 142

Town Planning and Development Act 1928 (WA), s 5AA(3), s 11, s 12

Result:

Expert evidence considered
Valuation fixed at $140,000

Category: A

Representation:

Counsel:

Plaintiff: Mr P L Wittkuhn
Respondent: Ms L E Christian

Solicitors:

Plaintiff: McLeods
Respondent: State Solicitor

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

Banno v Commonwealth of Australia (1993) 81 LGERA 3
Beard v Director of Housing (1961) 9 LGRA 74
Birmingham Corporation v West Midland Baptist (Trust) Association (Inc) [1970] AC 874
Brewarrana Pty Ltd v Commissioner of Highways (1973) 32 LGRA 170
Carson v Minister for Environment and Planning (1990) 70 LGRA 215
Commissioner of Highways v Tynan (1982) 53 LGRA 1
Commonwealth v Arklay (1952) 87 CLR 159
Commonwealth v Milledge (1952) 90 CLR 157
CSR Ltd v Valuer General (1977) 17 SASR 446
De Graaf v Valuer General, unreported; NSW Land and Valuation Court; 23 May 1968
Dilatte v MacTiernan [2002] WASCA 100
Flotilla Nominees Pty Ltd v Western Australian Land Authority & Anor [2003] WASC 122
Housing Commission of New South Wales v Falconer [1981] 1 NSWLR 547
Housing Commission of New South Wales v San Sebastian Pty Ltd (1978) 140 CLR 196
Inland Revenue Commissioner v Clay [1914] 1 KB 339
Inland Revenue Commissioners v Clay [1914] 3 KB 466 (CA)
J E Squarcini and Milino Pty Ltd v State Planning Commission, unreported; SCt of WA (Scott J); Library No 960200; 17 April 1996
John Bridge Ltd (in liq) v Commonwealth (1951) 11 The Valuer 375
Jones v Sutherland Shire Council [1979] 2 NSWLR 206
Leichardt Municipal Council v Seatainer Terminals Ltd (1981) 48 LGRA 409
Maurici v Chief Commissioner of State Revenue (2003) 212 CLR 111
Merivale Motel Investments Pty Limited v Brisbane Exposition And South Bank Redevelopment Authority [1988] 2 Qd R 562
Minister for the Environment v Florence (1979) 21 SASR 108
Minister of Environment v Petroccia (1982) 30 SASR 333
Morison v The Commonwealth (1971) 34 LGRA 273
Mount Lawley Pty Ltd v Western Australian Planning Commission (2004) 29 WAR 273
Pastoral Finance Association Ltd v The Minister [1914] AC 1083
Pointe Gourde Quarrying and Transport Co Ltd v Sub-Intendent of Crown Lands [1947] AC 565
Pownall v Conlan Management Pty Ltd (1995) 12 WAR 370
Raja Vyricherla Narayana Gajapatiraju v Revenue Divisional Officer Vizagapatam [1939] AC 302
Rendell v Release on Licence Board (1987) 10 NSWLR 499
RK Morgan Holdings Pty Ltd v Melbourne & Metropolitan Board of Works (1992) 77 LGRA 102
Royal Sydney Golf Club v Federal Commissioner of Taxation (1957) 97 CLR 379
Rukavina & Robertson v Wagga Wagga City Council (1993) 80 LGERA 8
Russia Lutvey & Sons Pty Ltd v Valuer General (1980) 7 QLCR 1
Spencer v Commonwealth (1907) 5 CLR 418
Trandos v Western Australian Planning Commission [2001] WASCA 346
West Australian Trustee Executor and Agency Company Limited v Perth Road Board (1929) 31 WALR 91
Western Australian Planning Commission v Arcus Shopfitters Pty Ltd [2003] WASCA 295
Woollams v the Minister (1957) 75 WN (NSW) 103

Case(s) also cited:

Arcus Shopfitters Pty Ltd v Western Australian Planning Commission (2002) 125 LGERA 181
Balquhidder v The Minister (1986) 40 SASR 63
Beutel v Commissioner of Irrigation and Water Supply (1975) 2 QLCR 327
Boland v Yates Corporation Pty Ltd (1999) 74 ALJR 209
Bronzel v State Planning Authority (1979) 70 LGRA 215
Bunney v State of South Australia (2001) 112 LGRA 213
Cienda Pty Ltd v South Australian Urban Land Trust (1988) 65 LGRA 419
Collins v Livingstone Shire Council (1972) 127 CLR 477
Freestone v Parramatta City Council (1974) 34 LGRA 35
Geita Sebea v Territory of Papua (1941) 67 CLR 544
Jovist Pty Ltd v Campbelltown City Council (1970) 19 LGRA 134
March v Frankston City [1969] VR 350
Players Pty Ltd v Corporation of the City of Adelaide [2001] SASC 369
Queensland v Murphy (1990) 95 ALR 493
Redeam v South Australian Land Commission (1977) 17 SASR 508
River Bank Pty Ltd v Commonwealth (1974) 4 ALR 651
State Through Department of Highways v Hoyt 284 So 2d 763 (1973) (LA)
Vains v Gosford Shire Council (1976) 24 The Valuer 756
Wm Collins & Sons Pty Ltd v Co-ordinator-General of Public Works (1974) 1 QLCR 1

TABLE OF CONTENTS

Introduction
The background to the claim for compensation, and that claim
The statutory framework to these proceedings
These proceedings
The Land, the Reserved Portion and the Balance Portion
The witnesses in this case
The issues: the before and after approach to valuation
The proper approach to valuation for the purposes of s 36(2b)
The proper approach where an adjoining landowner is expected to be interested in the land
What the before and after method measures
The before and after method and special value
The highest and best use of the Reserved Portion
The matter of permissible uses of the Reserved Portion: the "buffer" issue
Application of the before and after method and other methods in this case
The credibility of the valuers
Exhibit 12
The value of the improvements on the Land
Exhibit 12's "before" valuation
Exhibit 12's "after" valuation
Criticisms of Exhibit 12's "Before and After" valuation
Lot 19
The limestone aspect of Lot 19
The valuation of the improvements on Lot 19
Lot 13
Lot 20
Lot 24
The sales of Lots 13, 19, 20 and 24
The value of access to the slip road to Wanneroo Road
Lots 50 and 51
Lot 51
Lot 50
The date adjustment figure of 1.88 per cent derived from the sales of Lot 50
The matter of the improvements on Lot 50
The subdivisibility of the Land
Exhibit 13
Two dwellings on the Land, and purple title
Exhibit 14
Lot 30
The inundated land
The use of the sale of Lot 19 in a "before" valuation
The use of Lot 51 in the "after" valuation in Exhibit 14
Exhibit 15
The comparable sales introduced by Exhibit 15
Exhibit 32
The "before" valuation in Exhibit 32
The "after" valuation in Exhibit 32
The "direct comparison" method of valuation
Use of sales to the acquiring authority
The valuation of the Reserved Portion
Legal and valuation costs

GST

Interest

Orders

SIMMONDS J:

Introduction

This is an action arising out of a claim for compensation for injurious affection of land. That claim was by virtue of the combined operation of the Town Planning and Development Act 1928 (WA) (the "TPD Act"), the Metropolitan Region Town Planning Scheme Act1959 (WA) (the "MRTPS Act") (replaced by the Planning and Development Act 2005 (WA)) and the Metropolitan Region Scheme (the "MRS"). The land in question is the rear portion of the claimant's land in Wanneroo. I call the whole of the claimant's land in Wanneroo, including both the rear portion and the remainder, "the Land". The rear portion of the Land adjoins a lake area, and part of it is from time to time inundated. The rear portion has been reserved by an amendment to the MRS for parks and recreation purposes. I will from now on call the rear portion the "Reserved Portion". The remainder of the Land I will call the "Balance Portion".
These proceedings raise the question of the correct approach to be taken to valuation of the Reserved Portion. In particular, these proceedings raise the question of whether or not it would be appropriate in this case to adopt an approach that would value the whole of the Land, before any account is taken of the effect of the reservation of the Reserved Portion, and then to value the Balance Portion, using the difference as the value of the Reserved Portion. This approach was called in these proceedings "the before and after approach". A number of other issues as to the valuation of the Reserved Portion and other amounts claimed are raised in this case, whether or not the "before and after approach" or the "before and after method" is considered to be an appropriate approach.
I begin by setting out the background to the claim for compensation and the way these proceedings arose out of that claim, and the statutory framework to the claim and these proceedings. I then describe the proceedings, before providing a more detailed description of the Land and the Reserved and Balance Portions. I then deal with the issue of the application of the before and after approach, and the remaining valuation issues, as well as other claims in these proceedings.

The background to the claim for compensation, and that claim

The Land is known as Lot 37 (No 1954), Wanneroo Road, Neerabup. It is more particularly described as Lot 37 on Plan 8548, being the whole of the land comprised in Certificate of Title Volume 82 Folio 136A.
Effective 3 November 1994, before the claimant, the plaintiff in these proceedings, acquired the Land, and by Amendment 948/33 to the MRS, the Reserved Portion was reserved under Pt II of the MRS for the purposes of Parks and Recreation. Accordingly, the Reserved Portion had been reserved for a public purpose within the meaning of s 12(2a)(b)(i) of the TPD Act as applied (with the balance of s 12 and with s 11) to the MRS by s 36(1) of the MRTPS Act, and within the meaning of cl 20 of the MRS.
In August 1996 the plaintiff in these proceedings acquired the Land.
The Land at all material times has been located within the district of the City of Wanneroo. Prior to the reservation of the Reserved Portion, the Land, including the Reserved Portion, was zoned "rural" under both the City of Wanneroo Town Planning Scheme No 1 ("TPS1") and the MRS. The Balance Portion has at all material times also been zoned rural under both Schemes.
By an Application for Approval to Commence Development dated 17 May 1999 and lodged with the City of Wanneroo, the plaintiff applied for approval under TPS1 and the MRS to construct a "residential dwelling – single storey" extending into the Reserved Portion.
In accordance with cl 29(1)(a)(i) of the MRS, the City of Wanneroo forwarded the Application dated 17 May 1999 to the Western Australian Planning Commission (the WAPC), the defendant in these proceedings. The defendant is the authority responsible under cl 29(1)(a)(i) of the MRS for determination of applications to commence and carry out development of land reserved under Pt II of the MRS. The defendant is also the authority responsible for payment of compensation payable for injurious affection to land by reason of the provisions of the MRS, in accordance with s 11 and s 12 of the TPD Act.
By a notice dated 9 November 1999 the defendant informed the plaintiff that it refused the application. As a result, and pursuant to s 36(3)(b) of the MRTPS Act and cl 20(1) of the MRS, the plaintiff became entitled to claim compensation from the defendant for injurious affection. In accordance with cl 20(2) of the MRS the plaintiff submitted such a claim dated 8 May 2000.
By letter dated 4 August 2000 to the plaintiff's solicitors, and in accordance with cl 20(3) of the MRS and s 36(2)(b) of the MRTPS Act, the Minister of Planning on behalf of the defendant gave notice that, in lieu of paying compensation, the defendant had, on 18 July 2000 ("the election date") elected to acquire the Reserved Portion.
The parties have since then been unable to agree the price for the acquisition by the defendant of the Reserved Portion.

