Mount Lawley Pty Ltd v Western Australian Planning Commission
[2007] WASCA 226
•29 OCTOBER 2007
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE COURT OF APPEAL (WA)
CITATION: MOUNT LAWLEY PTY LTD -v- WESTERN AUSTRALIAN PLANNING COMMISSION [2007] WASCA 226
CORAM: STEYTLER P
McLURE JA
BUSS JA
HEARD: 2, 3 & 4 MAY 2007
DELIVERED : 29 OCTOBER 2007
FILE NO/S: CACV 64 of 2006
BETWEEN: MOUNT LAWLEY PTY LTD
Appellant
AND
WESTERN AUSTRALIAN PLANNING COMMISSION
Respondent
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram :TEMPLEMAN J
Citation :MOUNT LAWLEY PTY LTD -v- WESTERN AUSTRALIAN PLANNING COMMISSION [2006] WASC 82
File No :CIV 1550 of 1997
Catchwords:
Appeal - Town planning - Reservation and acquisition of land - Valuation - Metropolitan Region Town Planning Scheme Act 1959 (WA) s 36(2b) - Statutory emanation of Pointe Gourde principle - Disregarding effects on value attributable to the Scheme - Steps - Approach to zoning and development potential of land at valuation date - Where trial judge excluded expert evidence led by landowner
Legislation:
Metropolitan Region Town Planning Scheme Act 1959 (WA), s 36(2b)
Result:
Various findings of the trial judge set aside
Further submissions required as to the manner of disposition of the appeal
Category: A
Representation:
Counsel:
Appellant: Mr B W Walker SC & Dr J T Schoombee & Ms K L Hafford
Respondent: Mr K M Pettit SC & Ms D E Quinlan
Solicitors:
Appellant: Ilberys Lawyers
Respondent: State Solicitor for Western Australia
Case(s) referred to in judgment(s):
Brown v Churchill [2006] WASCA 17; (2006) 31 WAR 246
Fidler v Port Stephens Council [1998] NSWLEC 193
Fletcher Estates (Harlescott) Ltd v Environment Secretary [2000] 2 AC 307
Housing Commission of New South Wales v San Sebastian Pty Ltd (1978) 140 CLR 19
Malec v J C Hutton Pty Ltd (1990) 169 CLR 638
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
Pointe Gourde Quarrying and Transport Co Ltd v Sub‑Intendent of Crown Lands [1947] AC 565
Sellars v Adelaide Petroleum NL (1994) 179 CLR 332
Smith v Roads and Traffic Authority of New South Wales [2005] NSWLEC 438
Suttor v Gundowda Pty Ltd (1950) 81 CLR 418
Sydney Harbour Foreshore Authority v Walker Corporation Pty Ltd (No 2) [2006] NSWCA 386; (2006) 151 LGERA 186
Sydney Harbour Foreshore Authority v Walker Corporation Pty Ltd [2005] NSWCA 251; (2005) 63 NSWLR 407
The Crown v Murphy (1990) 64 ALJR 593
University of Wollongong v Metwally (No 2) (1985) 59 ALJR 481
Wattle Park Pty Ltd v Commissioner of Highways (1973) 6 SASR 69
Wilson v Liverpool Corporation [1971] 1 All ER 628
Introduction…………………………………………………………………………………….5
Issues arising in the appeal
Section 36(2b) of the Scheme Act
The retrial
Background to and development of the Scheme
Evidence accepted by the trial judge concerning the suitability of the Mount Lawley land for development
Evidence of likely zoning absent the Scheme
Evidence given by Dr Davies, Dr Tingay, Mr Bowman and Mr Goff
Evidence of the valuers
The approach adopted by the trial judge in respect of the issue of valuation
Grounds of appeal and cross-appeal
Planning considerations (grounds of appeal 1, 3 and 16)
The 1987 Corridor Plan Review
Planning considerations after 1987
The approach taken by the parties to the identification of steps in the Scheme
The appropriate approach to steps in the Scheme
Ground 1
Ground 16
Other contentions ‑ grounds 3 and 16
The zoning issue (grounds 5, 6, 7, 11, 12 and 17 and contention (1) of the respondent's notice of contention)
The 'direction' given by the Full Court
The three stage approach suggested in Smith
Ignoring effect on value and not the Scheme
Conclusions - grounds 5 and 6
Conclusions - ground 7
The excluded evidence and the development potential of the Mount Lawley land ‑ (grounds 2, 8, 9, 10, 13 and 21 and contentions (3), (4) and (5))
Evidence of probable zoning absent the Scheme
Basis for the exclusion of evidence given by Messrs Goff, Auret, Singleton, Stokes and Smith
Exclusion of Dr Tingay's second report
Exclusion of other evidence given by Mr Goff, Dr Tingay and Mr Bowman
The contention that the exclusion of the written evidence of Mr Goff and Dr Tingay had no consequence
Evidence of the appellant's valuers
The basis for exclusion of the appellant's valuation reports
Other bases advanced for the exclusion of the appellant's valuation evidence
Conclusions
The contention that the appellant has departed from the case run at the retrial
Costs (grounds 22, 23 and 24)
The cross‑appeal and the cross‑respondent's notice of contention
Conclusions
Summary
JUDGMENT OF THE COURT: This appeal and cross‑appeal concern the value of the reserved portion of 320 hectares of land (the Mount Lawley land) comprising Lot 46 and part of Lot 47 Maralla Road and Lexia Avenue, located to the west of a recently developed suburb known as Ellenbrook, in the City of Swan. The Mount Lawley land is some 22 kilometres north of the City of Perth on the Swan Coastal Plain. The land, which is close to the northern extremity of a corridor identified between 1987 and 1990 for expansion of the Perth metropolitan area, is owned by the appellant, Mount Lawley Pty Ltd (Mount Lawley).
The Mount Lawley land consists of a sandy dryland or upland area containing banksia trees and interspersed wetlands classified as lakes under the Environmental Protection (Swan Coastal Plain Lakes) Policy 1992 (Lakes EPP). The land is bounded on the west by state forest. Its eastern boundary abuts some 745 hectares of land that was owned by Sanwa Vines Pty Ltd (Sanwa). The land to the south of the Mount Lawley land (some 563 hectares in all) was owned by a statutory corporation operating as a state housing body, Homeswest. That land, in turn, lay to the west of 580 hectares of land owned by Multiplex Constructions Pty Ltd (Multiplex).
In the late 1980s Homeswest and Sanwa formed a company known as Ellenbrook Management Pty Ltd (Ellenbrook Management). That company proposed to develop the land owned by Homeswest and Sanwa as a new suburb to be known as Ellenbrook (Ellenbrook Project). Mount Lawley was initially to be involved in the development. However, it subsequently withdrew from it. The Ellenbrook Project was ultimately successful. In the early stages of its implementation the land to be developed (Ellenbrook land) was rezoned from rural to urban deferred. This was done by way of an amendment to the Metropolitan Region Scheme (MRS). This was Amendment 879/33 to the MRS which was gazetted on 16 October 1992. That amendment also effected the reservation of 301 hectares of the Mount Lawley land for parks and recreation. Another 8 hectares or so of the Mount Lawley land (CAH land) was reserved for a controlled access highway. The unreserved portion of the Mount Lawley land (some 11.9 hectares on Lot 47) was rezoned, by Amendment 879/33, to urban deferred. The Mount Lawley land had, until then, been zoned rural. The reservation of the 301 hectares for parks and recreation was made for the purpose of protecting and preserving significant wetlands and associated vegetation on that land. It is, for the purposes of the appeal, common cause between the parties that 175 hectares of the reserved land consisted of drylands, that 75 hectares consisted of wetlands (or lakes) and that the remaining 50 hectares consisted of drylands that were likely to be required by the Environmental Protection Authority (EPA) to be used as protective or 'buffer' zones around the wetlands, if development occurred on adjacent dryland areas.
In December 1995 the appellant applied to the respondent for approval to begin development of earth works for urban development and sand mining on the Mount Lawley land. As had been anticipated, the development application was refused. On 13 February 1996 the appellant claimed compensation for injurious affection in respect of its land. It was entitled to do so by virtue of s 11(1) of the now repealed Town Planning and Development Act 1928 (WA) (Town Planning Act). That section provides that any person whose land is injuriously affected by the making of a town planning scheme shall (if the claim is brought within the specified time) 'be entitled to obtain compensation in respect thereof from the responsible authority'.
Section 36(1)(a) of the former Metropolitan Region Town Planning Scheme Act 1959 (WA) (Scheme Act) provided, at the material time (like the Town Planning Act, it was repealed in 2005) that, for the purposes of applying s 11 of the Town Planning Act to the provisions of the MRS, that section shall be construed as if the respondent was the 'responsible authority'. Section 36(2) of the Scheme Act, when read with s 12(2a)(b) of the Town Planning Act and the terms of the MRS, required the respondent, when faced with a claim for injurious affection under the Town Planning Act, either to pay compensation to the claimant or to elect to acquire the affected land.
By letter dated 9 May 1996 the respondent elected to acquire the Mount Lawley land instead of paying compensation. However, the parties were unable to agree on the price to be paid. By s 36(2a) of the Scheme Act the price was consequently to be 'the value of the land as determined in accordance with subsection (2b)'. That subsection, so far as it is material, read as follows:
The value of the land referred to in subsection (2a) shall be the value thereof on the date the Commission elects to acquire the land under that subsection, and that value shall be determined ‑
(b) …
(ii)by the Supreme Court ‑ if the value of the land claimed by the owner thereof is more than $1000;
or
(c)by some other method agreed upon by the Commission and the owner of the land,
and that value shall be determined without regard to any increase or decrease, if any, in value attributable wholly or in part to the Scheme.
The 'Scheme' was defined in s 6 of the Scheme Act as:
[A] town planning scheme for the metropolitan region or any part thereof … and includes ‑
(a)the provisions of the Scheme;
(b)all maps, plans, specifications and other particulars contained in the Scheme and colourings, markings or legend thereon;
(c)the Scheme as varied or amplified by any amendment that has the force of law; and
(d)a subsequent scheme that has the force of law and any such subsequent scheme as varied or amplified by any amendment that has the force of law.
…
Both parties were, as they still are, content to treat Amendment 879/33 to the MRS and a later amendment, 950/33 (which rezoned the Ellenbrook land and the unreserved portion of the Mount Lawley land from urban deferred to urban), as 'the Scheme' for the purposes of s 36(2b) of the Scheme Act. That is because the amendments are the only parts of the MRS that relevantly affected the value of the Mount Lawley land. We will consequently refer to the amendments as 'the Scheme'.
