McKay v Commissioner of Main Roads [No 7]

JURISDICTION	:	SUPREME COURT OF WESTERN AUSTRALIA IN CIVIL
CITATION	:	McKAY -v- COMMISSIONER OF MAIN ROADS [No 7] [2011] WASC 223

CORAM

: BEECH J

HEARD

:	19 OCTOBER - 20 NOVEMBER 2009, 19 JULY -16 SEPTEMBER 2010, 15 OCTOBER, 25 OCTOBER - 5 NOVEMBER 2010, 29 NOVEMBER - 2 DECEMBER 2010

DELIVERED

:	1 SEPTEMBER 2011

FILE NO/S

:	CIV 1558 of 2007

BETWEEN

: RODERICK DOUGLAS McKAY

KATHLEEN GLENYS McKAY
Plaintiffs
AND
COMMISSIONER OF MAIN ROADS
First Defendant
WESTERN AUSTRALIAN PLANNING
COMMISSION
Second Defendant

Catchwords:

Resumption and acquisition of land - Compensation - Valuation of land - Requirement under s 241 Land Administration Act 1997 (WA) to value land discounting any effect on value attributable to the proposed public works - 'Pointe Gourde' principle - Whether statutory discounting permits enquiry into the zoning of the land in the absence of the proposed public works - Determination of zoning of the land in the absence of the proposed public works

[2011] WASC 223

Resumption and acquisition of land - Compensation - Valuation of land - Evidence - Relevance and admissibility of planning instruments and other matters after the date of taking in assessing market value - Whether such evidence is admissible to 'confirm a foresight' - Extent of urban potential of the subject land

Resumption and acquisition of land - Compensation - Valuation of land -

Valuation methodology - Comparable sales - Hypothetical subdivision analysis

Legislation:

Land Administration Act 1997 (WA), s 241(2), s 241(6), s 241(8), s 241(9)

Result:

Compensation awarded in the sum of $15,427,500 plus interest to be determined

Category: A

Representation:

Counsel:

Plaintiffs

:

Mr M J McCusker QC, Mr T Houweling,

Dr J T Schoombee (19 October -
20 November 2009) & Mr P G McGowan
(15 October - 5 November 2010)

First Defendant	:	Mr K M Pettit SC & Ms F B Seaward
Second Defendant	:	Mr K M Pettit SC & Ms F B Seaward

Solicitors:

Plaintiffs	:	Cornerstone Legal
First Defendant	:	State Solicitor for Western Australia
Second Defendant	:	State Solicitor for Western Australia

[2011] WASC 223

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

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

Australian Apple & Pear Marketing Board v Tonking (1942) 66 CLR 77

Boland v Yates Property Corporation Pty Ltd [1999] HCA 64; (1999) 74 ALJR

209

Brewarrana Pty Ltd v Commissioner of Highways (No 2) (1973) 6 SASR 541
Bronzel v State Planning Authority (1979) 21 SASR 513
Browne v Dunn (1893) 6 R 67
Cairns City Council v CMB No 1 Pty Ltd (1997) 96 LGERA 306
Caruso v Sydney Water Corporation [2008] NSWLEC 320
Chappel v Hart [1998] HCA 55; (1998) 195 CLR 232

Chino Pty Ltd v Transport Infrastructure Development Corporation [2006]

NSWLEC 768; (2006) 153 LGERA 136

Commissioner of Succession Duties (South Australia) v Executor Trustee and Agency Company of South Australia Ltd (1947) 74 CLR 358
Commonwealth Custodial Services Ltd v Valuer-General (NSW) [2006] NSWLEC 400; (2006) 148 LGERA 38
Cook & Edwards v City of Stirling (1991) 4 WAR 469
Cook v Roads and Traffic Authority of New South Wales [2007] NSWLEC 136

Corporation of the City of Adelaide v City of Port Adelaide Enfield [2000]

SASC 271; (2000) 110 LGERA 153

Coundrelis v Roads and Traffic Authority of New South Wales [2008]

NSWLEC 72

Dasreef Pty Ltd v Hawchair [2011] HCA 21
De Ieso v Commissioner of Highways (1981) 27 SASR 248
Downie v Sorell Council [2005] TASSC 74; (2005) 141 LGERA 304
Duffy v The Minister for Planning [2002] WASC 201
Duffy v The Minister for Planning [2003] WASCA 294

Fletcher Estates (Harlescott) Ltd v Secretary of State for the Environment

[2000] 2 AC 307

Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122; (2003) 27 WAR 403
Goodman v Roads and Traffic Authority of New South Wales [2000] NSWLEC

185

Gosford Shire Council v Green (1980) 48 LGRA 201
Griffith City Council v Polegato (1990) 20 NSWLR 696

Haig v Minister Administering the National Parks and Wildlife Act 1974 (1994)

85 LGERA 143

Housing Commission of New South Wales v Falconer [1981] 1 NSWLR 547

[2011] WASC 223

Housing Commission of New South Wales v San Sebastian Pty Ltd (1978) 140

CLR 196

ISPT Pty Ltd v Melbourne City Council [2008] VSCA 180; (2008) 20 VR 447
Kelly v Western Australian Planning Commission [2006] WASC 208
Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413

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

409

Longworth v Commissioner of Stamp Duties (1953) 53 SR (NSW) 342

Maggiotto v Roads and Traffic Authority of New South Wales [2006] NSWLEC

54

Maidment v Roads and Traffic Authority of NSW [2006] NSWLEC 606; (2006)

153 LGERA 249

McCathie v Federal Commissioner of Taxation (1944) 69 CLR 1
McDonald v Roads & Traffic Authority of NSW [2009] NSWLEC 105
McKay v Commissioner of Main Roads [2009] WASC 353
McKay v Commissioner of Main Roads [No 2] [2010] WASC 153
McKay v Commissioner of Main Roads [No 3] [2010] WASC 232
McKay v Commissioner of Main Roads [No 5] [2010] WASC 273
McKay v Commissioner of Main Roads [No 6] [2010] WASC 274
McKenna v Municipality of Burnie [1970] Tas SR 279; (1970) 22 LGRA 402
Melwood Units Pty Ltd v Commissioner of Main Roads [1979] AC 426

Minister Administering The Crown Lands Act v Deerubbin Local Aboriginal

Land Council (No 2) [2001] NSWCA 28; (2001) 50 NSWLR 665

Minister Administering The Crown Lands Act v New South Wales Aboriginal Land Council [2009] NSWCA 151
Minister for Army v Parbury Henty & Co Pty Ltd (1945) 70 CLR 459
Minister for the Environment v Florence (1979) 21 SASR 108
Minister of Environment v Petroccia (1982) 30 SASR 333
Mir v Valuer-General [2009] NSWLEC 139

Mount Lawley Pty Ltd v Western Australian Planning Commission [2004]

WASCA 149; (2004) 29 WAR 273

Mount Lawley Pty Ltd v Western Australian Planning Commission [2006]
WASC 82 Mount Lawley Pty Ltd v Western Australian Planning Commission [2007]

WASCA 226; (2007) 34 WAR 499

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

[2008] WASCA 158

Multari v Roads and Traffic Authority of New South Wales [2004] NSWLEC

649

NSW Aboriginal Land Council v Minister Administering the Crown Lands Act

[2007] NSWLEC 481
[2011] WASC 223

Peter Croke Holdings Pty Ltd v Roads and Traffic Authority of NSW (1998)

101 LGERA 30

Pointe Gourde Quarrying and Transport Company Ltd v Sub-Intendent of Crown Lands [1947] AC 565
Port Stephens Shire Council v Tellamist Pty Ltd [2004] NSWCA 353; (2004)

135 LGERA 98

Prast v Town of Cottesloe [2000] WASCA 274; (2000) 22 WAR 474

Professional Services of Australia Pty Ltd v Computer Accounting and Tax Pty

Ltd [No 2] [2009] WASCA 183

Rees v Minister for Planning and Housing (1991) 76 LGRA 167

Roads and Traffic Authority of New South Wales v Mosca [2006] NSWCA 159;

(2006) 146 LGERA 335

RTA v Perry [2001] NSWCA 251; (2001) 52 NSWLR 222
Rukavina v The Council of the City of Wagga Wagga [1993] NSWLEC 29
Smith v Roads and Traffic Authority of New South Wales [2005] NSWLEC 438
Sorell Council v Downie [2005] TASSC 2
Spencer v The Commonwealth (1907) 5 CLR 418
Startrail Pty Ltd and Main Roads Western Australia [2009] WASAT 243

Sydney Harbour Foreshore Authority v Walker Corporation Pty Ltd (No 2)

[2006] NSWCA 386; (2006) 68 NSWLR 487

Sydney Harbour Foreshore Authority v Walker Corporation Pty Ltd [2005] NSWCA 251; (2005) 63 NSWLR 407
Sydney Water Corporation v Caruso [2009] NSWCA 391; (2009) 170 LGERA

298

Taylor v Port Macquarie-Hastings Council [2010] NSWLEC 113

The Bell Group Ltd (in liq) v Westpac Banking Corporation [No 9] [2008]

WASC 239; (2008) 225 FLR 1

The Crown v Murphy (1990) 64 ALJR 593

The Secretary of State for Foreign Affairs v Charlesworth, Pilling & Co [1901]

AC 373

Trandos v Western Australian Planning Commission [2001] WASCA 346

Trustees Executors & Agency Co Ltd v Commissioner of Taxes (Victoria)

(1941) 65 CLR 33

Turner v Minister of Public Instruction (1956) 95 CLR 245
Tyler v Thomas [2006] FCAFC 6; (2006) 150 FLR 357

W and H Carter v Roads and Traffic Authority of NSW [2006] NSWLEC 89;

(2006) 144 LGERA 375

Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2004] NSWLEC 315; (2004) 134 LGERA 195

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

[2011] WASC 223

Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2009] NSWLEC 219; (2009) 173 LGERA 155

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

WASCA 295

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

24 NSWLR 156
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Table of contents

Section 1: Introduction..........................................................................................................10

1.1	Synopsis......................................................................................................................10
1.2	The taking order and the subject land.........................................................................12
1.3	The subject land: location and characteristics ...........................................................13
1.4	The subject land: regional setting..............................................................................15
1.5	Overview of local and regional planning and the zoning of the land.........................18
1.6	The plaintiffs' case and the course of the trial ............................................................23
1.7	Overview of the plaintiffs' case ..................................................................................29
1.8	Overview of the defendants' case and the main issues ...............................................30

Section 2: Legal principles ....................................................................................................34

2.1	The statutory framework ............................................................................................34
2.2	General principles: the meaning of 'value'.................................................................35
2.3	Highest and best use ...................................................................................................38
2.4	The knowledge to be attributed to the hypothetical parties........................................39
2.5	The nature of valuation and the role of the court .......................................................40
2.6	Doubts to be resolved in favour of the dispossessed owner .......................................43
2.7	'Discounting any increase or decrease in value attributable to the proposed public work' ...........................................................................................................................44
2.8	The effect of the proposed public works on the surrounding land .............................73
2.9	Evidentiary considerations relating to planning questions: subjective or objective? 74