The statutory framework to these proceedings

That framework is provided by the MRTPS Act, s 36(2a) and s 36(2b), as follows:
"(2a)Where the Commission elects to acquire the land as provided in subsection (2), if the Commission and the owner of the land are unable to agree as to the price to be paid for the land by the Commission, the price at which the land may be acquired by the Commission shall be the value of the land as determined in accordance with subsection (2b).
(2b)The value of the land referred to in subsection (2a) shall be the value thereof on the date the Commission elects to acquire the land under that subsection, and that value shall be determined –
(a)by arbitration in accordance with the Commercial Arbitration Act 1985; or
(b)on the application of the owner of the land, made in the prescribed manner –
(i)by a Local Court, sitting at a place nearest to where the land lies – if the value of the land claimed by the owner thereof is not more than $1000; or
(ii)by the Supreme Court – if the value of the land claimed by the owner thereof is more than $1000;
or
(c)by some other method agreed upon by the Commission and the owner of the land,
and that value shall be determined without regard to any increase or decrease, if any, in value attributable wholly or in part to the Scheme."

These proceedings

These proceedings are on an application by the plaintiff for the determination of the value of the Reserved Portion under s 36(2a) and s 36(2b)(ii).
In his re-amended statement of claim the plaintiff claims:
•A determination that the value of the Reserved Portion is $175,000;
•Interest from the Election Date to judgment on the amount the subject of the determination, pursuant to s 32 of the Supreme Court Act 1935 (WA) at the rate of 6 per cent or such other rate as the Court thinks fit;
•Interest on the amount the subject of the determination pursuant to s 142 of the Supreme Court Act from judgment to the date of settlement on the sale pursuant to the election to purchase at the rate of 6 per cent, or at such other rate as the Court thinks fit;
•An order that the defendant indemnify the plaintiff for any GST payable by the plaintiff as a consequence of the judgment in these proceedings;
•Such further and other orders as the Court shall think fit; and
•Costs.
The plaintiff at the hearing before me claimed the legal and valuation costs the plaintiff incurred prior to the commencement of these proceedings. This was on three alternative bases. I will return to that claim and those bases at the end of this judgment, when I will also consider the claims for interest and for GST.
The defendant in its amended defence says that the value of the Reserved Portion as at the election date was not more than $85,000. The defendant also denies that the plaintiff is entitled to interest, costs and an indemnity for GST or any other relief.
I now need to describe the Land, the Reserved Portion and the Balance Portion, in rather more detail. I also need to refer to the valuation evidence, in detail, after considering the principal issues as to the before and after approach to valuation.

The Land, the Reserved Portion and the Balance Portion

The Land comprises 4.0974 hectares, although on occasion in the evidence it is referred to as 4.0975 hectares in area. Its north western boundary is what was called in the hearing before me a slip road, running parallel and close to Wanneroo Road. A number of the other lots sales of which were considered by one or other of the valuers as comparable sales for the purposes of the determination in these proceedings also fronted on or in one case was connected to this slip road.
The Land runs in a north easterly direction off the slip road. Its south eastern boundary is at Lake Neerabup, and indeed a portion of the Land forms a portion of that feature.
Lake Neerabup is part of what I may describe as the Lake Neerabup area, which is a parks and recreation reserve area running to the east of the north eastern boundaries of the lots on Wanneroo Road that run in a north easterly direction from Wanneroo Road between Flynn Drive to the south and Wattle Avenue to the north. Those lots include all of the Wanneroo Road lots considered in this case as the subjects of possible comparable sales. The Lake Neerabup area also lies to the south of two lots, one running south off Wattle Avenue and the other running south of the southern boundary of that lot, and both to the east of Wanneroo Road, which I also consider as the subjects of possible comparable sales. Land in the Lake Neerabup area, but on the evidence before me not the area's entirety, becomes inundated in winter if not every winter, forming a lake body or bodies whose area is referred to in this judgment (unless the context otherwise indicates) as Lake Neerabup. The Land included in the Reserved Portion includes land a part of Lake Neerabup. That meant that in winter the Land was liable to be underwater to that extent. As will become apparent there is a contest on the evidence before me as to that extent. It was not in contest, however, that in some winters there would be no or very little water in Lake Neerabup, or at least none in the part within the Reserved Portion.
The Land's parallel south eastern and north western boundaries measure approximately 90.53 metres, and its parallel north eastern and south western boundaries measure approximately 452.70 metres. The Land is thus rectangularly shaped.
The Reserved Portion of the Land has the north eastern boundary of the Land which is in Lake Neerabup. The Reserved Portion follows the north western boundary of the Land approximately 95 metres to the south west. The Reserved Portion follows the south eastern boundary of the Land approximately 231.60 metres to the south west, and has a straight line diagonal boundary running from the north western boundary to join the south eastern one at that south west point. The Reserved Portion of the Land comprises 1.4784 hectares. It is thus irregularly (trapezoidally) shaped.
The Balance Portion of the Land has the south western boundary of the Land at the slip road. The Balance Portion follows the north western boundary of the Land north east approximately 357.70 metres from the slip road, and follows the south eastern boundary of the Land north east approximately 221.10 metres from the slip road. Its remaining boundary is the straight‑line diagonal boundary of the Reserved Portion. The Balance Portion of the Land comprises 2.6190 hectares. It is, like the Reserved Portion, irregularly (trapezoidally) shaped.
As at the election date, the Land was vacant land, although on it there were a shed, a windmill and a disused brick pumping station with pipes to Lake Neerabup. It also had boundary fencing. It would appear that the shed was on the Balance Portion, but the windmill, disused brick pumping station and pipes were on the Reserved Portion. The Land is mostly level, with some rise from the slip road and a gradual descent to Lake Neerabup. I did not inspect the Land. However, there are photographs of it in evidence (Exhibits 7, 8 and 9; and Exhibit 38, plaintiff's bundle of documents, at pages 60, 61 and 62) that confirm the Land is timbered, slopes gently down into Lake Neerabup, and has a pleasant aspect on that Lake, at least when it contains a considerable body of water.
The Reserved Portion comprised a portion to the north east which was regularly inundated, as well as the remainder to the south west which was partially timbered.

The witnesses in this case

At the trial evidence was given by two valuers, one called by the plaintiff (Mr Kinglsey Vincent) and one called by the defendant (Mr Stuart Paterson). There was also evidence given by the plaintiff himself, and other witnesses called by the plaintiff, a geologist (a Mr Lex Bastian); a representative of a corporate purchaser of a lot on Wanneroo Road near the Land (Mr Paul Delaveris) and a representative of a corporate purchaser of another such lot (Mr Matthew Peterson); an employee of the Department of Housing and Works with responsibility for co‑ordinating appeals to the Minister under the Local Government (Miscellaneous Provisions) Act 1960 (WA) (Mr Paul Scalzi); two town planning consultants (Mr Oscar Drescher and Mr Peter Goff); the Coordinator of Building Approvals of the City of Wanneroo (Mr Samuel Neale); and a planner employed by the City (Mr Philip Thompson). The defendant also called a Senior Natural Resource Management Officer in the Department of the Environment, Kwinana-Peel Region, who at the time of the development application for the Land was an Environmental Officer in the Strategic Projects Branch of the Policy and Planning Division of the then Water and Rivers Commission (Mr Adrian Parker); the Land Information Officer for the City of Wanneroo (Mr Robert Ruscoe); and a planner employed by the Department of Planning and Infrastructure (Ms Robin Watts).

The issues: the before and after approach to valuation

This approach as first put to me rested on the view that the characteristics of the Reserved Land required that the determination of the value of the Reserved Portion for the purposes of s 36(2b) MRTPS Act recognise the probability that the only person who would seek to acquire the Reserved Portion would be the owner of the Balance Portion adjoining it, at least if the WAPC itself was excluded. Those characteristics were that the Reserved Portion was landlocked, in the sense it had no road access, and much of its area was within Lake Neerabup (examination in chief of Mr Vincent, TS 188 ‑ 190; cross‑examination of Mr Paterson, TS 454 ‑ 455). The adjoining land would offer road access and would comprise substantial land none of which was within Lake Neerabup.
The approach involved valuing the Land (the "before" valuation), and subtracting from it the value of the Balance Portion (the "after" valuation). The difference would represent the price the owner of the Balance Portion would assign to, and be prepared to pay for, the Reserved Portion.
Failing to use this approach would represent a failure to properly assess the value of the Reserved Portion for the purposes of s 36(2b) of the MRTPS Act.
The parties agreed that this was the single most significant issue in the proceedings. Accepting the approach would lead to a number of issues as to the valuation evidence that purportedly used the approach. Rejecting the approach would mean that those valuations could only be used if there were another approach that could be properly used that would sustain them; it would also lead to a number of issues as to the remaining valuation evidence.
To assess the applicability of the before and after approach to this case, I must consider the following:
•The proper approach to valuation for the purposes of s 36(2b);
•The proper approach to the use in such a case of expected interest in the land to be valued of an adjoining landowner; and
•Whether the before and after approach cannot be used because it would provide for matters of value to the owner of the land to be valued which on the authorities are no part of the proper approach to valuation for the purposes of s 36(2b).

The proper approach to valuation for the purposes of s 36(2b)

