Lenz Nominees Pty Ltd v The Commissioner of Main Roads

[2012] WASC 6

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CIVIL

CITATION:   LENZ NOMINEES PTY LTD -v- THE COMMISSIONER OF MAIN ROADS   [2012] WASC 6

CORAM:   EDELMAN J

HEARD:   17-19 OCTOBER & 7 DECEMBER 2011

DELIVERED          :   12 JANUARY 2012

FILE NO/S:   CIV 1370 of 2007

BETWEEN:   LENZ NOMINEES PTY LTD

First-named Plaintiff

TINA MARIA GLASSON
Second-named Plaintiff

AND

THE COMMISSIONER OF MAIN ROADS 
Defendant

Catchwords:

Resumption and acquisition of land - Compensation - Valuation of land - Land Administration Act 1997 (WA), s 241(2) - Highest and best use - Whether highest and best land use is 'farming' or 'farming and lifestyle'

Resumption and acquisition of land - Compensation - Land Administration Act 1997 (WA), s 241(7)(a), 'severance of land' - Method for assessment of compensation for severance - Whether compensation for severance includes losses suffered due to the existence of pine trees planted on the resumed land - The proper method for calculation of compensation for the removed pine trees

Resumption and acquisition of land - Compensation - Land Administration Act 1997 (WA), s 241(7)(b), 'injurious affection' - Method of assessment of compensation for injurious affection - Whether permissible methodology to assess separately the injurious affection to the main residence and to the 'land'

Resumption and acquisition of land - Compensation - Consequential losses - Which types of consequential losses are recoverable under Land Administration Act 1997 (WA), s 241(6)(e) - Claims for compensation for losses which were not incurred, not proved, or would involve double recover

Legislation:

Land Administration Act 1997 (WA), s 241(2), s 241(6)(e), s 241(7)(a), s 241(7)(b), s 241(8), s 241(9)

Result:

Compensation assessed in the sum of $665,119, plus solatium and interest to be determined

Category:    A

Representation:

Counsel:

First-named Plaintiff     :     Mr P G McGowan

Second-named Plaintiff  :     Mr P G McGowan

Defendant:     Mr T C Russell & Ms K Y Loh

Solicitors:

First-named Plaintiff     :     Paiker & Overmeire

Second-named Plaintiff  :     Paiker & Overmeire

Defendant:     State Solicitor for Western Australia

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

Arcus Shopfitters Pty Ltd v Western Australian Planning Commission [2002] WASC 174; (2002) 125 LGERA 180

Attorney General v Brown [1920] 1 KB 773

Benton v Road Construction Authority (No 2) (Unreported, VSC, 1 March 1990)

Benton v Road Construction Authority (No 2) [1992] 2 VR 495

Bingham v Cumberland County Council (1954) 20 LGR (NSW) 1

Boland v Yates Property Corporation Pty Ltd [1999] HCA 64; (1999) 167 ALR 575

Brewarrana Pty Ltd v Commissioner of Highways (No 2) (1973) 6 SASR 541

Brisbane City Council v Mio Art Pty Ltd [2011] QCA 234

Bronzel v State Planning Authority (1979) 21 SASR 513

Butler v Egg & Egg Pulp Marketing Board [1966] HCA 38; (1966) 114 CLR 185

Caltex Petroleum Pty Ltd v Commissioner for Main Roads [2004] WASC 239

Cerini v The Minister for Transport [2001] WASC 309

CIC Insurance Ltd v Bankstown Football Club Ltd [1997] HCA 2; (1997) 187 CLR 384

CMB No 1 Pty Ltd v Cairns City Council [1999] 1 Qd R 1

Commissioner of Succession Duties (South Australia) v Executor Trustee and Agency Company of South Australia Ltd [1947] HCA 10; (1947) 74 CLR 358

Commonwealth Custodial Services Ltd v Valuer‑General (NSW) [2006] NSWLEC 400; (2006) 148 LGERA 38

Curwen v James [1963] 1 WLR 748

Duffy v The Minister for Planning [2003] WASCA 294

Epic Energy (Pilbara Pipeline) Pty Ltd v Commissioner of State Revenue [2011] WASCA 228

Fitter v Veal (1701) 12 Mod Rep 542; (1701) 88 ER 1506

Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122; (2003) 27 WAR 403

Greer v Alstons Engineering Sales and Services Ltd (Trinidad and Tobago) [2003] UKPC 46

ISPT Pty Ltd v Melbourne City Council [2008] VSCA 180; (2008) 20 VR 447

Kettering Pty Ltd v Noosa Shire Council [2004] HCA 33; (2004) 207 ALR 1

Konowalow & Felber v Minister for Works [1961] WAR 40

Leichhardt Council v Roads & Traffic Authority of New South Wales [2006] NSWCA 353; (2006) 149 LGERA 439

Leichhardt Municipal Council v Seatainer Terminals Pty Ltd (1981) 48 LGRA 409

Love v Roads Corporation [2011] VSCA 434

Marshall v Director‑General, Department of Transport [2001] HCA 37; (2001) 205 CLR 603

Maurici v Chief Commissioner of State Revenue [2003] HCA 8; (2003) 212 CLR 111

McKay v Commissioner of Main Roads [No 7] [2011] WASC 223

Mount Lawley Pty Ltd v Western Australian Planning Commission [2004] WASCA 149; (2004) 29 WAR 273

Mount Lawley Pty Ltd v Western Australian Planning Commission [2007] WASCA 226; (2007) 34 WAR 499

Mount Lawley Pty Ltd v Western Australian Planning Commission [No 3] [2008] WASCA 158

Owners of the Steamship Mediana v Owners, Master & Crew of the Lightship Comet (The Mediana) [1900] AC 113

Pastoral Finance Association Ltd v The Minister [1914] UKPC 77; [1914] AC 1083

Re Lehrer and The Real Property Act 1900 - 1956 [1961] SR (NSW) 365

Re Stockport Ragged, Industrial and Reformatory Schools [1898] 2 Ch 687

Roads Corporation v Love [2010] VSC 32; (2010) 173 LGERA 1

Ruxley Electronics & Construction Ltd v Forsyth [1994] 1 WLR 650

Ruxley Electronics & Construction Ltd v Forsyth [1996] AC 344

Singh v The Commonwealth [2004] HCA 43; (2004) 222 CLR 322

Sisters of Charity of Rockingham v The King [1922] 2 AC 315

Spencer v The Commonwealth (1907) 5 CLR 418

Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2008] HCA 5; (2008) 233 CLR 259

Western Australian Planning Commission v Arcus Shopfitters Pty Ltd [2003] WASCA 295

Wilson v Liverpool Corporation [1971] 1 All ER 628

Yates Property Corporation Pty Ltd (in liq) v Darling Harbour Authority (1991) 24 NSWLR 156

Table of Contents

1.     Introduction and summary
2    The witnesses and the evidence
3.     The Subject Land, the Taking, the public works, and the claim

3.1     A general description of the Subject Land prior to the Taking
3.2     The taking of part of the Subject Land on 26 July 2006
3.3     The Forrest Highway public works
3.4     The plaintiffs' claim

4.     The valuation of the Taken Land

4.1     The legal principles
4.2     The highest and best use of the Subject Land in its unaffected state

4.1.1      The meaning of 'lifestyle' use
4.1.2      Ms Glasson's evidence
4.1.3      Mr Miller's evidence on highest and best use
4.1.4      Mr Benson's and Mr Pember's evidence on highest and best use
4.1.5      Conclusions on highest and best use

4.2     Comparative sales and comparisons with the Subject Land

4.2.1      Methodology
4.2.2      The lifestyle elements of the Subject Land
4.2.2      The farming elements of the Subject Land
4.2.3      Difficulties with the approaches of Mr Benson and Mr Pember
4.2.4      Comparable sales of properties with lifestyle and farming use
4.2.5      Overlap in the valuers' preferred comparable sales
4.2.6      Other comparable sales chosen by Mr Miller
4.2.7      Other potentially useful sales chosen by Mr Benson and Mr Pember

4.3     Conclusions on valuation of the Taken Land

5.     Severance

5.1     The legal approach to severance
5.2     The plaintiffs' claim for compensation for severance

5.2.1      Severance claim for access issues
5.2.2      Severance claim for the gully drain
5.2.3      Severance claim for the 501 pine trees on the Taken Land

6.     Injurious affection

6.1     The legal approach to injurious affection
6.2     The valuers' methodology concerning injurious affection
6.3     The highest and best use of the Subject Land after the Taking

6.3.1      Legal principles
6.3.2      The highest and best use after the Taking

6.4     Assessment of the injurious affection

6.4.1      Ms Glasson's evidence concerning the injurious affection
6.4.2      Mr Benson's and Mr Pember's evidence concerning the injurious affection
6.4.3      Mr Miller's evidence on injurious affection
6.4.4      Conclusions on injurious affection

7.     Consequential losses

7.1     The legal principles
7.2     The alleged consequential losses claimed by the plaintiffs

7.2.1      Alleged consequential losses from the construction of the flyover
7.2.2      Alleged consequential losses from the 400 pine trees on the Remaining Land
7.2.3      Alleged consequential losses associated with planting the 501 pine trees on the Taken Land
7.2.4      Alleged consequential losses associated with replanting native trees that were within the Taken Land

8.     Solatium and interest
9    Conclusion

Appendix 1:  The Forrest Highway and Subject Land
Appendix 2:  The Subject Land and comparable sales

Appendix 3:  Aerial view of the Subject Land showing the 901 pine trees
Appendix 4:  Injurious Affection Sales Group 1
Appendix 5:  Injurious Affection Sales Groups 2 & 3

Appendix 6:  Injurious Affection Sales Group 4
Appendix 7:  Injurious Affection Sales Group 5

EDELMAN J: 

1. Introduction and summary

1. The plaintiffs are Lenz Nominees Pty Ltd and Ms Glasson.  They own rural‑zoned land in Birchmont, in the south‑west of Western Australia (the Subject Land).  The Subject Land is approximately 123 ha.  It is a short distance from a white sandy beach where people camp, fish, crab and prawn.

2. On 26 July 2006, approximately 14.5 ha of the Subject Land was resumed by the Commissioner of Main Roads under the Land Administration Act 1997 (WA) (the Taking). The resumed land (the Taken Land) was taken for public works. The public works were the construction of a new Perth‑Bunbury highway called the Forrest Highway.

3. This case concerns the assessment of compensation arising from the Taking.  The issues for resolution are as follows.

   (1)Assessment of compensation for the value of the land which was taken, which includes an assessment of the highest and best use of the land without regard to the public works: s 241(2) Land Administration Act.

   (2)Assessment of compensation for the damage suffered by the claimant due to the severing of the land taken from the adjoining land (severance): s 241(7)(a) Land Administration Act.

   (3)Assessment of compensation for the damage suffered by the plaintiffs due to a reduction of the value of the adjoining land (injurious affection): s 241(7)(b) Land Administration Act.

   (4)Assessment of compensation for the loss or damage sustained by the plaintiffs by reason of any other facts which are just to take into account in the circumstances of the case (consequential losses): s 241(6)(e) Land Administration Act.

4. As to (1), operose evidence and submissions were presented on this issue.  Consequentially, it consumes numerous pages of this decision.  But on one view, the practical difference between the conclusions of two of the opposed valuers on this point was only around 10%.

5. One of the expert valuers called by the Commissioner of Main Roads, Mr Benson, assessed the value of the Taken Land on the basis of a farming use with subdivision potential.  Mr Benson's assessment of compensation for the Taken Land combined with compensation for loss of subdivision potential by severance was $281,000.  In contrast, the valuer called by the plaintiffs, Mr Miller, whose evidence I prefer and whose valuation I accept, assessed the value of the Taken Land on the basis of a single lot with a farming and lifestyle use.  On Mr Miller's approach, there was no value lost from a loss of subdivision potential.  Mr Miller's assessment of compensation for the value of the Taken Land was $312,500.

