McKay v Commissioner of Main Roads - [2013] WASCA 135

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE COURT OF APPEAL (WA)

CITATION: MCKAY -v- COMMISSIONER OF MAIN ROADS [2013] WASCA 135

CORAM: MARTIN CJ
BUSS JA
MURPHY JA

HEARD: 5 - 7 NOVEMBER 2012

DELIVERED : 31 MAY 2013

FILE NO/S: CACV 115 of 2011
CACV 159 of 2011

BETWEEN: RODERICK DOUGLAS MCKAY
KATHLEEN GLENYS MCKAY
Appellants
AND
COMMISSIONER OF MAIN ROADS
First Respondent
WESTERN AUSTRALIAN PLANNING COMMISSION
Second Respondent

ON APPEAL FROM:
Jurisdiction              :  SUPREME COURT OF WESTERN AUSTRALIA
Coram  :BEECH J
Citation  :McKAY -v- COMMISSIONER OF MAIN ROADS [No 7] [2011] WASC 223
File No  :CIV 1558 of 2007
Jurisdiction              :  SUPREME COURT OF WESTERN AUSTRALIA
Coram  :BEECH J
Citation  :McKAY -v- COMMISSIONER OF MAIN ROADS [No 7] [2011] WASC 223 (S)
File No  :CIV 1558 of 2007

Catchwords:

Resumption and acquisition of land - Compensation - Valuation of land - Evidence - Whether judge acted as 'third valuer' - Whether judge undertook a valuation for which there was no recognised valuation methodology - Procedural fairness - Whether witnesses had a proper opportunity to deal with judge's approach to the valuation of land

Resumption and acquisition of land - Compensation - Planning - Past hypothetical rezoning - Documentary evidence - Whether judge should have accepted expert evidence of planning witnesses

Application to order new trial on the basis of a failure to comply with discovery obligations - Application to admit additional evidence

Remitter - Whether new trial should be limited to certain issues - Whether matter should be remitted to a different judge

Legislation:

Land Administration Act 1997 (WA), s 202, s 241
Town Planning and Development Act 1928 (WA), s 7

Result:

Appeal allowed in part

Category: B

Representation:

Counsel:

Appellants:     Mr P G McGowan & Mr T Houweling
First Respondent           :     Mr K M Pettit SC & Ms F B Seaward
Second Respondent       :     Mr K M Pettit SC & Ms F B Seaward

Solicitors:

Appellants:     Cornerstone Legal
First Respondent           :     State Solicitor for Western Australia
Second Respondent       :     State Solicitor for Western Australia

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

Abbott v Philbin [1961] AC 352
Allstate Life Insurance Co v Australia & New Zealand Banking Group Ltd (No 5) (1996) 64 FCR 73
AMP Henderson Global Investors v Valuer General [2004] NSWCA 264; (2004) 134 LGERA 426
Anthony v The Commonwealth of Australia (1973) 29 LGRA 61
Arcus Shopfitters Pty Ltd v Western Australian Planning Commission [2004] WASC 85
Auxil Pty Ltd v Terranova [2009] WASCA 163; (2009) 260 ALR 164
Brewarrana Pty Ltd v Commissioner of Highways (No 2) (1973) 6 SASR 541
Chappel v Hart [1998] HCA 55; (1998) 195 CLR 232
Commissioner for Australian Capital Territory Revenue v Alphaone Pty Ltd (1994) 49 FCR 576
Commonwealth Bank of Australia v Quade [1991] HCA 61; (1991) 178 CLR 134
Corporation of the City of Adelaide v City of Port Adelaide Enfield [2000] SASC 271; (2000) 110 LGERA 153
CSR Ltd v Della Maddalena [2006] HCA 1; (2006) 8 ALJR 458
Duffy v The Minister for Planning [2003] WASCA 294; (2003) 129 LGERA 271
Expectation Pty Ltd v PRD Realty Pty Ltd [2004] FCAFC 189; (2004) 140 FCR 17
Frizell v Valuer‑General (NSW) (1979) 26 The Valuer 497
George Wimpey & Co Ltd v Inland Revenue Commissioners [1975] 2 All ER 45
Goninan & Co Pty Ltd v Direct Engineering Services Pty Ltd [2007] WASCA 10; (2007) 33 WAR 182
Hughes Aircraft Systems International v Airservices Australia (1997) 80 FCR 276
ISPT Pty Ltd v Valuer General [2009] NSWCA 31; (2009) 165 LGERA 25
McKay v Commissioner of Main Roads [No 7] [2011] WASC 223
McLennan v McCallum [2010] WASCA 45
MMAL Rentals Pty Ltd v Bruning [2004] NSWCA 451; (2004) 63 NSWLR 167
Pateman v Higgin [1957] HCA 62; (1957) 97 CLR 521
Port Macquarie West Bowling Club Ltd v The Minister [1972] 2 NSWLR 63
Royal Sydney Golf Club v Federal Commissioner of Taxation [1957] HCA 31; (1957) 97 CLR 379
Selstam Pty Ltd v Ghaleb [2005] NSWCA 208
Spencer v The Commonwealth [1907] HCA 82; (1907) 5 CLR 418
Tanna v Deutsche Bank (Asia) AG; Saad v Barwick [1996] NSWSC 408
Tanna v Deutsche Bank (Asia) AG; Saad v Barwick [1998] NSWCA 223
The Commissioner of Taxation of the Commonwealth of Australia v St Helens Farm (ACT) Pty Ltd [1981] HCA 4; (1981) 146 CLR 336
Trandos v Western Australian Planning Commission [2001] WASCA 346; (2001) 117 LGERA 257
Trustees of the Roman Catholic Church v Hogan [2001] NSWCA 381; (2001) 53 NSWLR 343
Van der Velde v Halloran [2011] WASCA 252
Waterways Authority v Fitzgibbon [2005] HCA 57; (2005) 79 ALJR 1816

MARTIN CJ: This appeal should be partially allowed for the reasons given by Murphy JA, with which I agree. The judgment should be set aside and the matter remitted to the trial judge for further consideration of the limited issues identified by Murphy JA, in accordance with the process proposed by Murphy JA.
BUSS JA: I agree with Murphy JA.
MURPHY JA: The appeal in CACV 115 of 2011 is an appeal from a decision of Beech J. All references to paragraph numbers below are references to those in the primary judge's reasons, McKay v Commissioner of Main Roads [No 7] [2011] WASC 223, unless otherwise indicated.
The case concerns the valuation of approximately 88 hectares of land between Mandurah and Pinjarra in the context of an action for compensation pursuant to s 220 and s 223 of the Land Administration Act 1997 (WA) (the Act). The appellants owned the land, described as 'lots 191 and 192', before it was taken under pt 9 of the Act pursuant to a Taking Order registered on 20 July 2006. The second respondent, the Western Australian Planning Commission (WAPC), was the acquiring authority in relation to the whole of lot 191 and part of lot 192. WAPC acquired the land for the purpose of regional open space, and in particular for the construction of a regional recreational facility. The first respondent (Main Roads) was the acquiring authority in relation to the other part of lot 192, and that land was taken for the purposes of the extension of the Perth‑Bunbury Highway.
By s 202 of the Act, persons having an interest in the land taken under pt 9 are entitled, subject to pt 10, to compensation for their interest from the acquiring authority. By s 241(2)(c) of the Act, for compensation purposes, the land is to be valued as at the date of taking, ie in this case 20 July 2006.
The land in question was situated on the northern side of Pinjarra Road and the northern side of Old Mandurah Road. The appellants had acquired the land in 1990. It is about halfway between Mandurah (which is to the north‑west of the land) and Pinjarra (which lies to the south‑east of the land). Pinjarra Road is a four lane road and is the main and only direct link between Pinjarra and Mandurah. At the time of taking, the land was cleared rural land, used for grazing cattle, and was zoned rural.

In broad terms, prior to the taking date, urban development had occurred or been permitted in certain areas to the south of Old Mandurah Road. This included an area bordering the south of that road called Riverland Ramble. In 1995, lots 20 and 21 of Riverland Ramble were rezoned to 'special development', which permitted urban subdivision subject to conditions. That area was in part joined to the then existing town of Ravenswood, which lay further to the south of Old Mandurah Road. There was also an area called Murray River Country Estate, which lay even further to the south (and to the east) of Ravenswood, which was rezoned urban in 1996. The estate was on the outskirts of Pinjarra itself. Also to the south, but to the south‑west, near South Yunderup, was an area for urban development called Austin Cove.
The subject land was bounded on the west and south by roads (Fiegert and Pinjarra/Old Mandurah Roads respectively). To the east and north there were properties owned by other families (the Kellihers and the Emmanuels) who used their land for rural purposes.
The overarching issue was the value of the land taken. For that purpose, attention was to be given to the land's highest and best use. Section 241(2) of the Act requires that, in valuing the land for compensation purposes, there must be a 'discounting [for] any increase or decrease in value attributable to the proposed public work' for which the land is acquired.
There was an issue at trial as to whether s 241(2) of the Act required consideration of value on the basis of the zoning which the land would have had, but for the proposed public works. (See primary judge's reasons s 2.7.3.1 ‑ 2.7.3.6.) The appellants had contended, and the judge accepted, that it was necessary to make a finding on the zoning that the land would have had, but for the proposed public works. This was referred to in the judge's reasons as the 'hypothetical zoning' question or the 'past hypothetical rezoning' question. The respondents had argued that such an approach was impermissible on the proper construction of s 241(2). The respondents make the same submission, by way of notice of contention, in this appeal.
His Honour also said that it was common ground that the question of past hypothetical rezoning was to be decided objectively, by reference to orderly and proper planning, and not by reference to the likely subjective views or approaches of the particular decision maker [308].
The judge summarised the main elements of the appellants' case at trial, relevantly for present purposes, as follows [125] ‑ [126]:
(a)but for the proposed public works;
(i)the appellants would have applied for and obtained rezoning to urban/residential in the period prior to December 1997 when the Inner Peel Region Structure Plan (IPRSP) was published (the 'pre‑IPRSP case');
(ii)alternatively, if the subject land had not been zoned urban prior to the IPRSP, it would have been designated future urban in the IPRSP itself, and would consequently have been zoned urban in the Peel Region Scheme of 2003 (the 'hypothetical IPRSP case');
(iii)alternatively, if the land had remained rural in the IPRSP and in the Peel Region Scheme of 2003, then it would have been zoned urban or urban‑deferred by an amendment to the Peel Region Scheme between 2003 ‑ 2006 (the '2003 ‑ 2006 rezoning case');
(b)alternatively to (a), if, but for the proposed public works, the land would have been zoned rural as at 20 July 2006, then it would have had a high probability of being imminently rezoned to urban (this was the 'urban potential case');
(c)the highest and best use of the land would have been for a 'district commercial centre'.
(d)The appellants' valuers valued the land as follows:
(i)urban ‑ approximately $60 million to $65 million;
(ii)rural with urban potential ‑ approximately $36 million to $40 million; and
(iii)district centre potential ‑ $60 million to $70 million.
The judge summarised his answers to the questions raised by these contentions at [133] as follows:
(a)But for the proposed public works, would the land have been rezoned to urban in the years up to 1997, as a consequence of an application by the appellants for rezoning? ‑ No.
(b)If not, but for the proposed public works, would the land have been designated future urban in the IPRSP, and as a result been zoned urban in the PRS in 2003? ‑ No.
(c)If not, but for the proposed public works, would the land have been rezoned to urban or urban deferred by amendment of the PRS between 2003 and 2006? ‑ No.
(d)If not, but for the proposed public works, what was the urban potential of the land at the date of taking? ‑ Reasonable, but highly uncertain, and the odds did not favour approval of short-term rezoning.
(e)But for the proposed public works, would the land have been zoned or had the potential to be zoned for commercial use so as to permit a district centre in the way suggested by the appellants' commercial planner? ‑ No.
(f)Once the appropriate planning basis is identified what is the value of the land? ‑ $14.025 million.