The principal authority on the proper approach to such valuations is the judgment of the Full Court in Mount Lawley Pty Ltd v Western Australian Planning Commission (2004) 29 WAR 273. The Full Court there held (at [280] and [281]) that the proper approach is in terms of "market value", which it associated (at [281]) with the well known authority of Spencer v Commonwealth (1907) 5 CLR 418, per Griffith CJ, at 432, and per Isaac J, at 441. Partial quotations were set out from those pages of the judgments referred to in Spencer (supra) in the Full Court's judgment in Mount Lawley (supra) (at [281]). I set out in full the quotations from those pages in Spencer, because, as will appear, there are elements in them not reproduced in Mount Lawley that are of significance to me. I also set out later in this section other parts of judgments in Spencer which I also consider to be part of what the Full Court took from that case, and which are also significant for my purposes.
In Spencer (supra), Griffith CJ, at 432, said this:
"In my judgment the test of value of land is to be determined, not by inquiring what price a man desiring to sell could actually have obtained for it on a given day, i.e., whether there was in fact on that day a willing buyer, but by inquiring 'What would a man desiring to buy the land have had to pay for it on that day to a vendor willing to sell it for a fair price but not desirous to sell?' It is, no doubt, very difficult to answer such a question, and any answer must be to some extent conjectural. The necessary mental process is to put yourself as far as possible in the position of persons conversant with the subject at the relevant time, and from that point of view to ascertain what, according to the then current opinion of land values, a purchaser would have had to offer for the land to induce such a willing vendor to sell it, or, in other words, to inquire at what point a desirous purchaser and a not unwilling vendor would come together."
Isaacs J, at 441, said this:
"To arrive at the value of the land at that date, we have, as I conceive, to suppose it sold then, not by means of a forced sale, but by voluntary bargaining between the plaintiff and a purchaser, willing to trade, but neither of them so anxious to do so that he would overlook any ordinary business consideration. We must further suppose both to be perfectly acquainted with the land, and cognizant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property."
This approach to valuation should be taken to be by reference to the highest and best use of the land, which may not necessarily be its present use, and which allows for a consideration of the potential of the land, whether or not presently realisable, as where the use would require a permission from a public agency which has not been obtained and might be refused: see Mount Lawley (supra), at [162] to [167]; and see Alan Hyam, "The Law Affecting Valuation of Land in Australia", 3rd ed, Sydney, Federation Press, 2004, at 122 ‑ 124.
The matter of the consideration to be given to the potential of the land is also referred to in Spencer (supra), where the land in question was a vacant site in Fremantle at an early stage in the port's development. With respect to that aspect of the land Griffith CJ said this, at 431 ‑ 432, immediately preceding the better known passage above:
"In the case of chattels it is often, though not always, easy to ascertain the value. In order that any article may have an exchange value, there must be presupposed a person willing to give the article in exchange for money and another willing to give money in exchange for the article. When there is a large or considerable number of articles of the same kind which are the subject of daily or frequent sale and purchase, the value of the articles is taken to be their current price. Thus, in the Sale of Goods Act, the measure of damages for wrongful refusal to deliver goods is to be ascertained with reference to 'the market or current price of the goods.' The foundation of this doctrine is that a man desiring to sell such articles can readily find a purchaser at a price which is fairly certain, and conversely that a man desiring to buy can find a seller at about the same price. But these considerations are not necessarily equally applicable to land. There is, no doubt, much land in many places the value of which per acre is as definitely fixed as the price of wheat or sugar. But in the case of a new port, in a new State, where the area of land is limited, and each piece differs in many of its characteristics from the rest, it is impossible to apply any such rule. Bearing in mind that value implies the existence of a willing buyer as well as of a willing seller, some modification of the rule must be made in order to make it applicable to the case of a piece of land which has any unique value. It may be that the land is fit for many purposes, and will in all probability be soon required for some of them, but there may be no one actually willing at the moment to buy it at any price. Still it does not follow that the land has no value."
With respect to the same aspects, as I read his judgment, Isaacs J said this, at 440 ‑ 441, immediately preceding the better known passage from his judgment above:
"In the first place the ultimate question is, what was the value of the land on 1st January 1905?
All circumstances subsequently arising are to be ignored. Whether the land becomes more valuable or less valuable afterwards is immaterial. Its value is fixed by Statute as on that day. Prosperity unexpected, or depression which no man would ever have anticipated, if happening after the date named, must be alike disregarded. The facts existing on 1st January 1905 are the only relevant facts, and the all important fact on that day is the opinion regarding the fair price of the land, which a hypothetical prudent purchaser would entertain, if he desired to purchase it for the most advantageous purpose for which it was adapted. The plaintiff is to be compensated; therefore he is to receive the money equivalent to the loss he has sustained by deprivation of his land, and that loss, apart from special damage not here claimed, cannot exceed what such a prudent purchaser would be prepared to give him."
Immediately after the better known passage from his judgment which I earlier quoted, Isaacs J said this, at 441:
"In The Queen v. Brown [LR 2 QB 630], at p 631 Cockburn C.J. said:--'A jury, whether the dispute be as to the value of land required to be taken by the company, or as to the compensation for damages by severance, in assessing the amount to which the landowner is entitled, have to consider the real value of the land, and may take into account not only the present purpose to which the land is applied, but also any other more beneficial purpose to which in the course of events at no remote period it may be applied, just as an owner might do if he were bargaining with a purchaser in the market. That is the mode in which the land would be valued.' Having mentally placed itself in the position of the bargaining parties as on the critical date, 1st January 1905, the question for the tribunal is, what is the point at which the parties would meet; what is the sum the one would be willing to give and the other to take?"
The authorities, including the Full Court in Mount Lawley (supra), have noted a distinction between "market value" and "special value". What "special value" is, and whether "special value" is allowable in relation to s 36(2b), are matters I need to return to below, where I consider whether the before and after approach cannot be used because it would provide for compensation for matters of value to the owner of the land to be valued which on the authorities are no part of the proper approach to valuation for the purposes of the sub‑section. While it is not clear from Mount Lawley (supra) that "special value" is one of those matters, it is clear on that authority that compensation for "damages for severance" is one of them, as I will explain.

The proper approach where an adjoining landowner is expected to be interested in the land

Although the Full Court did not address the matter in Mount Lawley (supra), in the authorities on the market value approach from Spencer (supra) it appears to be accepted that, consistently with that approach, account needs to be taken of the impact on market value of the expected presence in the market for the land of a possible buyer with a special interest in it. Such a buyer might be an adjoining owner. See Hyam (supra), at 100 ‑ 101.
One of the leading authorities is Inland Revenue Commissioners v Clay [1914] 3 KB 466 (CA). The case involved the determination of the value of land for taxation purposes. The relevant statute called for the determination of the "amount which the fee simple of the land, if sold at the time in the open market by a willing seller … might be expected to realise" (Finance (1909-10) Act 1910 (Imp), s 25(1)). It will be noted that this is very similar wording to that associated with the market value approach.
The land in Clay (CA) (supra) had a house and garden, and its value for the purposes of the provision as a residence for private occupation was accepted to be no more than £750. However, a nursing home adjoined the land, and the trustees paid £1000 for the land, on the basis it met their need for further accommodation. An appeal against a decision of Scrutton J, who had dismissed an appeal from a referee's determination of the value of the land at £1000, was itself dismissed.
Swinfen Eady LJ said this, referring to s 25(1) of the legislation, at 475:
"The section means such amount as the land might be expected to realize if offered under conditions enabling every person desirous of purchasing to come and make an offer, and if proper steps were taken to advertise the property and let all likely purchasers know that the land is in the market for sale. It scarcely needed evidence to inform us – it is common knowledge – that when the fact becomes known that one probable buyer desires to obtain any property, that raises the general price or value of the thing in the market. Not only is the probable buyer a competitor in the market, but other persons, such as property brokers, compete in the market for what they know another person wants, with a view to a resale to him at an enhanced price, so as to realize a profit. A vendor desiring to realize any land would ordinarily give full publicity to all facts within his knowledge likely to enhance the price. The local conditions and requirements, the advantages of the situation of the property for any particular purpose, and the names of the persons who are probable buyers, would ordinarily be matters of local knowledge to the property brokers and agents and speculators. In order arrive at the amount which the land might be 'expected to realise,' all these matters ought to be taken into consideration."
Similarly, Cozens‑Hardy MR said this, at 472:
"The house or the land may immediately adjoin one or more landowners likely to offer more than the property would be worth to anybody else. …
… To say that a small farm in the middle of a wealthy landowner's estate is to be valued without reference to the fact that he will probably be willing to pay a large price, but solely with reference to its ordinary agricultural values, seems to me absurd. If the landowner does not at the moment buy, land brokers or speculators will give more than its purely agricultural value with a view to reselling it at a profit to the landowner."
Similarly, the third member of the Court, Pickford LJ, said this, at 479, 479 ‑ 480 and 480:
"I assume that the gross value is not to be measured necessarily by the price given by a buyer who is peculiarly in need of the particular piece of property, but it seems to me clear that the fact of there being such a person in the market must have an influence on the value in the open market. …
It is not denied by the appellants that the wish of the trustees to buy the house is a fact to be considered, but it is said that the only effect to be given to it is that a small sum is to be added to the value of 750l. to represent a final bid made by the trustees in order to acquire the property. This seems to me to be a fallacy, and to ignore what is common experience. It assumes that the dwelling house value, 750l., having been reached, everybody except the trustees will decline to make any further offer, and allow the trustees to become the purchasers by a single offer, which exceeds that amount in however small a degree. …
… I agree with Scrutton J. that the referee is not bound to take the actual [sale] figure given, and should not do so arbitrarily, but should consider all the circumstances and estimate what he considers the value in the open market. …"
I return to the part of Scrutton J's judgment which it appears Pickford LJ was referring to, below.
It should immediately be noted that the difficulty in applying this approach in this case is the effect on the market value of the interest of the owner of the Balance Portion, as an adjoining owner, in the Reserved Portion could not be a matter of direct evidence as in Clay (CA) (supra). The plaintiff made no offer to buy the Reserved Portion, but only entered into negotiations to sell it, in the context that led to these proceedings by the plaintiff. On the plaintiff's argument for the use of the before and after approach, it is necessary to see as the adjoining owner the owner of the Balance Portion, and it is the very election to acquire that gives rise to the Balance Portion.
However, the matter of an owner becoming an adjoining owner by virtue of the transaction giving rise to the need to value is addressed in an authority that endorsed the application of Clay (CA) (supra) in the compulsory acquisition context, Raja Vyricherla Narayana Gajapatiraju v Revenue Divisional Officer Vizagapatam [1939] AC 302 (see especially at 317, quoting with approval from the judgment of Cozens‑Hardy MR the passage as to the "small farm" quoted above). The Privy Council, in considering (at 313 ‑ 314) how value might be determined where land possessed "potentialities of such an unusual nature that the arbitrator has not similar cases [of prices paid for land in the neighbourhood for land acquired for comparable purposes]", and there were "only a very limited number of persons capable of turning the potentialities of the land to account", said this:
"If the owner of the land is the only person who can do so, the value to him must be ascertained by reference to what profit he might thereby have been able to derive from the land in the future. Take as an example the case of an owner of vacant land that adjoins his factory. The land possesses the potentiality of being profitably used for an extension of the factory. But the owner is the only person who can turn the potentiality to account. In valuing the land, however, as between him and a willing purchaser, the value to him of the potentiality would necessarily have to be included."
As I will explain below, this quotation is not, however, entirely applicable in this case.
Evidence in this case on the claimed potentiality that only the adjoining owner could turn to account came from Mr Vincent, when he was asked to consider what impact it would have on the owner of the Land, intending to build two houses on the Balance Portion, of having the Reserved Portion (examination‑in‑chief, TS 198):
"In a valuation sense, the two-house proposition on the balance portion, how does it compare with the two-house proposition where you're building partly on - rather, how does it compare with the situation where you still have the reserved portion?---If you still had the reserved portion, that means you own part of the lake. You still have your access. You still have your uninterrupted views. It can't be built out. You have use of the lake for recreation purposes. As I mentioned, this eco‑education higher and better use for the land would allow you to have access to the lake. Once the reserved portion is taken, you've lost that. The views might be built out. They could be planted out with trees. You certainly don't have access to the lake and you certainly can't use the lake.
Are you saying that views of the lake and access of the lake are attractions?---Very much so, yes."