The value of the Mount Lawley land was determined by the Supreme Court. It was found to be $2.9 million. This was significantly less than the value which had been placed on it by the appellant. The appellant appealed. The appeal was successful: Mount Lawley Pty Ltd v Western Australian Planning Commission [2004] WASCA 149; (2004) 29 WAR 273 (first appeal). The decision of the trial judge was set aside and a retrial was ordered. The retrial took place during February, March and April 2006. This time the trial judge (not the judge who had previously determined the value) concluded that the value of the Mount Lawley land was $4 million: Mount Lawley Pty Ltd v Western Australian Planning Commission [2006] WASC 82. He awarded interest on that sum from 7 May 1996. The appellant appealed once again. Its amended grounds of appeal comprised 24 grounds running to some 33 pages. Some of these grounds have since been abandoned. The respondent has cross‑appealed upon three grounds and lodged a notice of contention in the appeal. The appellant (cross‑respondent) has lodged a notice of contention in the cross‑appeal.
Issues arising in the appeal
Before turning to the reasons of the trial judge and to the grounds of appeal and cross‑appeal, it is convenient to give a broad overview of the issues that arise and to explain how the parties have agreed that they should be dealt with.
The principal issues essentially concern the following:
1.The proper construction of s 36(2b) of the Scheme Act, encompassing the question of when an increase or decrease in value is 'attributable wholly or in part to the Scheme'.
2.Whether the trial judge erred in his approach to the question of what factors, having an effect on value of the Mount Lawley land, should be excluded as having been 'attributable wholly or in part to the Scheme' (grounds 1 to 7 and 16 of the grounds of appeal).
3.Whether the trial judge was right to exclude some of the evidence led on behalf of the appellant upon the basis that it was irrelevant or otherwise inadmissible (grounds 2, 8, 9 and 21 and pars 3, 4 and 5 of the respondent's notice of contention).
4.Whether the trial judge erred in his assessment of the development potential of the Mount Lawley land (grounds 10 to 13 of the grounds of appeal, pars 1 and 2 of the respondent's notice of contention, grounds 1 to 3 of the cross‑appeal and pars 3 to 5 of the appellant's (cross‑respondent's) notice of contention in respect of the cross‑appeal).
5.Whether the trial judge was right to rely upon valuation evidence that had been led on behalf of the respondent (ground 17).
6.Whether the costs orders made by the trial judge were appropriate (grounds 22 to 24).
During the course of argument on the appeal, there was some debate concerning the question whether, if the appellant should succeed in one or more of its grounds of appeal, this court would be in a position to make the necessary findings or whether there should be a retrial. The parties agreed that that question was best left over until it had become apparent whether, and if so upon what basis, the appellant had succeeded. It was also agreed that the costs issues should be put to one side until all other issues have been dealt with. We will consequently deal with the issues raised by the appeal and cross‑appeal only so far as is necessary to determine whether the trial judge erred in fact or law. The remaining issues will be dealt with by way of further submissions once the former questions have been decided.
Before turning to the material evidence that was led at the retrial, to the judgment of the trial judge and to the detail of the grounds of appeal and cross‑appeal, we will deal with the first of the principal issues, being the construction of s 36(2b) of the Scheme Act.
Section 36(2b) of the Scheme Act
In the first appeal, the approach required by s 36(2b) was said to be similar to that required at common law by the so‑called 'Pointe Gourde principle' [70]. That is a reference to what was said in Pointe Gourde Quarrying and Transport Co Ltd v Sub‑Intendent of Crown Lands [1947] AC 565 as follows (572):
It is well settled that compensation for the compulsory acquisition of land cannot include an increase in value which is entirely due to the scheme underlying the acquisition.
The principle (the application of which is discussed in the reasons given in the first appeal ([62] ‑ [72]) has been discussed in a number of Australian cases. These include The Crown v Murphy (1990) 64 ALJR 593, where the High Court said (595):
One purpose of this principle is to ensure that a resuming authority does not employ planning restrictions to destroy the development potential of the land and then assess compensation for its resumption on the basis that the destroyed potential had never existed … The principle applies in cases where there is a direct relationship between the planning restriction and the scheme of which resumption is a feature and extends to cases where there is merely an indirect relationship, provided that the planning restriction can properly be regarded as a step in the process of resumption.
The cases considering the Pointe Gourde principle and various statutory emanations of it are helpful. However, it is the statutory embodiment of that principle as it appears in s 36(2b) of the Scheme Act to which effect must be given in this case (see the first appeal reasons at [65]).
The starting point, when considering the application of s 36(2b), is to identify 'the Scheme'. We have mentioned that, in this case, the components of the Scheme have been agreed by the parties. For present purposes, the Scheme is to be regarded as comprising Amendments 879/33 and 950/33 to the MRS. This agreement as regards the components of the Scheme is consistent with what was decided in the first appeal: see [140] ‑ [141] and [331]. There was no challenge to that decision.
Next, it is relevant to determine what increases or decreases in the value of the land are 'attributable wholly or in part to the Scheme', so that these may be disregarded. Just when the effect on value is so attributable can be a difficult question to answer. That kind of question has frequently arisen in other contexts. A well‑known example is provided by Housing Commission of New South Wales v San Sebastian Pty Ltd (1978) 140 CLR 196. That case dealt with s 124 of the Public Works Act 1912 (NSW). That section provided that compensation for land compulsorily acquired should be assessed without regard to any alteration to the value of the land arising from the establishment of any public works upon or for which the land was resumed. Jacobs J (with whom the other judges agreed) said that this provision was a statutory form of the Pointe Gourde principle (205). He went on to say (205 ‑ 206):
A difficulty which arises in the application of this principle is that valuation is in the ordinary case based on market value and, if the proposed public purpose and the possibility or likelihood of resumption therefore has become known prior to the date of resumption, the market value at the time of resumption will probably reflect by way of increase or decrease the possibility or likelihood of resumption for that public purpose. Therefore that value cannot be accepted. Yet it is inevitably in most cases the starting point of the process of valuation. With the actual market value at the time of resumption as the starting point it is then necessary to determine whether that value has been depressed or elevated by the market's foreknowledge of the possible or likely public purpose and consequent resumption. It is therefore inevitable in such circumstances that the public purpose has to be taken into account in the process of valuation but it can be taken into account only for that purpose.
Jacobs J saw no difficulty in applying s 124 of the Public Works Act in cases in which there is 'a direct relationship' between a restriction on land use (decreasing its value) and the proposed establishment of the public works in question. He said that in such a case the effect on value of the zoning or restriction ought to be ignored (206). However, he added that there are many situations where the relation between the zoning and the proposed public works is not clear cut. He provided the following example (206 ‑ 207):
Assume an area of land on the outskirts of existing settlement, and assume a planning authority concerned to designate land uses in a planning scheme. The land is designated open space. Thereafter it is resumed for the purpose of a public reserve. The fact that the land was zoned as open space may have depreciated its value. Does the resuming authority pay compensation at the depreciated value of open space or at some other value? The question cannot be correctly answered without knowing whether there was any connexion between the zoning as open space and the subsequent resumption. If the zoning was done with the intent or in anticipation that the land should be resumed for a purpose such as a public reserve or if the zoning was proposed or dictated by the resuming authority then s 124 requires that the zoning be ignored. It is only a step in the process of subsequent resumption. But in other circumstances the resumption may be unconnected with the act of zoning. It may be that the resuming authority selects the land for resumption as a public reserve because it is zoned open space; if it does so it is doing no more than ensuring that it, as well as others, conforms to the planning scheme. In those circumstances there is no relevant relationship between the zoning and the public purpose. No public purpose, existing or anticipated, intended, or urged by the zoning authority, leads to the zoning; rather, the zoning leads to the public purpose and consequent resumption.
Similar difficulties can arise under s 36(2b). What constitutes a 'step in the process' for the purposes of that section (if, as both parties accepted, the words 'attributable … to the Scheme' encompass steps in the process of the Scheme) is a matter of some controversy between the parties. During the appeal, both adopted a very wide view of the notion of a 'step'. The appellant did so because it was constrained by the manner in which it had conducted the retrial. The respondent did so because it takes the view that 'steps' comprise not only acts performed in order to facilitate a Scheme, but also what it referred to as 'portents of the Scheme' (a phrase that raises more questions than it answers). We will return, in more detail, to the respective approaches of the parties in this respect later in these reasons.
The question of what is a 'step in the process' in this kind of context has since been discussed in a number of cases. Relatively recently, in Sydney Harbour Foreshore Authority v Walker Corporation Pty Ltd [2005] NSWCA 251; (2005) 63 NSWLR 407 [85] (Walker No 1) Basten JA (with whom Beazley JA and Stein AJA agreed), said that the 'lesson of … San Sebastian … is that no narrow view should be taken of steps which may affect the value of land'. However, he added that 'it is necessary to distinguish between conduct which constitutes a proper exercise of planning powers irrespective of the ultimate resumption and a use of planning powers in pursuit of a proposed resumption'.
We have said that in this appeal we are required by the agreement of the parties, taken with their decision not to challenge the determination in the first appeal, to treat the Scheme as comprising Amendment 950/33 in addition to Amendment 879/33. The Scheme is consequently to be taken (as it was at the retrial) as including both the reservation of part of the Mount Lawley land and the upzoning of the Ellenbrook land. It also follows from the agreement of the parties in this respect, consistently with the approach adopted by the court in the first appeal, that they accept that the Scheme is the particular amendments (879/33 and 950/33) and that it is only the effect on value of those amendments that must be disregarded and not that of those amendments and any other amendments to the same effect that might, absent the particular amendments, have been made to the MRS. This means that this court is not required to ignore the reservation of the Mount Lawley land and/or the upzoning of the Ellenbrook land as an available planning option (which, if there had been such a requirement, would have precluded a finding that part of the Mount Lawley land would or might in any event have been reserved or that the Ellenbrook land would or might in any event have been upzoned).
It is important to mention, in this respect, that the appellant's case, at the retrial and in this appeal, was that the Ellenbrook land would have been zoned urban by the valuation date. This was important because there was evidence that the upzoning of Ellenbrook was a necessary, but not determinative, factor in any upzoning of the Mount Lawley land (neither party contended that the value of the Mount Lawley land was less than its rural value).