6. As to (2), the only aspect of the claim for compensation for severance which was established on the evidence was for the loss of 501 pine trees on the severed land, and the cost of replanting those trees.  One question was the proper head of compensation for this loss or damage.  I consider that it is severance damage because it arises 'due to' the severing of the Taken Land.

7. A further question for resolution was how that compensation for severance should be measured.  The possibilities were commercial planting cost/value; a notional cost for a third party to plant and grow the pine trees; the original cost of obtaining 501 pine tree seedlings; the value which a reasonable person would place on the 501 pine trees; or the cost of replanting the 501 seedlings.

8. The proper measure of the loss or damage due to the severing should be the cost of replanting the 501 pine trees.  Compensation should be assessed for that loss at $27,400.

9. As to (3), a preliminary issue concerned the manner in which all experts assessed the reduction in value of the adjoining land (injurious affection). The experts all treated the adjoining land separately from the main residence which was a fixture on that land. This approach is based on a false legal premise, since s 241(7)(b) of the Land Administration Act is concerned only with the value of the adjoining 'land'.  The main residence is a fixture, and part of that land.  However, I have concluded that, in this case, the methodology was capable of producing a result which was not unreasonable.

10. As to that assessment of injurious affection, Mr Miller's evidence of the injurious affection to the plaintiffs' land adjoining the Taken Land was compelling.  At a very high level of generality, it is perhaps unsurprising that the area of the Subject Land which remained after the Taking suffered significant injurious effect.  The Subject Land enjoyed, in part, a lifestyle use.  That lifestyle use is now severely blighted.  The Forrest Highway carries about 30,000 vehicles a day.  A flyover is likely to be built nearby which is up to 11 m in height.

11. It is possible that 'in effect cows don't mind' the Forrest Highway, as was assumed by one valuer called by the defendant (ts 192).  But the evidence showed that the lifestyle effect on humans is substantial.  In her witness statement, Ms Glasson described her land before the Forrest Highway construction as involving only sounds from the cows mooing and the birds chirping.  She said that the effect of the Forrest Highway on her home is that the trucks sound like aeroplanes and she hears them approaching from kilometres away:  Glasson witness statement (Glasson) pars 13 ‑ 14.

12. Expert valuation evidence given by Mr Miller, which I accept, showed that there is generally a substantial negative effect on the value of a property which adjoins a highway.  Compensation for injurious affection should be assessed at $325,219.

13. As to (4), none of the alleged losses claimed by the plaintiffs is recoverable. One reason why most of these losses are not recoverable is that the 'consequential loss' provision in s 241(6)(e) of the Land Administration Act does not allow recovery of all types of loss; this subsection only permits recovery of losses arising from interference with the activities carried on by the plaintiffs on the Subject Land.

14. Further, a number of the claimed losses were not incurred, or were not proved, or would involve double recovery. The submission that s 241(6)(e) permits recovery of losses which were not actually incurred should be rejected.

15. The total compensation to be awarded to the plaintiffs, excluding solatium and interest is $665,119.

1. The witnesses and the evidence

1. Apart from evidence from one of the plaintiffs, Ms Glasson, all the other evidence in this case was from experts.

2. Three experts were valuers:  Mr Miller, called by the plaintiffs; and Messrs Benson and Pember, called by the defendant.

3. Two other experts were also called by the defendant:  a forester, Mr McArthur, and an engineer, Mr Zoetelief.

4. Multiple reports were provided by several of the experts.  The expert reports and statements are abbreviated in this judgment as follows:

   1.Valuation report of Mr Miller, a valuer practising under the name Glenn Miller Property Consultants.  He inspected the Subject Land on 10 September 2008 and again on 17 February 2009.  He provided a valuation report dated 15 October 2010, exhibit GGM 2 to his witness statement, exhibit D (Miller 1).

   2.Responsive report of Mr Miller dated 15 October 2010 responding to the Report of Mr John Benson, exhibit GGM 4 to his witness statement, exhibit D (Miller 2).

   3.Valuation report of Mr Pember dated 9 October 2009, exhibit RGP 2 to his witness statement, exhibit G (Pember 1).

   4.Accommodation works report of Mr Pember dated 13 July 2011, exhibit RGP 3 to his witness statement, exhibit G (Pember 2).

   5.Responsive report of Mr Pember dated 30 September 2011 responding to the Miller Valuation Report, exhibit RGP 4 to his witness statement, exhibit G (Pember 3).

   6.Valuation report of Mr Benson, the Senior Valuer for the country south west in the Valuer General's Office since 1985.  That report is dated 9 November 2009, exhibit JRB 2 to his witness statement, exhibit F (Benson 1).

   7.Benson 1 also contains another report, produced in 2008, which was a sales analysis study for possible injurious affection to properties fronting highways (the 2008 Report).

   8.Accommodation works report of Mr Benson dated 27 July 2011, exhibit JRB 3 to his witness statement, exhibit F (Benson 2).

   9.Responsive report of Mr Benson dated 30 September 2011 responding to the Miller Valuation Report, exhibit JRB 4 to his witness statement, exhibit F (Benson 3).

   10.A memorandum of outcome of second valuers' conference dated 1 July 2009, exhibit A (Joint Expert Memorandum).

   11.An expert statement from an engineer, Mr Zoetelief, the Project Manager, Development, South West Region for Main Roads, Western Australia, exhibit H (Zoetelief).

   12.A witness statement and expert report from Mr McArthur, professional forester, exhibit I (McArthur).

5. By far the most detailed description of the Subject Land was given in Miller 1, and I have drawn from that report most heavily in making my findings concerning the broad description of the Subject Land below.

6. Mr Miller was an impressive witness.  For reasons which I explain in detail below, I have generally preferred his evidence over that of Mr Benson or Mr Pember.

1. The Subject Land, the Taking, the public works, and the claim

3.1     A general description of the Subject Land prior to the Taking

1. The following summary is derived from the documentary material and from relatively uncontroversial evidence given by the valuers, particularly Mr Miller's detailed description of the Subject Land.

2. Prior to the Taking, the Subject Land was an estate in fee simple at lot 1475 Herron Point Road, Birchmont, in the Shire of Murray.  It was Murray Location 1475 on deposited plan 206344, held under certificate of title vol 1488 folio 790.

3. The Subject Land was an irregular 'L' shaped parcel of land with an area of 123.0522 ha:  Miller 1, page 18.

4. In 2002 the plaintiffs became the registered proprietors of the Subject Land.

5. The Subject Land was, and is, held by the plaintiffs as tenants in common with Lenz Nominees having a three‑fifths share and Ms Glasson having a two‑fifths share:  exhibit 3.

6. As a broad approximation of distance, the Subject Land is located 20 km southwest of Pinjarra, 40 km southeast of Mandurah, and 100 km south of Perth.

7. The closest towns to the Subject Land are Mandurah (population 36,000) and Pinjarra (population 6,500).

8. Immediately to the north of the Subject Land is Mostert's Dairy property:  Miller 1, pages 18 ‑ 19.

9. Immediately to the south of the Subject Land is gazetted road frontage to Herron Point Road:  Miller 1, pages 11, 18 ‑ 19; Benson 1, page 5.

10. Herron Point Road runs westerly from the Subject Land to Herron Point.  The water's edge at Herron Point is just over 3 km from the Subject Land; part of the distance is a sealed road and part is a gravel path.

11. Herron Point is one of the most scenic places on the estuary.  It contains a sandy beach with white sand.  There is a boat ramp there.  Unlike other areas on the estuary, Herron Point has no algal blooms or ferns.  People can camp there; they can fish; they can prawn; and they can crab:  (ts 28, 42, 245 ‑ 246); Miller 1, page 11.

12. Immediately to the east of the Subject Land is a gazetted adjoining dirt road:  Miller 1, page 11.

13. Immediately to the west of the Subject Land is another farming property:  Miller 1, page 18.  Further to the west of the Subject Land is Old Bunbury Road:  Miller 1, page 17.

1. The Subject Land is generally flat.  It is part of a 400 sq km area known as the 'Harvey Drainage System'.  Most of this area is cleared, fenced and pastured land:  Glasson, par 6; Miller 1, page 17.

2. Approximately 95% of the Subject Land consists of cleared, fenced and pastured paddocks:  Miller 1, page 11.

3. Part of the Subject Land suffers from seasonal inundation.  One paddock, which Ms Glasson described as the 'swamp paddock' is prone to flooding (ts 27).

4. The Subject Land falls within the suburb of Birchmont (ts 114).  A nearby suburb is Coolup Flats (ts 114, 155).

5. The Subject Land has power and telephone connected to it.  Water and sewerage are not connected.  Like other properties in the locality, water must be obtained on the property itself (which has a bore) and septic tanks are used for effluent disposal:  Benson 1, page 5; Miller 1, page 21; Glasson, par 5.

6. The Subject Land has various improvements on it.  These are as follows:  the original homestead (in poor repair); the main residence; various sheds; gully spoon drains; two windmills; one bore; two water tanks; three steel sheds; eleven cattle troughs; and several fenced off areas of planted trees and revegetation:  Miller 1, page 11; Glasson, par 5.

7. The sheds are in good repair and the main residence is in fair condition for its age:  Miller 1, page 23.

8. The main residence was built in 1972.  It has four bedrooms, bathroom and ensuite, living area, formal lounge and formal dining areas:  Miller 1, page 22.

9. The zoning of the Subject Land is 'Rural'.  That zoning existed at the date of registration of the Taking on 26 July 2006.  The minimum lot size of rural zoned land in the area is 40 ha: Miller 1, page 25.

10. In the autumn of 2003, Ms Glasson planted 1,100 pinus radiata trees (part of the family of pine tree); 901 of those trees survived the planting (ts 25).

11. The planting occurred after consultation between the plaintiffs and the defendant concerning the location of the new Forrest Highway:  Glasson, pars 42 ‑ 44.

12. Unfortunately the boundaries for the subsequent resumption decision of the Commissioner of Main Roads did not conform with the advice given to the plaintiffs concerning the Taken Land.  The boundaries of the subsequent resumption decision meant that 501 of the pine trees were on the Taken Land.  The pine trees can be seen on the aerial view of the Subject Land in Appendix 3.

3.2     The taking of part of the Subject Land on 26 July 2006

1. On 13 December 2005, the Commissioner of Main Roads issued a 'notice of intention to take interests for a public work'. The notice was issued under s 170 of the Land Administration Act.  The public work was the construction of the new Perth‑Bunbury 'Forrest Highway'.  Part of the plaintiffs' land was included in the notice.

2. On 25 July 2006, the Commissioner of Main Roads issued a Taking Order in relation to land which included 14.5516 ha of the 123.0522 ha Subject Land:  exhibit 32  (the Taken Land).

3. The Taking Order was registered on 26 July 2006 (ts 7).

4. The portion of the Subject Land which was not resumed is now identified as lot 48 on deposited plan 51502, estate in fee simple held under certificate of title vol 2631 folio 858 (the Remaining Land).

5. The portion of the Subject Land which was resumed is now identified as lot 372 on deposited plan 51502, estate in fee simple held under certificate of title vol 2631 folio 859 (the Taken Land).

6. The Taken Land is a roughly rectangular strip of land on the eastern boundary of the Subject Land.  It was grazing land which was mostly cleared, fenced and pastured:  Benson 1, page 7; Miller 1, page 20.

7. The Taken Land included 501 of the 901 pine trees which Ms Glasson had planted.  An aerial view of the trees can be seen in Appendix 3 to these reasons.