The other evidence was from Mr Paterson, who said this (cross‑examination, TS 478 ‑ 479):
"WITTKUHN, MR:   Mr Paterson, I would like you to assume that if the West Australian Planning Commission was to acquire the reserved portion pursuant to the election to purchase procedure, they would have the right to plant out views of the balance portion of lot 47 over the lake. You would have to accept, would you not, that that then would affect the value of the balanced portion of lot 37?---I suppose you could plant wall-to-wall plants around the buffer area, as I have described it, but I don't know what you would get to grow in the middle of the lake.
But if you were to plant along the boundary of the reserve portion, for example - - -?---Yes. You could possibly do that if you wanted to.
SIMMONDS J:   I don't think that was your question, Mr Wittkuhn.
WITTKUHN, MR:   No.
If that were to occur, do you accept that that would affect the value of the balance portion of lot 37?---Yes, I think it would have some impact on it.
In valuing the reserve portion, a valuer should attach some significance, should he not, to the fact that the ownership of the reserve portion would carry the benefit of being able to actually recreate on the lake when it is inundated?
SIMMONDS J:   The witness may well understand that question. I am not sure I do. Could you re-ask it?
WITTKUHN, MR:   Yes, certainly, your Honour.
You would expect, would you not, that the valuer should attribute some value to the fact that ownership of the reserve portion would entitle the owner to actually recreate on the reserve portion such as, for example, putting a kayak out there when the lake is inundated?---Yes, I accept that."
I have previously noted that Lake Neerabup was not always inundated. The only valuer to comment on the impact of that possibility on the interest of prospective purchasers was Mr Vincent, who testified as follows (examination‑in‑chief, TS 199):
"I wonder if Mr Vincent could be shown please exhibits 7 and 8.
Mr Vincent, can you comment on how those photographs affect, if at all, your views on value?---Exhibit 8 I think speaks for itself. The two photographs there in exhibit 8 are obviously taken on a sunny day in winter and I find them very attractive. The lake would fill up in winter and that would be the amenity and the enjoyment that you would get.
And the other photographs?---The other photographs - that's exhibit 7. I'm not sure what time of the year they were taken. Obviously it's in winter - very attractive, I find.
What about the periods when the lake is not inundated?---During the high point in summer, the lake would dry up, as many lakes throughout the metropolitan area do. I think there's one in Shenton Park which is Lake Jubilup or Julibup which is surrounded by the most expensive housing in Shenton Park. That dries up to a mud bath in summer. I don't think it would worry people. They know what the season is, what the four seasons are going to bring. They know that the lake is going to dry up in summer. They know that it is going to fill up in winter. This is all taken into account by purchasers."
I take from Mr Paterson's evidence that there is no contest that the owner of the Balance Portion would be a potential buyer for the Reserved Portion, and a reason for that owner's interest would be the views of Lake Neerabup that the Reserved Land would protect, and the amenity of access to the Lake that the Reserved Portion would afford. Indeed the plaintiff's evidence was also to this effect (Kelly, witness statement, Exhibit 10, par 7). Whether there were other reasons for such an interest is a matter I will return to below.
It was put to me for the defendant there were other adjoining owners than the owner of the Balance Portion to consider. There was the owner of the lot sharing the north west border above the Land (Lot 36 Wanneroo Road) and there was also the owner of the lot sharing the south east border below the Land (Lot 38 Wanneroo Road, although its north western border appears to end at the point at which the south eastern border of the Reserved Land begins). Both of those lots, like Lot 37, provided slip road access to Wanneroo Road. In March 2002, after the date as at which the valuation in this case must be made, Lot 36 became Lots 800 and 801 on Plan 31950, when Lot 800, whose north eastern boundary appears on the evidence to include all of the former Lot 36's boundary with Lake Neerabup, was sold to the defendant. As to Lot 38, it also has a boundary with Lake Neerabup. There was evidence, from Mr Paterson, that at the valuation date its owner "could possibly be interested in adding it [the Reserved Portion] to their parcel" (cross‑examination, TS 454). As will become evident below, the owner of Lot 38 at that date was in fact the defendant.
It was put to me that the before and after method of valuation could have no application where there were more adjoining owners than one who were potential buyers. I do not agree. Assuming the method was otherwise appropriate (a matter still to be resolved), the fact that there might be the same potentiality of equivalent interest to more than one adjoining owner (as where adjoining owners' lands ringed the land being acquired) would not make the method any less useful a guide to the economic value of their interest in the Reserved Portion.
However, in any event here I consider there is no such equivalence of interest as between the three adjoining owners. I note that at the election date (the date for valuation) both Lot 36 and Lot 38 had their own access to the lake. In this respect their owners would not be adjoining owners of the same sort as the owner of the Balance Portion of the Land.
At the same time, it is a matter of some nicety to determine an appropriate method by which to arrive at the effect on the value of the Reserved Land of the interest of such an adjoining owner in the features described, considered as a particular "potentiality" of the land for the purposes of Raja (supra). For the plaintiff, of course, it is submitted that the before and after approach is that method. That approach (in this case) would direct attention to sales comparable to a sale of the Land, and to sales comparable to a sale of the Balance Portion.
It is not suggested that there were any sales of land comparable to the Reserved Portion to adjoining owners of land comparable to the Balance Portion, with a possible exception, for Lot 30 Wanneroo Road, to which I will return. However, there were some sales of land comparable to the Reserved Portion to the defendant, as I will indicate below. For the defendant, it is put that these illustrate that there were other potential purchasers for the Reserved Portion than adjoining owners, as indeed the basis for a valuation, of the Reserved Portion in different ownership than the Balance Portion, requires one to hypothesise a situation other than an acquisition on an election to acquire by the defendant that resulted in that ownership.
However, I do not consider that the fact there is a market for the land apart from an adjoining owner affects the applicability or otherwise of the before and after method of valuation. Indeed, there was just such a position in Clay (CA) (supra). I return below to the use of prices on sales to the defendant itself.
Further, the defendant lays emphasis on the authorities on the market value approach that stress the willing purchaser to be hypothesised is one who has no pressing need to acquire, who is acting prudently and who thus should not be expected to pay the full value to the purchaser of the potentiality, dealing with a willing vendor who would not hold out for the highest price. See principally Pastoral Finance Association Ltd v The Minister [1914] AC 1083, at 1088 ‑ 1089; and Inland Revenue Commissioner v Clay [1914] 1 KB 339 per Scrutton J at 348 ‑ 349, and 350.
I particularly note the judgment of Scrutton J in Clay (supra), at 349, and 350, which appear to be the passages to which Pickford LJ in the Court of Appeal decision in that case was referring in the passage I quoted from his judgment. Scrutton J said this, at 349 (emphasis added):
"If the owner of No. 83 [the subject land] had said to an expert, 'I wish to sell, but am not forced to, and can wait and negotiate; my house is worth 750l. to private owners to live in, but my next neighbour desires to extend his premises, and my house is so convenient and well built that it will pay him to go up to 1200l. rather than build elsewhere; what do you think I can realize by a sale?' I think such an expert would have answered, 'Well, it depends on diplomacy in bargaining, but I should think you could be sure of selling for at least 1000l., and if you refuse to sell except at your price you can very likely get more.' I exclude the last hypothesis of refusal, as I do not think the vendor would then be a 'willing seller at the time', but I see nothing in the Act to require me to exclude the first hypothesis, which seems to me the obvious business way to look at the transaction. In other words I cannot exclude from the 'open market' the principal buyer, though for a genuine business reason he will pay a price higher than others."
At 350, Scrutton J said this:
"In my view, therefore, the referee was right in fixing 1000l. as the gross value of 83, Durnford Street both in April, 1909, when the nursing home having offered Mrs Buchanan 850l. and having been refused were enlarging No. 84, and in September, 1910, when they bought No. 83 for 1000l. He was right in this, not because of the sale for 1000l., but because of the reasonable expectation that a willing seller could get 1000l. or more from the nursing home. Referees in assessing gross value on the occasion of sales are not bound by the actual consideration figure, which may be a misunderstanding of market value without business foundation, but where they find a sale influenced by the business wants of the buyer and a profitable transaction to him I think they are justified in considering it, though no other buyer would give such a price except to resell to the one special client."
This might be expressed in the terms of what it is expected the person would be prepared to pay, not what that person expected to gain from the transaction, which falls to be determined: Beard v Director of Housing (1961) 9 LGRA 74, Crisp J, at 80. I note that the quotation from Raja (supra), at 313 ‑ 314, above, referred to using the full value to the adjoining owner who was the claimant. However, in that respect I consider that quotation is not applicable in the present context, because the present is not a compulsory acquisition case, where (as I will explain) it is value to the claimant that is in issue.
I consider that the before and after method would indeed be inconsistent with these authorities if the method were one to value the Reserved Land in the hands of the owner of the Balance Portion, rather than as evidence to assist in determining the effect on the market value of the Reserved Portion of the interest of that owner in that land. The authorities require the valuation to recognise it is the land with its potentialities, not the land with their realisation, that is being valued: Hyam (supra), at 86. It is precisely the contention of the plaintiff that the before and after method is a proper guide to what the adjoining owner would be prepared to pay, not that it is a measure of what the potentiality would be worth in the adjoining owner's hands.
However, I consider that it is not appropriate to take the approach that the valuer called by the defendant, a Mr Paterson, did in the following exchange from his re‑examination (TS 481 ‑ 482; see also cross‑examination, TS 455):
"You were asked a question early on about the obvious and natural market for the reserved portion of lot 37. What did you understand the question to mean as the obvious and natural market?---I would take it if a person had the opportunity to buy say two and a half hectares of good land and then he had the opportunity to buy another portion of low lying land that he couldn't really use, it would be a figure that he would be prepared to pay that would reflect that added value to him.
Is it your position that that figure is necessarily going to reflect the amount by which acquiring that property might increase the overall value of the property?---I believe it's one and the same, yes."
There is even stronger evidence to the same effect from Mr Vincent (cross‑examination, TS 265):
"That wasn't my question, Mr Vincent. My question was: if someone is wanting to acquire some property adjoining theirs, what I'm suggesting to you is that they wouldn't be prepared to pay for that adjoining property the value that they think it might add to their land. They would be prepared to pay something less than that?---You can suggest that. I don't agree with it."
Taking the approach that the figure would be "one and the same" as the difference produced by the before and after approach, or that a valuer should exclude the hypothesis that an adjoining owner might not be prepared to pay for the adjoining property more than a sum less than the value they thought it might add to their land, cannot be reconciled with the approach to market value in Clay (CA) (supra), or the general approach from Spencer (supra), of a willing but not anxious purchaser. Taking that approach is to treat this case as one of a compulsory acquisition, where (generally speaking) it is "value to the owner" rather than simply "market value" that is in issue: see Hyam (supra), at 278 ‑ 279. The present proceedings, as I will explain in more detail later, are not on a compulsory acquisition.
This takes me to the matter of what the before and after method contended for by the plaintiff does measure.