Section 3: Objections to evidence.........................................................................................76

3.1	Introduction ................................................................................................................76
3.2	Post-taking evidence: the defendants' position..........................................................78
3.3	Post-taking evidence: review of the authorities.........................................................81
3.4	Post-taking evidence: summary of principles............................................................92
3.5	Post-taking evidence: rulings ....................................................................................94
3.6	Other objections........................................................................................................102

Section 4: Pre-IPRSP rezoning: but for the proposed public works, would the subject

land have been rezoned to urban between 1990 and 1997?................................105

4.1	Pre-IPRSP rezoning: overview of the parties' cases................................................106
4.2	Evidence ...................................................................................................................112
4.3	But for the proposed public works, would the plaintiffs have applied to have the land rezoned to urban in the pre-IPRSP period? ..............................................................119
4.4	Background to the sewerage issue and the shire's letter of 15 January 1991 ...........146
4.5	But for the proposed public works, would the plaintiffs have received a copy of the letter of 15 January 1991? ........................................................................................149
4.6	The rezoning of Riverland Ramble ..........................................................................155
4.7	Other developments..................................................................................................184
4.8	The planning documents...........................................................................................199
4.9	The structure planning process leading to the 1996 IPRSP .....................................232
4.10	The blighting effect of the Highway on the subject land and other surrounding land ..................................................................................................................................239
4.11	Other evidence relied on by the plaintiffs ................................................................252
4.12	Pre-IPRSP rezoning: conclusions............................................................................261

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Section 5: Hypothetical IPRSP...........................................................................................266

5.1	Introductory overview ..............................................................................................266
5.2	The IPRSP: background and relevant provisions ....................................................268
5.3	The hypothetical IPRSP: the planners' opinions .....................................................285
5.4	The hypothetical IPRSP: general observations on methodology, reasoning and the plaintiffs' case ...........................................................................................................303
5.5	The hypothetical IPRSP question: analysis and conclusions ..................................306
5.6	Blight? Ravenswood in the hypothetical IPRSP .....................................................326

Section 6: Rezoning 2003 - 2006 .........................................................................................328

6.1	Background and context ...........................................................................................328
6.2	The evidence of Mr Robinson and Mr Flugge .........................................................334
6.3	The defendants' planners' evidence ..........................................................................338
6.4	Analysis and conclusions .........................................................................................339

Section 7: Urban potential ..................................................................................................345

7.1	Urban potential: background and context................................................................346
7.2	Urban potential: planners' opinions .........................................................................351
7.3	Urban potential: findings of fact..............................................................................362
7.4	Planning documents..................................................................................................411
7.5	Population, lot demand and urban land supply.........................................................447
7.6	Urban potential: conclusions ...................................................................................492

Section 8: The potential of the land for a commercial district centre and intensive

residential use..........................................................................................................507

8.1	Introduction: the plaintiffs' commercial case; the valuers' assumptions, and an overview ...................................................................................................................507
8.2	Location in the abstract: would the subject land have been selected as the location for the major commercial centre in the Ravenswood area?......................................513
8.3	Applications and approvals for a commercial centre at Riverland Ramble .............518
8.4	District centre potential: timing...............................................................................525
8.5	District centre potential: conclusion........................................................................533

Section 9: Valuation of the subject land ............................................................................535

9.1	Valuation: principles and methodology...................................................................537
9.2	Overview of the expert valuation evidence ..............................................................544
9.3	Market conditions .....................................................................................................563
9.4	The Clough/Rapley transaction ................................................................................570
9.5	The Gold Fortune transactions .................................................................................590
9.6	Baldivis sales ............................................................................................................601
9.7	The sale of lot 9007, part of Riverland Ramble .......................................................615
9.8	Mr Zucal's sales ........................................................................................................619
9.9	Conclusions from the analysis of comparable sales .................................................621
9.10	Hypothetical sales analysis.......................................................................................625
9.11	Mr Brown's special rural valuation...........................................................................643
9.12	My reasons for rejecting the valuers' urban potential valuations .............................645
9.13	The value of the subject land: conclusions..............................................................653

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Section 10: The plaintiffs' additional claims .....................................................................655

10.1	Introduction ..............................................................................................................655
10.2	'Solatium': compensation for taking without agreement .........................................655
10.3	The claim for a transfer duty indemnity ...................................................................658
10.4	Interest ......................................................................................................................662

Section 11: Conclusion ........................................................................................................665
Schedule 1: The defendants' objections.............................................................................666
Schedule 2: Outline of documents referring to the TAFE proposal or the RRF proposal,

1989 - 1996...............................................................................................................678 Appendices ............................................................................................................................695

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BEECH J:

Section 1: Introduction

1.1	Synopsis......................................................................................................................10
1.2	The taking order and the subject land.........................................................................12
1.3	The subject land: location and characteristics ...........................................................13
1.4	The subject land: regional setting..............................................................................15
1.5	Overview of local and regional planning and the zoning of the land.........................18

1.5.1 The pre-IPRSP period: 1990 - 1997 ................................................................18
1.5.2 The IPRSP ........................................................................................................19
1.5.3 The Peel Region Scheme..................................................................................20
1.5.4 Urban potential .................................................................................................21

1.6	The plaintiffs' case and the course of the trial ............................................................23
1.7	Overview of the plaintiffs' case ..................................................................................29
1.8	Overview of the defendants' case and the main issues ...............................................30
1.1	Synopsis

1              This is an action for compensation for the taking of about 88 ha of
land between Mandurah and Pinjarra. The land was owned by the plaintiffs until it was taken for public works to be undertaken by the first defendant, the Commissioner of Main Roads, and the second defendant, the Western Australian Planning Commission (the WAPC).
2              The overarching issue is the value of the land taken. Valuation of the
land invites attention to its highest and best use. The plaintiffs contend that the highest and best use of the land is for residential development, or for commercial development combined with intensive residential development. The plaintiffs contend that the land should be valued on the basis that it was, by the date of taking, zoned urban. That is because the relevant statute requires that any increase or decrease in the value attributable to the proposed public works be discounted. The plaintiffs say that, but for the proposed public works, the land would have been zoned urban, and the absence of that zoning decreased its value.
3              The defendants contend that the land should be valued on the basis

that, at the date of the taking, it was zoned rural with urban potential in the
medium or long term.
4              A major issue in the case was whether, but for the proposed public

works, the land would have been zoned urban or rural at the date of
taking.
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5 The plaintiffs' contentions as to the urban zoning of the land involve
a series of alternatives. Each alternative has involved detailed attention to the town and regional planning regimes, broader planning environment, other rezoning applications and other circumstances applying during several different periods between 1990 and 2006. That has had consequences for the volume of evidence in the trial. The trial occupied 17 sitting weeks spread over more than 12 months; there were many hundreds of exhibits, occupying well over one hundred lever arch files.
6 The plaintiffs also contend, in the alternative, that the land should be

valued on the basis that its highest and best use, and zoning or potential
zoning, included commercial development for a district shopping centre.

In broad overview, the plaintiffs' case is that:

(1) valued on the basis of its district commercial centre potential, the
land was worth about $60 million to $70 million;
(2) valued on the basis that it was zoned urban, the land was worth
about $60 million to $65 million; and
(3) valued on the basis that the land was zoned rural, with strong potential to be imminently rezoned to urban, the land was worth about $36 million to $40 million.

The defendants contend that:

(1) as a matter of law, the land must be valued on the basis that it was
zoned rural and had urban potential;
(2) alternatively, as a matter of fact, but for the proposed public works, the subject land would have been zoned rural and it should be valued on the basis of rural zoning with urban potential;
(3) the land's urban potential was uncertain and in the medium or long
term; and
(4) valued on that basis, the land was worth about $6 million to
$7 million.

In broad overview:

(1) I do not accept the defendants' first contention;
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(2) I find that, but for the proposed public works, the land would have been zoned rural, and it should be valued on the basis that it was zoned rural and had urban potential;
(3) I find that, in the assumed absence of the proposed public works, the urban potential of the land was reasonable, with a high degree of uncertainty; and
(4) valued on that basis, I find that the value of the land was
$14.025 million.
10 The balance of this introductory section 1 is organised as follows.
Section 1.2 explains the taking order and the land the subject of this action. Section 1.3 identifies the location and character of the subject land. I explain the regional setting in section 1.4. Section 1.5 provides an outline of the local and regional planning, to enable the plaintiffs' case to be understood. After explaining some aspects of the course of the trial in section 1.6, I summarise the plaintiffs' case in section 1.7. Finally, in section 1.8, I summarise the defendants' case and identify the eight major issues for determination. I also state my conclusions on those issues and explain the organisation of the rest of these reasons.

1.2	The taking order and the subject land
11	By Taking Order dated 18 July 2006 (the Taking Order), lots 191 and 192 on plan 2087, comprising 87.6587 ha, were taken under pt 9 of the Land Administration Act 1997 (WA) (the LA Act).
12	By the Taking Order, two other parcels of land were taken. One of
those other parcels was lot 189 on plan 2087, also owned by the plaintiffs. In this action, the plaintiffs claimed compensation in respect of the taking of lot 189, as well as in respect of the taking of lots 191 and 192. In the course of the trial, the parties settled the plaintiffs' claims respecting lot 189. Consequently, this action now concerns, and these reasons relate to, compensation only in respect of the taking of lots 191 and 192. I will refer to lots 191 and 192 as the subject land.
13	In 1990, the plaintiffs acquired the subject land as part of a wider landholding known as Windsor Park. Windsor Park included lots 187, 188, 189, 191, 192 and lot 23 Pinjarra Road, North Yunderup. Lots 187 and 188 later became lots 300 and 301 respectively. Lot 23 is a small parcel west of lot 301 and north of lot 300. It was not part of the land taken.

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14            The other parcel of land the subject of the Taking Order was a
portion of lot 301 on deposited plan 44563. Until 2006, lot 301 was also owned by the plaintiffs. By the date of the taking, lot 301 had been transferred to other parties. Thus there is no claim in this action in respect of lot 301.
15            The transaction by which the plaintiffs sold lot 301 is relied on by
the plaintiffs as a comparable sale in valuing the subject land. The transaction was referred to as the 'Clough/Rapley transaction' (reflecting the name of the acquiring parties).
16            The Taking Order was registered on 20 July 2006. Consequently, as

is common ground, the date of taking is 20 July 2006. By s 241(2)(c) of
the LA Act, the land is to be valued as on the date of taking.
17            The Taking Order stated that the taken land had been 'set apart for

the purpose of the following public work, namely New Perth - Bunbury
Highway and Regional Open Space'.
18            When the land was taken, new lot numbers and titles were created. I
will refer to the subject land by its lot numbers before it was taken. For ease of exposition, I will refer to lots 191 and 192 in the present tense, notwithstanding that they no longer exist.
19            Part of lot 192 was taken for the purposes of the New
Perth - Bunbury Highway and the balance for the purpose of Regional Open Space. All of lot 191 was taken for the purpose of Regional Open Space.