However, it does not follow that, because the Scheme is the particular amendments, it is open to the court to make a finding on the balance of probabilities that the same planning decision or decisions would have been made and given effect to (that is, the Mount Lawley land reserved or the Ellenbrook land upzoned) prior to the valuation date. The amendments giving effect to the reservation of part of the Mount Lawley land and the upzoning of the Ellenbrook land amount to the Scheme itself, not to a step in the Scheme. This materially distinguishes s 36(2b) from the New South Wales statutory scheme considered in the New South Wales cases relied on by the appellant including Smith v Roads and Traffic Authority of New South Wales [2005] NSWLEC 438 and Sydney Harbour Foreshore Authority v Walker Corporation Pty Ltd (No 2) [2006] NSWCA 386; (2006) 151 LGERA 186 (discussed later in these reasons). As we shall explain, under the New South Wales legislation the zoning of the relevant land can be a neutral planning decision which is not a step in the Scheme and the zoning is never the equivalent of the Scheme under s 36(2b).
Section 36(2b) requires that the value of the Mount Lawley land is to be determined as at the valuation date without regard to any increase or decrease in value attributable wholly or in part to the amendments that constitute the Scheme. That is to be done by ignoring, as at the valuation date, the reservation and upzoning given effect to by those amendments. Ignoring the effect on value of the amendments as at the valuation date has the consequence of reviving the pre‑amendment rural zoning for both the Mount Lawley land and the Ellenbrook land. Accordingly, consistently with what was held in the first appeal ([141], [162], [185]), we are required to ignore the fact of the upzoning (and reservation) and the issue to be determined is what, if any, premium the hypothetical purchaser would be prepared to pay over and above the rural value in order to reflect the urban development potential of the Mount Lawley land.
Returning to the issue of what will be regarded as 'steps' that may affect the value of land, this will necessarily depend upon the construction of the statutory provision under consideration. For example, in San Sebastian Jacobs J construed the words 'establishment of public works' in s 124 of the Public Works Act 1912 (NSW) as being 'wide enough to cover the whole subject matter of the establishment of the particular public work ‑ proposal or requirement by the relevant authority, intention of the planning authority by such zoning to induce the establishment of the public work, even urging by outside bodies that the public work should be established' (213). (See also, in this last respect, Walker No 1 [58] ‑ [59]; and Walker No 2 [17].) In the two Walker Corporation cases the court was concerned with the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) s 56(1)(a), which required an assessment of the market value of land to be made which disregarded 'any increase or decrease in the value of the land caused by the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired' (our emphasis). Those provisions (and the provision considered by Jacobs J in SanSebastian) are, on the face of it, wider in scope than s 36(2b) of the Scheme Act.
In considering what is, or is not, a 'step' in the context of s 36(2b), the question to be answered is, as we have said, whether or not an increase or decrease in the value of the land to be acquired by the respondent is 'attributable to' the Scheme. Any number of events having an effect on the value of land, including political, scientific, social or commercial occurrences, might be precursors to, or lead up to or have some relation to, a Scheme, but that is not to say that those changes in value are necessarily attributable to the Scheme itself. They may or may not be so.
The difficulty is most acute when considering 'steps' that precede the Scheme. On the face of it, they will have an impact on value attributable to the Scheme only if that impact is attributable in whole or in part to the proposed Scheme itself as, for example, the advertising of the Scheme or a publication of some other kind that is a prerequisite to the coming into effect of the Scheme. However, proposed Schemes may alter as they develop and foreknowledge of their likely occurrence can be obtained by the property market during the development stage. In Wilson v Liverpool Corporation [1971] 1 All ER 628 Lord Denning said:
A scheme is a progressive thing. It starts vague and known to few. It becomes more precise and better known as time goes on. Eventually it becomes precise and definite, and known to all. Correspondingly, its impact has a progressive effect on values. At first it has little effect because it is so vague and uncertain. As it becomes more precise and better known, so its impact increases until it has an important effect. It is this increase, whether big or small, which is to be disregarded as at the time when the value is to be assessed. (634)
Just when this effect on value is attributable to a step in 'the Scheme' (as opposed to something less than or different from the Scheme) raises difficult questions in the application of s 36(2b).
These questions were given some attention in the first appeal. The court held ([66]; and see also [70], [71]), following Murphy, that a reservation could not be isolated from the circumstances in which it was created and that it was 'necessary to identify the entirety of the process which led to the reservation and then to exclude the effect of that process in the valuation exercise'. While the court did not say what was comprehended by 'the entirety of the process', it is plain enough from this that the effect on value of statutory steps in that process, such as advertising an intention to amend the MRS, calling for submissions in respect of the proposed amendment and the like, must be disregarded. The Full Court also said [70] that s 36(2b) of the Scheme Act should be approached in a manner similar to the approach adopted in San Sebastian in respect of s 124 of the Public Works Act 1912 (NSW). It said that it was necessary to disregard, not only the effect on value of the Scheme itself, but also the effect on value of 'the steps taken towards it as it evolves' [71]. The court did not expand upon the meaning of that phrase. Finally, in this respect, the court, using language which, with the benefit of hindsight, was rather too broadly expressed said that 'it is the Scheme that is ignored (including all that led up to it)' [180]. However, that was a reference back to what had earlier been drawn from Murphy and San Sebastian as to what constitutes a step and was intended to be understood in that context.
It is true that a Scheme is 'a progressive thing'. However, as we have said, the step or occurrence affecting value must be 'attributable' to the Scheme itself and not (as we understand s 36(2b)) to some different, or as yet unformed, notion that ultimately led to the creation of the Scheme. A step must be attributable to the Scheme, not the Scheme to a step. That is to say, the step must have been taken in order to bring about the Scheme itself, or a variant of it that is not materially different. As to this last proposition, it seems to us that a step may be attributable to a Scheme even if the form which the proposed Scheme then took differed from that which the Scheme ultimately took, so long as the difference is not such as to lead to the conclusion that the Scheme ultimately created was not substantially that which had been proposed. It also seems to us that the step must be taken with the intention of facilitating the Scheme or for the purpose of creating it, if it is to be attributable to the Scheme. So, for example, some proposed general planning consideration that may or may not lead to a Scheme of the kind ultimately implemented could not be said to be attributable to the Scheme merely because, as matters turned out, a Scheme which adopted that planning consideration was subsequently implemented (cp the approach taken in respect of the different legislation in San Sebastian (213)).
Also, the words 'attributable to the Scheme' plainly have the consequence that the effect on value of characteristics or location of the land, or other factors affecting the land (such as population pressures), which always had the capacity to enhance, or reduce, its prospects of development and hence its value are not to be disregarded merely because they led, ultimately, to the Scheme. That is so even if they are specifically identified, or otherwise referred to, by the Scheme: see in this respect the approach adopted (albeit in the context of different legislation) by Basten JA in Walker No 1 [63]. The same is true of inherent characteristics of, or other factors affecting, land that is adjacent to the subject land, so far as those characteristics or factors are capable, independently of the Scheme (and its steps), of affecting the development potential, and hence the value, of the subject land. Regard to characteristics and factors of either kind might lead a hypothetical, informed purchaser to anticipate, independently of the Scheme and its steps, an outcome similar to that which in fact happened as a result of the Scheme. In such a case the Scheme (or knowledge of steps leading to it) may have no impact on the value of the land.
Murphy provides an example of this. In that case the subject land was zoned rural. An application to have it rezoned as residential land was refused by a local council, partly because that zoning would threaten a neighbouring turtle rookery. The Queensland State Government later resumed the land for an environmental park. The question arose whether, in valuing the land, a premium should be allowed for the prospect of future urban development. The Land Appeal Court refused to allow any premium above rural value upon the basis that a prudent purchaser would have made no allowance for the possibility of future subdivisions. The Full Court of the Supreme Court of Queensland reversed the decision, holding that the refusal to rezone was a 'step' in the sense in which that word is used in San Sebastian. The court consequently disregarded the rural zoning and valued the land on a notional residential zoning. The appeal to the High Court succeeded. Mason CJ, Brennan, Deane, Gaudron and McHugh JJ said that a characteristic or attribute of the land which affects its value must be taken into account in the assessment of compensation even if the planning restriction which is a step in the process of resumption is dependent upon or directed to that characteristic or attribute (595). It is accordingly plain that inherent characteristics of the land will be relevant to any valuation of it, even if those characteristics prompted a step leading to acquisition and the effect on value of the step itself must be disregarded.
Of course, the fact that the change in value is only partly brought about by an event attributable to a Scheme will not, on that account, result in it falling outside the ambit of s 36(2b). That is apparent from the use of the words 'in whole or in part'. However, only that part of the increase or decrease in value that is attributable to the Scheme is to be disregarded.
The retrial
That brings us to the evidence that was led at the retrial, and to the approach that was taken by the parties to that evidence.
As in the appeal, at the retrial both parties gave to the words 'attributable … to the Scheme' a very wide meaning. This influenced their submissions as regards the use to which particular evidence could (or more importantly, could not) be put. We will return to this topic later, when examining some of the events which were said by both parties to have been 'steps' that were attributable to the Scheme.
As in the first trial, a good deal of evidence was led during the retrial. However, we propose to refer only to so much of it as is material to the issues to be decided at this stage. That evidence falls into three broad categories. The first concerns the background to, and development of, the Scheme, encompassing evidence of events that were said by one or both of the parties to amount to 'steps' attributable to the Scheme. The second category comprises evidence given as regards the likely zoning of the Mount Lawley land if there had been no Scheme. The third category consists of the evidence of the valuers. We will deal with each in turn.
Background to and development of the Scheme
The events leading up to Amendment 879/33 are conveniently summarised in the judgment of the trial judge [112] ‑ [241]. Because much of that summary is uncontested, we will draw from it in outlining relevant events in the background to and development of the Scheme.
The trial judge took, as his starting point, the 'Stephenson‑Hepburn' plan of 1955, prepared by Professor Gordon Stephenson and Mr Alistair Hepburn, the then town planning commissioner. That plan, which was conceptual in nature, had no statutory effect. However, it subsequently formed the basis for the MRS. At the time of the creation of the plan, the Mount Lawley land (which was not identified in the plan) was designated as general rural land. The Mount Lawley land was zoned rural in 1963, when the MRS was gazetted. The MRS, as amended from time to time, is given statutory force by Pt III of the Scheme Act. Section 34 of the Scheme Act provides that no local authority planning scheme is to be made unless it is 'in accordance with and consistent with' the MRS.