Terminology

These reasons adopt the following terms and abbreviations used by the primary judge:
•DPUD - Department of Planning and Urban Development - name changed to Ministry for Planning in 1995 and to DPI in 2001 [485].
•DPI - Department of Planning and Infrastructure [80].
•IPRSP - Inner Peel Region Structure Plan - designed to provide a basis for a regional planning scheme for the Peel region - published in draft in July 1996 and in final form in December 1997 [55] ‑ [61].
•LPS - Shire of Murray's draft Local Planning Strategy, adopted by the Shire in August 2005 [80], [1471], [1574].
•MRCE - Murray River Country Estate.
•PRS Peel Region Scheme 2003 - the product of work done between 1997 to 2002 in light of the IPRSP [62] ‑ [73].
•TPS 4 Shire of Murray Town Planning Scheme No 4 - applicable in the period 1990 - 1997 [49].
•WAPC - Western Australian Planning Commission.

The appeal - overview

There are 18 grounds of appeal. Grounds 1 to 6 deal with the judge's findings on valuation (the 'valuation grounds'). The remaining grounds relate to planning issues (the 'planning grounds'). Grounds 1 to 6 are independent of the planning grounds and proceed on the assumption that the planning grounds do not succeed.
In relation to the planning grounds, grounds 7 to 15 were said to relate to the appellants' pre‑IPRSP case, that is, but for the proposed public works, the subject land would have been rezoned urban in the period up to 1997 prior to the publication of the final IPRSP. Counsel for the appellants informed the court that grounds 8 to 14 depended upon ground 15 being established, and that it would be unnecessary to determine those grounds if ground 15 failed (ts 170).
Grounds 16 and 17 relate to the appellants' 'hypothetical IPRSP case', that is, relevantly, but for the public works, the subject land would have been included as 'future urban' in the IPRSP. Ground 18 relates to the appellants' 'urban potential case' - the urban potential of the subject land on the assumption that in the absence of the public works, the subject land would have been zoned rural as at 20 July 2006, but with a high probability of being imminently rezoned to urban.
By the notice of contention, the respondents contend that the primary judgment should be upheld on the alternative basis that the court's task of discounting any increase or decrease in value attributable to the proposed public work pursuant to s 241(2) of the Act 'is to be undertaken on the facts existing as at the date of Taking, and should not include determining whether a rezoning would have occurred in a hypothetical preTaking date history assuming the public work had never been proposed'.
Within the appeal, there were also two interlocutory applications. The appellants applied to amend their grounds of appeal to add a new ground to the effect that there should be a retrial on the basis that the respondents had allegedly not given proper discovery. The respondents made an application to tender new evidence. Each of those applications was refused, with reasons to be published in the disposition of the substantive appeal.
I will deal with the valuation grounds first. It is convenient to outline, at the outset, the valuation principles and the principal findings made by the judge for the purposes of his determination of value.

Valuation principles and the judge's principal findings on valuation

Valuation - principles

The judge's statement of the relevant principles and the basis upon which the parties approached the issue of valuation at trial, are not challenged: see [163] ‑ [173], [2217] ‑ [2223], [2522]. The principles stated by his Honour included the following.
In relation to the comparable sales method, the judge referred with approval to the observations of Pullin J in Arcus Shopfitters Pty Ltd v Western Australian Planning Commission [2004] WASC 85 [18] ‑ [23] to the effect that it is not necessary to find an irreducible minimum of two comparable sales, before the comparable sales method has any validity [2220]. His Honour also referred to the observations of Tobias JA in AMP Henderson Global Investors v Valuer General [2004] NSWCA 264; (2004) 134 LGERA 426 [68] to the effect that it is not necessary to reject the comparable sales method if there is only one comparable sale [2221]. The judge also observed that the search for comparable sales is not to be distorted by any perceived need for a minimum number of comparable sales [2222]; ISPT Pty Ltd v Valuer General [2009] NSWCA 31; (2009) 165 LGERA 25 [27].
His Honour also said that just because a sale is excluded from use in the comparable sales process of reasoning, it does not necessarily follow that it must be discarded from all consideration [2217]; Brewarrana Pty Ltd v Commissioner of Highways (No 2) (1973) 6 SASR 541, 551; Duffy v The Minister for Planning [2003] WASCA 294; (2003) 129 LGERA 271 [25]. Although not mentioned by his Honour, the observations of Ash J in Frizell v Valuer‑General (NSW) (1979) 26 The Valuer 497, 501 are to similar effect.
As to evidence which is not a comparable 'sale', the following additional observations may be made. Whilst an unaccepted offer to purchase land is not direct evidence of value, it may, subject to it being genuine and at arm's length, and subject to proper regard being given to its terms and all the circumstances in which it is made, provide some indication of a likely minimum or floor price for the land: Auxil Pty Ltd v Terranova [2009] WASCA 163; (2009) 260 ALR 164 [42] ‑ [51]; MMAL Rentals Pty Ltd v Bruning [2004] NSWCA 451; (2004) 63 NSWLR 167 [98] ‑ [102]. It may thereby be used, depending on the circumstances, as a 'signpost' (MMAL [38]) which gives some direction to the ultimate location of value.
Correspondingly, and subject to the same qualifications, a call option, under which the seller is obliged to sell at the agreed price, may provide an indication of the ceiling price for the land: Expectation Pty Ltd v PRD Realty Pty Ltd [2004] FCAFC 189 [90]; (2004) 140 FCR 17. As the primary judge observed, an option, which is legally binding, may be afforded greater weight than an unaccepted offer [2522].

The evidence

His Honour reviewed the evidence of the valuers in relation to potential comparable sales and accepted that three transactions could be considered - the Clough/Rapley transaction, the Gold Fortune transaction and the sale of lot 23 Pinjarra Road (lot 23). The appellants' valuers had identified the first two transactions as relevant (Mr Brown relied on both and Ms Le‑Fevre relied on the second). Lot 23 had been identified by a valuer for the respondents (Mr Zucal). In accepting the relevance of these transactions, his Honour also rejected evidence of other transactions referred to by the valuers on each side. His Honour also rejected the hypothetical subdivision analysis (HSA) methodology of valuation undertaken by another valuer called by the respondents, Mr Wilson.
The details of the Clough/Rapley transaction, the Gold Fortune transaction, and the sale of lot 23 are examined in detail in relation to ground 4. For present purposes, it is sufficient to note the following. The Clough/Rapley land was owned by the appellants and comprised approximately 55.5 hectares, known as lots 300 and 301. The land lay on the south side of Pinjarra Road, immediately southwest of the subject land. The Clough/Rapley transaction was a complex transaction entered into by the appellants with Clough/Rapley on 14 November 2005. The Gold Fortune land comprised three lots totalling 20.7 hectares. The land was to the west of lot 300 of the Clough/Rapley land, and was also on the south side of Pinjarra Road. Two lots had been acquired in June 2005. The relevant transaction, considered by his Honour, involved the grant of an option in July 2006 with, in effect, two option periods. Lot 23 was located on Pinjarra Road, on its southern side, and comprised 11.17 hectares. It was sold in March 2006 for a sum representing approximately $139,000 per hectare.

The appellants in this appeal acknowledged that the land in each of these three transactions was 'within some striking distance of the subject land' (ts 15).