8. On 25 January 2007, the Commissioner of Main Roads made an offer of compensation to the plaintiffs under s 217 of the Land Administration Act.  The offer was $227,000 with interest at 6% from 15 January 2007 until settlement:  exhibit 39.

9. On 12 February 2007 the offer from the Commissioner of Main Roads was rejected by the plaintiffs:  exhibit 21.

10. The rejection of the offer by the Commissioner of Main Roads triggered the power of the plaintiffs to bring an action for the assessment of compensation under s 220(b) of the Land Administration Act.

11. On 16 March 2007, the plaintiffs and the Commissioner of Main Roads entered a Deed of Partial Discharge of Claim.  The plaintiffs accepted advance payment of the amount of the offer of $227,000 and interest in partial satisfaction for their claim for compensation:  exhibit 42.

3.3     The Forrest Highway public works

1. The construction of the Forrest Highway from Perth to Bunbury commenced in November 2007.

2. It is proposed that the Forrest Highway will include a stage 2 'flyover' which will reach up to 11 m in height and will be built in proximity to the Subject Land.  However, the construction of the flyover has not yet commenced and no commencement date has yet been set.  It has not even been determined how the flyover will be constructed:  Zoetelief, par 32.

3. The Commissioner for Main Roads conceded that the public works to be taken into account for the assessment of compensation should include the 'fly over':  defendant's submissions, par 6.

3.4     The plaintiffs' claim

1. The Subject Land was acquired by the Commissioner of Main Roads under pt 9 of the Land Administration Act. Section 202 of the Land Administration Act creates a right to compensation from the acquiring authority for every person having an interest in land which is acquired under pt 9.

2. It is common ground that the date for assessment of compensation is the date that the Taking Order was registered, 26 July 2006 (ts 7):  Land Administration Act s 241(2)(c).

3. In assessing the amount of compensation for the Taking, regard is to be had only to the matters in s 241 of the Land Administration Act.  By reference to that section, the plaintiffs claim compensation under six different heads:

   (1)Compensation for the value of the Taken Land ($312,500):  amended statement of claim, par 11(a);

   (2)Compensation for farming severance costs ($74,500):  amended statement of claim, par 11(b);

   (3)Compensation for injurious affection ($325,219):  amended statement of claim, par 11(c);

   (4)Compensation for consequential losses ($285,326):  amended statement of claim, par 11(d);

   (5)Solatium at 10%:  amended statement of claim, par 11(e); and

   (6)Interest from the date of receipt of claim to date of settlement at 6% per annum:  amended statement of claim, par 11(f).

   It was common ground that the plaintiffs were entitled to (5), a solatium at 10%:  defendant's closing submissions, par 226.

4. The remainder of these reasons sets out the law, the evidence, and my reasoning in relation to each of the claims (1) ‑ (4) above.  If the quantum of interest is not agreed, I will hear submissions separately concerning the quantification of the claim to 6% interest.

1. The valuation of the Taken Land

4.1     The legal principles

1. The principles in relation to valuation of taken land have recently, and comprehensively, been set out by Beech J in McKay v Commissioner of Main Roads [No 7] [2011] WASC 223. In the brief summary which follows, I am indebted to his Honour's lucid description of the law and his navigation through the many authorities, especially at [144] ‑ [171] of his judgment.

2. I have set out below 13 basic legal propositions, with a small selection of the authorities in support.  These are the propositions which are generally relevant to the determination of the valuation of the Taken Land in this case.  In other particular areas which fall for consideration in this judgment I have considered the legal issues in more detail.

   (1)Assessment of compensation must be conducted with regard only to the matters contained in s 241 of the Land Administration Act: s 241(1); Konowalow & Felber v Minister for Works [1961] WAR 40, 41 (Virtue J).

   (2)No regard is to be had to the value of any improvements made without the consent of the Minister after the registration of the notice of intention on 13 December 2005: s 241(4) Land Administration Act.

   (3)The purpose of the assessment of compensation for resumed land is to ensure that the person to be compensated is given a full money equivalent of his or her loss:  Commissioner of Succession Duties (South Australia) v Executor Trustee and Agency Company of South Australia Ltd [1947] HCA 10; (1947) 74 CLR 358, 373 ‑ 374 (Dixon J).

   (4)Compensation for the value of the resumed land should be assessed in a theoretical, albeit artificial, fashion by assuming that the land had been sold on the date of its acquisition by the resuming authority:  Boland v Yates Property Corporation Pty Ltd [1999] HCA 64; (1999) 167 ALR 575, 647 ‑ 649 [265], [271] (Callinan J).

   (5)This theoretical approach to assess compensation for the resumption of the land requires the court to identify the price which would be paid under a hypothetical bargain between a person 'desiring to buy the land… to a vendor willing to sell it for a fair price but not desirous to sell':  Spencer v The Commonwealth (1907) 5 CLR 418, 432 (Griffith CJ); Mount Lawley Pty Ltd v Western Australian Planning Commission [No 3] [2008] WASCA 158 [25] (the Court).

   (6)In assessing the price payable in this hypothetical sale, it must be assumed that the hypothetical purchaser would be purchasing the land for the most advantageous use for which it is adapted:  Spencer v The Commonwealth (441) (Isaacs J).  This 'most advantageous use' is commonly referred to as the 'highest and best use' of the land:  ISPT Pty Ltd v Melbourne City Council [2008] VSCA 180; (2008) 20 VR 447, 458-459 [40] (the Court); Commonwealth Custodial Services Ltd v Valuer‑General (NSW) [2006] NSWLEC 400; (2006) 148 LGERA 38, 45 [15] (Biscoe J).

   (7)The highest and best use of the land may be a single use or it may be a package of alternative uses:  ISPT Pty Ltd v Melbourne City Council 462 [57].  However, in the instance of a package of alternative uses, care must be taken to ensure that those alternative uses are not inconsistent:  Lovev Roads Corporation [2011] VSCA 434 [63] ‑ [66].

   (8)In assessing the highest and best use, the existing use will be a relevant, although not necessarily determinative, factor:  ISPT Pty Ltd v Melbourne City Council 458 ‑ 459 [40]; Commonwealth Custodial Services Ltd v Valuer‑General (NSW) 45 [15] (Biscoe J).

   (9)The hypothetical purchaser must be assumed to have regard to all relevant available information, and to be cognisant of all circumstances which might affect the value of the land:  Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2008] HCA 5; (2008) 233 CLR 259, 276 ‑ 277 [51] (the Court); Boland v Yates Property Corporation Pty Ltd [271] ‑ [274] (Callinan J).

   (10)However, the hypothetical sale and the determination of the value of the plaintiff's interest in the land taken, and the compensation payable to the plaintiff must be conducted by 'discounting any increase or decrease in value attributable to the proposed public work':  Land Administration Act s 241(2).

   (11)In conducting the valuation exercise it has been iterated and reiterated that a court must not usurp the skill and experience of a valuer.  In other words, the court must not allow itself to become a 'third valuer':  Bronzel v State Planning Authority (1979) 21 SASR 513, 523 (Wells J); Brewarrana Pty Ltd v Commissioner of Highways (No 2) (1973) 6 SASR 541, 544 ‑ 545; Arcus Shopfitters Pty Ltd v Western Australian Planning Commission [2002] WASC 174; (2002) 125 LGERA 180 [76] (Pullin J).

   (12)However, the prohibition against a court becoming a 'third valuer' does not, and cannot, prevent the court from making its own adjustments to the valuations, particularly where a valuer's adjustments to comparative sales are not wholly accepted.  Judicial adjustment to the valuation may sometimes be unavoidable because a court cannot adopt adjustments which it has rejected; the court would otherwise be left with no basis to assess the value of the subject land:  McKay v Commissioner of Main Roads [2484] (Beech J).

   (13)If any doubts exist in assessing the compensation payable, then those doubts should be resolved by a liberal estimate in favour of the dispossessed owner:  Commissioner of Succession Duties (South Australia) v Executor Trustee and Agency Company of South Australia Ltd (373 ‑ 374) (Dixon J); Boland v Yates Property Corporation Pty Ltd [100] (Gaudron J), [111] (Gummow J), [356] (Callinan J).

4.2     The highest and best use of the Subject Land in its unaffected state

1. A central issue in dispute in this trial was the highest and best use of the Subject Land in an unaffected state prior to the Taking.  The valuations of Messrs Benson and Pember proceeded upon one assumption as to the highest and best use.  The valuation of Mr Miller proceeded upon another.

2. The basis upon which Mr Miller proceeded should be preferred.  This section of my reasons explains why Mr Miller's description of the highest and best use of the Subject Land as 'lifestyle and farming' should be preferred.

4.1.1  The meaning of 'lifestyle' use

1. There was considerable evidence given by the valuers concerning whether the Subject Land had 'lifestyle' characteristics.  However, there is no formal valuation definition of 'lifestyle'; the term is not contained in any relevant legislation, scheme, strategy or guideline document (ts 230).

2. Although 'lifestyle' is not a formal term, it assumed real significance in the assessment of the highest and best use of the Subject Land.  Mr Benson and Mr Pember both denied that the Subject Land as a single lot had any lifestyle characteristics.

3. In these reasons, when I use the term 'lifestyle', I have used it in the sense in which Mr Miller uses it, namely a buyer who has, as one consideration, elements of lifestyle choice in selecting a property.

4. The elements of lifestyle choice are separate from the considerations of deriving an income from farming.  Hence, as Mr Miller explained, elements of lifestyle choice include matters such as the desire of a purchaser to be near the beach (ts 67); for water views (ts 68); for a property without loud noise (ts 96).  I refer below at [119] ‑ [123] to specific lifestyle characteristics peculiar to the Subject Land.

5. The purchaser of a 'lifestyle' or a 'lifestyle and farming' property will be influenced by the size of the property.  As Mr Miller acknowledged, the possible activities on smaller farms are more restricted than those on larger farms.  However, Mr Miller considered that the sales of these smaller farms were still relevant for comparison because they were all sales of properties where a lifestyle element was involved and the purchasers were not simply buying the property to establish a living as a farmer (ts 117).

4.1.2  Ms Glasson's evidence

1. The only non‑expert witness was Ms Glasson.  Much of Ms Glasson's evidence was uncontested.  She was an impressive witness.  She was frank in her answers to questions in cross‑examination.  She did not gloss any of her answers.  She was forthright in answering questions, and answered honestly whether or not her answers assisted her case.  I have no hesitation in accepting her evidence, save for hearsay and inadmissible matters.

2. A commendable and conscious decision was taken by counsel, in the interests of the efficiency of the trial, not to object to a number of minor inadmissible matters such as hearsay in the evidence of Ms Glasson and the valuers.  I have placed no weight on these matters.

3. The Subject Land was bought by Ms Glasson and Lenz Nominees in 2002.  Ms Glasson used the Subject Land as a grazing farm and, since 2006, as a sheep stud farm:  Glasson, par 5; (ts 26).

4. Ms Glasson described the Subject Land (in its unaffected state) as

   the most beautiful place to live just minutes down the road to a lovely beach on the Harvey Estuary ... a productive farm in a high rainfall area only half an hour from the City of Mandurah with access to goods, schools, and shopping ... all the peacefulness of living in the country (Glasson, par 58).

5. Although Ms Glasson gave evidence that the profit potential of the farm had been reduced, no evidence was given about the profitability of her farm. Nor was any claim brought under s 241(6)(b) for disruption of a business.

6. For the purposes of the farming enterprise, Ms Glasson would transport livestock on and off the property (ts 27).

4.1.3  Mr Miller's evidence on highest and best use

1. Mr Miller's opinion was that a sale based on the highest and best use of the Subject Land in its unaffected state would be to 'an individual lifestyle/investor type buyer':  Miller 1, pages 12, 27.