The Corridor Plan
The Scheme Act established an authority known as the Metropolitan Region Planning Authority (MRPA). In 1970 the MRPA produced what was described as a 'Corridor Plan' (exhibit 2105) for the expansion of Perth over the next 20 years. Its purpose, as the name suggests, was to direct urban expansion along corridors or 'strong communication routes' between 'large areas of countryside … for non‑urban uses'. The plan was conceptual in nature. It proposed only four corridors, being to the north‑west, east, south‑east and south‑west of Perth. The Mount Lawley land was not in any of these corridors. It lay between the north‑western and eastern corridors in an area proposed for non‑urban use in town planning schemes gazetted on 19 June 1974 (Shire of Swan Town Planning Scheme No 1) and 9 December 1985 (Shire of Swan Town Planning Scheme No 9).
In October 1987 the Corridor Plan was reviewed by a body described as the 'Review Group to the State Planning Commission' (Review Group). That group produced a report entitled 'Planning for the Future of the Perth Metropolitan Region' (exhibit 2231) (Corridor Plan Review). The terms of reference for the preparation of the report required its authors to consider how the Corridor Plan might best be amended in order to serve as a strategy for the rapid expansion of Perth. The report forecast a need for a substantial number of dwellings in order to house the rapidly expanding population. It also assessed the 'likely' implications for the MRS of the forecast expansion. It was divided into three parts. The first was devoted to demographic and economic forecasts. The second set out a revised set of planning objectives and strategies. The third involved the choice of a preferred strategy.
The report noted that the supply of available land in the fastest‑growing urban areas, such as the north‑west corridor, would be exhausted by 1991 (page 40) and that, while high‑density housing in inner suburbs was an option (page 44), it was not a complete solution (page 5). The protection of coastal wetlands remained a high priority. The report referred, in this respect, to the existence of natural vegetation and wetlands in the area of the Mount Lawley land (pages 69 ‑ 71).
The report identified a number of new areas as being suitable for development. These included areas north of Midland. A diagram titled 'The Preferred Strategy' (page 10 of the report) showed land to the south of the Mount Lawley land as 'proposed future urban' (the northern most extremity of this land appears from the diagram to be less than two kilometres south of the southern boundary of the Mount Lawley land). The Mount Lawley land fell within an area identified as 'metropolitan park system'. The diagram was schematic and did not identify cadastral boundaries. The authors of the report acknowledged that land would have to be rezoned from rural to urban in order to achieve the objectives discussed. However, they warned landowners and prospective developers not to 'anticipate the outcome until public consultations and amendments … [were] complete' (page 11 and see also pages 74 ‑ 75).
The report noted that the Perth coastal plain was 'a delicately balanced environment' and that the coastal wetlands system was 'under the greatest pressure from both use and development'. It considered that the protection of the coastal wetlands system 'should continue to be a high priority in a revised strategy' (page 7). The wetlands referred to included a system encompassing the Mount Lawley land. The report also mentioned the increasing importance of groundwater resources, in particular the Gnangara Mound which extended, in part, below the Mount Lawley land. There is a map, on page 89 of the report, which identifies the level of constraint to urban development in the area there depicted. While it is difficult to identify the Mount Lawley land on that map with any precision, that land appears to be in an area in which the constraints on urban development are 'Extremely High' or 'High'.
Working Paper 17
The Corridor Plan Review was published in conjunction with a comprehensive assessment of bushland and wetlands described as 'Working Paper 17' (exhibit 2221). The purpose of this document was said to be that of explaining 'the thinking behind the recommendations for the Metropolitan Open Space system'. It classified natural resources into various categories, including bushland and wetlands. Wetlands were said to be 'a principal focus of community concern with the region's environment'. The paper suggested that many wetland environments were being incorporated into new reserves. The importance of the wetlands to the region's ecology was explained in considerable detail. Their function as waterfowl habitats and summer refuges for inland and migratory birds was said to be recognised internationally.
One of the authors of the working paper was Mr James Singleton, who was then the 'Director, Sustainability' at the Department of Planning and Infrastructure (DPI). He was also a member of the Review Group. The trial judge said, in the course of discussing the Working Paper and Mr Singleton's evidence [132] ‑ [135]:
The Mount Lawley land is situated on the infertile Bassendean Sands. However, the Working Paper noted the importance of the northern banksia woodlands on the Bassendean Sands.
Reference was made also to the importance of groundwater in the Swan Coastal Plain, and in particular, the superficial or unconfined aquifer mentioned above: the Gnangara Mound:
'The larger Gnangara Mound to the north has a north south ridge rising to 70 metres AHD, a total volume of 65,000 million cubic metres and volume of stored water estimated at 13,000 million cubic metres. The southern, smaller Jandakot Mound has an elevation of 25 to 30 metres only and a storage capacity estimated at 5000 million cubic metres.
These two water bodies are not only principal sources of water for the urban population, but are essential components of the region's ecology. The vegetation and animals of the region are directly dependent upon the groundwater. They are also a dominant feature of the water balance of the region. Without their existence the coastal plain would be barely habitable.
Seepage from the aquifers supplies water into the few surface water courses that exist, and where the water table is exposed at the ground surface there occur the distinctive swamps and lakes of the plain.'
James Philip Singleton was a co-author of the Working Paper (although it bears only his name) and a member of the Corridor Review team, on secondment from the State Planning Commission, where he was a Senior Planning Officer (exhibit 4031). Mr Singleton gave evidence at the trial and the retrial.
Mr Singleton's evidence, all of which I accept, was that one purpose of the Working Paper was to explain succinctly how an 'opportunity constraints analysis' was undertaken. This involved, ultimately, the preparation of a 'constraints map' on which environmental, social and engineering factors were combined, so that their composite effect on urban development could be assessed. In this way, it would be possible to devise a planning strategy for the Metropolitan Region.
After referring to this evidence, the trial judge remarked that it was common ground between the parties, albeit for different reasons, that 1987 was the 'appropriate starting point for the identification of "the Scheme" in s 36(2b) of the Scheme Act' [141]. He said, in this respect [141] ‑ [144]:
The WAPC contends that the conservation significance of the Mount Lawley land was recognised in 1987: and that the steps taken then and subsequently to reserve it simply gave effect to its characteristics. The reservation was not driven by a desire to acquire the Mount Lawley land. It is therefore submitted that this is not a step which falls within the San Sebastian principle.
WAPC contends further that, insofar as the identification of the north-east corridor increased the value of the Mount Lawley land by creating a potential for development, it was a step in that part of the Scheme of amendment 879/33 which involved a rezoning of rural land to urban deferred.
The WAPC submits that the step should be ignored because the process resulted from the desire to create an urban corridor.
For reasons which appear below, I accept the submissions of the WAPC.
Mr Sokolowski's appraisal
In August 1989 Mr Ronald Sokolowski, a senior technical officer with the Department of Conservation and Land Management (CALM) was asked to undertake a general appraisal of location 45 Maralla Road (encompassing part of the Mount Lawley land), seemingly for the purpose of considering the creation of a possible nature reserve. The title to the report that he prepared pursuant to this request makes it plain that it was a preliminary assessment. The report (exhibit 2095) was prepared for Dr David Coates, a senior research scientist employed by CALM. Mr Sokolowski recommended that the 'commendable' floristic diversity and richness of the land appraised by him made it worthy of protection and proper management.
In his evidence at the retrial (accepted by the trial judge), Mr Sokolowski said that his opinion in August 1989 had been that the land should be acquired and managed by a state instrumentality such as CALM. However, he emphasised that this was only a preliminary assessment. He accepted that there was nothing unusual or extraordinary about the area appraised by him, to the extent that it comprised banksia woodlands, other than the general health of those woodlands. He said that banksia woodlands are a fairly common feature of the Swan Coastal Plain.
The Urban Expansion Policy Statement
In May 1990 the Department of Planning and Urban Development (DPUD) released a 'Draft Urban Expansion Policy Statement for Metropolitan Perth' (1990 draft DPUD Statement). This document (exhibit 2232) referred to extensive submissions that had been made in respect of the earlier proposals for urban expansion. It reassessed those earlier proposals. It lists many of the general planning considerations that had previously been set out in the Corridor Plan Review. The foreword to the report, written by Mr David Hatt, who was then the chief executive officer of DPUD, records that:
The Department of Planning and Urban Development will soon be proposing a new Metropolitan Strategic Plan, which will outline future directions for a wide range of metropolitan planning issues. It will also stress the need for reducing the demand for outward expansion by increasing development opportunities in the established urban areas, and improving the efficiency of land development in new urban areas. Identification of the areas most suitable for urban growth will be central to the proposals of the Strategic Plan.
The Metropolitan Strategic Plan will be released later this year and will provide the framework and direction for the long‑term planning of the Region. Its strategic policy recommendations will be supported by separate, more detailed policy statements of which the Urban Expansion Policy Statement is one.
Paragraph 2.3.3 of the 1990 draft DPUD Statement referred to 'the establishment of a major new urban growth area in the north‑east, extending between Midland and Upper Swan on each side of the Swan Valley'.
Two categories of potential new urban land were identified for the purposes of the policy statement. These were respectively referred to as 'Category A' and 'Category B'. Category A included those areas most likely to be urbanised in the normal course of development within the next 30 years. Category B included those areas that were currently constrained by major issues that would need to be resolved to enable urbanisation to occur within the next 30 years. Three thousand hectares of land in the West Swan area were identified as Category A land. As far as this can be discerned from the plan showing the location of these categories, the Mount Lawley land was not included in either of Category A or Category B. It remained in an area designated as rural. This led to a complaint by the appellant, made by letter dated 31 July 1990. The complaint was that the Mount Lawley land had been omitted from any urban category, 'despite its suitability for that purpose'. The letter said that detailed surveys had shown that there were only 70 hectares of wetland in the total area of 320 hectares and that the balance was 'high, dry banksia covered sandhills which are perfectly suited to urban development'.
Feilman Planning Consultants (Feilmans) had been retained to assist with the Ellenbrook Project, of which Mount Lawley was then still a proponent. In July 1990 Feilmans made a submission to DPUD in respect of the 1990 draft DPUD Statement. It noted that, although much of the Ellenbrook land had been included in Category A, the Mount Lawley land had not, 'presumably … because of the presence of some areas of wetland'. It recommended the inclusion of the Mount Lawley land and an area of State forest. It suggested that the State forest land should be exchanged for wetlands on the Mount Lawley land.