Clough/Rapley

Although his Honour rejected Mr Wilson's HSA methodology, he did accept Mr Wilson's evidence to the effect that relevant information could be drawn from the Clough/Rapley transaction in relation to lot 301. Adopting Mr Wilson's analysis of the sale price, his Honour found that the transaction signified a 'floor value' for lot 301 of $194,000 per hectare, that a purchaser was prepared to pay for lot 301 [2420], [2449] ‑ [2452]. His Honour also accepted Mr Wilson's evidence of the rate of increase of the value of such land from November 2005, the time of that transaction, to July 2006 (the time of taking). Using an annualised figure based on Mr Wilson's evidence of 47%, his Honour escalated the figure of $194,000, up to $255,000 per hectare as at July 2006 in respect of the floor value for lot 301 [2458], [2463]. (It may be noted here that his Honour seems to have used the terms 'floor price' and 'floor value' somewhat interchangeably - see, for example, [2451], [2452], [2485].)
Using certain evidence provided by the appellants' valuers, his Honour also found that insofar as the whole transaction concerned a sale of both lots 300 and 301, it reflected the parties' value of the land rezoned to urban within three years, with an urban rate per hectare of $300,000 as at November 2005 [2441] ‑ [2445]. Using the same rate of escalation based on Mr Wilson's evidence, his Honour escalated the urban value of lots 300 and 301 to $400,000 per hectare in July 2006 [2464].
His Honour then found that the highway made a modest positive contribution to the value of the Clough/Rapley land. He accordingly proceeded to discount its effect. The figure of $255,000 per hectare, being the floor value for lot 301 as at July 2006, was discounted to a range of $235,000 to $240,000 per hectare as the floor value for lot 301, absent the highway, as at July 2006. (This appears to represent a discount of approximately 8% and 6% respectively). The figure of $400,000 was discounted to a range of $370,000 to $375,000 per hectare as the 'urban value' of the land comprising both lots, absent the highway, as at July 2006 [2472] ‑ [2473]. (This appears also to represent a discount of approximately 8% and 6% respectively).
The judge then considered the nature and extent of the differences between the subject land and the Clough/Rapley land [2474] ‑ [2487]. The judge found that the subject land was:
(a)superior to the Clough/Rapley land insofar as it did not have the environmental constraints of the Clough/Rapley land and had better overall lot yields;
(b)inferior to the Clough/Rapley land in that:
(i)the Clough/Rapley land had the attraction of being closer to the water;
(ii)the Clough/Rapley land had significantly superior urban prospects as the parties had expected that land to be rezoned to urban in three years;
(iii)the Clough/Rapley land was smaller in area with a resultant higher rate per hectare.
His Honour found that, weighing those matters overall, the subject land was inferior to the Clough/Rapley land and that the Clough/Rapley land had a substantially higher per hectare value than the subject land [2476] ‑ [2478].
The judge said that no valuer had expressed an opinion on the extent of the appropriate adjustment of the floor value of lot 301, in order to derive a floor value for the subject land, and that he would have to make his own assessment of the appropriate adjustment, which would necessarily involve an element of arbitrariness or guesswork [2482] ‑ [2485].
His Honour then:
(a)discounted the floor price of $235,000 to $240,000 per hectare for lot 301 to arrive at a 'floor value of the subject land in the range of' $145,000 to $175,000 per hectare, absent the highway, as at July 2006. (This reflects discounts in the order of 38% - $235,000 down to $145,000, and 27% - $240,000 down to $175,000);
(b)found that discounting the $370,000 to $375,000 per hectare for the urban value of the Clough/Rapley land, taking into account in particular the attraction of the water feature and the difference in size, would suggest an 'urban value' of the subject land of a little under $300,000. (This involved a reduction of, roughly, 20%.) His Honour held that, consequently, the value of the subject land as zoned rural with urban potential, absent the highway, as at July 2006, would be very substantially less than $300,000 per hectare [2486] ‑ [2487], [2653].

Gold Fortune

In relation to the Gold Fortune transaction, the judge found that the option price (in respect of the first option period) indicated a ceiling price of $311,000 per hectare for the Gold Fortune land [2525]. As with 'floor value' and 'floor price', his Honour appears to have used 'ceiling value' and 'ceiling price' somewhat interchangeably - see, for example, [2610], [2654], [2667 (b)], [2751 (b)].
His Honour then reduced that figure to discount the likely effect of the highway. He said that he had adopted the higher end of the range used for discounting the Clough/Rapley land in that regard. He derived a figure for the ceiling value of the Gold Fortune land, as at July 2006 absent the effect of the highway, of $285,000 [2530]. (That would appear to be a discount of 8.4% applied to $311,000).
His Honour then compared the Gold Fortune land with the subject land [2531] ‑ [2539]. His Honour noted, and accepted, the appellants' evidence to the effect that the subject land was superior insofar as the Gold Fortune land had a lower yield and higher development costs. His Honour said, however, that the detail in the appellants' evidence with respect to those matters would not have been known by the optionee or a potential purchaser.
Nevertheless, his Honour regarded the subject land as, overall, inferior to the Gold Fortune land for three reasons:
(a)the urban potential of the Gold Fortune land was substantially greater than that of the subject land;
(b)the respondents' evidence, accepted by his Honour, was that that the difference in size meant that a lower hectare value applied to the subject land;
(c)the Gold Fortune land had a greater waterfront influence [2532] ‑[2538].
The judge discounted the ceiling value of $285,000 for the Gold Fortune land, absent the highway, to arrive at a 'per hectare ceiling value of the subject land somewhere in the range of $210,000 to $230,000 per hectare'. The judge in effect reiterated his earlier comments as to the difficulties in quantification and guesswork involved in this discounting exercise [2539]. (The discount from $285,000 to $210,000 approximately reflects a 26% discount, and the discount from $285,000 to $230,000 reflects a discount of approximately 19%.)

Lot 23

The third transaction which his Honour drew upon was the sale of lot 23 [2635] - [2644].
The respondents' valuer, Mr Zucal, had said that lot 23 was a comparable sale. The land was 11.17 hectares. It was zoned rural in the PRS and TPS 4, but was designated 'special use (home based business)' in the draft LPS. It was sold in March 2006 for $1.54 million, or approximately $139,000 per hectare. Mr Zucal considered that lot 23 had superior development potential to the subject land, and that its smaller size gave it a higher rate per hectare. He accordingly considered that the price of $139,000 per hectare revealed by this sale would provide a ceiling for the subject land.
The judge accepted Mr Zucal's evidence that lot 23 could be used as a comparable sale, but rejected his evidence that it provided a ceiling value for the subject land.
The judge accepted Ms Le‑Fevre's evidence (on behalf of the appellants) to the effect that the two locations should not be equated and that the subject land's proximity to Mandurah gave it an advantage, and that services were not available on lot 23. His Honour also accepted her evidence that the subject land had a higher use potential than lot 23. He also noted that there was a rapidly rising market in 2006, and that some allowance should be made for that in valuing the subject land as at July 2006. His Honour considered these factors outweighed the smaller rate per hectare attributable to the subject land size, and found, as a best estimate, that the sale of lot 23 indicated a value of $140,000 to $180,000 for the subject land. In doing so his Honour recognised that he was 'in the territory of making best guesses' and that the difficulties in quantifying the adjustment were 'particularly acute' [2644].
It appears that his Honour did not, in relation to lot 23, first escalate the per hectare value to July 2006 to derive and identify a per hectare value as at the taking date, and then adjust that identified figure to reflect the likely effect of the highway, before then comparing the relative merits of the subject land and lot 23 (as he had done in relation to Clough/Rapley and Gold Fortune transactions).

Summary of derived values

The judge summarised the assistance he derived from the three transactions in the following terms [2651] ‑ [2657].
Only three transactions were of real assistance. Each assisted in a different way. The Clough/Rapley transaction indicated that the subject land had a 'floor range' of between $145,000 to $175,000 per hectare, and also that the value of the subject land was very substantially less than $300,000 per hectare. The Gold Fortune transaction indicated that the subject land had a 'ceiling range' of $210,000 to $230,000. Lot 23 was the only transaction which provided a 'direct value range'. It indicated that the subject land had a value as at July 2006 in the range of $140,000 to $180,000 per hectare. His Honour's findings must be taken to be reference to a range of value absent the highway.
His Honour said that the ranges indicated by those transactions were substantially consistent, but were inconsistent in one respect. The bottom of the 'direct value' range derived from lot 23 ($140,000) was lower than the bottom of the 'floor value range' indicated by Clough/Rapley ($145,000). Notwithstanding the conditional character of the Clough/Rapley transaction, given the location, zoning, and proposed highest and best use and size of that land, his Honour considered that the Clough/Rapley transaction was a more reliable indicator than lot 23. Consequently, his Honour said, he would not select a value less than $145,000 for the subject land, notwithstanding that a value of $140,000 - $145,000 was within the range indicated by lot 23.

HSA method

His Honour went on to consider the hypothetical subdivision analyses [2669] ‑ [2752]. Having evaluated the evidence, his Honour concluded that the HSA method suggested a value of not more than $140,000 per hectare. However, the judge considered the method was insufficiently reliable to be of any assistance in identifying where, within the ranges which he had adopted by reference to the comparable sales method, the value of the subject land was located. His Honour acknowledged the uncertainties in the adjustment of comparable sales but nevertheless concluded that the adoption of the mid‑points of the ranges indicated by comparable sales was more reliable than using the HSA method to inform the selection from within those ranges [2752].

Judge's conclusions on value

His Honour concluded his reasons in relation to the value of the subject land in the following terms [2798]:
(1)There is limited sales data providing a sound foundation for valuing the land. For the reasons given in section 9.6, the Baldivis sales do not assist.
(2)The Clough/Rapley transaction indicates a floor price for lot 301 as rural land with urban potential. When that price is escalated to take account of the rising market, discounted for the effect on value of the Highway, and adjusted to take account of the superior value of lot 301, it indicates a floor value for the subject land in the range of $145,000 to $175,000 per hectare.
(3)The Clough/Rapley contract can also be taken as an indication of the urban value of lots 300 and 301. After escalating for the increase in land values to July 2006, discounting the effect on value of the Highway and adjusting for the lesser value of the subject land, that indicates an urban value for the subject land of a little under $300,000 per hectare. That is an indication that the value of the subject land, with its uncertain urban potential, is something very substantially less than $300,000 per hectare.
(4)The first exercise price of the Gold Fortune option indicates a ceiling price for the subject land in the range of $210,000 to $230,000 per hectare.
(5)The sale of lot 23 is an indication of a per hectare value of the subject land in the range of $140,000 to $180,000.
(6)These ranges are consistent with other broad indications in the sales evidence.
(7)In the circumstances of this case, the HSA method is not reliable. The long periods from the taking date to the commencement and completion of the notional subdivision mean that it is not a reliable indicator of the value of the land. Adoption of the midpoint of the ranges indicated by comparable sales is more reliable than using the HSA method to inform the selection from within those ranges.
(8)Adopting the midpoint of the ranges, the sales suggest a value of the subject land of $160,000 per hectare.
(9)Adopting that rate produces a total value of $14.025 million. I value the subject land in that sum.
It is convenient to commence an analysis of the valuation grounds by considering the grounds which allege errors of fact by the primary judge. These grounds are grounds 4 and 6.