What the before and after method measures

The before and after method of valuation has a well recognised use in cases of compensation for expropriation of part of a holding: Hyam (supra), at 114 ‑ 116. Its use has been described as follows, in Carson v Minister for Environment and Planning (1990) 70 LGRA 215, Hemming J, at 220 ‑ 221:
"Each valuer initially assessed compensation by the 'before and after' method. The subject resumption involved the compulsory acquisition of only part of an unsubdivided parcel of land. The 'before and after' valuation method is an acceptable tool, often employed by a valuer in such circumstances as one way of taking into account all elements of compensation to which the dispossessed owner is entitled. It is often the most appropriate method of valuation when the excised parcel is of unusual size or shape, or if other reasons make it likely to be difficult to sell or even unmarketable. This method is particularly appropriate to avoid the double counting of damages where questions of enhancement or severance arise: see Realty Corporation Ltd v Commissioner for Main Roads (1940) 14 LGR (NSW) 204 and Gosford Shire Council v Green (1980) 48 LGRA 201.
However, the before and after method is not necessarily appropriate in all circumstances and has been rejected in a number of cases: see Hieronymus v Minister for Education (Land and Environment Court, 29 June 1989, unreported), and the cases referred to in Proprietors of Strata Plan 20754 v Council of the Shire of Hawkesbury, Land and Environment Court, Stein J 25 July 1989, unreported).
The Court is not bound to adopt the before and after approach, and it appears to be inappropriate where, as in this case, each valuer eventually assigned little, if any, difference to the rate per hectare in each part of the exercise. As observed in the Hieronymus decision (supra), in such circumstances the exercise has no utility because the same result would be achieved by merely valuing the resumed parcel itself. It became common ground that compensation in this case should be assessed by determining the value of the resumed land as a separate parcel."
Here, there is no contest that the rate per hectare in the "before" part of the use of the method would be different from the rate per hectare in the "after" part of that use, although whether it would be higher or lower was a matter of contest, as I will indicate.
However, the defendant's submission was that the method was inappropriate for another reason, which was that the method necessarily measured matters which, on Mount Lawley (supra), at [326] ‑ [330], were not part of the value to be determined under the MRTPS Act, s 36(2b). Those matters were severance damage and other matters of injurious affection to the land retained. These were not part of the value to be determined under s 36(2b), because that section is concerned with compensation for injurious affection in respect of the land reserved, the Reserved Portion in this case, not compensation in respect of any residual land not so reserved, the Balance Portion in this case, for which there may have been severance loss, or in respect of which there may have been some other injurious affection: Mount Lawley, at [328].
The authorities on the application of the before and after method are concerned with compensation for expropriation: there are none in relation to valuations under the MRTPS Act, s 36(2b). The former compensation is for the loss to the owner dispossessed as a result of the expropriation, whether the loss was of the market value of the expropriated property, or the loss was of a portion of the value of the dispossessed owner's retained land, with, if the statute under which the valuation is being done so requires, the loss to be reduced by any enhancement of the value of the retained land: see Hyam (supra), at 334 ‑ 336.
The valuation under s 36(2b) of the MRTPS Act is a form of measurement of injurious affection to the land the subject of a reservation caught by the Act. However, the election to acquire by the defendant that is necessary for that form to be engaged is not equivalent to a compulsory acquisition: there is no power of compulsory acquisition under the MRTPS Act, s 36. See Mount Lawley (supra), at [237] to [263].
However, I do not conclude from the non-inclusion of compensation for severance damage to retained land, and more generally the lack of equivalence of the election to acquire under s 36 of the MRTPS Act to an expropriation, that the before and after method has no application in the former context. At the same time, the method would require careful use.
The method does it seems to me assist with valuation of land which by reason of its shape and landlocked character is likely to be difficult to sell, if not unmarketable, but which has an attraction a valuer should take into account, such as that acknowledged by both valuers in this case, to an adjoining owner in the position of the owner of the Balance Portion. The method assists a valuer, it seems to me, in two ways.
First, the method should (properly used) help to indicate whether indeed there is a potentiality in the reserved land the lack of ownership of which by the owner of the retained land would reduce the market value of the retained land. There must be a potentiality, available to the owner of the retained land, which would have an impact on that market value through the expected interest of that owner, to ground the use of the potentiality in the valuation exercise as the plaintiff submits.
Secondly, the method should (properly used) directly indicate the upper limit of the impact of the potentiality on the market price of the reserved land. However, market value requires that the valuer hypothesise a willing but not anxious purchaser facing a willing seller. Therefore the actual impact should be expected to be below the upper limit unless the evidence otherwise indicates.
The need for care in the use of the method arises out of the fact (if market values are used) it measures (in a case like this one) what the owner of a residual portion of land would lose by not buying the portion in question, not (directly) what the impact on the market value of the land the subject of the election would be of his interest in avoiding any such loss. To repeat, it is the impact on market price of the interest of the owner of the latter sort of which on the authorities of Clay (CA) (supra) and Raja (supra) account should be taken. Separating that impact from the loss the owner would suffer is not required in cases of compensation for expropriation, which are concerned with determining the loss of value to the owner resulting from the expropriation: Birmingham Corporation v West Midland Baptist (Trust) Association (Inc) [1970] AC 874, per Lord Reid, at 893; Hyam (supra), at 274. However, just such a separation is required in cases of valuation of the land in question under s 36(2b), on Mount Lawley (supra).

The before and after method and special value

For the plaintiff it was put to me that the before and after method could be justified by reference to the principle that an owner should be entitled to any greater value of the land in question that it represented to the owner, even if it was not value that would be enjoyed by any other or many other potential owners. Counsel put emphasis on the fact the Full Court in Mount Lawley (supra) at [282] had left open whether value for the purposes of s 36(2b) included such "special value".
The Full Court in Mount Lawley (supra), in indicating that the proper approach to the determination of value under s 36(2b) of the MRTPS Act is in terms of "market value", contrasted this with the matter of "special value", as follows (at [281], [282]):
"In Boland v Yates [Boland v Yates Property Corporation Pty Limited (1999) 74 ALJR 249] both Callinan J and Gleeson CJ (with whom Gaudron and Gummow JJ agreed) referred to the fact that land might have a 'special value', reflecting 'a value to the owner over and above the price which a hypothetical purchaser may pay' ([16] per Gleeson CJ; and see [292] per Callinan J).
It is not clear to us that compensation for injurious affection under s 36 can include any allowance for 'special value' in that sense, and we do not read Scott J in Hill [Hill v Western Australian Planning Commission (2000) 107 LGERA 229] to be suggesting otherwise. However, we do not need to decide this as, in our view, there is no demonstration of any 'special value' in that sense in this case."
I do not consider I need to address the argument that "special value" is included within "value" under s 36(2b), as I have already concluded that the use of the before and after method can be justified as I have indicated. That justification is in terms of, and accounts for, the special interest of the owner of adjoining land. It seems to me that that special interest might derive, not simply from the character of the land as adjoining land, but (unlike this case) from a special use of it by its then owner, a use which may be permissible only to that individual. It seems to me that the Full Court in Mount Lawley (supra), at [286] and [287] allowed for this when they said:
"In our view, it is likely to be a rare case in which there is a difference between the market value of land and its special value to the owner. That is because the factors of special value are likely to be components of the market value which are recognisable as such by a notional vendor and purchaser who are 'conversant' or 'perfectly acquainted' with the land and all its features.
Callinan J described 'special value' in the following way in Boland v Yates at [292]:
' … its value to the owner over and above its market value. It arises in circumstances in which there is a conjunction of some special factor relating to the land and a capacity on the part of the owner exclusively or perhaps almost exclusively to exploit it.'"
The example Callinan J in Boland v Yates (supra) used to illuminate "special value" in that sense was described later in his judgment at [292] as follows (footnote omitted):
"There will in practice be few cases in which a property does have a special value for a particular owner. Obviously neither sentiment nor a long attachment to it will suffice. The special quality must be a quality that has an economic significance to the owner. A possible case would be one in which, for example, a blacksmith operates a forge in the vicinity of a racetrack on land zoned for residential purposes as a protected non-conforming use, the right to which might be lost on a transfer of ownership or an interruption of the protected use. Such a property will have a special value for its blacksmith owner, and perhaps another blacksmith who might be able to comply with the relevant requirements to enable him to continue the use but to no one else."
It seems to me that "special value" in the sense described by Callinan J is not involved in this case, because it is not suggested that the potentiality of the Reserved Portion was only available to the claimant, as opposed to any other or few other potential owners of the Balance Portion. Indeed, I understood counsel for the plaintiff and for the defendant so to agree.
I note that the plaintiff, Mr Kelly, has a background as a "civil/marine engineer" (his witness statement, Exhibit 10, par 4). He did give evidence that he would have been "prepared" to raise a house in the Reserved Portion "higher" than a "modest sand pad" would have provided for if that "was required", because of that background (par 30). However, I do not consider that to be evidence this gave the Reserved Portion a special value to him.
I also note that the before and after method of valuation is not one that (if it uses market values, as the method seems commonly to do) captures special value in the sense described by the Full Court in Mount Lawley (supra). Rather, the method requires supplementation to achieve such a capture, as is indicated in Commissioner of Highways v Tynan (1982) 53 LGRA 1, Wells J, at 10 ‑ 11, as follows:
"This method requires the valuer to begin by taking the original tenement -- in this case, the farmland as held and used immediately before the valuation date, which is 4 September 1980, and giving to it its market value; he must then determine the value to the claimant of the retained land, and for that purpose he must first find a market value for the retained land, and then bring to account the special financial advantages, and the special exemptions from financial disadvantages, that were lost to the retained land by reason of the removal of the subject land from the original farm complex and the structure of use and occupation, in accordance with which the farm was formerly operated. If this procedure is thoroughly and imaginatively pursued, the difference between the before and after values will yield a figure representing the value of the subject land to the claimant. Where it is based on reasonable sales evidence, this method is generally reliable, provided the circumstances are scrutinized in order to identify all the special benefits lost, and no error of principle is made in assessing what was their value to the claimant."
No need for any such supplementation has been suggested here. In any event, such supplementation would be to account for the impact on market value of that special exemption or financial advantage, not the loss of either on an expropriation.