In November 1990 the final version of the 1990 draft DPUD Statement was released (1990 final DPUD Statement). The foreword to that document (exhibit 2228), again written by Mr Hatt, records that the 'growth options' for the region had been described in the Corridor Plan Review. Mr Hatt goes on to say that the current Statement 'identifies the land considered suitable for urban development'.
Map 1 of the 1990 final DPUD Statement (page 3) is titled 'Perth Metropolitan Region Future Urban Form Concept'. This map shows a north‑eastern corridor which has at its northern end a black arrow which, according to the legend, denotes 'Future Urban Growth Option'.
Page 4 of the 1990 final DPUD Statement highlights the fact that population pressures have placed the original Corridor Plan under strain, with a high demand for housing in the 'new urban fringe suburbs'. Paragraph 2.21 (page 5) refers to the Corridor Plan Review and says of it, amongst other things, that, 'The semblance of a north‑east corridor north of Midland was introduced as a new growth area'. Paragraph 2.3.3 (pages 6 and 7) records that the 1990 final DPUD Statement 'provides for continued growth, with emphasis on', amongst other things, 'the establishment of a major new urban growth area in the north‑east, extending between Midland and Upper Swan on each side of the Swan Valley'. Once again, the areas identified as potential urban areas were categorised. The Middle Swan and West Swan areas in the north‑eastern corridor fell within Category A. The Middle Swan land and land identified as 'Wexcombe' (also in the north‑eastern corridor) were categorised A1, being the principal sources of new housing land in the next five to 10 years. Page 15 of the 1990 final DPUD Statement refers to Category A2 land, being land likely to be developed in the medium to long term. That includes land in the north‑eastern corridor identified as Belhus, Henley Brook, Beechboro, Millendon and Herne Hill.
Page 15 of the 1990 final DPUD Statement records that it is 'now necessary to undertake more detailed structure planning in each of the corridors to resolve regional and local issues'. It also records that:
The structure planning will provide the most detailed assessment of land suitability for development and more closely define the boundaries of future urban areas. Public participation will be encouraged in the process to ensure the real needs of the community are being met.
Metroplan
When the next planning policy statement emerged in December 1990 (exhibit 2233, described as 'Metroplan'), it did not include the Mount Lawley land in the proposed urban expansion areas. Rather, the configuration of the north‑eastern corridor was equivalent to that which had been contained in the 1990 draft DPUD Statement. Metroplan expressly recorded that it was 'not a statutory plan' and that, instead, it provided 'a framework within which more detailed policies and programmes will be progressively refined' (page 93). It said that 'the most significant new growth [in areas other than the north‑west and south-west of Perth] will be to the north‑east ‑ north of Midland, on either side of the Swan Valley'. It also pointed out that there was a need to protect natural wetlands, important wildlife habitats, areas containing significant flora or landscapes and the Gnangara underground water mounds (page 10).
The document recorded that urban expansion would be accommodated by widening existing corridors 'and by the development of a new north‑east corridor north of Midland' (page 20). It referred specifically to the proposal for the development of Ellenbrook, as a 'major new urban settlement which will house up to 70,000 people' (page 36).
A map of proposed urban expansion areas (page 37), appears (as best we can make it out) to include only part of the Mount Lawley land as potential urban land, with the balance of that land being shown as additional open space (see also figure 9 on page 83 of the report).
Mr Middle's report
In February 1991 Mr Garry Middle prepared a report (exhibit 2864) for the Water Authority of Western Australia and the Shire of Swan titled, 'Evaluating the Lentic Wetlands on the Swan Coastal Plain in the Shire of Swan'. This report refers to DPUD's intention to build new housing in the Shire of Swan. The report suggests that it will provide the Shire 'with an important planning tool to help with wetland protection' (page 5). It refers to the Lexia wetlands (extending over part of the Mount Lawley land). Mr Middle said, of these wetlands (page 18):
The Lexia wetlands are, most likely, a link system, both hydrological and as a wildlife habitat, and as such may well be unique as a largely intact wetland/dryland system. Given that this area may be developed for housing, it is important that this 'system' nature of this area is studied in more detail. Further, given the C [conservation] rating of these wetlands, any development will need to be carried out in a way that maintains their important natural values.
The 1991 draft Ellenbrook PER
In July 1991 Feilmans submitted, on behalf of Ellenbrook Management, a draft document titled 'Ellenbrook Public Environmental Review Report' (exhibit 0873) to the EPA. The trial judge considered this report (draft Ellenbrook PER) to be significant because it recognised the conservation significance of 400 hectares of the Mount Lawley land. Page 4 of the draft Ellenbrook PER reads as follows:
A detailed analysis of the wetlands was conducted to establish the nature of the vegetation. It was found that the vegetation associations and assemblages, while not being particularly significant in themselves, have considerable conservation value because of the small number of remaining wetlands on the Coastal Plain. The management issues involved in retaining all or some of the wetland area have been assessed and the conclusion reached that the best approach will be to preserve an area of approximately 100 ha by reservation under the Metropolitan Region Scheme. This is the portion of the total wetland area which exhibits the greatest diversity of characteristics and is best suited to long‑term management. The total area which embraces the wetlands exceeds 400 ha and it has been concluded, following discussions with Officers from CALM that resources would not be available to effectively manage such a large area. Without adequate management the area would quickly deteriorate due to feral animal and weed intrusion.
The trial judge also took into account the fact that the report mentioned that the total area, 'which embraces the wetlands', included banksia woodlands which, while not 'particularly unusual', varied considerably in both physiognomy and species composition (page 31).
Mr Ferraro's file note
In September 1991 Mr Eugene Ferraro, a senior planning officer with DPUD, produced a file note (exhibit 1219) in which he discussed current issues relating to the Ellenbrook Project. The note reveals that the EPA had determined that the level of assessment required to evaluate the Ellenbrook Project was a Public Environmental Review (PER) and that the PER was currently being prepared. The file note recorded that, while the State Planning Commission would normally await the findings of the PER before deciding 'on the processing of an amendment', it had been agreed that the PER should be advertised concurrently with 'the MRS amendment'. Under the heading 'Regional Open Space', the note reads as follows:
One of the major landholdings (Mt Lawley) is affected by a wetland system which is considered to be of high environmental significance. The PER will recommend that the most important lake should be protected via a Regional Open Space Reservation. The amendment as submitted reflects the preservation requirements and proposes to rezone approximately 80 ha of land to Parks and Recreation.
This action will require the Commission to either purchase the land or pay compensation for injurious affection. The Commission has four options regarding this land.
1.Proceed with the amendment as submitted and commence negotiations to purchase the land affected.
2.Proceed with a modified environment which proposes to reserve only the land required for the reservation, with the balance remaining Rural, thus ensuring lower 'next best use' value.
3.Delete the whole of the Mt Lawley landholding from the amendment.
4.Include the whole of the Mt Lawley landholding within the Urban Deferred zone.
Mr Ferraro's note concluded by recording that the issues mentioned by him were not significant enough to warrant the amendment being delayed. He said that a decision could be made on the proposed zoning or reservation of the Mount Lawley land based on financial considerations, given that that land was 'not necessary to be included within the amendment to make the Ellenbrook Project viable'.
DPUD's brochure in October 1991
In October 1991 DPUD published a brochure entitled 'The North‑East Corridor, Planning Issues and Growth Options' (exhibit 2238). The purpose of this brochure (DPUD brochure) was that of eliciting public response to two possible development options for the north‑eastern corridor. The brochure described its 'main aim' as being 'to start people talking about the issues and get feedback from the local community'. The options identified (which were broad in concept) were respectively a 'linear option' and a 'cellular option'. Drawings in the brochure reflecting these options appear to show that a little less than half of the Mount Lawley land would become urban, with the remainder being designated as 'rural, conservation and open space'. However, as the trial judge pointed out, the possible urban areas are different in the case of each option and neither drawing reflects the proposed reservation then under consideration [182]. Moreover, the brochure recorded that 'it will be important to make sure that the whole range of environmental factors is taken into account and important landscape and environmental features are preserved'.
Mr Briggs's letter
In a letter dated 23 October 1991 (exhibit 2396) addressed by him to the executive director of the EPA, Mr A D Briggs, who was the district manager for the Perth district of CALM, commented on the draft Ellenbrook PER. He made two comments of significance for present purposes. The first was that, because of the significance accorded by the draft Ellenbrook PER to the wetlands, 'the north‑west wetlands should be reserved to include the surrounding sand dune ridge'. He said that this would provide a buffer against the possible introduction of die‑back and preserve a natural vegetation filter and ecosystem supporting the wetland. The second comment of significance was that he took exception to the inference that CALM's resources would be inadequate to justify reservation of more than 90 hectares of the 400 hectares identified as having wetland conservation value.
Meetings of the Metropolitan Planning Council in November and December 1991 and approval of the amended plan
On 6 November 1991 the Metropolitan Planning Council resolved to advertise the proposed Amendment 879/33. This was so notwithstanding that there remained many outstanding issues. The minutes of the meeting (exhibit 2120) record that:
The … discussion focussed on the various issues which had not yet been fully resolved, and in respect of which it may be considered premature to proceed with the proposed amendment at this time. Such issues included the proportion of the wetland areas which should be included in the Parks and Recreation Reservation and the feasibility of managing a large reserved area; drainage and nutrient management requirement; the effects of high levels of traffic over the groundwater mound; the need to ensure that all servicing requirements have been fully considered; the need to examine employment creation initiatives which might be pursued; the possibility that the draft Public Environmental Review report may require further work to reach an acceptable form, and that changes to the area presently proposed for Urban Deferred zoning could result; and the need to make provision for approval of the relevant authorities and any special arrangements which may be required to facilitate inclusion of the State Forest land in the Amendment.
At its next meeting, on 4 December 1991, the Metropolitan Planning Council noted that the Minister for the Environment had decided that State forest land should not be included in the proposed amendment and that this required a modification of the plan. Concern was expressed, at that meeting, that the rezoning of the Ellenbrook land was premature. The minutes of the meeting reveal that the proponents of the Ellenbrook Project were to be told that, before the amendment was finalised, various issues were to be addressed, including:
Resolution of Environmental Issues including the identification of all land to be set aside for wetland protection, and preparation of a drainage and water resource management plan including land within or which may be affected by the proposed amendment.