Ground 4 - alleged errors in fact finding in relation to comparable sale transactions

Ground 4

The appellants allege, by ground 4, that the judge erred in fact in finding that:
(a)the Clough/Rapley transaction indicated a floor price for lot 301 as rural land with urban potential in the range of $145,000 to $175,000 per hectare (ground 4(a));
(b)the Clough/Rapley transaction indicated an urban value for the subject land of something very substantially less than $300,000 per hectare (ground 4(b));
(c)the Gold Fortune transaction indicated that the ceiling price for the subject land was in the range of $210,000 ‑ $230,000 per hectare (ground 4(c)); and
(d)the sale price of lot 23 was an indication of a per hectare value of the subject land in the range of $140,000 ‑ $180,000 per hectare (ground 4(d)).
Before addressing each of the grounds in ground 4, it is necessary to provide some further detail concerning the Clough/Rapley and Gold Fortune transactions.

The Clough/Rapley transaction [2375] ‑ [2487]

The Clough/Rapley land

The Clough/Rapley land was approximately 55.5 hectares, comprising what was known as lots 300 and 301. The land is on the south side of Pinjarra Road, immediately south‑west of the subject land. It lay between Pinjarra Road and Wilgie Creek. On the other, southern side of Wilgie Creek, is the residential area of North Yunderup. Gold Fortune is immediately to the west.
It was shown as a 'greenbelt rural living' zone in the IPRSP. It was zoned rural in the PRS and designated urban in the draft LPS and as 'future communities' in Network City.

The Clough/Rapley transaction

The appellants' solicitors, by an undated memorandum, invited tenders to purchase lots 300 and 301 by 21 September 2005. The memorandum stated, in effect, that it was anticipated that the land would be rezoned urban in an amendment to the PRS. However, by 16 September 2005, the Peel Region Planning Committee had resolved not to initiate an amendment to include the Clough/Rapley land in the urban zone in the PRS, pending the outcome of a planning review then underway. The tenor of the memorandum was that there was a high degree of confidence that the land would be rezoned to urban following the planning review.
The purchasers gave evidence to the effect that they expected the land to be rezoned urban within three years, although it might happen earlier because the amendment might be capable of being progressed separately from the IPRSP review. The purchasers considered the developable area to be 42.39 hectares. The purchasers' expectation was also reflected in a valuation report prepared for them by Burgess Rawson in February 2006.
On 14 November 2005, the appellants entered into a contract with the Clough/Rapley parties for the sale of lots 300 and 301. The price was $14.3 million plus $6,500 per lot permitted by the approved subdivision plan. Prior to certain subsequent minor variations the price was payable:
(a)by four instalments on fixed dates totalling $7.5 million;
(b)by payment of the balance of $6.8 million within two weeks of the buyer obtaining rezoning approval to rezone lots 300 and 301 from rural to urban residential; and
(c)$6,500 per lot on an approved subdivision to be paid within 10 days of the approval of the subdivision plan.
Settlement for lot 301 was originally agreed to be 27 March 2006, and was later amended to be 26 May 2006. Settlement for lot 300 would be within 10 days of the buyer obtaining zoning approval for both lots.
If rezoning approval for both lots was obtained earlier than the last scheduled instalment of the sum of $7.5 million, then the balance of the $14.3 million was payable within 10 days, and settlement of lot 300 would proceed accordingly.
It was agreed that the appellants could excise an area from sale of lot 301 (originally 4 hectares and later amended to 4.52 hectares) for their residential purposes.
The contract also contained terms to the effect that:
(a)if both lots are not rezoned within three years of the date of the agreement (ie, within the period to 14 November 2008), the buyer may within the following two years:
(i)elect to exclude lot 300 and (subject to (b) and (c) below) retain lot 301 on the basis that its obligations had been satisfied by the prior payment of $7.5 million; or
(ii)elect to proceed to settlement of lot 300 (reasons [2397], Appendix 5, cl 2.5(a) and (b));
(b)if the buyer so elects to exclude lot 300, or if it makes no election at all within the stipulated two‑year period, the appellants have an option to repurchase lot 301 for, in substance, $7.5 million (reasons [2397], Appendix 5, cl 2.5(c)); and
(c)if the buyer excludes lot 300 and the appellants do not exercise their option to repurchase lot 301 within 15 days from the end of the option period, or if the buyer elects to proceed with lot 300 but after five years from the date of the agreement the land (lots 300 and 301) is still not rezoned urban, there is provision for additional consideration to be payable to reflect the increased prevailing market price (if any) at each of those dates (reasons [2397], Appendix 5, cl 2.5(d)).
The appellants were also entitled to retain possession of lot 301 after settlement until the earlier of settlement of lot 300 or five years from the date of the agreement.
The buyer was responsible for pursuing the zoning application.

Gold Fortune Transaction [2488] ‑ [2543]

The Gold Fortune land

The land comprised lots 123, 185 and 205, with a total area of 20.7 hectares. They lay to the west of lot 300 and were also on the south side of Pinjarra Road. Lots 185 and 205 abutted Wilgie Creek. Lot 123 was a small lot immediately to the north of lot 185.
The land was zoned rural in the PRS apart from the small parcel in lot 185 designated regional open space near Wilgie Creek. The land was designated 'greenbelt rural living' in the IPRSP and 'future communities' in Network City.
Lot 185 and 205 were designated urban in the draft LPS. Lot 123 was designated rural-residential in the draft LPS.

The Gold Fortune transaction

Gold Fortune had acquired two of the three lots of the land for a total of $3 million in June 2005 at an average price of $160,000 per hectare.
In July 2006, Gold Fortune granted an option to acquire all of its shares (and thereby, in effect, the land as the land was its only asset) to Mount Richon Investments Pty Ltd. The option fee was $545,000. The agreement provided that if the option was exercised by 7 October 2006, the purchase price would be $6.447 million. If exercised after then, but before 31 August 2007, the purchase price would be $9 million, plus any capital expenditure by Gold Fortune on its assets during the option term.
The option was not exercised by 7 October 2006.
However, between early October 2006 and March 2007, the proponents of the Gold Fortune land worked up a proposed outline development plan.
In May 2007, Mount Richon assigned the option to an assignee for $350,000 plus 15 unencumbered housing blocks to be developed on the land.
In June 2007, the Shire of Murray's Planning Committee resolved to initiate a scheme amendment to the TPS to rezone Gold Fortune land as 'special development'.
On 20 August 2007, Mr Flugge of Greg Rowe & Associates wrote on behalf of Gold Fortune to Mr Bulstrode at the DPI, giving notice of an intention to lodge a request with the WAPC for urban rezoning of the Gold Fortune land under the PRS. He also referred to a similar request that had been made in relation to the Clough/Rapley land.
On 29 August 2007, the assignee of the option exercised the option.

Gold Fortune valuation evidence and findings [2506] ‑ [2543]

The appellants' valuers, Ms Le‑Fevre, and Mr Brown, in effect valued the Gold Fortune land by adding the option fee, plus the assignment fee, to the second exercise price. Ms Le‑Fevre then discounted that amount back to July 2006 to reflect the time value of money.
The respondents' valuer Mr Zucal, considered that the sale could not be properly used and that what was, in substance, effectively urban designated land in August 2007, could not be used to value rural land in 2006.
The respondents' valuer Mr Wilson, also considered that the plans for rezoning and discussions with the WAPC up to August 2007 indicated that the eventual sale in 2007 could not properly be used as a comparator with rural land in July 2006. He emphasised that the first option, up to October 2006, had not been exercised.
His Honour accepted that the exercise of the option in August 2007 reflected circumstances then existing. He found that the urban prospects of the Gold Fortune land were already better than the subject land as at July 2006, and that by virtue of the steps taken toward urban rezoning of the Gold Fortune land in the 13 month period from July 2006 up to August 2007, a purchaser of the Gold Fortune land would have had significantly more confidence in its urban prospects than at July 2006. He nevertheless considered that the first option price gave some indication of the ceiling price of the land based on it being zoned rural, with a potential for urban development. His Honour did not add the option fee to the first exercise price. His Honour noted that there was no universal rule as to that, and that the proper approach depended upon the terms of the option instrument. His Honour found that in this case, in light of the terms of the option instrument, and having regard to the object and purpose of the option fee, the fee should not be added to the exercise price. He accordingly found that the transaction indicated a ceiling value for the Gold Fortune land of $311,000 per hectare. (See [2519] ‑ [2529]).
As noted earlier, he then reduced that figure in order to discount for the effect of the highway, and arrived at a figure of $285,000 per hectare as the ceiling price for the Gold Fortune land, absent the highway, as at July 2006 [2530].