2. In his report, Miller 1, Mr Miller suggested that the hypothetical buyer 'would probably take advantage of the potential for subdivision into three lifestyle farmlets over the medium to long term' (page 12).  This was later modified at page 27.

3. In oral evidence, Mr Miller clarified these two statements in his report.  He explained that he did not consider that an 'imminent' subdivision was the highest and best use at the valuation date.  He said that he considered that the subdivision potential of the Subject Land was not part of its highest and best use.  He therefore placed very little weight on the medium to long term potential for subdivision (ts 62).

4. Mr Miller also conducted a hypothetical subdivision exercise in which he concluded that the value of the Subject Land, if subdivided into three lots, was substantially less than the value of the Subject Land if sold as a single lot to a hypothetical purchaser to use as a lifestyle and farming property:  (ts 41, 61); Miller 1, attachment 9.

5. Mr Miller explained that his reference to a 'lifestyle' buyer in his highest and best use was to a person who is an individual lifestyle investor but who is also going to operate, at least in the medium to long term, the property as a fully operational grazing and stud farm proposition:  (ts 60); Miller 1, page 27.

6. The hypothetical farming and lifestyle buyer considered by Mr Miller would also be someone who might want to make a little profit from the land but would not be a serious farmer making serious money (ts 81).

7. In other words, on Mr Miller's analysis the hypothetical purchaser of the Subject Land at the date of Taking, who intended to use the Subject Land for its highest and best use, would be a person wishing to use the property as a 'lifestyle farming property':  Miller 1, pages 29 ‑ 30.

4.1.4  Mr Benson's and Mr Pember's evidence on highest and best use

1. Mr Benson and Mr Pember agreed with Mr Miller that the highest and best use of the Subject Land was for farming.  But neither Mr Benson nor Mr Pember considered that the Subject Land contained any lifestyle characteristics (ts 195 ‑ 197, 246, 259 ‑ 260).

2. A further difference from Mr Miller was that Mr Benson and Mr Pember considered that the highest and best use of the Subject Land, without regard to the public works, would involve subdividing it into '3 lifestyle lots':  Joint Expert Memorandum, par 4; Benson 1, page 7; '2 or 3 "lifestyle lots"'; Pember 1, page 35.

3. My conclusions in relation to the subdivision potential and the lifestyle use of the Subject Land are expressed in the next section.  However, in this section I explain why aspects of Mr Benson and Mr Pember's evidence concerning why the Subject Land would not be used, in its highest and best use, for lifestyle uses in addition to farming uses were unclear, or contradictory.

4. An example was in cross‑examination of Mr Pember.  In cross‑examination, Mr Pember initially denied that the market for a lifestyle farming operation was any different from the market for a farming operation (ts 230).  Only after a substantial number of further questions did he eventually acknowledge that a 'lifestyle farming operation' would be a different market from a 'farming operation' (ts 231).

1. Mr Benson gave evidence that the Subject Land was not a lifestyle property and said that, for that reason, he did not attach any premium to its location in Birchmont (ts 130).  But in cross‑examination he said that there was no point in the distinction he had made about whether a property was a lifestyle property (ts 153).

2. In cross‑examination Mr Benson also sought to draw a distinction between 'lifestyle' and 'aesthetics' (ts 154 ‑ 155).  But in his report he described aesthetics in a remarkably similar way to the way in which he had been cross‑examined about 'lifestyle' ie 'an aesthetical value in protecting the "country" lifestyle and quietness of the house':  Benson 1, page 21.

4.1.5  Conclusions on highest and best use

1. For eight reasons, I prefer the conclusion of Mr Miller that a hypothetical sale of the Subject Land for its highest and best use would involve (1) lifestyle considerations, and (2) would not involve subdivision.  The highest and best use is a hypothetical purchaser who is an individual lifestyle investor, and who is also going to operate the Subject Land as a fully operational grazing and stud farm proposition.

2. First, as Mr Miller explained, his opinion that subdivision of the Subject Land into three lots would not be the highest and best use was supported by the sales evidence.  Half, or more, of the sales of rural lots in the region were properties of more than 80 ha.  Since the minimum lot size for rural land was 40 ha then all of these properties could be subdivided.  But although there was some evidence of some isolated subdivision proposals, Mr Miller's uncontradicted evidence was that there has not been a single subdivision of any site that had then been on‑sold (ts 41).  It would be remarkable if no such buyer were using his or her land at its highest and best use.

3. An extreme example of this was Mr Pember's comparative sale number five:  Pember 1, page 30.  This was a sale of a 256 ha property, more than twice as large as the Subject Land.  Although the property was on six separate titles it sold as a single sale in December 2005.  Mr Pember could not point to a single property in Coolup Flats or the surrounding areas which had been subdivided.

4. Secondly, there is a powerful reason why buyers in the market had not been subdividing even large properties.  There is no significant difference in rates paid per hectare in the locality for properties between 40 ha and 100 ha.  As I explain below at [138] ‑ [147], the valuers generally agreed on this at the valuers' conference.  It is supported by the sales evidence.

5. Further, Mr Miller also explained that the substantial costs of subdivision meant that it would not be profitable to subdivide a lot such as the Subject Land (ts 64).

6. Mr Miller's conclusion about the high costs of subdivision is also consistent with Mr Benson and Mr Pember's feasibility studies.  Although their feasibility studies were conducted on their different assumption that the Subject Land had only a farming use, the studies showed that the cost of subdivision was extremely high.  Their feasibility studies suggested that the value of the Subject Land when subdivided would be $17,000 (Benson) or $18,000 (Pember) per hectare.  But the studies apparently suggested that the value with subdivision potential was only $14,500:  Pember 1, page 25; exhibit F1 (Benson); see also ts 312.  This considerable difference in value between potential and actual subdivision demonstrates a large cost of subdivision, particularly because there was little risk that subdivision would not be achieved (ts 178).

7. Thirdly, Mr Miller's conclusion that the highest and best use of the Subject Land would not involve subdivision was supported by his hypothetical subdivision comparison exercise:  Miller 1, pages 158 ‑ 160.  Mr Miller was not cross‑examined on this exercise.

8. Fourthly, as the Commissioner of Main Roads properly conceded, the use to which the plaintiffs put the land is a relevant indicator of the highest and best use, although not determinative:  defendant's closing submissions, par 12; see also plaintiffs' closing submissions, par 9 and the authorities above at [66](8).

9. As discussed above at [76] ‑ [77], the plaintiffs had not subdivided the Subject Land.  They had used the Subject Land in part for lifestyle reasons including its tranquil setting, and proximity to amenities.

10. Fifthly, both Mr Benson and Mr Pember accepted that the plaintiffs' use of the land was its highest and best use (ts 200, 261).  As Mr Benson and Mr Pember were aware, Ms Glasson had planted hundreds of pine trees at the boundary of her property:  she actually planted 1,100 but 901 survived (ts 22).  The purpose for which that was done, as the valuers were aware, was to block the effect of the impending Forrest Highway, including the noise and sight.  These are lifestyle issues.

11. Sixthly, Mr Benson's and Mr Pember's conclusions that the highest and best use of the Subject Land was for general farming without a lifestyle element were, to a degree, inconsistent with the lifestyle circumstances surrounding sales of smaller properties.

12. Although those smaller properties were sold to a different class of buyer from a potential buyer of the Subject Land, I accept Mr Miller's evidence that the smaller sales were indicative of the Birchmont locality being well sought after as a lifestyle location in comparison with localities such as West Pinjarra or Coolup:  Miller 1, pages 37 ‑ 38.

13. Mr Miller persuasively provided a number of reasons for this lifestyle desirability of Birchmont; a pattern which applies beyond the sales of smaller properties to sales of larger properties with a lifestyle component as well:

    •although the Harvey Drainage System region has historically been a general farming locality with only a small percentage of buyers as hobby farmers or investors (Miller 1, page 17) this has recently changed.  As Mr Miller observed, more recently a larger percentage of hobby farmers or investors have been purchasing properties in the area.  This is because of the unique lifestyle which is centred around the Peel and Harvey Estuaries, the ocean and the Darling Escarpment:  Miller 1, page 17.

    •a number of factors have induced these hobby farmers and investors: the Mandurah Rail link; the Peel Region Scheme; the Kwinana Freeway extensions and the Perth‑Bunbury Highway; the Wagerup Refinery extensions and other large infrastructure projects; the clean‑up of the Peel and Harvey estuaries due to projects such as the Dawesville Cut; and a general market preference by purchasers to move to lifestyle‑type locations: Miller 1, page 17.

14. Seventhly, contrary to his conclusion that the Subject Land did not have 'lifestyle' as part of its highest and best use, in Mr Benson's assessment of injurious affection, he took into account the effect on lifestyle.  In his report, Mr Benson said that the pine trees had value in protecting

    the 'country' lifestyle and quietness of the house.  This 'damage' has been allowed for in the injurious affection section of this report allowing for loss in the potential added value of the house (Benson 1, page 21).

15. In section 6.2 of these reasons, I explain why it is an error to treat the 'house' as if it could be the subject of some different use, or some different method of valuation from the Subject Land.  The house is a fixture.  It is the Subject Land.  If the house has a lifestyle use then the Subject Land must have a lifestyle use as well.

16. Eighthly, even apart from the matters above, I have concerns with the valuation evidence of Mr Benson and Mr Pember which would have caused me real hesitancy before acceding to Mr Benson and Mr Pember's conclusions about the highest and best use of the Subject Land.  My concerns with their valuations are set out above at [87] ‑ [92] and at various points below in these reasons.

17. For these eight reasons, I consider that Mr Miller's approach to the highest and best use of the Subject Land should be adopted.  The highest and best use is that of an individual lifestyle investor who is also going to operate the property, at least in the medium to long term, as a fully operational grazing and stud farm proposition.

18. In any event, even if I had preferred the view of Mr Benson and Mr Pember that the Subject Land had no 'lifestyle' element in its highest and best use, then a question may have arisen whether that lifestyle element should be taken into account as an objective, ascertainable 'special value' to the plaintiffs which had been lost.  This might have been relevant in relation to compensation for the Taken Land, although possibly not for injurious affection:  see Pastoral Finance Association Ltd v The Minister [1914] UKPC 77; [1914] AC 1083, 1088 ‑ 1089; Boland v Yates Property Corporation Pty Ltd [16] (Gleeson CJ), [354] (Callinan J); compare Mount Lawley Pty Ltd v Western Australian Planning Commission [2004] WASCA 149; (2004) 29 WAR 273, 329 ‑ 330 [282] (the Court) (Mount Lawley [2004] WASCA); Arcus Shopfitters Pty Ltd v Western Australian Planning Commission [70] ‑ [75] (Pullin J).

19. However, although there was an evidentiary basis for a claim for compensation for special value, no claim for special value was raised by the plaintiffs.  My acceptance of Mr Miller's approach to highest and best use is a further reason why it is unnecessary to consider this issue.

4.2     Comparative sales and comparisons with the Subject Land

4.2.1  Methodology

1. The valuation methodology adopted by all valuers was to assess the value of the Subject Land, and hence the Taken Land, by reference to comparative sales.  This valuation methodology is the 'traditional, and usually unexceptionable' method:  see Maurici v Chief Commissioner of State Revenue [2003] HCA 8; (2003) 212 CLR 111, 120 [16] (the Court).

2. As I have explained, the highest and best use of the Subject Land was as a lifestyle and farming property.  Relevant factors to consider in comparison with other sales evidence are location, size, proximity, potential use, and soil characteristics (ts 62).

3. In applying the comparable sales technique, sales will not always fall neatly into a category of comparable or non‑comparable.  The process involves selecting potentially useful transactions and carefully analysing them to determine if they are comparable:  Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122; (2003) 27 WAR 403, 408 [21] (Pullin J).