The minutes also recorded that the State Planning Commission considered that the proposed urban deferred boundary might require further modification to reflect the findings of the PER.
Mr Raymond Stokes, the urban development coordinator of the metropolitan branch of the Planning Services Division of the DPUD, attended the meeting of the Metropolitan Planning Council on 6 November 1991. He gave evidence at the retrial. He had been employed by the DPUD (and its successor body, the DPI) for some 27 years. In his evidence, he said that the advertisement of the proposed amendment and the postponement of outstanding issues was 'very, very unusual'. Notwithstanding this, the amended plan was approved by the Minister for Planning, Mr David Smith, on 9 January 1992, albeit with some misgivings. Mr Smith said, in the course of his evidence at the retrial, that at the time he had thought that the reservation of 90 hectares of the Mount Lawley land would be inadequate and that the amount of land reserved should have been 'somewhere between 250 and 450 ha'.
Gazettal of proposed Amendment 879/33
The proposed Amendment 879/33 was gazetted on 31 January 1992 (exhibit 0815). It was publicly advertised between February and May 1992. The gazette reveals that the effect of the proposed amendment on the MRS was to exclude various lots in the Shire of Swan from the 'Rural' zone and to include them in the 'Urban Deferred' zone and the 'Parks and Recreation Reserve' as shown on State Planning Commission Plan No 2.0686/5. This plan shows the Ellenbrook land as being zoned urban. The vast majority of Mount Lawley Lot 46 is shown as falling within an urban zone. Two‑thirds of Lot 47 and the remaining portion of Lot 46 is shown as being reserved for parks and recreation. The balance of Lot 47 is shown as being zoned urban.
It is apparent from a letter dated 4 February 1992 written by DPUD to Mount Lawley and a briefing note prepared by Mr Hatt for the Minister of Planning on 11 March 1992 that a number of issues remained outstanding at that time. These included the resolution of environmental issues, including the identification of the land to be set aside for wetland protection, the preparation of a drainage and water resource management plan and the prospect of further changes to the proposed urban deferred boundary depending upon the findings of the PER. The draft Ellenbrook PER that had been prepared by Feilmans was regarded as unsatisfactory. Also, the EPA then still had a number of concerns that required to be addressed, which were set out in a letter to Feilmans from Mr Rob Sippe of the EPA (exhibit 2405). One of these related to its belief that nothing had been done, or was proposed to be done, to evaluate, fully, the banksia woodlands between the wetlands. The EPA considered that an evaluation was required which would examine not only the wetlands as a functional habitat, but also their interaction with the woodlands within which they were found. Similar concerns had been raised by a group of local land owners known as the Ellenbrook Conservation Group.
Mr Shea's letter
On 10 April 1992 Mr Syd Shea, the executive director of CALM, wrote to DPUD with respect to the proposed amendment to the Scheme. The letter (exhibit 2447) complains that the plan to reserve only 90 hectares is based on an overly pessimistic view of CALM's resources. Mr Shea asked that the date for submissions on the Amendment be deferred until the PER had been published.
The revised Ellenbrook PER
On 14 April 1992 a revised and enlarged version of the draft Ellenbrook PER prepared by Feilmans (revised Ellenbrook PER) was approved for publication by the EPA (exhibit 2213). This identified a number of wetlands and some areas of vegetation as having conservation significance. It noted that the total area of wetlands within the Ellenbrook Project area was about 410 hectares. However, notwithstanding what had been said by CALM, it reiterated that only some 90 hectares should be preserved by reservation under the Scheme because there would be inadequate resources to manage a larger area over the long term. The report identified the following four scenarios:
Scenario 1 includes the complete Lexia wetland system and covers about 410 ha of the proponents' land as well as about 90ha immediately to the north which is owned by others who are not a party to the proposed development. The northern portion is substantially bushland with some degraded farmland, and includes 4 wetlands. The proponents' land in this scenario is all bushland with several large and small wetland areas.
Scenario 2 is similar to Scenario 1, but limited to those wetlands which have been identified as 'lakes' under the EPA Draft Environmental Protection [Swan Coastal Plain Wetlands] Policy.
Scenario 3 is similar to scenario 2 but includes only those 'lakes' within the proponents' land.
Scenario 4 involves the preservation of a 90ha area which has been identified as containing most of the conservation values of the total system, and is of a manageable size and shape which will allow its conservation in the long term.
The report recommended the adoption of scenario 4. This was because it offered 'the opportunity for more intensive management and therefore greatly increases the likelihood of long‑term maintenance of the conservation values in this area'. Scenario 1 was said to be 'not practicable in management or financial terms, or in terms of overall community cost'. The report argued that the 90 hectares exhibited most of the characteristics worth preserving.
Mount Lawley's withdrawal
On 4 May 1992 Mount Lawley lodged with DPUD a submission notifying DPUD that it had been unable to 'resolve equitable terms and conditions' with adjoining land owners and that it no longer supported the proposed Amendment 879/33. It asked that the Mount Lawley land be withdrawn from the Ellenbrook proposal. This submission was one of 183 received by the State Planning Commission in response to its advertisement. There were 175 objections, four supporting submissions and two submissions in which no clear position was stated.
The Keighery and Burbidge report
On 2 June 1992 a report (exhibit 2097) was prepared by G J Keighery and A Burbidge, on behalf of CALM, in respect of the revised Ellenbrook PER. The report suggested that, despite the 'impressive size' of the PER, it was 'almost devoid of useful biological data'. The authors went on to say:
An area of such importance should be subject to a detailed fauna survey before any development is allowed to proceed. However, no fauna work has been carried out. Furthermore, there are no data from which to confidently extrapolate, despite claims to the contrary in the PER. However, two points are worth noting. Various amateur herpetologists have apparently recently recorded over 40 reptiles and amphibians in the study area during a very brief survey. This compares very favourably with the number (44) known from Yanchep National Park (the nearest comparable area for which data exist), and for which there is a long history of data collection including two detailed surveys. The Ellenbrook area is therefore of significance well above that claimed in the PER. It is likely that the area is also of considerable significance for other animal groups.
After making a number of other comments to similar effect, the authors of the report suggested that inadequate measures were proposed for reservation of all significant wetland types. They reached the following conclusion:
In summary, the document is entirely inadequate on which to make an informed assessment of conservation value of the area and expected impact of the development proposal. It is likely that the proposal would have a very significant detrimental environmental impact, and therefore should not be allowed to proceed.
Bulletin 642
On 28 August 1992 the EPA prepared a report (Bulletin 642) and recommendations to the Minister in respect of the Ellenbrook Project, pursuant to s 44 of the Environmental Protection Act 1986 (WA). Bulletin 642 (exhibit 0635) mentioned that 734 submissions had been received and that the principal issues raised had related, effectively, to conservation issues, and noted a growing view in the community that the remaining wetlands of the Swan Coastal Plain were essential for the maintenance of ecological systems and that strong action was needed in order to protect them. Recommendation 2 of Bulletin 642 was that the proponents should set aside approximately 450 hectares in order to protect the Lexia wetlands in the north‑west corner of the proposal area, encompassing three quarters of the Mount Lawley land. The EPA advised the Minister to approve the proposal subject to the various recommendations made by it.
The August 1992 DPUD report
On 4 August 1992 a report (August 1992 DPUD report) on the submissions that had been received by the State Planning Commission in response to its advertisement was produced for the Metropolitan Planning Council by a regional manager of DPUD. This report (exhibit 2125) recommended that Amendment 879/33 be modified in accordance with plan 2.0686/6, referred to earlier in their reasons. It mentioned that objections in respect of 'the natural conservation of that land in the north portion of the amendment site' had 'dominated the public hearings'. Particular reference was made to a submission from the Australian Conservation Council to the effect that:
[P]resent research indicates that the wetland areas of the north of the site were high in conservation value due to the diversity of flora and fauna in the vegetated areas of the site … further study needs to be completed of [sic] this area, however, [they] were able to identify the north‑western corner of the amendment area as a priority for conservation; this being an area of over 400 ha containing wetlands and high quality banksia woodland.
Mr Hatt's letter and the revised amendment
On 1 September 1992 Mr Hatt wrote to the Minister for the Environment, commenting on the EPA's recommendation dated 1 August 1992. In his letter (exhibit 2539), he said that the Metropolitan Planning Council considered that the amendment 'now adequately reflects regional conservation interests by increased reservation for Parks and Recreation'.
On the same day Amendment 879/33 was revised (exhibit 2127). It reserved almost all of the Mount Lawley land for parks and recreation. The reservation coincided almost exactly with that recommended by the EPA in Bulletin 642.
The Minister's Statement
On 13 October 1992 the Minister published a 'statement that a proposal may be implemented' (exhibit 0163) pursuant to s 45(5) of the Environmental Protection Act. The statement approved the Ellenbrook development, subject to conditions. One of these was that 'an area of approximately 450 hectares in the north‑west corner of the site as indicated in Figure 4 in Environmental Protection Authority Bulletin 642 … should be set aside to be reserved and subsequently vested in the National Parks and Nature Conservation Authority, the final boundary of which shall be to the requirements of the Minister for the Environment on the advice of the Department of Conservation and Land Management and the Department of Planning and Urban Development'.
The Semeniuk report
In October 1992 the V & C Semeniuk Research Group prepared a draft report (exhibit 2224) on behalf of DPUD in respect of 'the northeast corridor study'. The objectives of the study were:
1.to provide preliminary guidance to DPUD on the protection of environmental, wildlife and landscape conservation values associated with urban development proposals for the Northwest, Southwest, Northeast and Southeast corridors, and the Foothills Area; and
2.to develop indicative parameters that ensure that the design of urban areas, drainage systems and management of water resources is consistent with the protection of designated environmental and wildlife values.
The report 'strongly recommended' that the Ellenbrook wetlands be conserved. The area recommended to be reserved encompassed all of the Mount Lawley land as well as other land in the northern half of the proposed Ellenbrook development. The report was never finalised because of a 'falling out' with DPUD. The proposal to reserve the land identified was never seriously considered by DPUD.
The Gazettal of Amendment 879/33
On 16 October 1992 the Scheme was amended in accordance with the gazettal on 1 September 1992 and the vast majority of the Mount Lawley land was excluded from the 'Rural Zone' and included in 'Parks & Recreation Reservation'.