Disposition

As to ground 4(a), the appellants make, in effect, two principal submissions. The first is that the judge erred in fact in accepting Mr Wilson's evidence in deriving a floor price for lot 301 of the Clough/Rapley land, and in not accepting the evidence of the appellants' valuers. It is said that Mr Wilson's approach was wrong because the Clough/Rapley transaction proceeded on the basis of the parties' 'expectations' that the whole land would be rezoned, and that accordingly only the full purchase price could provide any real assistance on the question of value. It is also said that if it were thought that rezoning of the land did not have a high prospect of success, the only appropriate course was to take the full contract price and adjust it for contingencies to reflect the lack of certainty. The second principal submission is that the judge erred in discounting the derived floor price of $235,000 to $240,000 for lot 301 absent the highway, to obtain a floor value range for the subject land of $145,000 to $175,000.
As to the first principal submission, the judge examined the evidence of each of the valuers in detail [2404] ‑ [2433]. The judge preferred Mr Wilson's expert evidence, in relation to the figure which could be derived from the transaction with respect to lot 301, over that of the other valuers. The judge was entitled to accept Mr Wilson's evidence on this topic despite Mr Wilson not using the comparable sales methodology himself, and despite the judge's rejection of Mr Wilson's HSA valuation.
The Clough/Rapley transaction was a complex one comprising various elements. There were discrete features of the transaction applying to lot 301, even though it was also part of the overall sale. The price for lot 301 was a firm price that a third party purchaser was legally committed to pay for that lot with its potential for rezoning, regardless of whether there was in fact rezoning from rural to urban within three years. Also, it reflected, in effect, the minimum price which the vendor could obtain for lot 301. Even if rezoning did not occur within the contemplated period and the purchaser did not proceed with lot 300, the vendor could, at its option, allow the sale of lot 301 to stand and recover any additional increase in its market value under cl 2.5(d)(i)(A) and cl 2.5(d)(ii) of the contract, or repurchase it at the original capital sale price (subject to certain limited adjustments) under cl 2.5(c) of the contract. It gave the vendor certainty of selling at that price and, accordingly, it was open to the judge to treat this aspect of the transaction as indicating a floor price for lot 301. Further, in my view, his Honour was correct in rejecting the respondents' contention that the Clough/Rapley contract gave the buyer a put option [2448].
Further, his Honour was correct to focus attention on the pricing elements of the transaction as reflected in the parties' agreement. It was the information discernible from the agreement, and not the parties' supposed subjective expectations about it, which was relevant. The parties' expectations no doubt informed the terms of their bargain, but it was the latter, and not the former, which was of utility for the purpose of the exercise undertaken by his Honour. Accordingly, I would reject the appellants' first principal submission in relation to ground 4(a).
As to the appellants' second principal submission, for the reasons given later, I would see the reduction undertaken by the judge in order to obtain a floor price for the subject land as involving an error of principle and a denial of procedural fairness, and not as an error of fact.
As to ground 4(b), the error is said to arise because the judge omitted to have regard to, or 'misconstrued' the evidence of Ms LeFevre and Mr Brown, valuers for the appellants, in that:
(a)Mr Brown, who relied on Clough/Rapley as a comparable sale, had denied that his figure of $311,000 per hectare represented urban value; and
(b)Ms LeFevre had not placed reliance on the Clough/Rapley transaction herself and had said that whilst the sale price indicated a rate of $298,000 per hectare, the developable area (excluding wetlands etcetera) was $411,000 per hectare.
His Honour expressly recognised each of those points, [2411] ‑ [2416], and it was open to his Honour to accept as much or as little of the witnesses' evidence as he considered appropriate. The judge did not misconstrue the evidence of the appellants' valuers. Mr Brown's figure of $311,000 per hectare reflected his view of the contract price for the sale of lots 300 and 301 as at the date of that transaction in November 2005, after adjustments for the delayed settlement [2408]. Although he regarded this as the value of the land zoned rural with urban potential, he agreed that 'it represented the price of obtaining urban land for the purchaser' [2411]. Mr Brown's concession in that regard was aptly made. The full purchase price for lots 300 and 301 was payable on the basis that by completion, the land would be zoned urban. The full purchase price was not payable merely for rural land with urban potential. Accordingly, Mr Brown's characterisation of his figure of $311,000 per hectare as being for land zoned rural with urban potential was erroneous, and his Honour's approach to Mr Brown's evidence was correct.
In a related submission, the appellants also contended that the judge failed to distinguish between rural land purchased on the basis that it will be rezoned urban within a specified period, and 'urban land being purchased at urban value'. It is said that 'in the former circumstance, but not the latter, the purchase price has to take into account [amongst other things] … the risk that the land will not be rezoned' (par 36 appellants' written submissions).
It may be accepted that land already zoned urban is likely to command a price (call it price A) which is higher than a price for land which is rural at the time of the contract for sale but which is sold (at say price B) on the basis that it will be rezoned urban within the specified period allowed for completion. All things being equal, in the former case the land will be more readily developed and a return on development more quickly obtained than in the latter case. There remains, however, a distinction between those two situations on the one hand, and on the other hand a transaction in which the land is sold at a price (call it price C) on the basis that the land is and remains rural at the time of completion, albeit that it has urban potential. It is in this third case (and not the second as the appellants' submissions would suggest) that the purchaser outlays the purchase price but at the same time bears the risk that the land thereby acquired may never be rezoned urban. The appellants' contention is, in effect, that the judge failed to recognise that price A will generally be greater than price B. It does not, however, address the comparison, made correctly by the judge in relation to the sale of lot 300 and 301 in the Clough/Rapley transaction, that price B will be greater than price C.
The Clough/Rapley transaction indicated a price agreed in 2006 for land as zoned urban in 2009. The full purchase price did not represent a value for the land as rural land with a potential to be zoned urban at some stage in the future but with the inherent risk and uncertainty that the land may never achieve rezoning. Accordingly, the judge correctly regarded the full purchase price as an objective reflection of the parties' view of the value of the land zoned urban within 3 years [2443] ‑ [2444]. It follows that the judge's finding was open on a proper understanding of Mr Brown's evidence.
Also, no error has been shown in the judge's approach to Ms LeFevre's evidence. Ms LeFevre 'did an analysis of the Clough/Rapley land that was similar in character to Mr Brown's' [2415]. She agreed that the land was purchased on the basis that it would eventually be rezoned [2412]. She obtained a figure of $298,000 per hectare from the sale price. Whilst she also produced a figure of $411,000 per developable hectare, the judge had found that the valuers in substance accepted the proposition that 'it would be wrong to simply divide the purchase price by the number of developable hectares' [2322]. There is no challenge to that finding.
Accordingly, I would dismiss ground 4(b).
As to ground 4(c), it is said, first, that the judge erred in failing to add the option fee to the exercise price. It was pointed out that all the valuers had added the option price to the exercise price when calculating the per hectare value. The judge's reasons are at [2523] ‑ [2524]:
In calculating a per hectare rate derived by the Gold Fortune transaction, all of the valuers added the option fee to the exercise price. However, in my view, the option fee should not be included in the calculation of the per hectare value, whether ceiling or otherwise, indicated by the Gold Fortune transaction. Unsurprisingly, the cases do not reveal a universal legal rule about whether an option fee should be included in the calculation of the per hectare rate derived from the exercise of an option. Rather, the approach taken is that that depends on the terms of the option instrument.
The Gold Fortune option deed expressly provides, by cl 5, that the option fee is not to form part of the purchase price. To my mind, that is reinforced by consideration of the object and purpose of the option fee. The option fee is the price paid to obtain the certainty arising from the vendor's commitment to sell to the option holder in accordance with the terms of the option. That gives the option holder the opportunity to do whatever due diligence, and take whatever other steps, it wishes to until the end of the option period. Moreover, when the time comes for the option holder to decide whether or not to exercise the option, the option fee is a sunk cost. It does not form part of what the option holder must pay to purchase the land.
There was evidence that there was a heated and rising market at the relevant time. In that context, the total option period was a lengthy one - in excess of 12 months. Also, the right acquired by the grantee of the option was readily tradeable - cl 9 of the option agreement permitted assignment without consent. In these circumstances, it was properly open to the judge to conclude that the option fee was not a component of the price payable for the land, but rather a fee reflecting an agreed value for the chose in action, that is, the bundle of rights conferred on the grantee of the option at that time. The chose in action is separate from the property the subject of the option: George Wimpey & Co Ltd v Inland Revenue Commissioners [1975] 2 All ER 45; Abbott v Philbin [1961] AC 352. The judge was not bound to accept the opinions of the expert valuers. No error of fact is shown.
The appellants next allege that their expert valuers' evidence was to be preferred when they adopted the second exercise option price rather than the first exercise option price, which was the exercise price adopted by Mr Wilson, a valuer for the respondents. The judge was entitled to prefer Mr Wilson's evidence. His Honour explained why he regarded the second exercise price as of no real significance. His Honour, amongst other things, drew attention to the fact that steps had been taken in the 13 month period between July 2006 and August 2007, when the second option was exercised, to progress the zoning of the Gold Fortune land to urban. No error of fact is shown. I would dismiss ground 4(c).
As to ground 4(d), the appellants' contentions are in substance twofold. First, it is contended, in effect, that it was not open to treat lot 23 as a comparable sale. Secondly, if it were a comparable sale, the judge erred in adjusting the sale price for lot 23 of $139,000 per hectare, so as to reach a range of value for the subject land of $140,000 to $180,000.
As to the first contention, lot 23 was advanced as a comparable sale by one of the respondents' valuers, Mr Zucal. Mr Zucal considered lot 23 to be superior in potential to the subject land, but his Honour regarded that view as reflecting, in effect, Mr Zucal's bleak view of the urban potential of the subject land [2637]. His Honour concluded that the sale of lot 23 could be used, subject to appropriate adjustments, as a comparable sale with respect to the subject land having regard to the facts that:
(a)both were zoned rural;
(b)both were on Pinjarra Road;
(c)both were located in the same general vicinity; and
(d)both were identified for a higher use in the draft LPS in the absence of the proposed public works.
Ms LeFevre, one of the appellants' expert valuers, responded to Mr Zucal's reliance upon lot 23 in a report drawn to the court's attention by counsel for the appellants. Ms LeFevre said:
Situated a few kilometres south‑east of the subject lands, this lot is within an area which was proposed for Special Use under the Draft Local Planning Strategy initially to provide opportunity for home occupation industries or business with subdivision in line with Special Rural sized lots and at the date of sale, this was the land's potential. Subsequently, after being approached by landowners, the Local Authority amended the Special Use potential to include possible Residential although not envisaged to be of an Urban nature.
The sale is a little too old to be directly relevant to the date of valuation … it is possible that this sale reflects the market perception of the validity of the LPS in terms of providing a higher and better use potential than Rural for lands in this location along Pinjarra Road. That should surely have been a basis of it being 'comparable'.
This sale should in our opinion be considered good evidence of being less than the lower end of the likely market range for Rural land with at least Rural/Residential subdivision potential, and a conservative adjustment for the increase in value since March [2006], at 30%, would have indicated a comparative value of $185,000 per ha at July 2006. (GB 16308 ‑ 16309)
In my view, it was open to his Honour, having regard to Mr Zucal's evidence, to treat lot 23 as a sufficiently comparable sale subject to appropriate adjustments. Ms Le‑Fevre's evidence, referred to above, lends support to that conclusion. Mr Zucal's bleak view of the urban potential of the subject land did not require the complete rejection of lot 23 as a comparable sale. It did require rejection of Mr Zucal's view that the sale of lot 23 signified a ceiling value for the subject land. The judge did reject his view on this, and his Honour adjusted, upwards, the per hectare value derived from the sale of lot 23 [2639] ‑ [2644]. Accordingly, no error of fact has been shown on the judge's acceptance of lot 23 as a comparable sale subject to appropriate adjustment.
It is the process of adjustment which is the subject of the appellants' second contention under ground 4(d). In relation to that contention, for the reasons given later, I consider that there was an error of principle and a denial of procedural fairness, rather than an error of fact in this regard.
The next valuation ground which alleges errors of fact is ground 6.