1.3	The subject land: location and characteristics
20	Lots 191 and 192 are on the northern side of Pinjarra Road and Old Mandurah Road in the locality of Ravenswood.
21	The land is about halfway between Mandurah and Pinjarra. It is
about 9 km south-east of Mandurah and about 8 km north-west of Pinjarra.
22	Pinjarra Road is a four-lane road that is the main and only direct link
between Mandurah and Pinjarra. The plaintiffs' case emphasises the benefits for the subject land of its location on Pinjarra Road.
23	As at 2006, the Kwinana Freeway ended at or around Baldivis. At
that point, the freeway continued into Safety Bay Road. From that road, a traveller from Perth would travel on Mandurah Road (possibly via Ennis

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Avenue) to Mandurah. The subject land is about 69 km in a straight line south of the Perth CBD. In 2006, travelling by road it was something more than 80 km from the city.
24 The certificate of title for the subject land indicates the following
(exhibit 270B, appendix JF 2). Lots 191 and 192 are broadly rectangular in shape, apart from an excised area of about 2.5 ha that is on the western boundary of lot 192. Lot 192 is located at the corner of Pinjarra Road and Fiegert Road. It is a little over 500 m wide along its northern boundary, and its southern boundary abuts Pinjarra Road for a length of about 520 m. From Pinjarra Road, it runs to the north for around 910 m along its eastern boundary. Lot 192 has a total area of 40.3977 ha. Lot 191 is immediately east of lot 192. It is around 480 m wide along its northern boundary. To the south, it abuts Pinjarra Road for about 280 m, and then Old Mandurah Road for a little less than 230 m. The lot runs to the north for a little more than 1 km along its eastern boundary. Lot 191 has an area of 47.2318 ha.

This suggests the total area of the subject land is 87.6295 ha.

26            However, the Taking Order suggests the total area of land taken is
87.6587 ha (exhibit 251B). The difference between these figures (0.0292 ha) is less than one three-thousandth of the total area. I will adopt the higher figure of 87.6587 ha as the total area of the subject land.
27            Lots 191 and 192 are close to the Murray River. Lot 189 is on the
southern side of Pinjarra Road, on the Murray River. It can be seen from exhibit 202, as shown below, that the river is at its closest point to Pinjarra Road at lot 189.
28            The subject land was at all relevant times serviced by electricity,
water, telephone and, apart from sewerage, other services that might be required for a new urban development. The timing and conditions under which sewerage was available is dealt with in section 4 of these reasons.

At the time of the taking, the plaintiffs lived in the house on lot 188 (later lot 301), and used the subject land for grazing cattle.

30 The subject land was flat, sparsely vegetated, cleared rural land. It
did not have any buildings or other improvements on it. The land was fenced, pastured and watered to accommodate the cattle grazing enterprise.
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31 It is an agreed fact that the subject land does not have any

environmental attributes of any significance that would prevent urban development of the land.
1.4	The subject land: regional setting

The setting of the land within its locality can be seen by reference to the orthophoto of March 2006 that is exhibit 202.
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33 The land north of Old Mandurah Road and Pinjarra Road shown as
'McKay' is lots 191 and 192. The 'McKay' land south of those roads is lot 189. The land shown as 'Clough/Rapley' is lots 300 and 301. (The broken yellow line on the subject land does not reflect title boundaries.)
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The small town of Ravenswood is south-east of the subject land, along Pinjarra Road.
There are some urban developments in the general locality that are emphasised by the plaintiffs.

36 In 1995, lots 20 and 21 Old Mandurah Road were rezoned to 'special
development', permitting urban subdivision, subject to conditions. These lots were the urban development known as Riverland Ramble, situated south of Old Mandurah Road and, in part, adjoining the then existing town of Ravenswood.

The reference to 2004 regarding Riverland Ramble on exhibit 202 is to the year the first stage of the subdivision was released.

38 The plaintiffs' case involves attention to what occurred with
Riverland Ramble in several respects. The plaintiffs contend that the approval of the rezoning of Riverland Ramble supports the conclusion that, absent the proposed public works, had application been made for urban rezoning of the subject land, the rezoning would have been approved.
39 They contend that the reasons leading to the rezoning of Riverland
Ramble would similarly have applied to lots 191 and 192 and led to the same result. Indeed, as an alternative, they go further and contend that lots 191 and 192 would have been rezoned to urban in preference to Riverland Ramble. Further, one of the alternatives postulated by the plaintiffs is that, but for the proposed public works, they would have made a joint application with the owner of Riverland Ramble for the rezoning of both sets of land.

Consequently, in section 4 of these reasons, I give detailed attention to the progress of the rezoning and development of Riverland Ramble.

41 The plaintiffs also point to the approval, in 1996, of the rezoning of
Murray River Country Estate. That estate was on the north-west outskirts of the townsite of Pinjarra, with part of that development on Pinjarra Road.
42 Further, the plaintiffs point to Austin Cove, near South Yunderup,
south-west of the subject land and on the other side of the Murray River. In 1989, when first approved, the development was known as the Murray Lakes Golf Course Estate. In 1996, the owners proposed an amendment
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to increase the development from about 500 to 1,500 lots. That
amendment was gazetted in 1998 .
43            Immediately to the west of lot 192, across Fiegert Road, is wetland
and bush. Further west of that is the rural-residential and special rural locality of Furnissdale and Barragup, to the south and north of Pinjarra Road respectively.
44            Immediately to the east of lot 191 is lot 190. That is part of a larger
holding of lots to the north and east owned by the Kelliher family. The Kelliher land includes the land north from lots 190, 191 and 192, two lots beyond Rogers Road and east to Paterson Road. That land had, at 2006, been used for rural purposes for some time.
45            Immediately east of lot 190 are lots 10, 11, 12 and 6. These lots

were owned by interests associated with the Emmanuel family. The land
was zoned and used for rural purposes.
46            The defendants emphasise that the land to the north and east of the
subject land was zoned and used for rural purposes at the date of taking and for many years before. They contend that that land is proxy for the subject land, but for the proposed public works. The plaintiffs submit that that land remained rural for other reasons, not applicable to the subject land, including that the owners did not then want to develop their land.

The location of the Ravenswood drag strip (lot 41) can be seen to the east of Ravenswood and Riverland Ramble.

1.5	Overview of local and regional planning and the zoning of the land
48	This introductory overview is intended to do no more than provide a
context for understanding the various alternative parts of the plaintiffs' case. The history of local and regional planning will be considered in much more detail later in these reasons.

1.5.1 The pre-IPRSP period: 1990 - 1997

One part of the plaintiffs' case focused on rezoning under the Shire of Murray Town Planning Scheme No 4 (TPS 4) in the years prior to 1997. On 23 June 1989, TPS 4 was published in the Government Gazette and came into force under the Town Planning and Development Act 1928 (WA) s 7. Under TPS 4, some land was set aside for the purposes of a reserve. Other land was classified into various zones. The zones included residential, residential development, rural, special rural and commercial. Subsequently, in 1995, in approving the urbanisation of Riverland
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Ramble, a new zone class was created of 'special development' (see exhibit 25).
50 The parties prepared trial bundles in advance of the trial. The
bundles were in four parts. Each part was divided into a (large) number of books. Each book was paginated continuously from the first page through to the last document. Exhibit 25 is found at part 1, book 11, pages 54 - 74. Throughout the trial, the parties referred to documents by their location in the trial bundle. I will do the same. I will use the shorthand of 1/11/54 to mean trial bundle part 1, book 11, page 54. Statements and reports of witnesses were referred to in a similar way. The shorthand 30/10 refers to page 10 of volume 30 of the witness statements and reports.
51 Some of the scheme maps for TPS 4 are exhibit 13. In TPS 4, a

small portion of lot 192 was reserved for the purposes of a major
highway. The rest of lot 192 and all of lot 191 were zoned rural.

The land surrounding the subject land was also zoned rural in TPS 4 when it was promulgated in 1989.
The town planning scheme could be amended by the shire, subject to approval of the Minister: Town Planning and Development Act s 7.

54 One major part of the plaintiffs' case contends that, but for the
proposed public works, TPS 4 would have been amended, upon the plaintiffs' application, some time between 1994 and 1997 so that the subject land was zoned urban (the pre-IPRSP rezoning case). The parties and witnesses often referred to land being rezoned 'urban' in this period, meaning 'residential' or other zoning permitting urbanisation of the land. I will do the same.

1.5.2 The IPRSP

55 Another alternative strand of the plaintiffs' case has, as its
foundation, the designation of the subject land, but for the proposed public works, as future urban in the Inner Peel Region Structure Plan (IPRSP). One of the purposes of the IPRSP was to provide a basis for a regional planning scheme for the Peel region.

In July 1996, the WAPC published the 'for public comment' version of the IPRSP (the 1996 IPRSP) (exhibit 7, 1/10/54 - 178).
In December 1997, the WAPC published the final IPRSP (the 1997 IPRSP) (exhibit 6, 1/6/260 - 323).
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58            The IPRSP designated land in a number of ways. Some land was
designated for public purposes. The public purposes included 'Open Space - Recreation' and 'State Highways and Roads - Existing and Proposed'. It also designated land for private uses. The designations included rural, rural living, urban, and several categories of future urban. The designations only indicated existing and proposed future zonings and did not effect any rezonings.
59            Part of lot 192 was designated for the purpose of 'State Highways
and Roads - Existing and Proposed', for the Perth - Bunbury Highway. The balance of lot 192 and all of lot 191 was designated 'Open Space - Recreation'.
60            Both the 1996 IPRSP and the final 1997 IPRSP stated that the form
of urban development proposed by the IPRSP was in discrete urban villages. Apart from Shire of Murray's main town of Pinjarra, urban villages were contemplated at Ravenswood, Furnissdale/Barragup and Yunderup/Murray Lakes.
61            It is a major part of the plaintiffs' case that, but for the proposed
public works (if not already zoned urban), the subject land would have been designated future urban in the IPRSP and would have been part of the proposed urban village of Ravenswood. Future urban designation in the IPRSP was an important step towards being zoned urban in the Peel Region Scheme.

1.5.3 The Peel Region Scheme

From 1997 until 2002, work was done on the preparation of the Peel Region Scheme in light of the IPRSP.

63 The Peel Region Scheme 2003 (the PRS) was published in the
Government Gazette on 23 October 2002. It comprises the scheme text and the scheme map sheets numbered 1 to 20. The scheme text is exhibit 116 (1/8/11 - 21). The scheme map is exhibit 2.
64 Clause 10 of the scheme provides for the reservation of land for

public purposes, including Regional Open Space and Primary Regional
Roads.

By cl 11, land is classified into zones under the scheme. Each zone has a stated purpose. The zones include urban, urban deferred and rural.
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66 The scheme map reserves lot 191 and part of lot 192 for Regional

Open Space. The balance of lot 192 is reserved for Primary Regional
Roads.

