WILSON and WESTERN AUSTRALIAN PLANNING COMMISSION - [2009] WASAT 119

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL

STREAM: DEVELOPMENT & RESOURCES

ACT: LAND ADMINISTRATION ACT 1997 (WA)

CITATION: WILSON and WESTERN AUSTRALIAN PLANNING COMMISSION [2009] WASAT 119

MEMBER: JUDGE J CHANEY (DEPUTY PRESIDENT)

HEARD: 17, 18 AND 19 NOVEMBER 2008

DELIVERED : 19 JUNE 2009

FILE NO/S: DR 53 of 2007

BETWEEN: TERENCE GRATTON WILSON EXECUTOR OF THE ESTATE OF DULCIE ELIZABETH WILSON
Applicant
AND
WESTERN AUSTRALIAN PLANNING COMMISSION
Respondent

Catchwords:

Resumption of Land - Compensation - Approach to valuation - Piecemeal approach - Comparable sales - Hypothetical subdivision - Whether flood fringe capable of development - Whether land developable if reason for taking ignored - Foreshore premium - Severance

Legislation:

Aboriginal Heritage Act 1972 (WA)
Environmental Protection Act 1986 (WA)
Environmental Protection (Clearing of Native Vegetation) Regulations 2004 (WA)
Health Act 1911 (WA)
Land Administration Act 1997 (WA), s 241(2), s 241(7), s 241(8), s 241(9), s 241(11), s 241(12), s 248
Metropolitan Region Scheme, cl 12, cl 30A
Metropolitan Region Town Planning Scheme Act 1959 (WA), s 32
Supreme Court Act 1935 (WA), s 142
Swan River Trust Act 1988 (WA), s 5, s 7, Sch 1
Town of Vincent Town Planning Scheme No 1

Result:

Compensation assessed at $1,330,958 plus interest

Category: B

Representation:

Counsel:

Applicant: Mr P McGowan and Ms L Rowley
Respondent: Ms DE Quinlan and Ms R Howlett

Solicitors:

Applicant: N/A
Respondent: N/A

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

Brewarrana Pty Ltd v Commissioner of Highways (1973) 32 LGRA 170
Commonwealth v Arklay (1952) 87 CLR 159
Flotilla Nominees Pty Ltd and Western Australian Land Authority [2003] WASC 122
Maurici v Chief Commissioner of State Revenue [2003] HCA 8; (2003) 195 ALR 236
Merivale Motel Investments v Brisbane Expo Authority (1987) 64 LGRA 108
Pointe Gourde Quarrying & Transport Co Ltd v Sub-Intendent of Crown Lands [1947] AC 565
Queensland v Murphy (1990) 64 ALJR 593
Western Australian Planning Commission v Arcus Shopfitters Pty Ltd [2003] WASCA 295

REASONS FOR DECISION OF THE TRIBUNAL:

Summary of Tribunal's decision

The respondent compulsorily resumed approximately one-third of the applicant's land which abutted the Swan River in Mt Lawley. The area of land taken comprised the flood plain of the river. It was previously reserved for parks and recreation. Part of the reserved land comprised floodway, and the other part comprised flood fringe.
Valuers engaged by the parties disagreed as to the appropriate method of valuation, and as to the value of the land taken. Part of the reason for the valuers differing was because they made different assumptions, based on different expert views, as to the possibility of development of the taken land. The developability of the land was affected by the proximity of the river and a gas pipeline which passes through the reserved land.
The Tribunal reviewed the expert evidence as to the possibility of developing the land. It considered the alternative development scenarios put forward by the parties. Having reached conclusions on those matters, it considered the approaches of the valuers and determined that a value based on other sales in close proximity was to be preferred, although it considered the hypothetical subdivision method as a check to the value arrived at from other sales. The Tribunal concluded, however, that the values selected by the valuers, who utilised a comparable sales method, failed to take account of the advantage of private ownership of the river foreshore. After taking that factor into account, and assessing compensation for the decrease in value of this portion of the land not resumed, the Tribunal assessed compensation in the sum of $1,330,958 plus interest.