Ground 6 - alleged errors of fact: Baldivis sales

Ground 6 alleges that the judge erred in fact in finding that the sales in Baldivis relied upon by the appellants' valuers did not provide useful comparable sales either directly or with adjustment.
The appellants' submissions comprise, in essence, four assertions:
(a)that having accepted aspects of the reasoning of the appellants' valuers, the judge ought to have accepted the whole of their evidence, including their conclusion that the sales in Baldivis provided useful comparable sales evidence;
(b)the judge erred in finding that in 2006 land was being purchased in Baldivis with an expectation of imminent rezoning;
(c)factors accepted by the judge as indicating that the Baldivis sales were not comparable sales were not 'singularly or collectively … sufficient to justify' the judge's ultimate finding on the question;
(d)the judge's conclusion was inconsistent with his acceptance that lot 23 provided useful evidence of a comparable sale.

Background

The appellants' valuers were, relevantly, Mr Brown and Ms LeFevre. Ms LeFevre made four points which, she said, indicated that the sales in Baldivis were comparable with the subject land. They were that sales in Baldivis also involved land zoned rural with urban potential, the land in Baldivis shared similar topography with the subject land, the land there shared similar drainage and fill requirements, and there was a relationship between Baldivis and Rockingham which was similar to the relationship between Ravenswood and Mandurah. The judge accepted the first three aspects of Ms LeFevre's evidence [2549] ‑ [2550].
The judge also found that the appellants' other valuer, Mr Brown, could give no, or no satisfactory, explanation as to why the Baldivis sales were comparable [2554] ‑ [2558]. That finding is not challenged.
The judge preferred the evidence of the respondents' valuers over the evidence of the appellants' valuers. Based largely on the evidence of the respondents' valuers, the judge made nine findings of fact relevant to the ultimate question of whether the Baldivis sales were comparable [2611]:
(a)Baldivis attracted people who work in the city and metropolitan area due to its proximity to the Kwinana Freeway;
(b)Ravenswood did not and would not attract such people (and all the more so in the assumed absence of the Highway). Its market is for people working in Peel;
(c)Baldivis was a well-established residential suburb; the same could not be said of Ravenswood;
(d)Baldivis had a strong and well-established market for residential lots, whereas there were much more limited sales in Ravenswood;
(e)there was a substantial number of en globo sales in Baldivis, unlike in Ravenswood;
(f)lot sizes were larger in Ravenswood;
(g)end lot prices were substantially higher in Baldivis;
(h)the WAPC and the local authority had identified the need for further urban land in Baldivis and were actively pursuing rezoning. Purchases of urban land in relevant parts of Baldivis in 2006 were made in the expectation of likely imminent rezoning; and
(i)consideration of sales in the Ravenswood vicinity does not support using Baldivis sales as comparable sales.
Only one finding of fact is challenged (by their second contention, the appellants challenge the second sentence of sub‑paragraph (h) of [2611] referred to above). The appellants also challenge, by their third contention, the inference drawn by the judge from these primary findings of fact, namely, that the Baldivis sales do not provide useful comparable sales evidence.
Other unchallenged findings of fact are that:
(a)Baldivis is not in the Shire of Murray, nor even the Peel region [2262];
(b)Baldivis is a Perth commuter area; Ravenswood is not [2575];
(c)by 2006 Baldivis was a wellestablished and expanding residential suburb. As a residential area, Ravenswood was 'embryonic' [2581].

Disposition

As to the appellants' first contention, the judge was entitled to accept the evidence of the respondents' valuers and, moreover, the suggestion that the judge was required to accept the whole of the evidence, including the conclusions, of the appellants' valuers is misconceived. Whilst the judge accepted the first three propositions advanced by Ms LeFevre, he added [2550] ‑ [2551]:
Standing alone, these [three] points fall well short of justifying use of Baldivis sales as comparable. Other matters relevant to the contemplated future urban development must be considered. For example, what is the demand for lots? Of what size? What is the likely selling price? How quickly could lots be sold? How soon could all necessary planning approvals be obtained? What are the likely costs of developing the land to the point of lot production?
These questions reflect the fact that in assessing urban potential, a prospective purchaser looks at more than just the prospect that rural land will be rezoned to urban. The purchaser must also assess the likely economics of urban development of the land.
The appellants' submissions do not mention these additional findings nor do they seek to demonstrate any error by the judge in fact or in logic in making them.
The judge also noted that Ms LeFevre had accepted that Baldivis and Ravenswood had different target markets [2568].
Furthermore, there were material aspects of the appellants' expert evidence, including that of Ms LeFevre's, which the judge did not accept. For example:
(a)the judge made a finding that an aspect of Ms LeFevre's evidence 'substantially understates the central significance of the freeway to Baldivis as a residential location' [2569];
(b)in relation to Ms LeFevre's reliance on her view that the Baldivis/Rockingham relationship was analogous to the Ravenswood/Mandurah relationship, the judge said:
In my view, this aspect is not a matter of significant weight in assessing the comparability of Ravenswood and Baldivis. Apart from anything else, it overlooks the fundamental difference between the two locations. Baldivis is a Perth commuter area; Ravenswood is not. Because of that, the relationship between Baldivis and its nearest regional centre of Rockingham differs from the relationship between Ravenswood and its nearest regional centre of Mandurah. I do not accept that the 'drawcard' for Baldivis is Rockingham [2575].
(c)Ms LeFevre's analysis of endlot prices suffered from two major deficiencies. One was that her reasoning indicated that she relied upon the amount that a particular purchaser expected, rather than on her own detailed analysis of sale prices. The other was that she overlooked or gave insufficient attention to the difference in lot sizes and that this significantly undermined the reliability of her analysis [2600] ‑ [2601], [2604];
(d)some Baldivis 'sales' upon which the appellants' valuers relied did not proceed to settlement, and Ms LeFevre accepted that a contract that does not proceed to settlement 'does not constitute reliable sales evidence' [2590].
There was no attempt by the appellants to dislodge any of these findings, which were critical of the appellants' expert evidence.
Accordingly, there is no merit in the first assertion.
As to the appellants' second assertion, the finding which is challenged is derived from [2611 (h)] of the judge's reasons set out in […] above. It is only the second sentence in that paragraph which is the subject of any challenge. It is said that that particular finding is dependent upon an earlier finding to the effect that a constraint on development in Baldivis, with respect to water waste management, did not emerge to the public until 2007 [2559]. It is said that this finding is wrong and hence the finding in the second sentence of [2611 (h)] is incorrect.
There are three answers to this assertion. First, even if the contention were correct, it has not been shown that the combination of all the other considerations identified by the judge in [2611] do not justify his Honour's ultimate conclusion as to the inutility of the Baldivis sales evidence relied upon by the appellants' valuers. Secondly, I am not satisfied that the finding in question is dependent on the earlier finding to which the appellants have referred. Rather, when the second sentence of [2611 (h)] is read in the context of the sentence preceding it, and in the context of the judge's findings at [2582] ‑ [2588], the finding in the second sentence relates to expectations based on steps taken by the relevant local authority and by the WAPC in connection with the proposed rezoning of land in Baldivis. In other words, the appellants' second contention rests upon a misconstruction of the judge's reasons. Thirdly, the earlier finding that the constraints with respect to waste water did not emerge to the general public until 2007 has not been shown to be in error. Mr Wilson, whose evidence the judge accepted, said that this issue only emerged in 2007 (GB 6277) and, as the judge observed [2559], the appellants' witness, Mr Brown, appears to have agreed with that in oral evidence (GB 6277). Further, Mr Hiller's statement (exhibit 243, GB 17854) to which the appellants referred, does not support their contention that 'rural sales in Baldivis occurring after May 2006 were sold in the knowledge that the land would not be developable until 2014 or 2015 due to sewerage constraints' (appellants' written submissions par 73). Rather, it indicates that the first time that the Water Corporation did not support the proposed rezoning was on 30 August 2006 (GB 17859 par 21). It also indicates that although one developer was aware in May 2006 that a waste water treatment plant had been proposed for 2015, the developer was seeking a temporary solution in the meantime on the basis that it was proposing a development plan commencing in 2008, with a development rate of 150 to 300 lots per year (GB 17886 - 17887).
For these reasons, the appellants' second contention should be dismissed.
As to the appellants' third contention, in my view it was plainly open to the judge to draw the inference that he did from the primary facts found in [2611]. Apart from mere assertion, the appellants have not sought to demonstrate why the inference was not open to his Honour on those facts. His Honour's conclusion was also supported by the expert evidence of the respondents.
As to the appellants' fourth contention, there is nothing in the judge's reasoning in relation to Baldivis which reveals a logical inconsistency with his acceptance of lot 23 as a comparable sale. None of the features upon which the judge relied to reject the appellants' contention that the sales in Baldivis provided useful comparable sales information, apply to lot 23. No inconsistency is shown.
I would dismiss ground 6.
I now turn to the remaining valuation grounds.