The scheme map, in the locality, is set out in section 6.1 below.

68 A large area of land south of Old Mandurah Road around
Ravenswood is zoned urban. It includes the land comprising the Riverland Ramble estate and Settlers Village. It is bordered on the east by lot 52 Old Mandurah Road. Lot 52 is zoned rural. The urban zoned area takes in the Ravenswood townsite and extends to the junction of Old Mandurah Road and Pinjarra Road.

Lot 41 Old Mandurah Road and part of lot 2, both east of lot 52, are zoned urban deferred.
None of the land north of Old Mandurah Road is zoned urban or urban deferred. It is all zoned rural.
There is an area zoned urban at Yunderup, and another urban area further south that is Austin Cove stage 2.

72 One part of the plaintiffs' case contends that, had the land been
designated future urban in the IPRSP, the land would have been zoned urban or urban deferred in the PRS from the time the PRS came into force.

Alternatively, if the land had been zoned rural in the PRS as at 2003, the plaintiffs contend that the land would have been zoned urban or urban deferred by amendment to the PRS made some time between 2003 and the date of taking.

1.5.4 Urban potential

74 The plaintiffs also have, as an alternative, an urban potential case.
The plaintiffs say that if, contrary to their primary contentions, but for the proposed public works, the land would have been zoned rural, its highest and best use would nevertheless have been urban, and, as at the taking date, it would have had a very high likelihood of being rezoned to urban in the near future.
75 As I will explain in detail in section 2, the defendants contend that

the only question is in the urban potential of the land. They contend that
its urban potential was uncertain and only in the medium to long term.
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Some of the planning matters relevant to the question of the subject land's urban potential at July 2006 are as follows.

77 In September 2004, the WAPC published Network City. See
exhibit 4A (1/13/1); exhibit 4B (1/13/2 - 131); exhibit 4D (4/2/338). In November 2005, the WAPC published 'Network city - a milestone in metropolitan planning', exhibit 4C (1/13/132 - 143). There are issues between the parties and between their respective planners about how Network City bore on the prospects of urbanisation of the subject land as at July 2006.
78 Also in 2004, the Peel Region Planning Committee of the WAPC
determined that amendments to the PRS needed to be considered and there needed to be a review of the IPRSP. I will give detailed attention to the progress and status of the review, as at July 2006, in section 7.

On 13 September 2004, the State Government announced the construction of the New Perth - Bunbury Highway: see exhibit 9.

80 In August 2005, the shire adopted draft Town Planning Scheme 5
(TPS 5) (exhibit 5A and exhibit 5B) and the draft Local Planning Strategy (the draft LPS) (exhibit 47). Those documents had been in the course of preparation for many years. Officers of the shire had communications with and input from officers of the Department for Planning and Infrastructure (the DPI), including Mr Cameron Bulstrode.
81 The draft TPS 5 identified a significant amount of land as

'development areas'. That included land to the north and east of the
subject land.

The draft LPS included land north of Old Mandurah Road as 'urban'.
In late 2005, the shire forwarded the draft LPS and TPS 5 to the
WAPC.

84 On 20 June 2006, the Planning and Development Services
Committee of the shire resolved to modify the draft LPS to include additional land north of Old Mandurah Road in the triangle bounded by the Highway, Paterson Road and Old Mandurah Road (exhibit 11). Thus by the date of taking, all of the land in that triangle, as far east as lot 6, other than the subject land, was designated urban in the draft LPS.
85 It is common ground that TPS 5 required the approval of the Minister
and that the draft LPS required the endorsement of the WAPC before they
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would come into operation. See for TPS 5, Town Planning and Development Act s 7 and Planning and Development Act 2005 (WA) s 87; and for the draft LPS, Town Planning Regulations 1967 (WA) reg 12B.
86 It is also common ground that the WAPC's consideration of the draft
LPS and TPS 5 would, as at July 2006, take place in the context of the WAPC's then pending review of the IPRSP. There is an issue as to the prospects of that review producing a view of future urban land consonant with that stated in the draft LPS. More broadly, there are issues as to what the well-informed hypothetical purchaser would have expected, as at July 2006, about the timing and likely outcome of the WAPC review.

There are also issues between the parties as to:

(a)

the extent to which the draft LPS enhanced the prospects of short-term urbanisation of the subject land, but for the proposed public works; and

(b)

the extent to which what is shown in the draft LPS is relevantly attributable to the proposed public works.

1.6	The plaintiffs' case and the course of the trial
88	It is convenient to outline the plaintiffs' case in the context of
outlining the course of the trial. On a number of occasions in the course of the trial, issues have arisen about what is and is not part of the plaintiffs' case. Over the course of the action there have been changes in the plaintiffs' case. That is not said as a criticism, but for the purposes of exposition and clarity.
89	It was clear, well before the trial, that the plaintiffs' primary case was
that, but for the proposed public works, the subject land would have been zoned urban at the date of taking: see the statement of claim [20] and reply dated 24 August 2009 [2]. No particulars of those paragraphs were sought. The defendants joined issue with those pleas, pleading that, but for the proposed public works, lots 191 and 192 would have been zoned rural under the PRS and TPS 4 (the defence [10]). No particulars were sought of the statement of claim [20] and the reply [2].
90	For reasons which I explained in *McKay v Commissioner of Main Roads [No 5]* [2010] WASC 273, in my view, the high level of generality of the pleadings meant that they could not fairly serve as the exclusive statement of what was the plaintiffs' case. See, in particular, [34] - [36], [74] - [79].

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Some of the history of the proceedings is outlined in McKay [No 5].

92            Because it appeared to me, before the trial, that the real issues in the
action did not emerge clearly from the pleadings, at a directions hearing in May 2009, with the agreement of the parties, I ordered that the parties exchange statements of issues, facts and contentions.
93            The plaintiffs' Statement of Issues, Facts and Contentions (SIFC)
filed 28 August 2009 contended that, but for the proposed public works, the subject land would have been zoned urban as at July 2006. The SIFC did not attempt to identify any particular time at which or period during which the land would, but for the proposed public works, have become zoned urban. The nub of the plaintiffs' contentions in the SIFC was that, at the time of taking, the land would either have been zoned urban or it would have had a high potential to be rezoned to urban in the very short term.
94            The plaintiffs' SIFC foreshadowed what was referred to as the 'split
taking' case. Before the SIFC, the action had proceeded on the basis that the plaintiffs' case was that the effect of both proposed public works - the highway and the regional recreational facility - was to be discounted. The split taking case involved the contention that the land taken for each of the two purposes should be treated separately. In the case of the land taken for the highway, the regional recreation facility was not to be discounted. Similarly, in the case of the land taken for the regional recreation facility, the presence of the highway was not to be discounted.

The trial was listed for six weeks to commence on 19 October 2009.

96 On 16 September 2009, the plaintiffs served substantial further

evidence in support of the split taking case, including statements from
planning and engineering experts.

On 18 September 2009, the plaintiffs filed and served valuation reports based on the split taking approach.

98 The split taking case contended that the highest and best use of the
subject land was for substantial commercial development, including a district shopping centre, together with intensive residential development. That marked a change in the plaintiffs' case. The plaintiffs' planning evidence exchanged up to August 2009 put forward a number of concept plans said to reflect a suitable development for the subject land. There were three plans prepared by Greg Rowe & Associates and several
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development plans prepared by Mr Butterly of Whelans. None of those
plans involved a district shopping centre.
99            Earlier, in May 2009, the valuers had agreed during their conferral
that for the purpose of their hypothetical subdivision analysis, as part of their valuation, the urban development concept plan number 1 prepared by Greg Rowe & Associates (the GRA concept plan) (exhibit 191A, 25/392) was the plan to be adopted by them in relation to lots 191 and 192. Thereafter, the parties had acted on the basis that the GRA concept plan represented the plaintiffs' case as to the appropriate development of lots 191 and 192 for the purposes of the valuation of those lots. The plan showed the bulk of the land dedicated to the production of more than 1,000 residential lots, with 2 ha in the south-east corner designated for commercial development.
100          On 18 September 2009, the defendants filed an application seeking
orders to the effect that the plaintiffs be precluded from advancing the split taking case. The defendants' application was made returnable on 22 September 2009.
101          On 21 September 2009, the plaintiffs' solicitors advised the

defendants' solicitors and the court that the plaintiffs abandoned the split
taking case.

The trial commenced as planned on 19 October 2009.

103 On 28 October 2009, the eighth day of the trial, in the course of
opening, the plaintiffs indicated that they relied on part of one of the reports of their valuer, Ms Jennifer Le-Fevre, which had been exchanged as part of the split taking case. The report stated that the land was to be valued on the basis that its highest and best use was for a district centre, and valued the land accordingly. The defendants immediately objected. With the parties' agreement, I directed that the issue about the plaintiffs' proposed reliance on evidence supporting the district centre case be dealt with at the completion of the plaintiffs' opening.

The defendants filed an affidavit in support of their opposition to the plaintiffs' reliance on the district centre case.

105 On 3 November 2009, the plaintiffs indicated that, in light of the

defendants' affidavit, they did not propose to lead evidence in support of
the district centre case (ts 1180).
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106          On or about 9 November 2009, the plaintiffs served a number of new
witness statements on the defendants. The concurrent expert evidence session of the planners was then due to commence on or about 11 November 2009.
107          On 11 November 2009, the defendants objected to the plaintiffs'
reliance on parts of the newly served witness statements. The case supported by the witness statements was, in broad summary, that, but for the proposed public works, the plaintiffs would have joined with the developers of Riverland Ramble in the 1990s to seek rezoning of the subject land to urban, and that the same result would have occurred in relation to the subject land as occurred for Riverland Ramble, in a similar time frame. The additional witness statements brought into significantly sharper relief the question of whether, but for the proposed public works, the land would have been rezoned to urban in the mid-1990s.
108          By that stage, it was abundantly clear that, regardless of the proposed

new evidence, the trial would not be completed in the two weeks
remaining of the allocated trial dates.

After hearing submissions, I gave oral reasons for concluding that:

(a) the defendants would be prejudiced if the plaintiffs were permitted to rely upon the new evidence in the then remaining two weeks; and
(b) the plaintiffs should be permitted to rely on the evidence, but only on the basis that the trial of the issues associated with the new evidence be adjourned (see ts 1782 - 1788).
110 Following the delivery of my reasons, the parties identified witnesses
whose evidence could be taken in the then remaining two weeks that the trial was listed. Evidence was received over that remaining period, and the trial was adjourned part-heard.

Difficulties with the availability of counsel meant that the trial could not resume until July 2010.