4. In performing the exercise of assessing comparative sales, none of the valuers adopted an approach which explained for every sale the particular rate that each comparative sale would have suggested as a price for the Subject Land.  I do not consider this to be a flaw in any of the valuers' analyses.  Provided that sufficient reasoning and information exists to show how a meaningful comparison can be drawn, the very nature of a comparative sales approach usually requires a number of comparative sales sufficient in volume to justify a deduction or inference as to the value of the Subject Land:  Western Australian Planning Commission v Arcus Shopfitters Pty Ltd [2003] WASCA 295 [51] (McLure J).

5. All valuers took the relevant date for the comparative sales to be the date of contract, rather than the date of settlement (ts 70, 159, 250).  This is the correct date for comparison, being the date when the price was chosen, and commitment made, by a willing buyer and seller.

6. The comparable sales considered by the valuers differed significantly.  Some differed significantly in size from the Subject Land.  Some differed significantly from the location of the Subject Land.  And some differed significantly from the relevant date of the Take, 26 July 2006.

7. The line between sales which are comparable and those which are incomparable is a matter of degree.  If too much adjustment is necessary to make a sale comparable then it might be unsafe to use.  Although a court will adjudicate on this issue, the question of where this line is to be drawn is a matter for an expert valuer to determine:  Duffy v The Minister for Planning [2003] WASCA 294 [25] (McLure J).

4.2.2  The lifestyle elements of the Subject Land

1. In terms of lifestyle, Mr Miller's evidence was that the lifestyle considerations of the Subject Land included proximity to amenities including a 'popular' beach and estuary with 'recreational/camping facilities':  (ts 67); Miller 1, pages 11, 17.

2. The lifestyle considerations particular to the Subject Land in its unaffected state, also included the lack of noise, apart from the birds chirping and cows mooing:  Glasson, par 13; Miller (ts 96).  The popular beach and recreation and camping to which Mr Miller referred was a reference to one of the most scenic places on the estuary, with its sandy beach and white sand; its camping; and its fishing, crabbing and prawning:  (ts 28, 42); Miller 1, pages 11, 17.

3. I have also referred above to the evidence of Ms Glasson and the valuers concerning the proximity of the Subject Land to the City of Mandurah (population 36,000) and its amenities.  The evidence was that the City of Mandurah is approximately 40 km or 30 minutes drive away.

4. Mr Pember acknowledged that factors such as the proximity of the Subject Land to the sandy beach, camping, crabbing, prawning and fishing were 'positive attributes'.  He said that they do not add value in terms of farming (ts 245 ‑ 246).  But, for the reasons explained above, the highest and best use of the Subject Land is for lifestyle as well as farming.

5. Mr Benson gave evidence that the Subject Land was flat and was not directly fronting the estuary (ts 130).  I accept that if the Subject Land were hilly then it might have even more lifestyle appeal.  But, for the reasons in the paragraphs immediately above, I do not accept Mr Benson's evidence that because of these factors the Subject Land 'does not have any aesthetic attributes that a lifestyler would be looking for' (ts 130).

4.2.2  The farming elements of the Subject Land

1. Mr McArthur observed that the soils in that part of Western Australia where the Subject Land is located are naturally shallow (ts 266).  The soil on the Subject Land was also shallow, sandy top soil:  Miller 1, page 19.

2. The soils on the Subject Land are predominantly good in comparison with other farming properties in the region:  Benson 1, page 6; Miller (ts 70, 74); Pember (ts 216).

3. There are also four places on the Subject Land which are seasonally inundated with water, comprising about 15% of the Subject Land:  Miller 1, page 18; (ts 58 ‑ 59).  However, this is not a feature which would detract significantly from the farming potential of the Subject Land in a hot climate like Pinjarra:  the feed will last longer in the heat, and the Subject Land does not sheet flood (ts 69).

4. Overall, it was common ground that the Subject Land was suitable for grazing:  closing submissions of the Commissioner of Main Roads, par 10.  However, although Ms Glasson's sole employment was in relation to the grazing and stud operation on the Subject Land (ts 27), no evidence was given concerning the viability of that business.

4.2.3  Difficulties with the approaches of Mr Benson and Mr Pember

1. Many of the comparative sales considered by the valuers were hobby farm lifestyle‑type properties. I accept that all of this sales evidence involved 'potentially useful transactions' in the sense I have described above at [114].

2. However, the approach of Mr Benson and Mr Pember to their chosen comparative sales does not accord with the highest and best use of the Subject Land.  They were comparing the comparative sales with the Subject Land on the basis that the highest and best use of the Subject Land was farming only.  But I have concluded that Mr Miller's approach should be adopted and that the highest and best use of the Subject Land at the date of Taking was as a lifestyle and farming property.

3. Mr Benson's and Mr Pember's assessment of the adjusted value of the Subject Land deriving from their chosen comparative sales has therefore proceeded upon a flawed assumption concerning the highest and best use of the Subject Land.

4. Further, a number of other concerns arise with each of Mr Benson and Mr Pember's reports.  Those difficulties are sufficiently significant that, even independently of the question of highest and best use, I would have had real doubts concerning the weight to put on their assessments of value deriving from their comparative sales exercises.

Lack of clarity with some of  Mr Pember's comparative sales

1. As to Mr Pember, it was unclear which comparative sales Mr Pember had relied upon to reach his conclusion that the value of the Subject Land was $14,500 per hectare.

2. In Mr Pember's report he reached his conclusion on value by 'consideration of the evidence arising in sales 5, 6, 8, 9, 16 and 17':  Pember 1, page 35.

3. In the Joint Expert Memorandum, Mr Pember said that the sales he had considered were (as correctly relabelled) sales 5, 6, 8, 9, 12, 13, 14:  Joint Expert Memorandum, par 1.

4. In cross‑examination, Mr Pember said that he placed most weight on the sales to which he had referred in the conferral document, not the sales to which he had referred in his report.  He said that the value in his report, of $14,500, was derived from the sales referred to in the conferral document not the ones set out in the analysis section of his report (ts 234 ‑ 235).

5. Two of the sales upon which significant reliance was placed in Mr Pember's analysis (Pember 1, pages 35 ‑ 36) were sales 5 and 17. One of those, sale 17, did not appear in the Joint Expert Memorandum from which Mr Pember said the report figure had been derived.

6. In light of this evidence it is not clear which sales Mr Pember had relied upon in reaching his conclusions in his report or if, for example, sales such as sale 17 should be disregarded, or discounted from his report, or how this could be done. The process is further complicated by the omission in Mr Pember's report of the instructions from the Commissioner of Main Roads upon which Mr Pember was to proceed (ts 245).

Opaqueness in Mr Benson's evidence concerning the relevance of size

1. Mr Benson expressed an important view at the valuers' conference, and endorsed that view in the Joint Expert Memorandum at par 2.  The view was:

   Benson - All sales selected are relevant as valuer does not consider there is much difference in value per hectare between lots of 40 hectares - 100 hectares.  It is not until a lot is 20 hectares or under that noticeable differences start to emerge.

   Mr Miller agreed with this assessment of Mr Benson that there was not much difference in value per hectare between lots of 40 ha ‑ 100 ha:  Joint Expert Memorandum, par 2.

2. At another point in the Joint Expert Memorandum, all of the experts agreed that the magnitude of a property led to no discount, or only a modest discount for lots between 40 ha and 100 ha:  Joint Expert Memorandum, par 8.  In other words, the per hectare rate for lots from 40 ha ‑ 100 ha was not materially changed.

3. Consistent with this view, one of the five preferred comparable sales to the 123 ha Subject Land, which was chosen by Mr Benson in the Joint Expert Memorandum, was a 41.5 ha property:  Joint Expert Memorandum, par 1.

4. In cross‑examination, Mr Miller also explained one basis for this conclusion in the Joint Expert Memorandum that the per hectare rate for lots from 40 ha ‑ 100 ha was not materially different.  Mr Miller explained, and I accept, that although properties between 47 ha and 120 ha were not viable farming propositions, more profit could be made with larger properties and other activities such as running sheep and cattle were more economically viable (ts 81).

5. Mr Miller also explained that the sales evidence, as a whole, supported this conclusion.  One extreme example to which he made reference to show that size does not have a significant effect on the rate per hectare was a property which was twice the size of the Subject Land (a 250 ha property) which sold for a rate of $14,638 per hectare.  This was a single sale of six lots, which was not as well located as the Subject Land.  Further, the sale occurred eight months prior to the date of Taking when the market was generally much quieter:  Miller 1, page 118.  As I explain below, the market at that time was growing at a continuous rate of 3.5% per month.

1. This conclusion is highly significant because there were few sales involving properties of more than 100 ha which were also directly relevant for comparison purposes with the Subject Land (123 ha).

2. Also consistent with the view expressed in the Joint Expert Memorandum that there was not much difference in rate per hectare between lots of 40 ha ‑ 100 ha, Mr Benson relied in his report upon 24 sales of varying sizes:  Benson 1, pages 8 ‑ 18.  Although the six properties upon which Mr Benson relied most heavily were over 90 ha, half (12) of the 24 sales were of properties between 40 ha and 100 ha.  A further six were fewer than 40 ha.  After referring to all these sales, Mr Benson said in his report that '[a]ll recent sales in the immediate district have been analysed in an effort to ascertain a fair market value for the subject':  Benson 1, page 18.

3. In oral evidence, Mr Benson appeared to retreat from this position.  Counsel for the Commissioner for Main Roads said in closing written submissions that Mr Benson, like Mr Pember, considered that 'the 40 ‑ 50 ha lots do not provide a direct comparison with the subject land being a 123 ha lot with subdivision potential':  par 56.  Mr Benson never said this expressly. However, in oral evidence he did attempt to distinguish the values disclosed by 40 ha lots:

   Basically they show there were cheap ones at 14, 15 thousand a hectare up to about 23,000.  Then we have got to make allowances for soil‑type location, access, aesthetics.  When we get into the smaller blocks they sell on a block-value component, and if you have got 40 hectares with 20 hectares of bush that can sell for more than 40 hectares which is all clear so it's a block value feel the block, for the land (ts 146).

4. On the other hand, Mr Benson acknowledged in cross‑examination that properties above 40 ha were comparable with the Subject Land and that the size was not a 'disqualifying factor' (ts 170), although he suggested that noticeable differences would emerge between 20 ha and 40 ha (ts 196).  This was a point which he had not mentioned in the Joint Expert Memorandum.

5. Overall, Mr Benson never fully retreated from his view that properties of over 40 ha were comparable with the Subject Land without much difference in value per hectare, but his position in relation to the size of the property in his various statements was not particularly clear.

Lack of transparency in Mr Benson and Mr Pember's reports

1. A further difficulty with the reports of Mr Benson and Mr Pember is a lack of transparency in relation to a number of significant matters.

2. In relation to sales which occurred after the date of Taking, all valuers accepted that it was necessary to discount the sale price to take account of the increase in the market.  Nowhere in Mr Benson's or Mr Pember's reports did they clearly justify the discount factor which they had used.

3. In oral evidence Mr Benson said that he had taken into account a growth rate of 2% per calendar month (ts 133).  Mr Benson admitted that in his report he did not explain how such a market adjustment was made to the comparative sales he considered (ts 159).

4. The only point in Mr Benson's report where movements in the market prior to the date of Taking are considered is at pages 28 ‑ 29 of appendix 1 to Benson 1.  On those pages he considers the movement from June 2005 to August 2006.  He concluded that the sales in this period show an increase of 20% ‑ 25% (page 29).  This corresponds with the 2% per month which he said in oral evidence had been taken into account in his comparisons.  But it only does so by assuming that the growth rate is not continuous or cumulative.