Introduction

These proceedings concern a claim by the applicant for compensation for the compulsory taking of land in Joel Terrace, Mt Lawley.
The applicant is the Executor of the estate of Dulcie Elizabeth Wilson, and is the proprietor of what was formally Lot 349 Joel Terrace, Mt Lawley. The original area of Lot 349 was 3,369 square metres. By a taking order registered on 5 April 2005, the respondent resumed 1,180 square metres of Lot 349 (now known as Lot 802). The area which remained in the ownership of the applicant is now known as Lot 801, and has an area of 2,189 square metres.
Lot 349 had as its eastern boundary the high water mark of the Swan River. The portion of the land which was the subject of the taking was reserved for parks and recreation. The land was acquired by the respondent for the purpose of building a cycle path around the Swan River and for other purposes consistent with the land's reservation for parks and recreation under the Metropolitan Region Scheme. The balance of the land outside of the reservation is zoned Residential R60 under the Town of Vincent Town Planning Scheme No 1.
Lot 802 is traversed by a 5 metre wide easement for what is known as the East Perth Lateral of the Dampier to Bunbury natural gas pipeline. The existence of the pipeline and the easement has potential implications to the capacity to develop Lot 802. The pipeline itself is approximately 1.2 1.3 metres below the surface.
The whole of Lot 802 is situated in what is referred to in the Swan River Trust Policy SRT/EA3 in relation to flood prone land as the 'flood plain'. The flood plain is the portion of a river valley which is covered with water when the river overflows its banks. The flood plain includes areas known as the 'floodway' and the 'flood fringe'. The floodway is the main river channel and the main portion of the flood plain which forms the main flow path for flood waters during major flooding. The flood fringe is the area of the flood plain, outside of the floodway, which is affected by flooding at the level of the 100 year flood. Approximately two thirds of Lot 802 comprises floodway, and the remaining one third, most distant from the high water mark of the Swan River, comprises flood fringe. Lot 801, being the land retained by the applicant, rises steeply from its eastern boundary which approximates the western edge of the flood plain.