112 From an early stage of the trial, the defendants contended that the
plaintiffs had not adequately identified their case in certain important respects. The plaintiffs opened their case at considerable length. Following that, in the course of the defendants' opening in November 2009, the defendants complained that the plaintiffs' case was not adequately articulated and identified. Among other things, the
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defendants contended that the plaintiffs' case did not identify a particular point in time or period at which it was contended by the plaintiffs that, but for the proposed public works, the land would have become zoned urban. That was necessary, the defendants submitted, because different planning considerations and instruments, facts and circumstances, were applicable at different periods from, say, 1990 through to the taking in 2006.
113 In the course of exchange with senior counsel for both parties, the
court requested from the plaintiffs, and the plaintiffs agreed to provide, a document that set out what changes the plaintiffs said there would have been, assuming no proposed public works, in any planning documents or other facts, with a statement of the reasoning for each such change (ts 1433 - 1447). The request sought articulation of the reasoning for changes in the hypothetical scenario (as against the actual historical situation) by reference to such points in time or periods as were relied on in the plaintiffs' past hypothetical rezoning case (see, for example, ts 1436 - 1438, 1679 - 1681).
114 On 19 November 2009, the last day of the trial before it was
adjourned until July 2010, the plaintiffs provided a document of that date entitled 'Changes in Documents and Events that the Plaintiffs say Would Probably have Occurred but for the Proposed Public Works' (the Changes Document).

The Changes Document states that:

(a) its purpose was to summarise what changes to facts and planning documents the plaintiffs hypothesised there would have been, but for the proposed works, and the reasons which the plaintiffs say support each of those hypotheses; and
(b) it was not intended to be a pleading or pleading-like document, or to override or restrict the evidence of the experts: [23].
116 The Changes Document contends that the plaintiffs would have
engaged an experienced planner in 1992, alternatively in 1994, to progress the rezoning of lots 191 and 192 to urban and that, by 1996 or 1997, an amendment of TPS 4 to that effect would have been achieved: [34], [40] - [41]. (I will refer to this as the pre-IPRSP rezoning case.) Paragraph 42 states that, 'in that case', the IPRSP would have included lots 191 and 192 as part of the proposed urban village of Ravenswood. Consequently, the PRS would have shown lots 191 and 192 as urban: [43].
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117 The Changes Document states, as a further alternative, that on the
hypothesis that the subject land was zoned rural or urban deferred in the PRS as at July 2006, the purchaser would have considered it was likely to be rezoned to urban in a short time.
118 At a directions hearing on 9 December 2009, the plaintiffs confirmed
that another alternative part of their case (although not spelled out in the Changes Document) was that, but for the proposed public works, the land would have been designated future urban in the IPRSP. (I will refer to this as the hypothetical IPRSP case.)

At the directions hearing on 9 December 2009, the exchange of further evidence and expert evidence was programmed.

120 The plaintiffs exchanged substantial further proposed evidence and
expert evidence on or about 31 March 2010. That evidence primarily concerned the pre-IPRSP rezoning case. It also included evidence in support of a contention that, but for the proposed public works, the highest and best use and zoning or potential zoning of the subject land would have been for a district centre with associated commercial and intensive residential use. There was no objection to the addition of that latter contention to the plaintiffs' case.

The defendants' expert reports in reply responded to those elements of the plaintiffs' case.

122 In the ninth week of the trial, in August 2010, an issue emerged
about the scope and content of the plaintiffs' hypothetical rezoning case. The issue emerged in the context of the identification of questions for the agenda for the concurrent expert planning session. The issue was whether a question proposed by the plaintiffs for the planners' concurrent session should be permitted. The question was in these terms:
If lots 191 and 192 were not included as 'future urban' in the IPRSP, would they have been zoned urban or urban deferred in the PRS in 2003, or by amendment of the PRS before July 2006?

123 That directed attention to the scope of the plaintiffs' hypothetical past

rezoning case, as it had been articulated in the pleadings, SIFC, opening
and the Changes Document.

I delivered reasons for decision on 16 August 2010, later published:
McKay [No 5]. In summary, I decided that:
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(a) the plaintiffs had not articulated a case that the subject land (assuming it to be rural in the hypothetical IPRSP) would have been rezoned to urban between 1997 and 2003;
(b) the plaintiffs should not be permitted to advance a case to that effect; and
(c) notwithstanding that the plaintiffs had not, in the Changes Document or otherwise, articulated a case of rezoning between 2003 and 2006, subject to further objection from the defendants in the event of prejudice by way of surprise, the plaintiffs were permitted to advance a case that the land would have been rezoned by amendment of the PRS between 2003 and 2006.
As to (c), my attention was not drawn in argument to something said by senior counsel for the plaintiffs in the course of the defendants' opening. Counsel articulated a case of rezoning between 2003 and 2006 (ts 1321), although the Changes Document did not include that contention. In any event, I did not disallow that case, and the case was run.

1.7

Overview of the plaintiffs' case

The main elements of the plaintiffs' case may be summarised as
follows.

(1)

The land is to be valued on the basis that, as at the date of taking, it was zoned urban. That is because, but for the proposed public works, it would have been zoned urban. I will refer to this as the plaintiffs' past hypothetical rezoning case. That case arises in the following three alternative ways. But for the proposed public works:

(a)

the plaintiffs would have applied in the early to mid-1990s for the rezoning of the land, and the land would have been rezoned to urban/residential prior to 1997 (the pre-IPRSP rezoning case);

(b)

if not, the land would have been designated future urban in the IPRSP and would have been zoned urban in the PRS in 2003 (the hypothetical IPRSP case); or

(c)

alternatively, if the land had been rural in the IPRSP and the PRS in 2003, it would have become urban or urban deferred in the PRS by amendment to the PRS between 2003 and 2006 (the 2003 - 2006 rezoning case).
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(2) Alternatively to (1), if, but for the proposed public works, the land would have been zoned rural at July 2006, it would then have had a high probability of being imminently rezoned to urban.
(3) Further to (1) and, perhaps, (2), the highest and best use and zoning or potential zoning of lots 191 and 192 would have been for a district commercial centre.
(4) There are some additional elements to the plaintiffs' claim:

(a) a claim for an indemnity in respect of the transfer duty payable on a 'replacement property';
(b) an additional amount under s 241(8) of the LA Act to compensate for the taking without agreement; and
(c) interest under s 241(11) of the LA Act on the compensation awarded.
I will deal with these claims in section 10 of these reasons.
126 The valuers relied on by the plaintiffs have provided valuations on

each of bases (1), (2) and (3). The plaintiffs' valuers value the land as
follows:

(1)	urban - approximately $60 million to $65 million;
(2)	rural with urban potential - approximately $36 million to $40 million; and
(3)	district centre potential - $60 million to $70 million.

1.8

Overview of the defendants' case and the main issues

127 The defendants take legal and factual issue with the plaintiffs'
contention that the land should be valued on the basis that it is zoned urban. First, the defendants contend that such an approach is impermissible as a matter of law. They contend that a past hypothetical rezoning, absent the proposed public works, cannot be used as a foundation of valuation. Rather, the only question is as to the urban potential of the land with rural zoning. I will explain the defendants' position in detail in section 2, dealing with legal principles.
128 Secondly, the defendants take issue with the plaintiffs' case at the
factual and evidentiary level. Assuming the past hypothetical rezoning question arises, the defendants contend that, but for the proposed public
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works, the land would have been zoned rural. They deny that the plaintiffs would have made an application in the first half of the 1990s for rezoning and deny that, if made, the application would have been successful. They deny that, but for the proposed public works, the land would have been designated future urban in the IPRSP. They deny that any application to amend the PRS between 2003 and 2006 would have been successful.
129          In summary, the defendants contend that the only permissible inquiry
at law, alternatively the relevant inquiry on the evidence, is as to the urban potential of the subject land. They contend that the subject land would have had an uncertain urban potential and that any urbanisation would have been in the medium or long term.
130          The defendants' valuers expressed the opinion that the land, valued

on the basis that it is rural with urban potential, is worth something
between $6 million and $7 million.
131          In May 2007, the defendants made an (open) offer of compensation
to the plaintiffs under s 217 of the LA Act. The plaintiffs rejected the offer. On 16 May 2007, the defendants made an offer to make an advance payment in partial discharge of the plaintiffs' claim. The plaintiffs accepted that offer. On 22 May 2007, the defendants paid the sum of $10,063,956.16 by way of advance payment, of which $9.6 million was principal compensation. The balance was interest on that sum at 6% from 1 August 2006 until payment.
132          The defendants counterclaim for the return of some of the advance
payment on the basis of mistaken payment or total failure of consideration. That counterclaim rests on the defendants' contentions about the value of the subject land. The parties agreed that the submissions on and resolution of the counterclaim should be deferred pending the court's determination of the value of the subject land.
133          At a broad level, the major issues involve the following eight

questions. (My answer to the question, and the section of the reasons
dealing with the issue, is identified in parenthesis.)

(1)

As a matter of law, is it relevant and permissible to inquire what the zoning of the land would have been, but for the proposed public works? (Yes; see section 2)
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(2) 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 plaintiffs for rezoning? (No; see section 4)
(3) 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; see section 5)
(4) 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; see section 6)
(5) 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; see section 7)
(6) 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 plaintiffs' commercial planner? (No; see section 8)
(7) Once the appropriate planning basis for the valuation is identified, what is the value of the subject land? ($14.025 million; see section 9). I will outline the major valuation issues in section 9. Among the broad issues are:

(a) what, if any, sales are useful as comparable sales?
(b) what is the proper analysis of the sales relied on as comparable sales?
(c) what are the preferable assumptions and inputs for a hypothetical subdivision analysis of the subject land?
(d) what are the relative merits, in this case, of the comparable sales method as against hypothetical subdivision analysis?
(8) What amounts, if any, should be awarded in respect of the plaintiffs' additional claims? (10% compensation for the taking without agreement, and interest; see section 10).
134 There were numerous objections to evidence. I made many rulings
during the trial. The parties were content for rulings on some categories
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of objections to be given, to the extent necessary, in the course of my
reasons. I deal with those in section 3.
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Section 2: Legal principles

2.1	The statutory framework ............................................................................................34
2.2	General principles: the meaning of 'value'.................................................................35
2.3	Highest and best use ...................................................................................................38
2.4	The knowledge to be attributed to the hypothetical parties........................................39
2.5	The nature of valuation and the role of the court .......................................................40
2.6	Doubts to be resolved in favour of the dispossessed owner .......................................43
2.7	'Discounting any increase or decrease in value attributable to the proposed public work' ...........................................................................................................................44

2.7.1 Identifying the proposed public works .............................................................44
2.7.2 The meaning of 'attributable' in s 241(2)..........................................................46
2.7.3 Does s 241(2) invite or permit attention to the hypothetical zoning of the land,
absent the proposed public works?...................................................................49

2.8

The effect of the proposed public works on the surrounding land .............................73

2.9

Evidentiary considerations relating to planning questions: subjective or objective? 74

2.1

The statutory framework

135

In any valuation case it is fundamental that the statutory framework

must be kept squarely in mind. That has been repeatedly emphasised in
the cases, and more so in recent years.

136

As I have said, the subject land was taken under pt 9 of the LA Act.