5. In contrast, Mr Miller explained the need to calculate growth on a continuous basis (ts 56, 122), and the manner in which the calculation should be made.  Absent a market shock the growth pressures are constant and growth occurs at a constant, or continuous, rate.

6. I accept Mr Miller's explanation.  As for the calculation of continuous growth, it does not require even the most basic knowledge of differential calculus.  As Mr Miller explained, a calculator with the button for growth function will suffice.

7. There are some further oddities about how the 2% figure is calculated by Mr Benson.  Mr Benson said that he determined an average cleared value of mid‑2005 sales and compared that with a mid‑2006 average.  In cross‑examination he conceded that his mid‑2005 sales 'average' was based on one property sale only and that it was wrong to describe this as an average (ts 160).

8. The lack of transparency in relation to the rate Mr Benson used to adjust for market movements is also compounded by Mr Benson's failure to provide a consistent contract date for a number of his preferred sales.  The contract date, as Mr Benson and the other valuers explained, is the relevant date from which the adjustments should be made (ts 159).  Yet, in Mr Benson's statements in the Joint Expert Memorandum and in his report, he sometimes provided dates of 'negotiation' and dates of settlement.  For instance:

   (a)Mr Benson described his sale number 1 in the Joint Expert Memorandum as 'negotiated April 2005 - settled 2 November 2005'.  In his report he described the same sale as 'negotiated June 2005 - settled 27/10/2005' (page 28).  In his oral evidence he said that the sale date was June 2005 (ts 159).  Mr Miller who relied consistently upon contract documents set out the offer and acceptance date as 27 April 2005:  Miller 1, page 123.

   (b)Another example is Mr Benson's preferred sale number 4.  In the Joint Expert Memorandum, Mr Benson described the sale as '[n]egotiated November 2005 - settled February 2006'.  In his report, Mr Benson described sale number 4 as '[n]egotiated January 2006 - settled February 2006':  Benson 1, page 9.  Mr Miller's report which focused upon the date of the offer document, and which I accept, said that the offer was dated November 2005:  Miller 1, page 122.

9. Mr Pember's discount rate was also subject to some of the transparency problems similar to those of Mr Benson's.  Like Mr Benson, a flat rate of interest was also applied by Mr Pember.  In Mr Pember's report he said that he had applied a 'flat 2% per calendar monthly rate':  Pember 1, page 25.

10. Mr Pember determined movements in the market based on values per hectare in late 2003 until early 2004; in late 2004; in mid‑2005; in mid‑2006; and in mid‑2007.  In 'support of those observations' he referred to only two sales in 2006 and three sales in 2007:  Pember 1, pages 21 ‑ 22.

11. In contrast with Mr Benson and Mr Pember, Mr Miller's determination of a growth rate on a continuous basis of 3.5% per calendar month was more transparent.  He explained that he derived this rate from the resale of the same 22 ha property in April 2004 and January 2007:  Miller 1, page 93; (ts 54 ‑ 56).

12. Mr Miller's approach is open to criticism for the limited evidence upon which it was based, but it was clear how his figure had been derived.  Overall, I consider that there are good arguments in favour of adopting a lower 2% adjustment, although on a continuous growth basis.  However, I accept that 3.5% was not unreasonable.

13. In comparison with Mr Benson and Mr Pember's 2% flat rate, Mr Miller's chosen rate of 3.5% continuous growth had the effect of a substantially greater reduction in the value of comparable sales after the date of Taking.  This caused a substantially reduced value of the Subject Land.  Six of Mr Miller's seven preferred comparative sales were after the date of Taking.  The remaining one was only several months before it.

14. Another example of a lack of transparency at points in Mr Benson and Mr Pember's reports relates to a comparative sale relied upon by both Mr Benson and Mr Pember.  The sale was number 4 of Mr Benson's sales, and number 6 of Mr Pember's.  It was located on Old Bunbury Road.  This was one of their preferred sales at both the expert conference and in their reports.

15. Nowhere in either of the reports of Mr Benson or Mr Pember did they mention that during the winter months two thirds of this property was underwater.  Only in cross‑examination was this 'dam‑type land feature' acknowledged by Mr Benson (ts 174).

4.2.4  Comparable sales of properties with lifestyle and farming use

1. Mr Miller said that the comparable sales considered by the three valuers were 'hobby farm lifestyle-type properties'.  He said that the owners of these properties 'cannot draw a full income off anything between 20 hectares to three or four hundred hectares' (ts 43).  I accept that all of the comparable sales considered by the valuers are 'potentially useful' (in the sense described above at [114]) on this basis for a valuation based upon a highest and best use as lifestyle and farming.

2. In the Joint Expert Memorandum on 1 July 2009, Mr Miller identified five sales which were the most comparable with the Subject Land.  He labelled these sales with numbers 168, 65, 6, 87, and 133.

3. In his report, Mr Miller identified one further sale upon which reliance was placed, sale number 33:  Miller 1, page 90.  And in oral evidence he relied upon a further sale referred to in his report, namely sale number 35:  (ts 44, 62); Miller 1, page 93.

4. The table below sets out the five sales relied upon by Mr Miller in the Joint Expert Memorandum, together with the additional two sales in italics.  It also sets out the sales chosen by Mr Benson and Mr Pember in the Joint Expert Memorandum with Mr Benson's additional sale in italics.  Minor additions or corrections arising from oral evidence concerning details in the Joint Expert Memorandum have been included.

G Miller

Report Sale No	Address/Legal Description	Parties	Size	Zoning	Date of Acquisition/ Contract	Price	Analysed Land Value per hectare
(168)	Lot 350 Daudson Road, Nirimba (C.T. 1638/84)	Michael John Nicholls & Kristen Renae Nicholls	47.26 ha	Rural	1/12/06	$1,150,000	$25,216/ha
(65)	Lots 65, 66 [Fishermans Road], Coolup (C.T. 2135/710 and C.T. 1656/858	David Ernest Ellis & Janene Rita Ellis	140.2 ha	Rural	11/06	$2,450,000	$15,335/ha
(6)	Lot 2 (986) Old Bunbury Road, West Coolup (C.T. 1952/107)	Tanuja Sanders & Keith Thomas Sanders	21.8 ha	Rural	3/06	$830,000	$21,825/ha

G Miller (cont ...)

Report Sale No	Address/Legal Description	Parties	Size	Zoning	Date of Acquisition/ Contract	Price	Analysed Land Value per hectare
(87)	Lot 124 Mills Road, West Pinjarra (C.T. 1903/25)	Neslyn Bernard Gonsalves & Nancle Jane Gonsalves	53.59ha	Rural	10/06	$1,150,000	$15,064/ha
(133)	Lot 2 Gibbings Rd, Coolup (C.T. 1305/797)	Vernon Bruce Avery & Michelle Lesley Avery	96.65 ha	Rural	8/06	$1,350,000	$11,898/ha $14,872/ha (adjusted/ easement)
(33)	Lot 54 Mayfield/ Gibbings Roads, Coolup	42.45ha	Rural	01/07	$1,380,000	$26,619/ha
(35)	Location 1407  Attein Road, West Coolup	22.32ha	Rural	04/04 (sale A) 01/07 (sale B)	$295,000 $770,000	$8,736/ha $24,283/ha

J Benson

Report Sale No	Address/Legal Description	Parties	Size	Zoning	Date of Acquisition	Price	Value per hectare
1	Murray Loc 1478, 1478 Plan 206344, Herron Point Road	McCarthy to Trucking Nominees Pty Ltd	117.3614 ha	Rural (Shire of Murray)	Negotiated April 2005 - settled 2 November 2005	$1,100,000	$9,200 cleared $7,500 uncleared
4	Murray 2942 (2942 Plan 88781) Old Bunbury Road	Sudholz to Hallett Cove Nominees Pty Ltd	117.3 hectares	Rural  General Farming Shire of Waroona	Negotiated November 2005 - settled February 2006	$1,490,000	$11,900 cleared overall
6	Coolup AA  Lots 107, 108, 109, 110, 111 and Lot 10 Old Bunbury Road	Bangadang (Kim Buller) to Blanfield Investments Pty Ltd	256.3 hectares	Rural (Shire of Murray)	Negotiated December 2005-settled February 2006	$3,900,000	$14,300 cleared
9	Coolup AA Lot 74 Plan 235004 and Lot 1 Diagram 77022, Browns Lane Road	Maiolo to Danman Investments Pty Ltd	139.2 hectares	Rural (Shire of Murray)	May 2006	$1,750,000	$11,843 cleared
[10]	Pt Murray 1443 being Lot 11 Diagram 89177, Grey Road	Cockell to Shalimar Holdings and Sleight	41.5 hectares	Rural (Shire of Murray)	January 2006	$800,000	$17,608 cleared $19,277 all in
20	Lots 65, 66 [Fishermans Road], Coolup (C.T.2135/710 and C.T. 1656/858	David Ernest Ellis & Janene Rita Ellis	140.2 ha	Rural	November 2006	$2,450,000	$16,200/ha

RG Pember

Report Sale No	Address/Legal Description	Parties	Size	Zoning	Date of Acquisition	Price	Value per hectare
8	Lots 1 & 74 Brownes Lane, Coolup	139.2 hectares	Rural (Shire of Murray)	April 2006	$1,750,000	$12,572
[9]	Lot 2 (No. 238) Gibbings Road, Coolup	96.7 ha	Rural (Shire of Murray)	July 2006	$1,350,000	$11,942
5	Lots 107, 108, 109, 110, 111 Paulls Road/ Sutters Lane, Lot 10 South West Highway, Coolup	256.3 ha	December 2005	$3,900,000	$14,241
6	[Lot] 2942 Old Bunbury Road, Coolup	117.3 ha	Offer October, settled 10 April 2006	$1,490,000	$11,850
[12]	Lot 124 cnr Mills Road & Sutters [Lane]	53.5956 ha	Rural (Shire of Murray)	October 2006	$1,150,000	$14,553
[13]	Lot 233 Coolup Road, Coolup	43.3 ha	Rural (Shire of Murray)	July 2006, settled November 2006	$660,000	$15,242
[14]	Lot 234 Coolup Road, Coolup	36.118 ha	Rural (Shire of Murray)	July 2006	$610,000	$16,889

4.2.5  Overlap in the valuers' preferred comparable sales

1. Three of the original five sales chosen by Mr Miller as the most directly comparable with the Subject Land were the same as those chosen by Mr Benson or Mr Pember, either at the valuers' conference or in their reports.  However, as I have noted above, one very significant difference was that, unlike Mr Miller, Mr Benson and Mr Pember did not have regard to the lifestyle use of the Subject Land in comparison with these properties.

Fishermans Road - Lots 65 and 66

1. The first of these three overlapping preferred sales is Mr Miller's sale number 65, located on Fishermans Road.  It is 140.2 ha.

2. It is marked on the map which is Appendix 2 to these reasons as 'Lots 65 and 66'.  It is to the east and slightly to the south of the Subject Land; it does not enjoy the same degree of proximity to the recreation and sandy beach of the estuary.  The property is also bisected by Fisherman's Road.  It is shaded yellow with green stripes in Appendix 2.

3. This sale was also relied upon by Mr Benson in his report as one of the eight properties he considered to be the 'most comparable'.  It was not relied upon by him in the Joint Expert Memorandum but I have added it to his list above because of his subsequent reliance on it in his report.  This was Mr Benson's sale number 20:  Benson 1, page 16.

4. The Fishermans Road property was described by Mr Benson as a '[v]ery comparable proposition to subject':  Benson 1, page 16.  The sale occurred five months after the valuation date.  He said that the price disclosed a rate of $16,200 per cleared hectare.

5. In comparing this sale, Mr Benson acknowledged that he had not considered any lifestyle aspect (ts 168).  He then said that a bisecting road, which deprives an owner of access, 'can be good' (ts 168).  I do not accept that the road bisecting the property was beneficial.  I prefer the approach of Mr Miller described below.