The highest and best use of the Reserved Portion

At this point I return to the matter of this use. I have already indicated that the zoning of the Land, including the Reserved Portion, was rural. Two classes of use within that zoning were referred to in the evidence, for both the Land and the Balance Portion. The Land includes the Reserved Portion, of course. One class was uses by commercial growers. There were a number of commercial growing operations in the area of the Land, and there was evidence that at one point the Land had been used in market garden operations, although that was some time ago, and the portion of the Land so used, which apparently included the Balance Portion for the most part, had "reverted to stunted regrowth" (valuation report of Mr Vincent of 20 June 2000, Exhibit 12). The other class of use was by purchasers for what were called "lifestyle" purposes. These included purchasers who would use the property for their own lifestyle, particularly the views and other amenities of Lake Neerabup, as well as purchasers who would use the property for a business in what was called "eco‑tourism" or environmental education. There was evidence that such business uses would require the approval of the City of Wanneroo, and I return to that evidence later. A mixture of both sorts of use could be envisaged, on the evidence of the purchase of a lot similar in size to the Land, Lot 14 (witness statement of Mr Matthew Peterson, Exhibit 21, par 7), but without its connection with Lake Neerabup. I return to Lot 14 below.
There was a further use for the Land and the Balance Portion referred to in the evidence, that of residential subdivision. I return to this use below, where I consider that on the evidence it did not represent a potential use for the Land or the Balance Portion for the purposes of determining market value. However, Mr Vincent, who treated subdivision as the highest and best use of the Land and the Balance Portion, had this to say in one of his reports (Exhibit 15) with respect to "tourism‑orientated uses" compared with subdivision:
"Whilst a tourism orientated business is not necessarily the highest and best use for the land, it is an alternative use to subdivision to a residential subdivision or a two-dwelling development, and as the above analysis demonstrates, a hypothetical purchaser would pay a similar rate for land for such a use, as they would for land with subdivision potential or a two-dwelling development that I have analysed in previous reports."
I return below to the matter of a "two‑dwelling development", as well as a "tourism orientated business". I also return to the sale, of Lot 14, Wanneroo Road, on which Mr Vincent rested his analysis. That sale, as well as the others relied upon by one or other valuer or both as comparable sales provide support for what I conclude is Mr Vincent's view in the passage I have quoted, that purchaser for "lifestyle" purposes is, after residential subdivision, the highest and best use for the Land and the Balance Portion.
However, the only comparable sale of land which on the evidence was acquired for commercial growing purposes, a sale relied upon by both valuers but for different purposes as I will explain, that of Lot 30 Wanneroo Road, does tend to indicate the potential for higher values in purchases for commercial growing purposes. However, as I will also indicate, there are difficulties with relying upon that sale, having to do with its character as a sale to an adjoining owner who was already conducting a commercial growing operation on the land acquired, an operation being conducted in conjunction with that on his adjoining lands.
Mr Paterson's evidence as to the highest and best use of the Land and the Balance Portion, as between commercial growing and "lifestyle" uses, is less clear. In his valuation report (Exhibit 32), he says this:
"A significant factor which I believe a president [sic] purchaser would take into account is the fact that approximately 1 ha of the rear reserve land is under water in the winter months and therefor [sic] this portion would most likely be discounted in the purchaser price. However, to offset this with the exception of commercial growers, the aspect for a lifestyle property with lake views in the winter months is likely to be a more significant than the loss of the use of the land by inundation."
However, his use of comparable sales includes only one identified as a transaction with a buyer for commercial purposes, being the sale of Lot 30 to which I previously referred, which as I will indicate he particularly relies upon for his "after" value, that of the Balance Portion. If Lot 30 is put to one side, I find no support from Mr Paterson's evidence that the highest and best use of either the Land or the Balance Portion is that of a commercial grower.
I conclude on all of this evidence that the highest and best use for the Land and the Balance Portion is then for "lifestyle" purposes.
The evidence was less clear on the highest and best use of the Reserved Portion considered apart from the rest of the Land. On the evidence of the irregular shape and landlocked character of the Reserved Portion, and the testimony of the valuers (Mr Vincent, examination in chief, TS 188; and Mr Paterson, TS 454) it seems to me, however, that the Reserved Portion would only be of interest to an adjoining owner, whether of the Balance Portion or one of the lots bordering Lot 37, to its north or its south, putting aside a sale to the defendant itself. I deal with such a sale later in these reasons. This would then in my view mean that the highest and best use of the Reserved Portion must be considered as identified with the highest and best use of the Land and the Balance Portion.

The matter of permissible uses of the Reserved Portion: the "buffer" issue

At the trial there was considerable attention devoted to the question of what sorts of works could be undertaken on the Reserved Portion, and in particular on that part of the Reserved Portion not part of Lake Neerabup. This attention was directed to the question of whether or not a lifestyle purchaser could utilise any of that part for the purposes of building at least part of a dwelling, as the plaintiff had proposed to do under his Application for Approval to Commence Development dated 17 May 1999 previously referred to. Such a dwelling would be positioned so as to take advantage of the views of the Lake and of its other amenities. There was for the defendant said to be evidence that any necessary permission for such works would be refused.
I accept for the purposes of this argument that the plaintiff's application should be taken as an indication of whether or not a dwelling could lawfully be constructed at least in part on the Reserved Portion. However, as I indicate below, I conclude that on the evidence the answer to this question has not been shown to me to have an effect on the value of the Reserved Land.
There were two possible bases put forward for the need for and refusal of permission to undertake the works referred to. One was the Environmental Protection (Swan Coastal Plain Lakes) Policy 1992 ("the EPP") and its requirements for authorisation of certain activities with certain implications for "lakes". The other was the requirement for a building licence by virtue of Local Government (Miscellaneous Provisions) Act 1960 (WA) ("the LGMP Act"), s 374(1), and the relevance to obtaining such a licence of what was referred to in the evidence as the "buffer requirements" of the then Waters and Rivers Commission.
At all material times the EPP had the force of law under the Environmental Protection Act 1986 (WA), s 31(d). Its purpose was "to protect the environmental values of lakes on the Swan Coastal Plain" (EPP, cl 2). There is no contest that Lake Neerabup was one such lake. The EPP required authorisation for certain activities, including causing or permitting material to be placed in such a position that the whole or any part of a "lake" is "filled in" (cl 10), or causing or permitting the discharge or disposal of effluent into a "lake" (cl 12), or causing or permitting the construction of any system for the "drainage of water into or out of a lake" (cl 13).
With respect to EPP, cl 10, I note the evidence of Mr Parker, an officer of the Waters and Rivers Commission at the time, that the "building envelope" under the plaintiff's proposal would extend into the "wetland", represented by the boundary of the "wetland dependent vegetation", by which I understand Mr Parker to mean the extent of Lake Neerabup as the Commission approached it (cross‑examination, TS 423). Later I consider the evidence on locating that boundary of the Lake as so understood. However, I note that the EPP defined the Lake as "those lakes on the Swan Coastal Plain that are shown coloured in green on Department of Land Administration Miscellaneous Plan No 1815" (cl 4(1)). The lakes are so defined by reference to aerial photographs, taken in the summer, of standing water (cl 4(2)). As I will shortly indicate, the approach to wetlands as used by Commission goes to a broader area. The Plan referred to (defendant's book of documents, Exhibit 39, page 94) shows, as seems to me to be confirmed by the plan for the dwelling under the plaintiff's proposal (Exhibit 39, page 98), an area well short of the proposed building area, even allowing for its projection lakewards by further works such as parking, that projection being a matter to which Mr Parker called attention in his evidence. Mr Parker in his evidence also indicated there was an "anomaly" between the "mapped EPP boundary and the extent of the wetland actually present upon Lot 37" (Exhibit 31, par 4). This "anomaly" apparently arose out of "problems in the mapping used by that policy" (cross‑examination, TS 420 - although there is some confusion in the later cross‑examination as to whether the question related to the boundary for the purpose of the buffer policy; and re‑examination, TS 425). Further, as Mr Parker acknowledged, "in any event" the Commission "maintains that the extent of the wetland dependent vegetation will prevail as the wetland boundary" (Exhibit 31, par 4). On this basis, I do not consider Mr Parker's evidence establishes that the plaintiff's proposal would have required an authorisation to avoid a breach of EPP, cl 10.
I note the evidence of Ms Watts, a planner employed by the Department of Planning and Infrastructure, (Exhibit 35, pars 43 and 48) which would indicate her view that the uses she refers to, which appear to include the construction of a dwelling at least partly on the Reserved Portion, could not have been undertaken on that land "due to the constraints" of, among other things, the EPP. However, there is not further detail in her treatment of the topic, and I do not consider it adds to the treatment in Mr Parker's evidence. I also note that neither she nor, as I will indicate below, Mr Parker, discusses the possibility of authorisation under the EPP.
With respect to EPP, cl 12, Mr Parker's evidence was that, in relation to the plaintiff's application for development approval, the Waters and Rivers Commission had determined its "requirements" for a 100 metre horizontal separation for septic tanks from wetlands, a 50 metre vegetated buffer to be maintained from the edge of the wetland dependent vegetation, and an additional 20 to 30 metre development setback from the buffer, or parks and recreation reserve boundaries, for residential development (witness statement, Exhibit 31, par 3) were engaged. The Waters and Rivers Commission wrote to the defendant, by a letter dated 20 October 1999, that "the proposed location of the residence is not sufficiently set back from the lake to meet [these requirements]" (Exhibit 39, page 26). In his testimony Mr Parker referred to the 100 metre requirement as one to ensure effluent disposal systems did not have a deleterious impact on a lake like Lake Neerabup (examination‑in‑chief, TS 420).
I view Mr Parker's evidence just referred to, and his other evidence, as going to the application of the EPP by virtue of cl 12, on effluent discharge or disposal. I note for this purpose particularly Mr Parker's evidence as to the physical possibility for the flow of discharge of effluent from the rear of the Land, a matter with respect to which I ruled he was qualified by his experience to provide a response to evidence of one of the planners called by the plaintiff, Mr Goff (examination in chief, TS 394 ‑ 396). In view of that experience I prefer that evidence to that of Mr Goff. Mr Goff's evidence was, however, not only that there would be no physical possibility of such flow, but that treatment systems to prevent objectionable effluent discharge could be used in relation to the plaintiff's proposal, and that in any event any such discharge remaining would be regarded by the authorities as unobjectionable in view of the levels of discharge of permitted seepage from adjacent market gardens (Exhibit 20, pars 16 and 17). Although the defendant put to me that viewing "the totality" of Mr Parker's evidence I should conclude that any authorisation required under the EPP would be refused, I note that evidence did not in fact indicate whether or not the use of the one of the systems referred to by Mr Goff would have an impact on the grant of authorisation under the EPP. I note that his evidence was as to the Commission's "requirements", and not to the possibility of authorisation under the EPP.