By s 202 of that Act, every person having an interest in land that is taken under pt 9 is entitled, subject to pt 10 of the LA Act, to compensation for the interest from the acquiring authority.

137

The amount of compensation is fixed by one of the following mechanisms under s 217, s 219 and s 220:

(a)	acceptance by a claimant of the offer made by the acquiring authority, or by a subsequent agreement between those parties;
(b)	an action for compensation by the claimant against the acquiring authority; or
(c)	reference of the claim to the State Administrative Tribunal.

138

The plaintiffs commenced this action for compensation under s 220 and s 223 of the LA Act. The WAPC is the acquiring authority in relation to the land (lot 191 and part of lot 192) acquired for the purpose of Regional Open Space (ROS). The first defendant is the acquiring authority in relation to the land (part of lot 192) taken for the purpose of the extension to the Perth - Bunbury Highway.

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139 Section 241 of the LA Act governs the assessment of compensation

in an action for compensation. Section 241(1) and s 241(2) of the LA Act
are in the following terms:

(1) In determining the amount of compensation (if any) to be offered, paid, or awarded for an interest in land taken under Part 9, regard is to be had solely to the matters referred to in this section.
(2) Regard is to be had to the value of the land with any improvements,
or the interest of the claimant in the land, assessed as on -

(a) in the case of an interest taken for a railway or other work authorised by a special Act - the first day of the session of Parliament in which the Act was introduced;
(b) in the case of an interest taken by agreement under section 168 - the date of the execution of the agreement, unless the agreement provides otherwise; or
(c) in the case of an interest to which paragraphs (a) and (b) do not apply - the date of the taking,
and discounting any increase or decrease in value attributable to the
proposed public work.

In dealing with the plaintiffs' additional claims in section 10 of these reasons, I will refer to subsections (6), (8), (9), (11) and (12) of s 241.
Section 241(1) makes s 241 an exhaustive statement of the matters to which regard may be had in determining the amount of compensation.

142 On a proper construction of s 241, the effect of s 241(1) and s 241(2)
is that compensation is to be awarded for the value of the land taken, assessed on the relevant date according to whichever of pars (a), (b) or (c) of s 241(2) is applicable.
143 Section 241(2) requires that any increase or decrease in value
attributable to the proposed public work be discounted. What is involved in and permitted by that discounting requirement is a substantial issue in the action. I will deal with that in section 2.7 of these reasons.

2.2	General principles: the meaning of 'value'
144	Compensation for the value of the land involves determining a
money equivalent of the asset: *Housing Commission of New South Wales v Falconer* [1981] 1 NSWLR 547, 570. 'Value' means exchange value. Value is determined by presupposing a person who is willing to

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give the thing that is being valued in exchange for money and another willing to give money in exchange for what is being valued: Spencer v The Commonwealth (1907) 5 CLR 418, 431; Boland v Yates Property Corporation Pty Ltd [1999] HCA 64; (1999) 74 ALJR 209 [79].
145 In summary, value is determined by identifying the price of a
notional bargain between hypothetical vendor and purchaser who are prudent, well informed and willing, but not anxious, to complete the exchange.

In Spencer v The Commonwealth, Griffith CJ stated the test of value in the following terms:
[T]he test of value of land is to be determined, not by inquiring what price a man desiring to sell could actually have obtained for it on a given day, ie, whether there was in fact on that day a willing buyer, but by inquiring 'What would a man desiring to buy the land have had to pay for it on that day to a vendor willing to sell it for a fair price but not desirous to sell?' It is, no doubt, very difficult to answer such a question, and any answer must be to some extent conjectural. The necessary mental process is to put yourself as far as possible in the position of persons conversant with the subject at the relevant time, and from that point of view to ascertain what, according to the then current opinion of land values, a purchaser would have had to offer for the land to induce such a willing vendor to sell it, or, in other words, to inquire at what point a desirous purchaser and a not unwilling vendor would come together (432).
In the same case, Isaacs J stated that:
To arrive at the value of the land at that date, we have, as I conceive, to suppose it sold then, not by means of a forced sale, but by voluntary bargaining between the plaintiff and a purchaser, willing to trade, but neither of them so anxious to do so that he would overlook any ordinary business consideration (441).

148 These statements have been consistently applied in cases since then.
The position was summarised by McHugh J in Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413 [49] - [50] in a passage cited with approval by the High Court in Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2008] HCA 5; (2008) 233 CLR 259 (Walker HCA) [51]. McHugh J said as follows:
Value is determined by forming an opinion as to what a willing purchaser will pay and a not unwilling vendor will receive for the property. In determining that value, there must be attributed to the parties a knowledge of all matters that affect its value. Those matters will include the predicted impact of future events as well as the experience of the past and the rates
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of return on other investments. As Isaacs J pointed out in Spencer v The
Commonwealth:
'We must further suppose both to be perfectly acquainted with the land, and cognisant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property.' (emphasis added by McHugh J)
The market for the property is, therefore, assumed to be an efficient market in which buyers and sellers have access to all currently available information that affects the property [49] - [50]. (footnotes omitted)

149 The hypothetical purchaser should be regarded as prudent: Spencer (440 - 441); Mount Lawley Pty Ltd v Western Australian Planning Commission [No 3] [2008] WASCA 158 (Mount Lawley [No 3] (2008)) [25]. Consistently with that, the hypothetical purchaser is to be taken to act rationally: Mir v Valuer-General [2009] NSWLEC 139 [43] - [45]. I think the same notion is implicit in what Callinan J said in Boland v Yates [265] - [269], in contrasting the artificial exercise of identifying the price of the notional bargain with the real world in which sentiment and emotion may significantly influence decision-making.

The value determined in the way explained above reflects market
value.

151 In some cases, land may have a 'special value' reflecting a value to
the owner over and above the price which a hypothetical purchaser may pay. See, for example, Boland v Yates [16] and [292]; Mount Lawley Pty Ltd v Western Australian Planning Commission [2004] WASCA 149; (2004) 29 WAR 273 (Mount Lawley (2004)) [281] - [287]; Arcus Shopfitters Pty Ltd v Western Australian Planning Commission [2002] WASC 174; (2002) 125 LGERA 180 (Arcus Shopfitters (2002)) [70] - [75]. In this case, the plaintiffs made no claim of special value to the owner.
152 There are a number of methods of assessing value. One method,
often the primary method, is by analysis of comparable sales. Other methods may be appropriate, depending on the expert evidence: Bronzel v State Planning Authority (1979) 21 SASR 513, 516; Boland v Yates [79], [280] - [291].

Education would commit to a final decision on the preferred site was:
1. TAFE and BMA to firm up land requirements at Fiegerts Road site, including negotiations with Main Roads over the future Perth - Bunbury Highway requirements. TAFE is looking at accommodating a 10 hectare building area for the Campus and associated grassed facilities. The current site for sale comprises 42 ha, with possibly only 20 ha being required for the campus facility (exhibit 258N, page 123). (emphasis added)

I do not think that the 'associated grassed facilities' was a reference to any proposal for an RRF. Whilst the TAFE college might have included playing fields or grassed areas for passive recreation, I do not think this amounts to collocating the TAFE college with an RRF. The grassed facilities are associated with the TAFE campus and not some independent regional proposal.
As a matter of future planning, it might have been possible to collocate an RRF with the TAFE college. The DEVET and the architects, BMA, were to liaise with the DPUD on integrating the TAFE campus with the surrounding long term planning and development. BMA raised the issue of preparing a structure plan for the shaded area surrounding the Fiegert Road site, north of Old Mandurah Road (exhibit 258N, page 124):
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Letter from Shire of Murray to the Premier, 20 December 1993
(exhibit 258O)
The letter is from Mr Nancarrow, the shire president, and notes concerns about the TAFE college proposal for Fiegert Road, particularly about delays in commencing development and decisions being made by people outside of the Peel region.
It does not mention any associated proposal for an RRF on the Fiegert
Road site.
Article from Mandurah Mail, 6 May 1994 (exhibit 258Q; also exhibit 179)
The article reports on a decision announced on behalf of the Education Minister to build a combined TAFE/Murdoch University campus in Mandurah. This seems consistent with what was said in February 1992
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(see exhibit RR146.24, page 6 above) about plans for Mandurah getting 'a
Peel Regional College that will be more than a TAFE college'.
The article states that 'it appears the Fiegert's Road site at Ravenswood, earlier earmarked for a Peel TAFE college, has been rejected'.
Shire of Murray Local Rural Strategy, July 1994 (exhibit 29,
1/11/75-289)
One of the planning considerations for precinct 7, Ravenswood, is that the
[s]ite adjoining Pinjarra Road, Fiegerts Road and future Perth-Bunbury highway alignment, is the subject of a report commissioned by Peel Local Government Commission and Peel Development Commission, for selection of a Regional education facility (exhibit 29, 1/11/180).

The LRS notes that one of the further planning needs is to identify the location and land use implications of possible tertiary education facilities.
This indicates that in mid-1994, the Fiegert Road site was still a possible location for the TAFE college.
There is no mention of any proposal or future intention by the shire to develop an RRF in Ravenswood.
Letter from Shire of Murray to Minister for Planning, 9 August 1994
(exhibit RR146.41)
The letter, from Mr Nancarrow, includes information to assist the Minister in his deliberations on the Riverland Ramble development proposal. It includes the following:
The Murray Shire's community expectations and public optimism towards future growth and development prospects in the Mandurah to Pinjarra corridor were then somewhat curtailed, when the Government announced that a proposed TAFE facility previously earmarked for a site adjoining the future Perth-Bunbury Highway in the Ravenswood locality was overlooked. Council felt that this decision was not taken with due regard for the long term community benefits or with sufficient consultation with State and Local Government Authorities based in the Peel region (exhibit RR146.41, page 1).

The letter does not mention any existing or new proposal to locate an RRF on the Fiegert Road site, including in terms that the RRF was intended to be developed in conjunction with the TAFE college.
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Peel Regional Strategy, September 1994 (exhibit 30, 1/6/96 - 144; exhibit 198)
Mr Evans represented the Shire of Murray on the steering committee.
The Peel Regional Strategy states, as one of its action points, that the Department of Training should develop a regional tertiary educational facility in Mandurah (1/6/121). The land use plan for the Strategy states that the site for the tertiary education facility was selected in August 1994 (1/6/139). The site identified on the plan (see exhibit 198) corresponds to the Gordon Road site shown in the 1992 TAFE College Site report (exhibit 28, 1/5/235).
The structure plan for the Rockingham/Mandurah/Pinjarra corridor was to examine the linkages of the tertiary education site to surrounding land uses and the Mandurah City centre (1/6/133). There is nothing that suggests the site location was uncertain at that time.
The Peel Regional Strategy also revised the 1990 Peel Regional Plan's proposal for an RRF. This was to be identified on suitable land north of Mandurah, instead of in Furnissdale/Barragup (1/6/122). It also states that the regional sporting facility proposed for a site north of Mandurah should be planned in conjunction with the proposed sporting facility at Lark Hill (1/6/124). The user groups, and the location and area of the regional sports facility were to be identified in the structure planning for the Rockingham/Mandurah/Pinjarra corridor (1/6/133).
The Peel Regional Strategy land use plan (exhibit 198) shows the preferred location for the regional sports facility in North Mandurah, as well as a smaller facility south of the Dawesville Cut. There are no regional sporting facilities identified anywhere in the Shire of Murray.
Working Paper No 4, November 1995 (exhibit 178)
The working paper, produced for the IPRSP committee, discusses the paper released in February 1995 by the Ministry of Planning about the Sport and Recreation Strategy (page 19). It then sets out and describes four potential sites:
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In respect of the Ravenswood site, the following is said:
A site of approximately 60 hectares has been identified just east of Pinjarra Road and just east of the Ravenswood townsite, between Pinjarra Road and the future Perth-Bunbury Highway. This approximate location was identified as part of the Sport and Recreation Strategy being prepared for the Ministry of Sport. The exact configuration of the site will need to be determined after more precise study of site conditions (exhibit 178, pages 20, 22).