6. In Benson 3, Mr Benson said that the Fisherman's Road location was superior because, in 2002, the price obtained for the Fisherman's Road property ($4,719 per hectare) was higher than the price for the Subject Land in 2002 ($4,250 per hectare).  However, it must also be recalled that Mr Benson's consideration was in the context of his opinion that the Subject Land enjoyed no lifestyle use; his reference to location may not have been in relation to any 'lifestyle' characteristics of the Fisherman's Road property.

7. Mr Miller gave a convincing explanation for why the Subject Land, which I accept was better located for lifestyle use, disclosed a slightly lower rate in 2002.  He explained that in 2002 the Subject Land was already affected by the proposed Forrest Highway.  It enjoyed better lifestyle characteristics but they were already blighted by the proposed public works although, as I explain below at [222], that effect is one which increases over time (ts 75).

8. In contrast with Mr Benson, Mr Miller's approach involved a much more closely tailored approach of adjustments to reflect the value of the Subject Land.  Mr Miller considered, and I accept, that having the Fishermans Road property bisected by a road was a disadvantage and also that the property was more poorly located for lifestyle purposes compared with the Subject Land.

9. Mr Miller also took into account that the date of contract for the Fishermans Road property was three months later than the date of Taking, requiring the value to be reduced for the rising market:  Miller 1, page 32; (ts 116).  In oral evidence he explained that he had reduced that rate by applying the substantial 3.5% monthly compounding discount rate which I have discussed above at [158] ‑ [160] (ts 116).

10. Mr Miller also referred to the poorer soil on the Fishermans Road property.  This conclusion was disputed by Mr Benson.  There was no expert evidence on the soil of the property, but I do not consider that this conclusion about soil makes any substantive difference.

11. Mr Miller concluded that a direct comparison would reveal a land component for the Subject Land of between $20,000 per hectare and $25,000 per hectare (ts 72).  Although this involves both a significant downward adjustment of the Fishermans Road sale value due to the high, compounding, monthly rate Mr Miller used, and a significant upward adjustment for the poorer location and bisecting road of the Fisherman's Road property, I accept that Mr Miller's conclusion is within the range of appropriate adjustments.  However, in light of all the considerations above, I consider that the appropriate adjustment would be closer to the bottom of that range.  A comparative value of the Subject Land of $21,500 per hectare is appropriate, as Mr Miller eventually concluded.

Mills Road - Lot 124

1. The second overlapping preferred sale is Mr Miller's sale number 87, the property at Mills Road.  This is Mr Pember's sale number 12.  It is 53.6 ha.

2. On the map in Appendix 2 to these reasons, this property is a triangular shape to the north east of the Subject Land, shaded yellow with green stripes.  It is marked 'Lot 124'.

3. The two valuers came to similar conclusions about the value per hectare disclosed from that sale:  Mr Miller's was $15,064 per hectare, and Mr Pember's was $14,553 per hectare.  Mr Benson considered that Mills Road disclosed a rate of $17,300 per cleared hectare but he did not choose it as one of his preferred sales:  Benson 1, page 17.

4. Mr Miller explained that the soil type of the Mills Road property was similar to the Subject Land, and that the sale date was three months after the date of Taking, which required his substantial discount factor.

5. Mr Miller was influenced in his adjustments by the fact that 'this site is considered not as well located as subject property as a lifestyle property':  Miller 1, page 33.  For that reason he concluded that the direct comparison indicated a value for the Subject Land of between $17,000 per hectare and $22,000 per hectare.

6. I accept this conclusion.  I also consider that it is reasonable for an upward adjustment toward the top of this range to reflect the lifestyle differences in the two properties.

7. In contrast, in Mr Pember's report he discussed the features of the Mills Road property without reference to any lifestyle features (which was understandable since he had considered that the highest and best use of the Subject Land was farming only).

8. Mr Pember did not make any direct comparison with the Subject Land:  Pember 1, page 32.  In the 'Valuation Analysis and Consideration of a claim' section in his report (page 35) Mr Pember did not refer to the Mills Road property despite having described it as one of his 'sales upon which most weight is placed' in the Joint Expert Memorandum.

1. Consequential losses

7.1     The legal principles

1. Like the label 'injurious affection', the label 'consequential loss' does not appear in s 241 of the Land Administration Act. It was used by the parties as a loose description of compensation awarded by reference to s 241(6). That subsection provides as follows:

   (6)Regard is to be had to the loss or damage, if any, sustained by the claimant by reason of -

   (a)removal expenses;

   (b)disruption and reinstatement of a business;

   (c)the halting of building works in progress at the date when the interest is taken and the consequential termination of building contracts;

   (d)architect's fees or quantity surveyor's fees actually incurred by the claimant in respect of proposed buildings or improvements which cannot be commenced or continued in consequence of the taking of the interest; or

   (e)any other facts which the acquiring authority, the court, or the State Administrative Tribunal considers it just to take into account in the circumstances of the case.

   The focus in this case was on s 241(6)(e).

2. The operation of this provision was considered by this court in Konowalow & Felber v Minister for Works.  In that case, part of the plaintiff's land was resumed for a new road under the Public Works Act 1902‑1956 (WA).  The plaintiff brought an action for compensation and a case was stated for the court on a question of law.

3. The most substantial part of the plaintiff's claim in Konowalow & Felber v Minister for Works concerned an allegation that vibrations from heavy vehicles on the new road would cause damage to buildings on the plaintiff's land.  The plaintiff had discontinued building work on their land for this reason.  The question of law stated for the court was whether the plaintiff could be compensated for (a) any injurious affection to the remaining land; and (b) any alleged damage to the building or proposed building by the vibrations.

4. One ground upon which the plaintiff in Konowalow & Felber v Minister for Works submitted that each head of damage could be claimed was by reference to a consequential loss provision, s 63(aa) of the Public Works Act which is in very similar terms to s 241(6) of the Land Administration Act.

5. Justice Virtue considered s 63(aa)(v) of the Public Works Act which is in very similar terms to s 241(6)(e) of the Land Administration Act. Section 63(aa)(v) provides that the court can have regard to 'any other facts which the respondent or the Court considers it just to take into account having regard to the circumstances of each case'.

6. His Honour held that only the second head of damage (damage to the building or proposed building by the vibrations) could be claimed under s 63(aa)(v).

7. The reason why the first head of damage (injurious affection to the remaining land) in Konowalow & Felber v Minister for Works was irrecoverable was that s 63(aa)(v) must be construed with s 63(aa)(i)‑(iv), ejusdem generis (of the same kind).  In other words, the reference to 'any other facts' should be construed to mean 'any other facts of the same kind as described in s 63(aa)(i)‑(iv)'.

8. The frequent reference to the Latin words ejusdem generis in the construction of legislation is little more than an insistence that statutory words be construed in their context.  Virtue J was following a line of authority when he said that 'I cannot conceive why the Legislature should have taken the trouble to specify in this subsection so many particular heads of damage except to show the type of damage to which they were referring' (42):  see Re Stockport Ragged, Industrial and Reformatory Schools [1898] 2 Ch 687, 696 (Lindley MR); Attorney General v Brown [1920] 1 KB 773, 798 (Sankey J).

9. The genus in s 63(aa)(i)‑(iv), which Virtue J identified, is 'compensation for loss or damage resulting from interference with the activities being carried on by the plaintiff on the land' (42).

10. When the Land Administration Act was proclaimed, and came into force on 30 March 1998, it was enacted against this pre-existing state of law.  The pre‑existing state of the law informs the interpretation of a statute:  CIC Insurance Ltd v Bankstown Football Club Ltd [1997] HCA 2; (1997) 187 CLR 384, 408 (Brennan CJ, Dawson, Toohey & Gummow JJ); Singh v The Commonwealth [2004] HCA 43; (2004) 222 CLR 322, 336 [19] (Gleeson CJ).

11. The Konowalow & Felber v Minister for Works approach has been applied to s 241(6)(e), confining its operation to compensation for loss or damage resulting from interference with the activities being carried on by a plaintiff on the land: Caltex Petroleum Pty Ltd v Commissioner for Main Roads [2004] WASC 239 [28] ‑ [34] (McKechnie J); Cerini v Minister for Transport [282] (Parker J).

12. In other words, each of s 241(6)(a) ‑ (d) is concerned with compensation for damage arising from interference with activities carried on by a plaintiff on the land. The interferences might give rise to expenses for (a) removal; (b) disruption or reinstatement of a business; (c) halting building works in progress, and terminating building contracts; or (d) architect's fees or quantity surveyor's fees for proposed works which cannot now be undertaken.

13. Section 241(6)(e) is therefore concerned with 'other facts' arising from interference with the activities carried on by the plaintiffs on the Subject Land.

14. It was also suggested in closing that s 241(6)(e) might permit recovery for losses which were not actually incurred. An analogy was drawn with the principle of damages that an assessment of compensation might be made for tortious damage to a motor vehicle, even though the owner has no intention to repair the vehicle (ts 287). In Ruxley Electronics & Construction Ltd v Forsyth [1994] 1 WLR 650, 657 (Ruxley [1994]), Staughton LJ made this point succinctly: '[i]f someone steals my watch I am not obliged to buy another before I can sue him in damages for conversion; nor need I intend to do so'.  In the appeal in the House of Lords, Lord Lloyd explained why this was the case:  'the plaintiff is entitled to recover the value of the watch, because that is the true measure of his loss':  Ruxley Electronics & Construction Ltd v Forsyth [1996] AC 344, 372 ‑ 373 (Ruxley [1996]).  On a balance sheet assessment, the assets of the owner of the watch are of less value.

15. Section 241(6)(e) does not permit the recovery of losses which have not been suffered for several reasons. First, s 241(6)(e) is concerned with loss or damage 'sustained' by the claimant. The focus of these introductory words of the section is upon loss or damage actually incurred. The words of s 241(6)(d) do not detract from this. Those words refer to architect's fees or quantity surveyor's fees 'actually incurred by the claimant in respect of proposed buildings or improvements'. The reference to 'actually incurred' narrows those fees which are recoverable. This is perhaps in contrast with s 241(6)(c) which may include future lost profits from the termination of building contracts. Or it could be to emphasise that only those fees incurred prior to the Taking are recoverable.

16. Secondly, construed in its context, s 241(6)(e) is concerned with pecuniary losses. It is not concerned with non‑pecuniary losses. As I explain below at [454] ‑ [456], compensation for non‑pecuniary loss, as solatium, is the subject of s 241(8) and s 241(9). Section 241(6)(e) therefore requires the plaintiffs to demonstrate quantifiable financial detriment.

17. Thirdly, the irrecoverability of compensation is consistent with the general law position concerning damages for a damaged watch or motor vehicle which the owner does not intend to repair.  In the example of a damaged watch or motor car which the owner has no intention to repair, there is a quantifiable financial detriment.  As Lord Lloyd explained in Ruxley [1996], the watch is less valuable. Although there is some controversy on this issue in the law of torts, the damages in such a case ought to be measured by the difference in value, rather than the cost of a repair which will not occur. But the short point is that like the general law of torts, s 241(6)(e) requires that real loss has been suffered or will be suffered before an award of compensation can be made.

7.2     The alleged consequential losses claimed by the plaintiffs

1. The plaintiffs, relying upon Mr Miller's report, claimed for the following alleged consequential losses:  Miller 1, pages 49 ‑ 50:

   (a)Anticipated disturbance to farming due to the construction of the flyover:  $10,000.

   (b)Costs associated with planting and maintaining 400 pine trees which survive in the Remaining Land:  $59,166.

   (c)Costs associated with planting and maintaining 501 pine trees within the Taken Land:  $181,160.