Grounds 1, 2, 3 & 5

Overview

A number of broad criticisms permeated the appellants' submissions in relation to grounds 1, 2, 3 and 5. They included the following.
First, the judge's approach to valuation did not reflect any recognised valuation methodology. Second, to the extent that he did adopt a recognised methodology - the comparable sales methodology - his application of the methodology miscarried. Thirdly, the quantification of the adjustments to the value to be deduced from the sale of lot 23, including the adjustments with respect to 'floor' value and 'ceiling' value in order to arrive at a value for the subject land, were critical to the outcome, but the judge made those adjustments without giving the appellants a proper opportunity to make submissions or adduce expert evidence on the adjustment process, and in particular its quantification. Fourthly, it is said that the judge does not adequately explain his reasoning in arriving at the adjustments to produce the 'direct value range', the 'ceiling range' and the 'floor range'. Although there is no separate ground of appeal which alleges error of law for want of reasons, the appellants appear to contend that the omission would not have arisen had the parties been given the proper opportunity to make submissions and adduce evidence. Accordingly, this fourth point seems to advert to the consequences of error, rather than identifying a separate ground of error.
These criticisms are put in various ways in grounds 1, 2, 3 and 5. Other errors are also alleged which are addressed separately when I come to deal with those grounds in these reasons.
In the meantime it is convenient to summarise, at the outset, my views with respect to these broad criticisms.
As to the first matter, the judge in my view did approach the issue of valuation by reference to a conventional valuation methodology - the comparable sales methodology. His Honour also examined the HSA method by reference to the expert evidence, but ultimately found it to be of no assistance. The judge found the sale of lot 23 to be a comparable sale, subject to adjustments. His Honour also found, in effect, that the hypothetical parties to the hypothetical purchase and sale of the subject land would have regarded the Clough/Rapley and Gold Fortune transactions, and the market in which those transactions occurred, as potentially providing signals as to the likely floor price for the subject land and the likely ceiling price for the subject land. That approach was open to his Honour, as was his finding that the Clough/Rapley transaction could be used as an indication of the value of the subject land zoned urban within three years, and that the subject land, zoned rural with urban potential, would have a substantially lower per hectare value.
As to the second matter, in my view no error is disclosed in the essential aspects of the judge's reasoning by which he concluded that the Clough/Rapley transaction indicated a floor price for lot 301, and the Gold Fortune transaction indicated a ceiling price for the Gold Fortune land. For reasons which I will develop later, in my view, his Honour erred in finding a floor price 'range' of between $235,000 and $240,000 for lot 301 of the Clough/Rapley land, when a floor price is not susceptible to a finding of 'range'. Nevertheless, in practical terms the range is immaterial at this point and the floor price for lot 301 derived by his Honour may properly be said to be approximately $240,000 per hectare for lot 301 of the Clough/Rapley land as at 20 July 2006, absent the highway. I also see no error in the way that his Honour obtained a ceiling price for the Gold Fortune land as at 20 July 2006, absent the highway, in the sum of $285,000 per hectare. Quite properly, no 'range' was selected at this point for the ceiling price of that land.
Nevertheless, I accept that his Honour erred in finding a 'ceiling value' range and a 'floor value' range for the subject land, and employing those 'ranges' of 'value' in the ultimate determination of the value of the subject land.
A floor price for an asset indicates that its value is located somewhere above that price. There cannot be a 'range' of floor prices for an asset. If the lowest point is the 'floor', anywhere above the lowest point, up to the top of the 'range', cannot by definition also be a 'floor'. If the highest point of the range is the 'floor', anything lower in the 'range' is irrelevant. The same difficulties apply, in the reverse, to a 'range' of ceiling prices.
The anomaly that the ultimate determination of value of $160,000 per hectare was less than a floor price which included $175,000 per hectare for the subject land was, with respect, obscured by the judge 'adopting' the 'mid‑point' of two ranges which included the 'floor value … range' [2798 (8)].
In this case, a floor price and a ceiling price, properly derived, for the subject land might be used to provide some guide and a context to a consideration of the appropriate adjustments for the purposes of deducing a value for the subject land from the sale of lot 23. However, his Honour did not use the information as to a floor price or a ceiling price in that way. Instead, his Honour determined a 'range' of floor prices and 'range' of ceiling prices and treated each range as its own independent range of 'value' from which a mid‑point of 'value' could be adopted, although, in the end, he had no regard to the latter range. He thereby ultimately treated certain evidence as to ceiling price, and (more importantly in terms of outcome) floor price, derived from transactions which his Honour found could not properly be regarded as conventional comparable 'sales' (see [2651]), as, in effect, providing direct evidence of 'value' in the same way that the comparable sale of lot 23 could provide (with adjustments) direct evidence of value. In my respectful view, to this extent, his Honour erred in law in the application of the comparable sales methodology.
For the reasons and to the extent outlined in relation to ground 3, I accept the substance of the third contention.
As to the fourth contention, the respondents in this appeal acknowledged that, save in the respect mentioned below, there was no evidence which would support the adjustments made by the judge in quantifying the ranges of value which he derived for comparison purposes with the subject land (ts 214 ‑ 215, 220 ‑ 221). The evidence relied upon by senior counsel for the respondents was a report of one of the respondents' valuers, Mr Wilson, who referred to rural land with an urban designation in the draft LPS, attracting approximately 34% of the value of urban deferred land. However, that report had been disavowed by the witness and the judge did not put any weight on it [2276] ‑ [2277].
The respondents also made general reference to the sale of property on Beacham Road, West Pinjarra at a rate of $130,000 per hectare, and to an earlier sale of two of the lots which came to comprise the Gold Fortune land. However, the Beacham Road land did not have the potential for urban use and the judge did not treat it as a comparable sale [2645] ‑ [2646], [2650]. The earlier sale of two lots of the Gold Fortune land was not treated as a comparable sale and could only be used, according to the judge, to see if the value which he derived from a consideration of Clough/Rapley, lot 23 and Gold Fortune was 'out of kilter' [2660]. Accordingly, neither transaction explains the adjustments made by the judge in ultimately deriving the value of the subject land.
With those observations in mind, it is convenient to turn to each of grounds 1, 2, 3 and 5.

Ground 1 - third valuer

The appellants allege that the judge erred in law by rejecting the conclusions reached by the valuers and, in effect, acting as a 'third valuer' instead of merely making adjustments to the opinions expressed by the valuers.
The judge stated the relevant principles and the basis upon which the parties approached the issue [163] - [173]. There was no challenge to those findings, which included:
In determining the value of the land taken, the court relies on the evidence of professionally qualified valuers. The court is not itself a valuation agency: Mount Lawley (2004) [183].
Valuation is an art not a science; it involves the exercise of many subjective judgments and the steps in reasoning are not always able to be articulated fully. In The Secretary of State for Foreign Affairs v Charlesworth, Pilling & Co [1901] AC 373, the Privy Council said as follows:
It is quite true that in all valuations, judicial or other, there must be room for inferences and inclinations of opinion which, being more or less conjectural, are difficult to reduce to exact reasoning or to explain to others. Everyone who has gone through the process is aware of this lack of demonstrative proof in his own mind, and knows that every expert witness called before him has had his own set of conjectures, of more or less weight according to his experience and personal sagacity. In such an inquiry as the present, relating to subjects abounding with uncertainties and on which there is little experience, there is more than ordinary room for such guesswork; and it would be very unfair to require an exact exposition of reasons for the conclusions arrived at (391).
That passage has been cited with approval in a number of cases in the High Court, beginning with Spencer, and in other Australian appeal courts.
Some of the adjustments to values deduced from comparable sales in order to arrive at valuation may be 'nothing more than the best guess that can be made': Leichhardt Municipal Council v Seatainer Terminals Pty Ltd (1981) 48 LGRA 409, 434; Yates Property Corporation Pty Ltd (in liq) v Darling Harbour Authority (1991) 24 NSWLR 156, 182 - 183. See also Duffy v The Minister for Planning [2003] WASCA 294 (Duffy (2003)) [29] - [31].
It has often been said that the court must not allow itself to be cast in the role of the 'third valuer': Brewarrana Pty Ltd v Commissioner of Highways (No 2) (544 - 545); Bronzel v State Planning Authority (523); Arcus Shopfitters (2002) [76]; Tyler v Thomas [2006] FCAFC 6; (2006) 150 FLR 357 [55] - [56]. Valuers have their own experience, training and skill and that role must not be usurped by the court: Bronzel (523).
On the other hand, it is clear that the court is not obliged simply to adopt one of the valuers' opinions. The court can make such adjustments to value as are required by the evidence: Mount Lawley Pty Ltd v Western Australian Planning Commission [2007] WASCA 226; (2007) 34 WAR 499 (Mount Lawley (2007)) [391]; Arcus Shopfitters (2002) [76]; Corporation of the City of Adelaide v City of Port Adelaide Enfield [2000] SASC 271; (2000) 110 LGERA 153 [88] - [89]. If the court finds any valuation evidence to be defective, incomplete or irreconcilable in some respect then it should use other evidentiary material to correct, complete or reconcile that evidence: Brewarrana (545).
There was no issue between the parties in this respect. The parties agreed that the court cannot adopt a valuation methodology that was not supported in any of the valuers' evidence. Further, the parties agreed that the court cannot simply take an average of competing valuations in order to resolve their differences. I am content to accept those propositions. However, I note that there is room for doubt about the first proposition: see Downie v Sorell Council [2005] TASSC 74; (2005) 141 LGERA 304 [33]. The parties did not identify anything else that is impermissible.

For these reasons, the appellants had not established a serious failure, or indeed any failure, by the respondents to comply with their discovery obligations in relation to documents concerning the potential urban development of Amarillo.
Secondly, the additional documents do not show that but for Amarillo, the Planning Review for the Peel Region would have proceeded separately and outside of the context of the Southern Sectors Review. The judge's finding on this question is at [1715]:
To my mind, the upshot is that in the Planning Review, the IPRSP review was not to be separately progressed to completion independently of this Southern Sectors Review. Rather, the IPRSP review would either be subsumed by this Southern Sectors Review or, to the extent necessary, would be progressed only later, in parallel with the Southern Sectors Review, when sufficient progress had been made on the Southern Sectors Review to provide an informed framework for a review of the IPRSP.
The additional documents tend to support that finding.
In an email dated 29 December 2005, an officer of the DPI referred to a communication in 'mid December [2005] in relation to the planning of Amarillo, and how it will be fitting into the Southern metro area and Peel Region' (page 408, emphasis added). Also, in an Amarillo position paper prepared on behalf of the Department of Housing and Works, and sent to the DPI, dated 20 June 2006, it was said that the 'way forward' included 'work with DPI on Metro South and Peel Region Structure Plans' (pages 328 and 341, emphasis added). The position paper indicates that in planning for the development of Amarillo, it was accepted that urgent regional planning was needed for the Southern Metropolitan and Peel Regions (page 335), but it does not suggest that this was unique to Amarillo, and that but for Amarillo regional planning of this kind would not have occurred.
In the WAPC minutes of 27 June 2006, it was recorded that the WAPC requested 'DPI to consider Amarillo in the current structure planning review of the Southern Sectors' (emphasis added, page 349).
The other additional documents do not present Amarillo as the catalyst for the Southern Sectors Review.
Thirdly, even if the first two points could have been overcome, there was nothing to indicate that there was a real possibility that the trial judge would have reached a different conclusion in relation to his ultimate findings at [2102]. The appellants did not demonstrate that if the WAPC had confined its review to the Peel region, there was a real possibility that the judge's findings as to the uncertainties associated with rezoning the subject land as at 20 July 2006, would have been more favourable to them. In this regard, the appellants failed to establish that there was a real possibility that other factors identified by the judge in [2074] would not have operated with equal significance for the prospects of rezoning the subject land, within a review of the Peel region on its own. Those factors included questions of need and supply, population projections, the attitude of the WAPC, the impact of Network City, the categorisation of future urban land, the principles and nature of the proposals in the draft LPS, and the planning decisions taken with respect to Clough/Rapley.