Mr Auret clarified in his oral evidence that the references to 'east' were incorrect (ts 3433).
The working paper also notes under the heading 'Issue No 9 - Tertiary Education Site' that the greyhound racing track at Gordon Road had been identified for a future university and TAFE college (page 26). No other site is mentioned.
Letter from Mr Kidd to Mr Auret, 8 January 1996 (exhibit 182D,
15A/496)
The letter refers to discussions between Mr Auret and Mr Flugge regarding potential sites for a regional sporting facility to be included in the IPRSP. The letter states:
Council resolved at its meeting on 21 December 1995 to advise you that, if you are of a mind to include in the structure plan for this area a large site for the establishment of a regional recreation/sporting complex, then you are asked to carefully and sincerely consider the site previously under consideration as suitable for the Peel TAFE College, in the Ravenswood locality (exhibit 182D, 15A/496). (emphasis added)
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This letter suggests a clear preference for any RRF in Ravenswood to be on the subject land.
1996 IPRSP, for public comment (exhibit 7, 1/10/54 - 178)
The report was produced by the Peel Regional Planning Advisory Committee (the IPRSP Committee), of which Messrs Evans, Berzins, Flugge and Auret were all members. At that time, Mr Flugge was the executive manager of planning in the Shire of Murray. The Committee was chaired by Mr Arthur Marshall MLA, the Member for Murray.
In ch 9.4, potential sites for regional sports facilities are identified and briefly outlined (1/10/97 - 98). The four sites are:

(1) Lark Hill Sporting Complex;

(2)

North Mandurah, which was a site of 60 ha for a regional sporting facility identified in the 1994 Peel Regional Strategy (1/10/98, 141 - 142; see also exhibit 198);
(3) Ravenswood (discussed below); and

(4)

Caddup, south of the Dawesville Cut, which was also identified as a site for a regional sporting facility in the Peel Regional Strategy land use plan.
In respect of Ravenswood, the 1996 IPRSP notes the following:
A site of approximately 60 hectares has been identified just east of the Perth-Bunbury Highway/Pinjarra Road intersection and just north of the Ravenswood townsite. It is the site previously being considered as a TAFE site and is favoured for regional recreation by the Shire of Murray. This approximate location was identified as part of the Sport and Recreation Strategy being prepared for the Ministry of Sport and Recreation. The exact configuration of the site will need to be determined after more precise study of site conditions (exhibit 7, 1/10/98).

There are only two significant changes to the text from the 1995 Working Paper No 4 (exhibit 178): the description of the site's location; and the inclusion of the second sentence. Everything else, including the site area of 60 ha, is unchanged from what appears in exhibit 178.
The 1996 IPRSP later clarifies that the Sport and Recreation Strategy identified the need for an RRF to serve the Peel region and the preferred location was somewhere in the Ravenswood locality. The Shire of
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Murray requested that the site selected in the IPRSP be the site that was formerly identified as a prospective TAFE college (1/10/142).
The 1996 IPRSP also confirms that the greyhound racing track on Gordon Road has been identified as the future university site in Mandurah and will need to relocate. It suggests along Old Mandurah Road in Ravenswood as one possibility (1/10/98).
The Gordon Road site will be the campus for a future extension of Murdoch University and a TAFE college (1/10/101, 124). The site is sufficiently large to provide for the tertiary education requirements of the region for the foreseeable future.
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Appendices Appendix 1: Extract of the 1990 Peel Regional Plan (exhibit 197)

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Appendix 2: Extract of the 1994 Peel Regional Strategy (exhibit 198)
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Appendix 3: Extract of the draft LPS maps (exhibit LPS150.8)

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Appendix 4: Extract of the GRA concept plan (exhibit 191A, 25/392)

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Appendix 5: Clause 2.5 of the Clough/Rapley contract (exhibit 64)

2.5

If the Rezoning Approval is not obtained

(a)	If within a period of three (3) years of the Agreement Date ('Rezoning Approval Period'), the Buyer does not obtain the Rezoning Approval, the Buyer may elect to exclude Lot 300 from this Agreement, in which case the following will apply:

(i)           upon notice in writing by the Buyer to the Seller of the exclusion of Lot 300 from the Agreement, which notice may be given by the Buyer to the Seller not later than two (2) years from the date of the expiry of the Rezoning Approval Period, the obligations of the Parties set out in this Agreement relating to Lot 300 shall immediately terminate and the Parties shall be released from all obligations in that regard;
(ii)          in such circumstances, the purchase price payable by the Buyer to the Seller in respect of Lot 301 shall be fixed at $7,500,000.00, subject to Clause 2.5(d) and to such amount having been paid by the Buyer to the Seller pursuant to Clauses 2.2(a)(i), (ii), (iii) and (iv), it being expressly agreed by the Buyer and the Seller that no additional amount shall be payable by the Buyer to the Seller in respect of the purchase price for Lot 301

(including any additional amounts under
Clause 2.2(a)(vi)), except as set out in Clause 2.5(d);
(iii)         the seller must provide the Buyer with reasonable assistance to enable the Buyer to obtain a refund of stamp duty (if available) as a consequence of the operation of this Clause 2.5(a); and
(iv)         except for Clauses 2.5(c) and (d), the Agreement shall terminate, but without prejudice to any rights of the Parties arising prior to the date of termination.

(b)

The Parties agree that at any time between the date of the expiry of the Rezoning Approval Period and two (2) years after that date, notwithstanding that the Buyer has not obtained the Rezoning Approval, the Buyer may elect to proceed to Settlement in respect of Lot 300 by notice in writing to the Seller, in which case the following will apply:

(i)

within 10 Business Days of notice in writing by the Buyer to the Seller notifying the Seller that the Buyer intends to proceed with the Settlement of Lot 300, the Parties must proceed to Settlement in respect of Lot 300 on the terms of the Agreement (as applicable);
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(ii) upon Settlement of Lot 300, the Buyer must pay to the Seller the amount referred to in Clause 2.2(a)(v); and
(iii) following the Settlement of Lot 300 referred to above, but subject to Clause 2.5(d) below, the terms of this Agreement shall continue to apply, including but not limited to the obligation of the Buyer to pay the amount to the Seller as specified in Clause 2.2(a)(vi) upon the Buyer obtaining the Approved Subdivision Plan, provided that the Buyer shall not be obliged to pay any further amount to the Seller upon the Buyer obtaining the Rezoning Approval in accordance with Clause 2.2(a)(v).

(c)

If the Buyer elects to exclude Lot 300 from this Agreement in accordance with Clause 2.5(a) above, or does not elect to proceed with the purchase of Lot 300 in accordance with Clause 2.5(b), the Buyer agrees that the Seller shall be entitled to exercise an option ('Option') to purchase Lot 301 (which Option is hereby granted by the Buyer to the Seller in consideration for the payment of $10.00, receipt of which is acknowledged by the Buyer) on the following terms and conditions:

(i)

the Option may be exercised by notice in writing from the Seller to the Buyer within 90 Business Days after:

(A) receipt by the Seller of the notice from the Buyer
in accordance with Clause 2.5(a)(i); or
(B) the expiry of five (5) years from the Agreement Date (if the Buyer does not elect to proceed with the purchase of Lot 300 in accordance with Clause 2.5(b)),
failing which the right of the Seller to exercise the Option shall terminate absolutely. For the avoidance of doubt, the Parties agree that if the Seller elects not to exercise the Option in accordance with Clause 2.5(c)(i)(A), the Seller's right to exercise the Option under Clause 2.5(c)(i)(B) shall terminate absolutely;
(ii) if the Option is properly exercised, then Lot 301 must be sold by the Buyer to the Seller on the following terms:

(A)

settlement of the purchase of Lot 301 by the Seller shall occur within 30 Business Days of the date of the exercise of the Option;
(B) the purchase price for Lot 301 shall be
$7.5 million payable on settlement;
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(C)

the Seller shall pay all stamp duty assessed on the sale of Lot 301 pursuant to Clause 2.5(c) and on the grant and exercise of the Option;

(D)

the price to be paid for Lot 301 is to be first applied to the discharge of any Security Interest over Lot 301 granted by the Buyer so that the Seller purchases the land unencumbered by any such Security Interest;

(E)

at the same time as the settlement of the purchase of Lot 301 by the Seller, the Buyer (to the extent that it is able) must assign to the Seller the benefit of any Subdivision Intellectual Property held by the Buyer in respect of the Land, in exchange for the payment by the Seller to the Buyer of 50% of the cost incurred by the Buyer in respect of the Subdivision Intellectual Property (including GST);

(F)

to the extent applicable to the sale of Lot 301 as provided in this Clause 2.5(c), Clauses 9.16 and 12 of this Agreement shall apply to the sale of Lot 301; and

(G)

upon settlement of the purchase of Lot 301 by the Seller pursuant to the exercise of the Option, this Agreement shall terminate (except to the extent that any provisions, by implication, are intended to survive the termination of this Agreement).