   (d)Costs associated with replanting native trees along Herron Point Road that are within the Taken Land:  $35,000.

7.2.1  Alleged consequential losses from the construction of the flyover

1. The alleged losses, by disturbance to farming, from the construction of the flyover are consistent with the genus of s 241(6) and therefore fall within s 241(6)(e). A disturbance to farming is an interference with activities on the Subject Land akin to disruption of a business.

2. However, there was insufficient evidence to support this claimed head of damage.  Mr Miller described the loss or damage as

   disturbance to sheep and cattle herd and method that [the] farm operates (ie on‑site sheep/cattle movement and stocking) due to the construction of the highway and flyover causing access/egress problems along Herron Point Road, over a three year period, say nominal $10,000 (Miller 1, page 49).

3. This amount is not recoverable as consequential loss under s 241(6)(e) for three independent reasons.

4. First, the evidence of Mr Miller on this point was not sufficiently clear.  He did not explain the nature of the access problems to which he referred, or the nature of the difficulties which the plaintiffs would encounter.  Nor did he explain whether the award was for subjective, non‑pecuniary loss which might be suffered by the plaintiffs, or whether it was for some objectively measurable type of loss.

5. In examination‑in‑chief Mr Miller said that he had allowed this item because in his 'intuitive judgment' the construction of the highway and flyover would make it difficult to move sheep in and out of the property and would create access problems (ts 45).  I have addressed the lack of loss from access problems above at [245] ‑ [262].

6. In cross‑examination, Mr Miller said that the amount provided was not in relation to movement of cattle on and off Herron Point Road but was 'just a nominal amount' for the 'disturbance to the way [Ms] Glasson operates her lifestyle property' (ts 109).

7. Secondly, to the extent that this claim concerned any impairment of lifestyle or farming use of the Remaining Land by the effect of the public works then the loss would be included in the assessment of injurious affection upon the Remaining Land.  To the extent to which it related to non-pecuniary loss due to acquisition without agreement, it would be included in the award of solatium.

8. Thirdly, I do not accept Mr Miller's conclusion that $10,000 is recoverable because it is merely a 'nominal' amount.  '[N]ominal' need not mean 'small':  Owners of the Steamship Mediana v Owners, Master & Crew of the Lightship Comet (The Mediana) [1900] AC 113, 116 (Lord Halsbury LC); Greer v Alstons Engineering Sales and Services Ltd (Trinidad and Tobago) [2003] UKPC 46 [7] (Sir Andrew Leggatt). But an award of a non‑token amount such as $10,000 cannot be made without justification for the quantification.

9. No compensation should be allowed for this alleged head of damage.

7.2.2  Alleged consequential losses from the 400 pine trees on the Remaining Land

1. The 400 pine trees to which reference is made in this section can be seen in the aerial photograph reproduced in Appendix 3 to these reasons.

2. This alleged head of compensation for loss and damage was for losses relating to the 400 pine trees which remain on the Remaining Land.  This alleged loss cannot be recovered for two separate reasons.

3. First, the alleged consequential loss from the 400 pine trees which still remain on the Remaining Land is not loss or damage 'arising from interference with the activities carried on by the plaintiffs on the Subject Land' as required by the genus of s 241(6)(e) of the Land Administration Act.

4. Secondly, no loss or damage has been suffered in relation to the 400 pine trees which still remain on the Remaining Land.  There is no suggestion that these 400 pine trees will be, or will need to be, removed by the plaintiffs.

5. In his report, Mr Miller valued the beneficial effect of the 400 remaining pine trees on the Remaining Land and the main residence as $36,259 and $5,100 respectively.  In assessing injurious affection, Mr Miller added back these amounts.  In other words, he correctly calculated the injurious affection on the assumption that the 400 pine trees remained on the Remaining Land and had ameliorated the effect of the public works.

6. But Mr Miller's assessment of $59,166 as compensation for the costs of planting and maintaining 400 pine trees within the Remaining Land does not relate to any loss or damage suffered.  To allow recovery of the cost of planting the 400 remaining pine trees would allow the plaintiffs the recovery of alleged costs without bringing into account the benefit obtained by the plaintiffs, namely the amelioration of the effect of the Forrest Highway.

7. In other words, the plaintiffs incurred cost in planting the 400 pine trees but the plaintiffs will obtain exactly the benefit from these trees which they intended.  The cost was incurred in order to offset the losses and effects of the public works.  The Remaining Land is more valuable because the 400 pine trees shield the noise from the Forrest Highway.  If the plaintiffs sell the Remaining Land, they will realise this benefit.  As Mr Miller concluded in his injurious affection exercise, the costs incurred by the plaintiffs had the effect of increasing the value of the Remaining Land by $36,259 and the main residence by $5,100.

8. To allow the plaintiffs compensation for the costs incurred in planting the 400 pine trees would enable the plaintiffs to obtain the very benefit they had intended, namely the enhanced value of the Remaining Land from that planting, as well as to recover their costs of the planting.

7.2.3  Alleged consequential losses associated with planting the 501 pine trees on the Taken Land

1. I have explained above at [268] ‑ [299] why I consider that this compensation should be assessed as a component of an assessment of 'severance'.  The few authorities which have considered compensation for loss of trees in the context of land acquisition have also treated this compensation as part of the valuation of the taken land, or as a loss caused by severance.

2. Plainly, any loss or damage from the 501 pine trees cannot be recovered under the head of severance as well as the head of consequential losses under s 241(6)(e) of the Land Administration Act.  To allow this would be to allow double recovery.

3. In any event, the lost 501 pine trees are not recoverable as consequential losses for two independent reasons.

4. First, the loss of the 501 pine trees by severance from the Subject Land is not an 'interference with the activities carried on by the plaintiffs on the Subject Land'. It does not fall within s 241(6)(e).

5. Secondly, even if the cost related to the 501 lost pine trees were an 'interference with the activities carried on by the plaintiffs on the Subject Land', and even if the cost were properly treated as s 241(6)(e) rather than severance, the consequential loss would not be $181,160. As I have explained above at [285] ‑ [290] the cost, and loss, which was incurred due to the replanting was $27,400.

6. The additional amounts represent losses which were not actually incurred.  For instance, as I have explained above, the notional cost of $137,500 is a cost for a third party to spend four years growing 500 pine trees in 75 litre bags:  exhibit 53; (ts 31).  Not only was this cost never incurred but this method of growing the pines was described by Mr McArthur as 'very expensive ... not commonly done ... highly unusual' (ts 272).

7.2.4  Alleged consequential losses associated with replanting native trees that were within the Taken Land

1. The final area of consequential losses claimed by the plaintiffs was the costs associated with replanting native trees within the Taken Land.  There are three reasons why these costs are not recoverable.

2. First, the loss of the native trees by severance from the Subject Land is not an 'interference with the activities carried on by the plaintiffs on the Subject Land'. It does not fall within s 241(6)(e).

3. Secondly, and unlike the loss of the 501 pine trees, there is no evidence that the plaintiffs will replant the native trees.  The native trees were not intended to perform the function of the pine trees, which were planted to shield the Subject Land from the public works.

4. Thirdly, there is, in any event, insufficient evidence from which the cost of replanting the native trees could be assessed.  Mr Miller simply says that he adopted $35,000 as the cost because this was 'agreed' in the conferral of experts in 2007 ‑ 2008:  Miller 1, page 50.  There was no evidence of such an agreement and Mr Miller said in cross‑examination that it was Mr Diggs, a different valuer engaged by the plaintiffs, who had been at the relevant conference and not him (ts 114).

1. Solatium and interest

1. The term 'solatium' does not appear in s 241 of the Land Administration Act. Its etymology is the Latin solacium, 'comfort'. The concern is to provide a monetary redress for a non‑pecuniary loss arising from the taking of land without agreement. The statutory source for an award of solatium is s 241(8) and s 241(9). Those subsections provide as follows:

   (8)If the interest in land is taken without agreement, an amount considered by the court or the State Administrative Tribunal or, for the purposes of making an offer, by the acquiring authority, appropriate to compensate for the taking without agreement may be added to the award or offer.

   (9)The additional amount under subsection (8) must not be more than 10% of the amount otherwise awarded or offered, unless the court or the State Administrative Tribunal, or, for the purposes of making an offer, the acquiring authority, is satisfied that exceptional circumstances justify a higher amount.

2. It was common ground between the parties that 10% solatium should be awarded:  plaintiffs' closing submissions, par 108; Commissioner for Main Roads' closing submissions, par 226.

3. The plaintiffs also sought interest in their prayer for relief at 6% from the date of receipt of claim until the date of settlement, relying upon s 241(11) of the Land Administration Act.  I did not receive any submissions on this issue and it is appropriate to defer any award of interest until after the delivery of these reasons.

1. Conclusion

1. Broadly, there were four issues raised in this case.

2. The first issue was compensation for the Taken Land: s 241(2) Land Administration Act.  Considerable time was spent in cross‑examination on this issue, and concerning the highest and best use of the Subject Land.  On this issue, although the valuers adopted different highest and best uses of the land, they were not actually far apart in quantum.  The combination of the value of the Taken Land and the loss of subdivision potential (severance) recognised by Mr Benson and Mr Pember led to valuations of $281,000 (Mr Benson) and $231,000 (Mr Pember).  Mr Miller, who did not recognise a loss of subdivision potential but who included lifestyle elements, assessed the value of the Taken Land at $312,500.

3. On this issue, the highest and best use adopted by Mr Miller should be used and Mr Miller's methodology should be accepted.  The conclusion he reached was solidly based on the evidence.  It was fair and reasonable and should also be accepted without any need for further adjustment.  Compensation for the value of the Taken Land is $312,500.

1. The second issue was compensation for severance: s 241(7)(a) Land Administration Act.  The only aspect of the claim for compensation for severance which was established, and which is recoverable, is for the loss of the 501 pine trees, and the cost of replanting them.  Compensation should be assessed for that loss at $27,400.

2. The third issue was compensation for 'injurious affection': s 241(7)(b) Land Administration Act.  On this issue the valuers diverged greatly.  This divergence was perhaps unsurprising in circumstances in which Mr Miller valued the land as including a lifestyle use, which was severely blighted by the public works; but the other valuers considered that the Subject Land had no lifestyle use.

3. Again, I preferred the approach of Mr Miller, and for reasons set out in detail above, Mr Miller's assessment of the value of injurious affection as $325,219 was a fair and reasonable assessment.  It should be accepted.  Although one view might be that his assessment was conservative, I do not consider that it requires further upward adjustment.  And none was sought by the plaintiffs.  Compensation should be made for injurious affection in the amount of $325,219.

4. The fourth issue was compensation for consequential losses: s 241(6)(e) Land Administration Act. None of these alleged losses is recoverable. Either the losses were not incurred, or they were not proved, or they would involve double recovery, or they did not fall within the terms of s 241(6)(e) of the Land Administration Act.  In some cases several of these reasons all independently meant that various claims for consequential losses failed.

5. The total compensation payable under each of these four heads is $312,500 (Taken Land), $27,400 (severance), and $325,219 (injurious affection). 

6. The total compensation to be awarded to the plaintiffs is $665,119 plus solatium and interest.

7. I will hear from counsel in relation to consequential matters including solatium, interest and deductions for the payment made in partial discharge of the claim.

Appendix 1:  The Forrest Highway and Subject Land

Appendix 2:  The Subject Land and comparable sales

Appendix 3:  Aerial view of the Subject Land showing the 901 pine trees

Appendix 4:  Injurious Affection Sales Group 1

Appendix 5:  Injurious Affection Sales Groups 2 & 3

Appendix 6:  Injurious Affection Sales Group 4

Appendix 7:  Injurious Affection Sales Group 5