Lot 6 Lake Road, the sale of which in 2001 appears in Exhibit 2 as sale item 13, was described in Mr Paterson's evidence from which I quoted above as being made up almost entirely of the same sort of lake bed as the Land, while having "very little buffer land, only a small strip that could be possibly considered to be of buildable use or something to that effect", with a steep drop from a "limestone track", which appears to be Lake Road. This track appears to offer access to the road to the north, Wattle Avenue, via Lake Road, and to mean that Lot 6, unlike Lot 800, was not landlocked. Mr Vincent in his evidence described Lot 6 as being "virtually nothing more than swamp land" (examination‑in‑chief, TS 168). Lot 6 comprised 6.9480 hectares, and on Exhibit 2 was sold as vacant land.
Lot 6 was sold in July 2001 for $140,000, at a time when, on Exhibit 2, it was the subject of a reservation for parks and recreation. The sale price represents $2.01 per square metre. Mr Paterson had valued this land for the defendant, as I have indicated, apparently no later than the time of his report (Exhibit 32), April 2001.
As I have indicated, Mr Paterson in his evidence referred to his valuation of Lot 6 as a basis, with his general experience, for the value he assigned to the wetlands in the Reserved Portion in his "direct comparison" valuation. On his evidence, there would be a need to adjust the price of Lot 6 for its greater area, although not for the date of sale in relation to the valuation date of 18 July 2000, on his evidence that "the market was only moving very slowly over that timeframe" (Exhibit 16). However, it seems to me that Lot 6 would be of only limited assistance in relation to a valuation of the Reserved Portion, given that it appears to have only a very small proportion of dry land, and that land was inferior to the corresponding portion of the Land (cross‑examination TS 479 ‑ 480). However, as I have indicated, the sale of Lot 6 tends to indicate a lower price would be paid for land which has relatively more wetland forming part of Lake Neerabup, compared with land with relatively less wetland forming part of the Lake.
A portion of the rear of Lot 22 Wanneroo Road, now Lot 1010, appears as sale item number 12 in Exhibit 2. Lot 22 lies to the south of the Land. Exhibit 2 indicates that the portion's area was "3.988 ha (3938 m2)", which appears to be in error – the correct area, given the size of Lot 22 shown on Exhibit 3, a plan of the Lake Neerabup area from the Valuer‑General's Office, would appear to be 0.3938 hectares (3,938 square metres). The portion appears to be landlocked. Mr Vincent in his cross‑examination refers to this portion as land that went "into the lake system" so far as it appeared from his inspection of the aerial photograph in Exhibit 39, page 2 (TS 227), and as having been sold to the defendant (TS 226). Mr Paterson gave no evidence as to the October 1998 sale of this portion of Lot 22. Exhibit 2 indicates that the portion of Lot 22 was sold in October 1998 for $30,000 as vacant land when it was the subject of a reservation for Parks and Recreation. This price represented $7.62 per square metre.
Neither Mr Vincent nor Mr Paterson relied upon this sale, however. Its use would appear to require adjustments for its smaller size and the date of the sale, at least. Considering the need for those adjustments, and without knowing more about the land, including its topography and the proportion of it represented by wetland, it is difficult to see what weight can be assigned to this sale.
Lot 43 Wattle Avenue (also referred to as Lot 80), lies to the north of the Land, and immediately north of Lot 6, and its sale in February 2002 appears as sale item 14 in Exhibit 2. Lot 43 appears to front on to Wattle Avenue. Exhibit 2 indicates that Lot 43's area is 6.8145 hectares. Mr Vincent in his evidence referred to this lot as being a "total lot involved in the lake system" (examination‑in‑chief, TS 168), with "not too much buffer on that one but it does appear to be at the north-eastern corner where the road comes down from Wattle Avenue" (cross‑examination, TS 228). Mr Paterson's only evidence with respect to the sale of Lot 43 in February 2002 is his indication that he did not rely upon it in his valuations (cross‑examination, TS 479). Exhibit 2 indicates that Lot 43 was sold as vacant land to the defendant for $210,000 in February 2002 when it was the subject of an election to purchase as land subject to a reservation for parks and recreation. This price represented $3.08 per square metre.
Again, neither Mr Vincent nor Mr Paterson relied upon this sale. Its use would appear to involve adjustments of the same sort as for Lot 6, whose price per square metre is similar if lower. It tends to confirm the price for Lot 6, while also indicating some measure of appreciation in prices between 2001 and 2002 which is in line with the evidence I have previously referred to.
Lot 16, Wanneroo Road, lies to the south of the Land. The sale of the rear portion of the lot, which was landlocked, to the defendant in October 1999 is not referred to in Exhibit 2, although it does appear in Exhibit 3. Mr Vincent gave evidence that Exhibit 3 showed the sale was of an area of 2950 square metres for $23,600 (cross‑examination, TS 229). This price represented $8.00 per square metre. Mr Paterson gave no evidence as to this sale.
Again, neither Mr Vincent nor Mr Paterson relied upon this sale. Its use would require the same sorts of adjustments as for the sale of the rear portion of Lot 22, above, whose price per square metre is similar. I note, however, that there is no evidence as to whether there were any improvements on the rear portion of Lot 16 sold to the defendant, or whether any part of it was wetlands. It is difficult to see what weight can be given to this sale in all the circumstances.
Lot 17 Wanneroo Road, lies to the south of the Land and borders Lot 16 to its south. The sale of the rear portion of Lot 17, which was landlocked, to the defendant in January 2001 is again not shown in Exhibit 2, although it does appear in Exhibit 3. Mr Vincent gave evidence that Exhibit 3 showed the sale as of 2962 square metres for $24,000 (cross‑examination, TS 230). This price represented $8.10 per square metre. Again Mr Paterson gave no evidence as to this sale.
Again, neither Mr Vincent nor Mr Paterson relied upon this sale. Its use would require the same sorts of adjustments as for the sale of the rear portions of Lots 16 and 22, above, whose prices per square metre are similar. Again, as with the sale of the rear portion of Lot 16 to the defendant, I note there is no evidence as to whether there were any improvements on the land the subject of the present sale or the proportion of the lot, if any, that is wetland. Again, it is difficult to see what weight can be given to this sale in all of the circumstances.
Lot 23 Wanneroo Road, lies to the south of the Land and borders Lot 22 to its south. The sale of the rear portion of Lot 23, which was landlocked, to the defendant in January 2001 is again not shown in Exhibit 2, although it does appear in Exhibit 3. Mr Vincent gave evidence that Exhibit 3 showed a sale of 3413 square metres to the defendant in January 2000 for $30,000 (cross‑examination, TS 230). This price represented $8.79 per square metre. Again Mr Paterson gave no evidence as to this sale.
Again, neither Mr Vincent nor Mr Paterson relied upon this sale. Its use would require the same sorts of adjustments as for the sale of the rear portions of Lots 16, 17 and 22, above, whose prices per square metre are similar. Again, as with the sale of the rear portions of Lots 16 and 17 to the defendant, I note there is no evidence as to whether there were any improvements on the land the subject of the present sale or the proportion of it (if any) that is wetland. Again, it is difficult to see what weight can be given to this sale in all of the circumstances.
Lot 38 Wanneroo Road, borders the Land to its south. It has a frontage on to the slip road. Its sale to the defendant in January 1996 is sale item 11 in Exhibit 2. (This date appears to be the date of settlement: a "sale date" of 20 December 1995 is given in Mr Vincent's report 20 June 2000 which is Exhibit 12.) Mr Vincent's evidence was that "quite a bit of the lake system" was within Lot 38 (cross‑examination, TS 255). Lot 38 was 4.0469 hectares in area, and was vacant land. Lot 38 was sold as vacant land to the defendant in January 1996 for $250,000, which represented $6.18 per square metre. Mr Paterson gave no evidence as to this sale.
Again, neither Mr Vincent nor Mr Paterson relied upon this sale. Its use would require adjustments at least for its date, and its greater area. However, its price would tend to confirm that for land including both dry land and wetlands forming part of Lake Neerabup, a lower price would be paid the greater the proportion of such wetland.
Overall, as I have indicated, the sales of Lot 800 (in March 2002, at $9.22 to $9.65 per square metre), Lot 6 (in July 2001, for $2.01 per square metre), Lot 43 (or Lot 80) (in February 2002, at $3.08 per square metre) and Lot 38 (in December 2005, for $6.18 per square metre) appear to me at best to serve as a check on the results of other bases for valuation: see Woollams (supra), at 109, per Hardie J; and Petroccia (supra) at 356, per Wells J. There is no evidence there was any other significant purchaser than the defendant of lots like the Reserved Portion in bordering on or taking in portions of the Lake, at least if the lot was landlocked. In this sense, it seems to me that the sales to the defendant here are closer to the first situation described in Petroccia (supra), of the defendant setting the price for such land, than to the second, of the defendant taking the price set by the owner. In neither case, however, would the price paid by the defendant be one that is the result of the untrammelled operation of free market forces. It seems to me, however, that the need for caution in the use of the sales to the acquiring authority would be greater in the first case than the second. While this does not prevent the use of those sales as I have described, I do not consider I can put them to any further use, except as I indicate below.

The valuation of the Reserved Portion

On the analysis I have set out, I first consider the "before" and "after" valuations in respect of the Land and its Balance Portion to determine whether or not there is an indication of a potentiality for the adjoining owner of the Balance Portion that the before and after method can measure, and to determine the upper limit to the value of that potentiality.
On balance, I prefer the valuation evidence of Mr Vincent, subject to the adjustments and qualifications I have referred to, many of which follow from the evidence of Mr Paterson.
In particular, I conclude that the rate per square metre in the "before" valuation is less than that in the "after" valuation, as Mr Vincent did, although I do not entirely agree with his figures. His approach to the "before" valuation needs in my view to take account of the difficulties with using the sale of Lot 30 as a comparable sale that I have identified, which makes resort to the sale of Lot 19 in 2000 more reliable, where I drew on both his approach to that sale and that of Mr Paterson. Mr Vincent's approach to the "after" valuation requires greater adjustment of the price of Lot 51 in 1997 than he makes. I derive some assistance in coming to this conclusion from the use of the sale in 2003 of Lot 801, although the extent of that assistance is limited, as I have indicated. At the same time I have noted the other sales I have indicated are of assistance in arriving at these values.
On balance, drawing on all of this evidence and making these adjustments and checks, I have come to the conclusions that follow.
The "before" value, the value of the Land was $449,000 (or $10.96 per square metre), while the "after" value, that of the Balance Portion, was $276,000 (or $10.55 per square metre).
In arriving at these figures, I have moved as Wells J did in Petroccia (supra), at 362 (footnote deleted) to:
"… complete the judicial process by "put[ting] [myself] as far as possible in the position of persons conversant with the subject at the relevant time, and from that point of view [ascertaining] what, according to the then current opinion of land values, a purchaser would have had to offer for the land to induce such a willing vendor to sell it, or, in other words, to inquire at what point a desirous purchaser and a not unwilling vendor would come together": see [Spencer (supra), per Griffith CJ] at page 432. The undertaking of this "necessary mental process" (ibid.) is an integral part of the judicial process, and is not, in se, a third valuation by another expert."
The resultant before and after value is of course $173,000 ($11.74 per square metre), which is very close to that arrived at by Mr Vincent in his valuation reports Exhibits 12, 13 and 14. However, as I have indicated, I have arrived at that value by somewhat different means.
I consider that the before and after method does indeed indicate that the adjoining owner of the Balance Portion of the Land (and to a lesser extent the owners of the land adjoining the Land to its south and to its north, as I have indicated) would pay more for the Reserved Portion than it might otherwise be worth to other buyers not buying for resale to that adjoining owner. The only such buyer it was suggested would be a potential buyer for this land was the defendant itself. I have already considered the sales to the defendant, which in my view in the circumstances of this case are some evidence of the price such a buyer would pay, albeit evidence that must be approached with considerable caution.
However, for the reasons I gave previously, I do not consider that I can simply take the before and after value as the market value of the Reserved Portion. That value would be expected to be some lesser figure, if the purchaser was not anxious but desirous to buy, after allowing for a seller not anxious but not unwilling to sell. In arriving at the lesser figure, I also note, for the reasons I gave previously, that the market value is not simply that amount only slightly above the market price that would apply in the absence of an adjoining owner's influence on the market which the adjoining owner would have to bid to acquire the land, and to this extent I would not follow any indication to the contrary from the judgment of Wells J in CSR Ltd v Valuer General (1977) 17 SASR 446, at 455. Doing the best I can with the evidence I have available to me, including in particular the evidence I reach in the next paragraph, I have arrived at a value of $140,000, or $9.50 per square metre.
I should note that, if it were not possible to use the before and after method of valuation, as here, it is not clear to me it would have been necessary on the evidence as I have understood it to resort only to the sales to the acquiring authority, "faute de mieux" (Petroccia (supra) at 356, per Wells J). That is because there is at least one sale that might have been resorted to, as well. It is the 1997 sale of Lot 51. However, that sale would have had to have been adjusted up for its date, its greater size and its lack of the amenities of Lake Neerabup, while down for its regular shape, its lack of inundated land and its access to the slip road to Wanneroo Road. Using the sales to the defendant as a check, I consider that would have yielded a value for the Reserved Portion not much different than that using the before and after method, although I would have derived that value with less confidence given the lack of the guidance that the before and after method allows me in my task of assessing the impact on market value of the interest in the Reserved Portion of the adjoining owner, of the Balance Portion.