(d)(i) Notwithstanding anything to the contrary contained in this

Agreement, if:

(A)

the Buyer elects to exclude Lot 300 from this Agreement, in accordance with Clause 2.5(a), and the Seller does not elect to exercise the Option; or

(B)

the Buyer elects to proceed to Settlement in respect of Lot 300 pursuant to Clause 2.5(b), but the Rezoning Approval is not obtained within 5 years from the Agreement Date,
the Parties agree that the provisions of this Clause 2.5(d) shall
apply.
(ii) In the circumstances referred to in Clause 2.5(d)(i) above:

(A)

within 15 Business Days of the last date by which the Option can be exercised or the expiry of 5 years from the Agreement Date, whichever is applicable, the Transaction
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Parties must meet to determine the additional consideration that is to be paid by the Buyer to the Seller in respect of the purchase of Lot 301 (if the Buyer has excluded Lot 300 from this Agreement under Clause 2.5(a)) or Lot 300 and Lot 301 (if the Buyer has elected to proceed with the Settlement of Lot 300 under Clause 2.5(b)) (respectively called the 'Additional Purchase Price' in this Agreement);

(B)

if the Parties are not able to agree on the Additional Purchase Price (as applicable) within the period referred to above, the issue must be referred to a Valuer appointed jointly by the Transaction Parties, or in the absence of agreement by the Transaction Parties within 10 Business Days, by the President for the time being of the Law Society of Western Australia;

(C)

the Valuer must determine the current market value (exclusive of GST) of Lot 301, or Lot 301 and Lot 300, as the case may be, as at the date of the appointment of the Valuer, applying all appropriate valuation principles, with the Additional Purchase Price then being determined by applying the following formulae:
Lot 301
APP = CMM - A
Where
APP means the Additional Purchase Price in respect of
Lot 301

CMM means the current market value of Lot 301 at the relevant date
A = $7.5 million
Lot 300 and Lot 301
APP = CMM - A
Where
APP means the Additional Purchase Price in respect of
Lot 300 and Lot 301
CMM means the current market value of Lot 300 and
Lot 301 at the relevant date
A = $14.3 million;
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(D) the determination of the Valuer, for the purposes of determining the Additional Purchase Price (as applicable) is final and binding on the Transaction Parties, with the Valuer acting as an expert and not an arbitrator;
(E) the Transaction Parties must equally share the cost of the
Valuer;
(F) the Additional Purchase Price (as applicable) must be paid by the Buyer to the Seller within 20 Business Days of it being agreed, or determined by the Valuer;
(G) simultaneously with the payment of the Additional Purchase Price (as applicable) in accordance with sub-clause (F) above, the Seller must procure the discharge of the Second Mortgage or caveat referred to in Clause 2.6(c), or the discharge of the charge and withdrawal of the caveats referred to in Clause 2.6(d) (as applicable), and thereafter this Agreement shall terminate, without prejudice to any of the rights of the Parties arising under this Agreement prior to the date of termination. The Transaction Parties expressly agree, that in such circumstances, the Buyer shall not be obliged to pay any additional amounts to the Seller pursuant to Clause 2.2(a)(vi) of this Agreement; and
(H) for the avoidance of doubt, if the consequence of applying the formulae referred to in sub-clause (C) is a negative amount, the Seller shall not be obliged to effect any payment to the Buyer.

(exhibit 117, 1/9/142, 220 - 222)

1926 In the five years leading to 2006, the population of Mandurah grew
considerably more quickly than Murray. The average annual rate of population growth for Mandurah was 6.0%, while for Murray it was 2.6%. In similar vein, the forecasts for the next five years from 2006 were for more rapid population growth in Mandurah (3.7%), than for Murray (1.9%).
1927 Some of the plaintiffs' planners suggested that, by 2006, population
growth had meant that the population projections in the 1996 IPRSP were outdated. The IPRSP forecasts did not underestimate growth in the Shire of Murray, but proved to be slightly optimistic. The 2006 population projection for Murray in WA Tomorrow No 6 was slightly less than what the IPRSP forecasts suggested it would be. Further, the population forecasts for Murray in 2011 and 2021 in the medium series of the 1996 IPRSP were for a greater population than was forecast for these years in WA Tomorrow No 6.

7.5.2.3

The plaintiffs' submissions on WA Tomorrow No 6

1928 The plaintiffs submit that while the market would have regard to the
figures in WA Tomorrow No 6, it would look at other matters and may take a different view. For example, the market may consider that the

(exhibit 222C, 24A/164)

2109 The district centre land use plan in appendix 1 of Mr Kotsoglo's
report showed the locations of these various uses on the subject land. The retail and department store were in the south-west sector of lot 192. To the east of that was a mix of land uses including some further retail and medical, cafes and restaurants, a cinema complex and other uses. Further east of that is shown some high density residential of R80 density. The

Citations

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

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1.5.1	The pre-IPRSP period: 1990 - 1997 ................................................................18
1.5.2	The IPRSP ........................................................................................................19
1.5.3	The Peel Region Scheme..................................................................................20
1.5.4	Urban potential .................................................................................................21

(1)	valued on the basis of its district commercial centre potential, the land was worth about $60 million to $70 million;
(2)	valued on the basis that it was zoned urban, the land was worth about $60 million to $65 million; and
(3)	valued on the basis that the land was zoned rural, with strong potential to be imminently rezoned to urban, the land was worth about $36 million to $40 million.

(1)	as a matter of law, the land must be valued on the basis that it was zoned rural and had urban potential;
(2)	alternatively, as a matter of fact, but for the proposed public works, the subject land would have been zoned rural and it should be valued on the basis of rural zoning with urban potential;
(3)	the land's urban potential was uncertain and in the medium or long term; and
(4)	valued on that basis, the land was worth about $6 million to $7 million.

(2)	I find that, but for the proposed public works, the land would have been zoned rural, and it should be valued on the basis that it was zoned rural and had urban potential;
(3)	I find that, in the assumed absence of the proposed public works, the urban potential of the land was reasonable, with a high degree of uncertainty; and
(4)	valued on that basis, I find that the value of the land was $14.025 million.

(a)	the extent to which the draft LPS enhanced the prospects of short-term urbanisation of the subject land, but for the proposed public works; and
(b)	the extent to which what is shown in the draft LPS is relevantly attributable to the proposed public works.

(a)	the defendants would be prejudiced if the plaintiffs were permitted to rely upon the new evidence in the then remaining two weeks; and
(b)	the plaintiffs should be permitted to rely on the evidence, but only on the basis that the trial of the issues associated with the new evidence be adjourned (see ts 1782 - 1788).

(a)	its purpose was to summarise what changes to facts and planning documents the plaintiffs hypothesised there would have been, but for the proposed works, and the reasons which the plaintiffs say support each of those hypotheses; and
(b)	it was not intended to be a pleading or pleading-like document, or to override or restrict the evidence of the experts: [23].

(a)	the plaintiffs had not articulated a case that the subject land (assuming it to be rural in the hypothetical IPRSP) would have been rezoned to urban between 1997 and 2003;
(b)	the plaintiffs should not be permitted to advance a case to that effect; and
(c)	notwithstanding that the plaintiffs had not, in the Changes Document or otherwise, articulated a case of rezoning between 2003 and 2006, subject to further objection from the defendants in the event of prejudice by way of surprise, the plaintiffs were permitted to advance a case that the land would have been rezoned by amendment of the PRS between 2003 and 2006.

2.7.1	Identifying the proposed public works .............................................................44
2.7.2	The meaning of 'attributable' in s 241(2)..........................................................46
2.7.3	Does s 241(2) invite or permit attention to the hypothetical zoning of the land, absent the proposed public works?...................................................................49

(1)	Lark Hill Sporting Complex;
(2)	North Mandurah, which was a site of 60 ha for a regional sporting facility identified in the 1994 Peel Regional Strategy (1/10/98, 141 - 142; see also exhibit 198);
(3)	Ravenswood (discussed below); and
(4)	Caddup, south of the Dawesville Cut, which was also identified as a site for a regional sporting facility in the Peel Regional Strategy land use plan.

(A)	receipt by the Seller of the notice from the Buyer in accordance with Clause 2.5(a)(i); or
(B)	the expiry of five (5) years from the Agreement Date (if the Buyer does not elect to proceed with the purchase of Lot 300 in accordance with Clause 2.5(b)),

(C)	the Seller shall pay all stamp duty assessed on the sale of Lot 301 pursuant to Clause 2.5(c) and on the grant and exercise of the Option;
(D)	the price to be paid for Lot 301 is to be first applied to the discharge of any Security Interest over Lot 301 granted by the Buyer so that the Seller purchases the land unencumbered by any such Security Interest;
(E)	at the same time as the settlement of the purchase of Lot 301 by the Seller, the Buyer (to the extent that it is able) must assign to the Seller the benefit of any Subdivision Intellectual Property held by the Buyer in respect of the Land, in exchange for the payment by the Seller to the Buyer of 50% of the cost incurred by the Buyer in respect of the Subdivision Intellectual Property (including GST);
(F)	to the extent applicable to the sale of Lot 301 as provided in this Clause 2.5(c), Clauses 9.16 and 12 of this Agreement shall apply to the sale of Lot 301; and
(G)	upon settlement of the purchase of Lot 301 by the Seller pursuant to the exercise of the Option, this Agreement shall terminate (except to the extent that any provisions, by implication, are intended to survive the termination of this Agreement).

(A)	the Buyer elects to exclude Lot 300 from this Agreement, in accordance with Clause 2.5(a), and the Seller does not elect to exercise the Option; or
(B)	the Buyer elects to proceed to Settlement in respect of Lot 300 pursuant to Clause 2.5(b), but the Rezoning Approval is not obtained within 5 years from the Agreement Date,

(B)	if the Parties are not able to agree on the Additional Purchase Price (as applicable) within the period referred to above, the issue must be referred to a Valuer appointed jointly by the Transaction Parties, or in the absence of agreement by the Transaction Parties within 10 Business Days, by the President for the time being of the Law Society of Western Australia;
(C)	the Valuer must determine the current market value (exclusive of GST) of Lot 301, or Lot 301 and Lot 300, as the case may be, as at the date of the appointment of the Valuer, applying all appropriate valuation principles, with the Additional Purchase Price then being determined by applying the following formulae:
Lot 301
APP = CMM - A
Where
APP means the Additional Purchase Price in respect of Lot 301
CMM means the current market value of Lot 301 at the relevant date
A = $7.5 million
Lot 300 and Lot 301
APP = CMM - A
Where
APP means the Additional Purchase Price in respect of Lot 300 and Lot 301
CMM means the current market value of Lot 300 and Lot 301 at the relevant date
A = $14.3 million;

(D)	the determination of the Valuer, for the purposes of determining the Additional Purchase Price (as applicable) is final and binding on the Transaction Parties, with the Valuer acting as an expert and not an arbitrator;
(E)	the Transaction Parties must equally share the cost of the Valuer;
(F)	the Additional Purchase Price (as applicable) must be paid by the Buyer to the Seller within 20 Business Days of it being agreed, or determined by the Valuer;
(G)	simultaneously with the payment of the Additional Purchase Price (as applicable) in accordance with sub-clause (F) above, the Seller must procure the discharge of the Second Mortgage or caveat referred to in Clause 2.6(c), or the discharge of the charge and withdrawal of the caveats referred to in Clause 2.6(d) (as applicable), and thereafter this Agreement shall terminate, without prejudice to any of the rights of the Parties arising under this Agreement prior to the date of termination. The Transaction Parties expressly agree, that in such circumstances, the Buyer shall not be obliged to pay any additional amounts to the Seller pursuant to Clause 2.2(a)(vi) of this Agreement; and
(H)	for the avoidance of doubt, if the consequence of applying the formulae referred to in sub-clause (C) is a negative amount, the Seller shall not be obliged to effect any payment to the Buyer.

[2011] WASC 223

1/09/11