Evidence accepted by the trial judge concerning the suitability of the Mount Lawley land for development
After a careful analysis of much of the evidence, the trial judge reached a number of conclusions in relation to the suitability of the Mount Lawley land for development. These are expressed in [624] of his reasons and summarise the effect of the evidence to which he referred. That paragraph reads as follows:
In my view, it may be assumed that the hypothetical prospective purchaser of the reserved Mount Lawley land in May 1996 would have made enquiries which established the following facts:
(1)Some 75 ha of the land constituted wetlands which were protected under the Lakes EPP.
(2)It could be argued that the boundaries of the wetlands on plan 1815 had been mapped inaccurately in 1991, or had changed subsequently due to changes in the level of the water table. However, there would be little prospect of persuading the EPA to amend the Lakes EPP.
(3)Although the Lakes EPP did not prohibit development of wetlands, there was a presumption against it: and the EPA was likely to oppose development in this case, having regard to its view that the Lexia wetlands generally were of high conservation value. The EPA's view was arguable, but it was justifiable on the evidence: in particular, the unique combination on the Swan Coastal Plain of the size and pristine quality of the wetlands and their proximity to each other.
(4)The upland areas surrounding the wetland basins were well suited for urban development, being elevated and well drained.
(5)The vegetation on the upland areas was banksia woodland in very good condition.
(6)Large areas of woodland of that kind, containing the Heddle vegetation complexes to be found on the reserved Mount Lawley land were present in secure reserves elsewhere, but not in association with such a substantial group of wetlands in such pristine condition.
(7)There were no priority flora on the Mount Lawley land.
(8)The wetland areas provided a habitat for the Southern Brown Bandicoot, which was a protected species. This would not preclude development, but it would be necessary in any development to ensure that the habitat was preserved, and adequate corridors provided, to ensure free movement of the Bandicoots.
(9)It would be a requirement of any development that vegetation buffers be provided round the wetlands. Although the width of the buffers might be a matter for negotiation, the EPA's usual practice was to require the minimum width of 50 metres when wetlands were included in an urban development. This would involve some 50 ha of land.
(10)Other agencies ‑ and CALM in particular ‑ were more conservation inclined than the EPA, but only the EPA was empowered to prevent development, or to impose onerous conditions.
(11)Before any development could proceed, it would be necessary for a full environmental assessment to be carried out. This would enable all interested authorities, organisations and individuals to make submissions, which the EPA would take into account in considering its attitude to development.
(12)Subject to these matters (which amounted to a considerable qualification), some 195 ha of the Mount Lawley land would be suitable for development.
None of what is said in subpars (1) to (11) is challenged. As to subpar (12), it is common cause that the reference to 195 ha of the Mount Lawley land should be one to 175 ha of that land. It is consequently common ground between the parties that there were 175 ha of dryland that were suitable for development (if looked at in isolation). We have said that it is also common cause that 75 ha of wetlands could not be used for development and that there would have to be a 'buffer' zone of at least 50 hectares (any greater amount would have to be drawn from the 175 ha of dryland that were otherwise suitable for development). However, the appellant relies upon what was said by its experts at the trial in support of the proposition that it was not correct to suggest, as the trial judge did in subpar (12), that the matters raised in (1) to (11) amounted to 'a considerable qualification'. We will return to this last issue later in these reasons.
Counsel for the respondent next contended that the approach adopted by the appellant during the course of the retrial, in urging the trial judge to apply the traditional approach identified in Smith, had the consequence that the risk assessment was converted into a 'Yes' or 'No' answer to the question whether urban zoning might ultimately be achieved, without making any assessment of the percentage value of that likelihood in order to quantify the lost 'chance'. He relied, in this respect, on such cases as Malec v J C Hutton Pty Ltd (1990) 169 CLR 638, 643 and Sellars v Adelaide Petroleum NL (1994) 179 CLR 332, 349, 350. He also contended that, because, absent the Scheme, the land would still have been zoned rural at the time of valuation, the value should be assessed by assuming a rural zoning and adding a premium for the potential for upzoning. He contended that the reservation of the land could not alter the fact that this was the appropriate way to approach the valuation and that the experts relied upon by the appellant (including Mr Goff) failed to follow that approach. Consequently, he submitted, their evidence was inadmissible or untenable for these reasons also. He contended, in this respect, that, absent any specification by the appellant's experts of a percentage discount, it was not practically open to the trial judge to make his own calculation in that respect.
However, in our respectful opinion, none of this provides a sufficient reason for declining to take any of this evidence into account. It is correct that what was to be taken into account in valuing the land was the 'possibility or likelihood' of obtaining an urban zoning: San Sebastian 211 ‑ 212; Murphy 597. However, the trial judge was able to examine the language of the valuers and of Mr Goff, and the information upon which each relied, in making his own assessment of the degree of probability of upzoning as, indeed, he did in the case of the respondent's valuers. As was submitted by counsel for the appellant, valuations, whether determined by a judge or not, involve matters that are not scientifically measurable and which involve assessments, often expressed in ranges and with varying degrees of confidence. There was no requirement that any of the valuers should have expressed their opinions in percentages and nor, for that matter, was there a requirement that the trial judge should arrive at his conclusion as regards value on some mathematical basis. What was needed was a qualitative assessment, supported by the evidence, of the prospects of an improved zoning so that this, in turn, might inform the valuation process.
In fact, the trial judge did not express his conclusion in any percentage terms. Rather, as we have said, he found that the hypothetical purchaser would be 'only cautiously optimistic that there was some potential for development' [641]. Moreover, Mr Wilson's valuation was broadly similar in approach to that adopted by Messrs Rae and Logan, save that he based his valuation on a different assumption concerning the zoning and consequently considered the most comparable sale to be one of rural land with only a limited urban potential. When the trial judge referred to this valuation he was, as we have said, prepared to find (by his acceptance of Mr Wilson's valuation) that the Mount Lawley land had some limited urban potential, again without finding it necessary to specify any percentage (other than by mentioning that Mr Wilson put a value on the dryland areas of the reserved land at a premium of 50% to 100% above the prevailing rural values for much smaller lots in close proximity to the Mount Lawley land).
Much the same is true of the trial judge's approach to Mr Carey's valuation [674] ‑ [686]. Mr Carey considered that a buyer would have paid 'rural value plus a small [unspecified] component for future urban potential'. He relied principally upon the same comparable sale as had been principally relied upon by Mr Wilson. In [686] of his reasons, the trial judge mentioned that Mr Carey 'felt that a buyer would take "a punt" on some possible development although this would be reflected in only a small increase above the worst case position'.
Counsel for the appellant contended that, even if the appellant's valuers had, for any practical purpose, valued the Mount Lawley land upon the basis of a 'top down' approach and concluded that no discount should be allowed (and he submitted in that respect that some discount was allowed in the process of selecting ranges of values and then selecting the appropriate sum within each range), the question whether they were right to arrive at this conclusion was a factual question which could only be determined after weighing up all of the evidence, including that which the trial judge had wrongly found to have been inadmissible. He suggested also that, if the trial judge considered that the appellant's valuers were wrong in failing to allow for a discount, then it was open to him, on the basis of all of the evidence, to conclude what discount should have been allowed for by them and to value the land accordingly. We agree with each of these contentions. The fact that the appellant's valuation evidence was presented in the way it was as a result of a mistaken reliance upon the traditional approach set out in Smith should not, of itself, result in its inadmissibility. The trial judge should still have been able to make an appropriate assessment of the worth, and weight, of that evidence in considering what, if any, allowance should be made for urban potential of the land as a factor to be taken into account in the course of valuing it. Moreover, when making his own assessment of the percentage probability of the Mount Lawley land obtaining, at least in part, an urban zoning and assessing its value on that basis (as he did), there was no reason why the trial judge should not have taken into account the urban value per hectare put upon the land by the appellant's experts, subject to whatever limitations he found to exist in their evidence.
There remains, in this respect, the respondent's contention that the trial judge's findings excluding the evidence of Messrs Logan, Rae and Zucal and the report prepared by Mr Goff should be upheld upon the basis that each took into account steps in the Scheme, rendering their evidence inadmissible upon that basis also.
It is apparent from what we have said when dealing with the evidence of the appellant's experts that they did take into account documents which are accepted by both parties, for the purposes of the appeal, to have been steps in the Scheme. However, as we have said when dealing with Mr Goff's report, this was not a basis for excluding their evidence in its entirety. None of Mr Rae, Mr Logan and Mr Zucal relied exclusively upon evidence that was accepted to be steps in the Scheme. To the extent that they did so, this was a matter to be taken into account in assessing the weight of the opinions expressed by them. In any event, we have mentioned that each of the three valuers identified ranges of values for different categories of land falling within the Mount Lawley land. There was no reason why the trial judge should not have had regard to that evidence in assessing the value of the wetlands (albeit the appellant's valuers had treated that area as a smaller area than that found, and now agreed, to have constituted the wetlands), and also the buffer zone and the potential urban areas. It was consequently open to the trial judge, having made his own assessment of these areas, and of the degree of potential for upzoning, to make some allowance that took into account the per hectare values arrived at by the experts in respect of each of these areas.
Conclusions
It follows from what we have said that, in our respectful opinion, the trial judge was wrong to exclude the evidence with respect to the likely zoning of the Mount Lawley land absent the Scheme and also the valuation evidence that was led on behalf of the appellant. Grounds 2, 8 and 9 are to that extent made out. The balance of the matters raised by ground 2 should be stood over for later argument. These relate only to issues concerning the conclusions that should have been reached by the trial judge if he had had regard to the excluded evidence (grounds 2.5 and 2.6).
As to grounds 10 and 13, it is plain that the trial judge regarded the 175 hectares of dry land as having had very limited development potential. We have said that, in the paragraphs challenged by these grounds, he found that the suitability of the dry land was subject to matters which amounted to a considerable qualification [624 (12)] and that the hypothetical purchaser would only be cautiously optimistic that there was potential for development [641]. These findings were made after wrongly excluding from consideration the evidence to which we have referred. Whether that error was such as would, or should, have had any significance to the outcome (Brown v Churchill [2006] WASCA 17; (2006) 31 WAR 246) is a question for further argument.
As to ground 21, as mentioned above, we have, in the course of dealing with other grounds, dealt with what we take to be the principal matters complained of by this ground, being the exclusion of the reports prepared by Mr Goff and Dr Tingay. We have said that, to the extent that the remaining issues raised by this ground remain pertinent (these relate to specified paragraphs in Mr Goff's statement (exhibit 3015): see pars 136 and 137 of the appellant's substituted submissions), they can be dealt with when dealing with other issues that have been left over for further submissions.