Legal and valuation costs

For the plaintiff it was put to me that he was entitled to be awarded these costs, being legal and valuation costs incurred in relation to the negotiations with the defendant that ultimately were fruitless and led to the institution of these proceedings. The nature and amounts of these costs appear from evidence of the plaintiff (Exhibit 10, pars 44 ‑ 45) and in detail from invoices supplied (Exhibit 38, pp 72 ‑ 80). The total involved is $9,148.35.
As I understand the submission, two of the three bases for the claim for these costs were for them other than as part of the costs of the proceedings themselves. The defendant made no objection to my considering that claim on those two bases, but sought to reserve for further argument after the decision was delivered the matter of dealing with the present claim as part of the costs of the proceedings themselves.
However, it is convenient I say something about the costs of the proceedings first.
The costs of the present proceedings are those of obtaining the valuation referred to in MRTPS Act, s 36(2b). It seems to me that in making the appropriate order as to those costs I should be guided by the authorities on compensation for compulsory acquisition. I now explain the basis for that view.
I have already indicated that the defendant's election to acquire is not the equivalent of a compulsory acquisition. However, I should note, as does the Full Court in Mount Lawley (supra), at [237] ‑ [264], that the election to acquire is an alternative the MRTPS Act, s 36(2)(b) allows the defendant to paying a claimant the compensation for injurious affection to which an owner of land is entitled under s 36(3)(b) of the MRTPS Act and cl 20(1) of the MRS. This is the compensation the owner has duly claimed under cl 20(2) of the MRS. As s 36(2a) (set out in full at the beginning of these reasons) provides, in the event (with the emphasis supplied):
"… the Commission and the owner of the land are unable to agree as to the price to be paid for the land by the Commission, the price at which the land may be acquired by the Commission shall be the value of the land as determined in accordance with subsection (2b)".
The provision last referred to, s 36(2b) (also set out in full at the beginning of these reasons), which is the provision under which the plaintiff is proceeding here, is for the owner to make application to the Supreme Court (in this case), to determine "the value" of the land.
In those circumstances, it seems to me that these proceedings are about one of the alternative ways in which the plaintiff's entitlement to compensation for injurious affection may be finalised. It is true that the plaintiff has a wider array of choices than an owner in a compulsory acquisition setting, who is faced either with accepting the acquiring authority's offer or commencing proceedings: see on compulsory acquisitions: Banno v Commonwealth of Australia (1993) 81 LGERA 34, at 53, per Wilcox J. While the defendant is bound by its election to acquire, the plaintiff in the case of an entitlement to claim compensation under s 36(3)(b) of the MRTPS Act and cl 20(1) of the MRS can take the course of not accepting the defendant's election to acquire at the value determined by this Court or determined in one of the other ways (where applicable) provided for in s 36(2b) of the MRTPS Act: see Mount Lawley (supra), at [240], [257] and [263]. However, in the case of non‑acceptance, it seems to me the plaintiff has withdrawn its claim for compensation, because the defendant cannot be compelled to pay compensation instead of the price, determined as the MRTPS Act provides, of the land for the acquisition of which it has elected, and by which election it is bound. That is, in a case like this one, the plaintiff has no option to force the defendant, where it has so elected, but where it has not agreed a "price" for the purposes of that election, to acquire the land at any other price than that determined as the legislation provides following such non-agreement. Whether the plaintiff accepts the defendant's election at that price or not, the plaintiff's claim for compensation in effect has been finalised.

On that basis, it seems to me that the authorities on costs in cases of claims for compensation on compulsory acquisition should guide me in making my determination as to the costs of these proceedings, the costs of which are otherwise governed by the law for the costs of proceedings in this Court, most notably Supreme Court Act 1935 (WA), s 37 and Rules of the Supreme Court 1971, O 66. Of particular relevance to that determination, in this case, is the quantum of the value determined here, as well as the other issues determined in these proceedings. For that purpose I note the issues "critical to the determination of that value" (Rukavina & Robertson v Wagga Wagga City Council (1993) 80 LGERA 8, at 9, per Pearlman J), most notably whether or not the before and after method could be used in any way, and the use of the valuation evidence proffered by the parties. I also note the novelty and difficulty of the principal issues in this case, which in my view made appropriate the length of time and detail in the submissions devoted to them (see Banno (supra), at 53, per Wilcox J).
I should note that I have not reached a final view as to the costs order to be made in this case, and I will hear further from the parties as to it in light of the determinations I have arrived at. In particular, I will hear further on the basis for the claim for legal and valuation costs incurred prior to the commencement of these proceedings order as part of such costs.
This returns me to the two other bases for the claim for the costs concerned.
One basis is put as that :
"… a hypothetical reasonable vendor would have sought to recover these costs in the negotiated sale and the hypothetical reasonable purchaser would have accepted this as being reasonable".
The other basis put forward is that the legal and valuation costs are aspects of "special value" to the plaintiff. If special value is included within "value" in s 36(2a) of the MRTPS Act, then the plaintiff can claim those costs on that account.
Taking the last matter first, I refer to my discussion of "special value", in the context of the before and after method of valuation, above. Even assuming that special value is included within "value" within s 36(2a) of the MRTPS Act, it seems to me that this basis of the claim cannot sustain it, on Mount Lawley (supra), at [287] ‑ [289].
Nor, it seems to me, can the other basis for the claim sustain it, on the same authority.
The Full Court in Mount Lawley (supra), at [287] ‑ [289] said this, in relation to the claim in that case for the costs of preparing the development application that was refused, that refusal giving rise to the claim for compensation which led to the defendant's election to acquire, as well as to the claim for rates and taxes paid on the land prior to completion of its acquisition by the defendant, interest on the purchase price and the costs incurred in buying a replacement property:
"Callinan J described 'special value' in the following way in Boland v Yates at [292]:
' … its value to the owner over and above its market value. It arises in circumstances in which there is a conjunction of some special factor relating to the land and a capacity on the part of the owner exclusively or perhaps almost exclusively to exploit it.'
Even if that test is applied to the additional components of value identified by the trial Judge in the present case, none of them qualifies.
The cost of preparing the development application represents an amount expended to produce information about the use of the land that might have been permissible absent the reservations. It is the kind of expenditure identified by Callinan J in Boland v Yates at [271] – [273] which demonstrates the potential of the subject land. It is therefore reflected in the market value. There is nothing in that expenditure reflecting a capacity of the appellant to exploit the land that is exclusive or almost exclusive to the appellant. See also St John Ambulance Association of Western Australia Inc v East Perth Development Authority (2001) 114 LGERA 112 at [87] - [99]. This is even more clearly the case for the holding costs of the land and interest on the sale price until settlement, and the costs the appellant would have incurred in buying a replacement property.
Those costs and that interest do not relate to attributes of the land, but rather, as the trial Judge acknowledged, to the particular sale transaction itself. They represent matters that do not go to increasing the value of the land, but rather to compensating the vendor for loss on delay in completion of that transaction and from being forced to find replacement property. The principle of s 36(2a) of the Scheme Act is that compensation is to be determined by fixing a price by reference to value as at the stipulated date, disregarding the stipulated items, and by the mechanisms indicated. That principle does not encompass compensation for other loss or damage, whether from dispossession or otherwise. Even in relation to resumption, the authorities from Spencer's case forward have clearly distinguished between claims for the value of the land and claims for "damage otherwise": Isaacs J, in Spencer's case at 438, quoted by Callinan J in Boland v Yates at [355]."
It seems to me that the legal and valuation costs are not "attributes of the land" but rather go to "to the particular sale transaction itself" and the demonstration of the potential of the land. They are therefore part of the value of the land determined by other means, and not capable of being "special value".

GST

While this item is claimed, there is no supporting argument for it. The defendant's defence denies any liability for GST.
In my view the claim for GST stands on no better footing than the previous claim. That is, GST cannot be claimed as a separate item, except as part of the costs of these proceedings.
As to the second basis for claim, it is not easy for me to see how GST can be successfully claimed as part of the costs of these proceedings.
As to the first basis for claim, I repeat that the Court is determining "value" for the purposes of the MRTPS Act. Until there is a contract of sale, there is no liability to GST. While the GST may diminish the effective price the plaintiff will receive once it accepts the price as determined in these proceedings, and may have had an impact on the market value of land from the time the tax was introduced, any such impact will be reflected in the determination I have described.
It is true that a number of the sales relied upon in this case as comparable sales pre‑dated the introduction, on 1 July 2000, of the GST. However, there was no indication in the evidence of the valuers that there had been any measurable market impact of that introduction, and no indication in the prices, some of which were shortly before, and some of which followed not long after that introduction, of any such effect.

Interest

While the Full Court in Mount Lawley (supra) (see especially at [292]) determined that interest could not be claimed as part of the "value" of the land to be determined in proceedings such as these, the Full Court did decide (see [306]) that a Court making a determination of value in proceedings like these had the power to award pre-judgment interest under Supreme Court Act, s 32. The defendant's defence denies the plaintiff is entitled to interest.
I have concluded that, if the plaintiff determines to accept the defendant's election to acquire at the price determined by these proceedings, pre‑judgment interest should run on the value that supplies that price. Were it not for the plaintiff's claim, I would have had interest run until "the judgment takes effect" from the date of the plaintiff's claim for compensation, not the defendant's election to acquire. It seems to me that it is the former which corresponds to the "date the cause of action arose", and it is the exercise of the defendant's option as I have described it that has transformed that claim into a process for determination of the price to be paid instead of the compensation to be allowed. Nor do I see a reason to abridge that period in any way. However, as the plaintiff's claim was only for interest from the Election Date, I consider that is the commencement date I should use.
Interest on the judgment itself will of course run as Supreme Court Act s 142 and Civil Judgments Enforcement Act 2004 (WA), s 8(1)(a) respectively provide.
I also consider that, in the absence of any other basis apparent to me in the evidence, the rate of pre‑judgment interest should be that which would apply to the sum as if it was a judgment debt, at the rates applicable to judgment debts. Those rates are the ones which were those gazetted for the purposes of former s 142 of the Supreme Court Act, and are now, effective 1 May 2005, the ones prescribed by regulation under s 8(1)(a) of the Civil Judgments Enforcement Act 2004 (WA).

Orders

I will hear from the parties as to the orders I should make in the light of these reasons.