Respondents' notice of contention and interlocutory application

In light of the findings made with respect to grounds 7 and 15, it is unnecessary to deal with the notice of contention.
The respondents made an interlocutory application during the appeal to adduce evidence in the form of the contract for sale of lot 23. It was said that this was relevant to the adjustments to be made in relation to lot 23 and, in particular, on the question of any escalation in value between the transaction date and the taking date. In this regard it was said, in effect, that the contract showed a settlement period of 90 days, which would take settlement closer to July 2006, and that, as a result, there would be no need for any material escalation.
The court rejected the respondents' application. My reasons for so doing were as follows.
The court is given a discretion, under pt 5 r 47(3)(d) of the Supreme Court (Court of Appeal) Rules to 'make an order relating to the admission of additional evidence'. The failure by the respondents to adduce the evidence, which was known and available to them at the trial, was a relevant factor weighing against the reception of the evidence in this appeal: Goninan & Co Pty Ltd v Direct Engineering Services Pty Ltd [2007] WASCA 10; (2007) 33 WAR 182 [12]. Also, it would have been contrary to the interests of justice to receive the evidence now, as it was material which, in my view, should have been raised at trial and the point exposed in order to allow the appellants the opportunity to adduce expert evidence to deal with it. The respondents had contended, in effect, that this concern was more theoretical than real, because the use which they wished to make of the material on appeal was, in any event, supported by the evidence given by Ms Le‑Fevre at trial. They referred in this regard to her evidence to the effect that in making adjustments in respect of a transaction occurring after the taking date, the practice was to go back to the date of settlement, and not to the date of contract (GB 6371). In my view, that submission lacked cogency for a number of reasons. The first is that Ms Le‑Fevre was not dealing, in that part of her evidence, with lot 23. The second is that she did not suggest or imply that the practice to which she referred was universal in its application, irrespective of the context and circumstances of the particular transaction under consideration. Thirdly, in one of her responsive reports (GB 16308 ‑ 16309), she had addressed the issue of escalation in price in relation to lot 23 from the date of the contract. It is difficult to suppose that had the point been exposed at trial, the appellants would not have sought to address the suggestion that in relation to lot 23, it was appropriate to put to one side the question of escalation because of the delayed settlement. Finally, on its own, a provision in a contract stipulating a date for settlement is not, of itself, evidence of the date of settlement. On the respondents' contention, it was the date of settlement which they wished to prove, and the tender of the contract for sale would not prove that fact.

Conclusion

It follows from the above that the appeal should be allowed in part in relation to grounds 2, 3 and 5 only. The primary court's orders, including in relation to costs, should be set aside.
The appellants sought orders in the appeal including orders to the effect that:
3.the matter be remitted to a differently constituted court, alternatively the amount of compensation be determined by this Court;
4.the Respondents pay the Appellants' costs of the appeal and trial.
It is evident from these reasons that this court is not in a position to determine the amount of compensation.
Section 59(3) of the Supreme Court Act 1935 (WA) provides, in effect, that this court may order a new trial 'as to part only of any matter in controversy … or as to any question or issue without disturbing any finding or decision as to any part of the controversy … or on any question or issue, and final judgment may be given as to any such other part … or on any such other question or issue.'
In Waterways Authority v Fitzgibbon [2005] HCA 57; (2005) 79 ALJR 1816, Hayne J (Gummow and McHugh JJ agreeing) said that it 'may readily be accepted that retrial is a remedy that inflicts great hardship on parties and witnesses' [135]. Kirby and Heydon JJ adopted observations to the effect that a new trial is 'a most deplorable result' [36].
The exercise of the power to order a retrial ultimately depends upon the demands of justice: McLennan v McCallum [2010] WASCA 45 [91]. The question of whether to order a new trial limited to certain issues or to order a new trial generally also depends on what is just in all the circumstances: Pateman v Higgin [1957] HCA 62; (1957) 97 CLR 521, 530. Generally speaking, the starting point is that if there is to be a new trial, it ought to be of the case as a whole unless the court thinks that it will do more injustice by setting the matter at large again: Pateman v Higgin (527); CSR Ltd v Della Maddalena [2006] HCA 1; (2006) 80 ALJR 458 [80] ‑ [81]. Thus, where the court considers that it is difficult to 'disjoin' the issue which makes the retrial necessary from other issues in the case, it will be appropriate to order a retrial of all such issues: Van der Velde v Halloran [2011] WASCA 252 [144] ‑ [145]. Similarly, a new trial should not be limited if there is a 'real chance' of the primary court having erred in the wider case: Trustees of the Roman Catholic Church v Hogan [2001] NSWCA 381; (2001) 53 NSWLR 343 [48].
In applying these principles, it is necessary to recall that the proceedings commenced in 2007. There were various hearings over the course of 2009 and 2010. The total hearing time occupied approximately 4 months. The case involved an enormous amount of documentary evidence and numerous witnesses. It appears that each point that might conceivably have been taken was taken. No stone was left unturned.
In these circumstances, and having regard to the limited issues upon which the appellants have succeeded, it would be undesirable for a new trial to be ordered on all issues, including the planning issues.
In relation to the valuation issues, the appellants also had limited success. They failed on ground 1 and also on grounds 4 and 6 in which they alleged certain errors of fact by the judge. They have succeeded, in effect, in demonstrating a denial of procedural fairness and an error of principle, both of which are errors that are bound up in the issue of the process and quantification of adjustment in relation to the comparable sale exercise.
I am satisfied that there is no 'real chance' that the primary court erred in the wider valuation case and, in my view, the issues upon which error has arisen may effectively be disjoined from the wider case on valuation.
The interests of justice in this context also include the 'appearance of justice' which may affect the decision as to whether the matter should be remitted to a differently constituted court: see Selstam Pty Ltd v Ghaleb [2005] NSWCA 208 [12] ‑ [17] (Mason P), [142] (Ipp JA), [237] (Basten JA). In this case, a number of observations may be made in that regard.
First, this is not, in essence, a situation where the judge has heard all the relevant evidence on a topic and has formed a view and made consequential findings on such evidence. Rather, the judge made findings as to the adjustment process in the absence of the evidence which the parties may have been capable of adducing on that matter. Indeed, his Honour lamented the absence of material to assist him, but regarded himself as having 'no alternative but to do' as he did: see [174], [2483], [2539], [2644].
Secondly, the valuation issues will be determined by reference to the expert evidence. There are no relevant credibility findings against the parties or witnesses of fact. As to the expert evidence, it is the case that the judge has made findings critical of Ms Le‑Fevre's evidence, (for example, [2702], [2709], [2719]) and, albeit to a lesser extent, Mr Zucal's evidence (for example, [2299], [2433], [2684], [2797]). Nevertheless, it would be open to each party on a retrial of limited issues to call new valuers if they wished.
Thirdly, this is not a case where there is any suggestion that the proceedings below were conducted so as to give rise to a reasonable apprehension of bias on the part of the primary judge. Insofar as there has been a denial of procedural fairness, it arose at the final hurdle, as it were, in a difficult and lengthy case which was otherwise, on all appearances, impeccably conducted by his Honour.
Fourthly, it would not serve justice or the appearance of justice for a different judge to undertake the final task of determining value - an exercise involving questions of degree and judgment - without any instinctive appreciation of the nature and scope of the anterior findings upon which the task is based, and without the benefit of the insight which must inevitably come from the intellectual engagement with the case up to that point.
It seems to me that in all the circumstances of this case, justice would be served if the issue of valuation were remitted to the primary judge on the basis, broadly speaking, that all of his Honour's findings stand, up to and including the point where his Honour found, in effect, that:
(a)lot 23 is the only comparable sale;
(b)the Clough/Rapley transaction indicates that as at the taking date, but for the proposed highway:
(i)the value of the Clough/Rapley land zoned urban within three years was in the order of $375,000 per hectare;
(ii)lot 301 of the Clough/Rapley land had a floor price of approximately $240,000 per hectare;
(c)the Gold Fortune transaction indicates that as at the taking date, but for the proposed highway, the ceiling price for that land was $285,000 per hectare.
This would leave, in effect, the parties with the opportunity to call further evidence and make submissions on the adjustment process in relation to the value to be deduced from the sale of lot 23, the 'urban value' derived from the Clough/Rapley transaction, and the likely ceiling price and floor price of the subject land having regard to the conclusions identified in sub‑paragraphs (b) and (c) of the preceding paragraph. I would hear further submissions from the parties as to the precise form of the orders for retrial once they have had an opportunity to consider these reasons.

CACV 159 of 2011

Finally, there was listed, at the same time as the hearing of this appeal, another appeal, CACV 159 of 2011, in which the appellants had appealed against the primary judge's costs orders in the proceedings below. If, as is contemplated by these reasons in relation to CACV 115 of 2011, the primary judge's orders below in relation to costs should be set aside in consequence of the disposition of that appeal, it will be unnecessary for the issues in appeal CACV 159 of 2011 to be determined.

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE COURT OF APPEAL (WA)

CITATION: MCKAY -v- COMMISSIONER OF MAIN ROADS [2013] WASCA 135 (S)

CORAM: MARTIN CJ
BUSS JA
MURPHY JA

HEARD: ON THE PAPERS

DELIVERED : 29 JULY 2013