The issues raised by pars (3), (4) and (5) of the notice of contention have been dealt with in the course of dealing with the grounds of appeal.
The contention that the appellant has departed from the case run at the retrial
Finally, we should deal with a contention, advanced by counsel for the respondent during the course of argument in the appeal, that the appellant has departed from the case that it ran at the retrial and that it should not be permitted to do so. He also contended that the appellant had changed its case during the course of the appeal as regards the extent of the land with urban potential.
Counsel for the respondent contended, first, that, had it been known by him that the appellant would acknowledge (as it now has, but did not at trial) that 126 hectares of the Mount Lawley land should be preserved, he would, for example, have cross‑examined Mr Goff with respect to that proposition so as to ask him whether, on that assumption, he considered that the rest of the land would have been urbanised. However, the fact that the appellant chose not to run arguments on appeal in respect of which it had been unsuccessful at the trial does not mean that it has changed its case. All that it means is that it no longer contends that the whole of the land would have been zoned urban. Its contentions in that respect are irrelevant to the opinion of Mr Goff, which was based upon his understanding of the evidence and his own experience and expertise. There is nothing to suggest that Mr Goff's conclusions in respect of the likely urban zoning were influenced in any way by the assumptions made by him concerning the likely area to be protected as wetlands. It is simply fanciful to suggest that 175 hectares of land might have been considered by Mr Goff to be too small a parcel to obtain an urban zoning in conjunction with that which might be obtained by adjoining land.
While the difference in the area of the land that was capable of urban use impacts upon the valuations prepared by the appellant's valuers, there is, as we have already said, no reason why their evidence concerning the per hectare value of the land, to the extent that it was likely to achieve an urban zoning, should not be taken into account. Also, if the appellant's valuers assumed an urban zoning (or relied on evidence making that assumption) instead of forming an opinion on the degree of urban potential that the Mount Lawley land had, the recognition that they should have formed such an opinion is not a change that prejudices the respondent. It was always open to counsel for the respondent to cross‑examine the appellant's valuers on this basis, as indeed he did. Also, as we have earlier mentioned, the approach taken by the appellant's valuers in this respect is a matter going to weight, rather than admissibility. The trial judge was able to make his own assessment of the likelihood of urban zoning. Once he had done so, it was open to him to make use (subject to whatever adjustments he saw fit to make) of all of the evidence of value per hectare, including that given by the appellant's valuers, in valuing the land.
Counsel for the respondent also took issue with the suggestion, which he said was made for the first time during the appeal, that the buffer land had some greater 'amenity value' than the wetlands. It seems to us that this suggestion was put forward in evidence at the retrial. Mr Zucal said (ts 9256 ‑ 9257) that the existence of the wetlands added to the desirability of the urban land and, it seems, he factored that into his valuation of the wetlands rather than exclusively into that of the urban land (see also ts 9314). (We have said that Mr Logan did something similar at page 16 of his report.) Although counsel for the respondent maintained his objection upon the basis that Mr Zucal did not specifically mention the buffer land in the course of his evidence, it is plain from his report that he was discussing the amenity value of all of the land that was not to be residential.
It consequently seems to us that there is nothing new in the appellant's contention that the non‑urban portion of the land might have some amenity value. All that is new is that the contention, as it is now advanced, relates solely to the buffer land. We are unable to see how this could have prejudiced the respondent in any material sense (see, in this respect, Suttor v Gundowda Pty Ltd (1950) 81 CLR 418, 438). This is not a case of the kind referred to in University of Wollongong v Metwally (No 2) (1985) 59 ALJR 481, 483, relied upon by the respondent.
Finally, there is no substance to the suggestion that there has been a change of case in the course of the appeal as regards the amount of land having urban potential. The appellant's case on the appeal, as we understood it, was consistently conducted upon the basis that the valuation should have been conducted upon the assumption that 75 hectares of the Mount Lawley land comprised wetlands that could not be developed, that 50 hectares of the land comprised a buffer zone that could also not be developed and that the remaining 175 hectares of dry land was the only land likely to have been developed. There is, in any event, no challenge in the grounds of appeal to the trial judge's findings in that respect.
Costs (grounds 22, 23 and 24)
We have said that the question of costs is to be left over for later argument.
The cross‑appeal and the cross‑respondent's notice of contention
We have also said that, because the cross‑appeal relates essentially to valuation issues (any overlap has been dealt with when dealing with the grounds of appeal), the cross‑appeal and the contentions filed in response to it will be left over for later argument.
Conclusions
We would set aside the findings of the trial judge to the extent required by these reasons. Further submissions are necessary as regards what should now be done in the light of the conclusions at which we have arrived.
Summary
It may be helpful if we were to conclude by summarising our principal conclusions. These are as follows:
(1)We are obliged by the agreement of the parties, which in turn is consistent with the unchallenged decision in the first appeal, to regard the Scheme, for the purposes of s 36(2b) of the Scheme Act, as comprising Amendments 879/33 and 950/33 (which, amongst other things, reserved part of the Mount Lawley land and upzoned the Ellenbrook land).
(2)It follows from the agreement of the parties, consistently with the approach adopted by the Full Court in the first appeal, that it is the effect of Amendments 879/33 and 950/33 on the value of the Mount Lawley land that must be disregarded and not that of those amendments, or any other amendments, to the same effect that might have been made to the MRS, absent Amendments 879/33 and 950/33.
(3)Ignoring the effect on value of Amendments 879/33 and 950/33 as at the valuation date has the practical consequence of reviving the pre‑amendment rural zoning for both the Mount Lawley land and the Ellenbrook land. Consequently, the fact of the reservation and upzoning must be ignored and the issue to be determined is what, if any, premium the hypothetical purchaser would be prepared to pay, as at the valuation date, over and above the rural value of the Mount Lawley land in order to reflect its urban development potential.
(4)'The Scheme', for the purposes of s 36(2b), incorporates steps in the Scheme. However, an occurrence affecting value will be treated as a step only if it is attributable to the Scheme itself and not to some different, or as yet unformed, notion that ultimately led to the creation of the Scheme. A step must be attributable to the Scheme, not the Scheme to a step. That is to say, the step must have been taken in order to bring about the Scheme itself, or a variant of it that is not materially different. A step may be attributable to a Scheme even if the form which the proposed Scheme then took differed from that which the Scheme ultimately took, so long as the difference is not such as to lead to the conclusion that the Scheme ultimately created was not substantially that which had been proposed. The step must be taken with the intention of creating the Scheme or for the purpose of creating it, if it is to be attributable to the Scheme. The words 'attributable … to the Scheme' in 36(2b) have the consequence that the effect on value of characteristics or location of the land, or other factors affecting the land (such as population pressures), which always had the capacity to enhance, or reduce, its prospects of development, and hence its value, are not to be disregarded merely because they led, ultimately, to the Scheme. The same is true of inherent characteristics of, or other factors affecting, land that is adjacent to the subject land, so far as those characteristics or factors are capable, independently of the Scheme (and its steps), of affecting the development potential, and hence the value, of the subject land.
(5)Neither party, in the course of the retrial, presented the trial judge with any principled definition of a 'step' in the Scheme.
(6)The trial judge erred, largely as a consequence of the approach adopted at the retrial by both parties, in his conclusion that the 1990 draft DPUD Statement released in May 1990 and the final version of that document released in November 1990 (which referred to 'the establishment of a major new urban growth area in the north‑east') were steps in the Scheme.
(7)The trial judge erred in assessing the development potential of the Mount Lawley land on the assumption that the 1987 planning considerations were still applicable, with the consequence that he did not take account of the growth of the north‑eastern corridor (putting to one side, of course, the development of the Ellenbrook land). Again, this error was contributed to by the approach taken up by the parties at the retrial.
(8)The trial judge, having been invited by the then counsel for the appellant to do so, was influenced in his approach to the valuation issue by the reliance placed by him on the 'traditional' approach identified in Smith. In adopting that approach, he was in error as it had no application to s 36(2b) of the Scheme Act. However, that error had no significant consequence. The trial judge approached the valuation issue upon the assumption that the Mount Lawley land would have been zoned rural at the valuation date, that the fact of the upzoning (of part of the Mount Lawley land and of the Ellenbrook land) and the reservation of the Mount Lawley land had to be ignored and that his task was that of determining what, if any, premium the hypothetical purchaser would be prepared to pay over and above the rural value in order to reflect the urban development potential of the Mount Lawley land. We have found that that was the correct approach.
(9)The trial judge's error in finding that the development potential of the Mount Lawley land should be assessed on the assumption that the 1987 planning considerations were still applicable led him to exclude evidence given by Messrs Stokes, Goff, Auret, Singleton and Smith that should not have been excluded.
(10)The trial judge also erred in finding that Mr Goff's report dated 31 May 2005 was inadmissible. That evidence was admissible and should have been taken into account. In reaching this conclusion (and that in (9) above) we say nothing concerning the weight that that evidence should have been accorded. The same comments are applicable to the second report of Dr Tingay, also erroneously regarded by the trial judge as having been inadmissible.
(11)The erroneous exclusion of the evidence referred to in (9) and (10) puts in question the trial judge's findings as to the development potential of the Mount Lawley land and, hence, on the issue of valuation.
(12)The trial judge was wrong to exclude the evidence given by the valuers who gave evidence on behalf of the appellant upon the basis that they had adopted a position that was untenable, having regard to the trial judge's findings as to the development potential of the Mount Lawley land (which, as we have said, took no account of the excluded evidence), and also on the ground that their position was untenable because they took account of planning considerations since 1987 (we have already found that planning considerations should not have been confined to that date). In arriving at that conclusion, we say nothing, once again, about the weight that should have been accorded to the appellant's valuation reports.
(13)We have also concluded that the trial judge was wrong to regard the appellant's valuation reports as having been inadmissible for the additional reason that they relied on the opinions only of Dr Davies, Dr Tingay, Mr Bowman and Mr Goff. We do not accept that any other basis existed for treating the appellant's valuation reports as inadmissible.
(14)We reject the contention, advanced on behalf of the respondent, that there was any material change of case by the appellant from that run at the retrial, or during the course of the appeal, as regards the extent of the Mount Lawley land that was likely to have been zoned urban, absent the Scheme. We also reject the contention that there was any material change of case regarding the 'amenity value' of the wetlands on the Mount Lawley land.
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