The approaches to compensation

Compensation for the taking is to be assessed in this case having regard to the heads of compensation available under s 241(2), s 241(7), s 241(8) and s 241(11) of the Land Administration Act 1997 (WA) (LA Act).
Section 241(2) provides that compensation is to be assessed having regard to the value of the land taken as of the date of taking, discounting any increase or decrease in value attributable to the proposed public work.
Section 241(7) applies where, as here, the land taken adjoins other land owned by the claimant, and requires regard to be had to the amount of damage suffered by the claimant due to the severing of the land from the adjoining land, or a reduction of the value of the adjoining land. It is not in issue between the valuers that Lot 801, being the adjoining land retained by the claimant, is reduced in value by reason of the loss of direct river access which was previously enjoyed by the former Lot 349.
The applicant relied upon the evidence of Mr Terry Dix, a certified practicing valuer. He considered the subject land to be significantly superior to all of the land the subject of available sales evidence in the general area. He considered that filling would be permitted within the flood fringe thus enhancing the development potential of the original lot. He based considerable emphasis on the direct river frontage previously available to the original Lot 349. Because the absence of direct river frontage in any other sales of land available for comparison purposes, he did not consider there to be any directly comparable sales of Engobo land. He therefore assessed the value of the land by reference to the subdivision potential of the whole of the former Lot 349. He then determines the value of Lot 802 by taking the proportion of the area of Lot 802 bore to the area of the former Lot 349. That produced the value of the taken land which Mr Dix assessed for the purpose of s 242(2) of the LA Act at $1,754,038.
Mr Dix then assessed the reduction of the value of the remaining land, Lot 801, having regard to the reduction of its development capacity, and its loss of direct river frontage for the purposes of assessing compensation under s 241(7) of the LA Act. For the purposes of assessing the development potential in land both before and after the taking, Mr Dix relied upon assessment of the development potential carried out by Mr Kenneth Adam, a town planner and architect, and the likely development costs of the subdivision suggested by Mr Adam prepared by Mr Michele Ferritto, a principle in the engineering firm, McDowell Affleck.
Mr Dix concluded that the value of the land taken was $1,754,038. He assessed the damage by severance under s 241(7) of the LA Act at $533,525 providing a total compensation figure before solatium and interest of $2,287,563.
The respondent relied upon the evidence of two certified practising valuers, Mr Rodney Pember and Mr Graham Packer. Both Mr Packer and Mr Pember, relying on the advice of town planning environmental consultants, concluded that the development potential of the land was not affected by the loss of Lot 802. That conclusion was based upon the proposition that the area of land taken was not capable of development because a large portion of it comprises flood way, the gas pipeline easement prevented development on the flood fringe, and that regardless of the reservation of the land the Swan River Trust would have required development to be setback to virtually the boundary of what is now Lot 801. There were also concerns for the potential for contamination by acid sulphate soils and heritage and native title issues that may arise.
Mr Packer and Mr Pember therefore took what they described as a 'piecemeal approach' to valuation, rather than assessing the overall value of the original lot and then apportioning that value on the basis of the area of land resumed. Rather, they contended, the undevelopable portion of the land necessarily had a lower value per square metre than the developable area of land. The difference between the apportionment basis used by Mr Dix, and the piecemeal approach used by Mr Packer and Mr Pember, was a fundamental difference between the experts.
Mr Packer relied upon sales of other land which had been reserved for parks and recreation along the river foreshore in reasonable proximity to the subject site. On the basis of comparison with those sales, he formed a view that the value of the land taken was $148,000. He considered that the damage to the remaining land, for the purpose of s 241(7) of the LA Act, amounted to $503,000, making a total compensation before solatium and interest of $651,000.
Mr Pember also relied upon sales of reserved land to the Western Australian Planning Commission (Commission) and determined that the value of the land taken was $130,000. He then assessed the value of the developable portion of the lot, which he took to be the area comprised in Lot 801, if there had been no taking of Lot 802 against the value of Lot 801 after the taking. He assessed the difference, arising from the loss of direct access of the foreshore and private use of the foreshore area, as being $360,000. He therefore assessed a total compensation amount before solatium of $490,000.

Development potential of the resumed land

A fundamental difference between the valuers which gave rise to their differing approaches was their respective assumptions as to the development capacity of the resumed land. Mr Pember and Mr Packer assumed that the resumed land was incapable of development. Mr Dix accepted that development could not be carried out in the floodway, but considered that the flood fringe was developable. Notwithstanding his acceptance that the floodway portion was undevelopable, he considered that the value of the whole of the resumed land should be assessed as a pro rata proportion of the value of the whole of the original Lot 349.
In my view, in the circumstances of this case, the piecemeal approach is to be preferred if it is the case that the resumed land, or some portion of it, is incapable of development. That is because, as all valuers agree, the value of the original land is based upon its highest and best use being for residential subdivision. If, as is the case, part of the land cannot be used for that purpose, because it is incapable of development, then that part has a fundamentally different character from the balance of the land. In looking at the area of land taken, it would be to overstate the value of that land to treat it as though it was capable of residential development when in fact it is not.
All valuers agreed that the availability of direct river frontage which assisted in respect of Lot 349 prior to the taking significantly enhanced the value of the lot. That is so, notwithstanding that the floodway at least and in the respondent's case the flood fringe as well, were undevelopable. The loss of that direct access, and of the capacity to utilise the flood plain area for purposes associated with the residential development possible on the original lot, has the effect of reducing the value of the developable portion of the lot. Compensation for that reduction is recoverable by the applicant pursuant to s 241(7) of the LA Act. The significance of the availability of the undevelopable land adjoining the river to the value of the developable portion does not, however, lead to the conclusion that the value of each square metre of the undevelopable portion of the land is equal to the value of each square metre of the developable portion.

Was the flood fringe capable of development?

As already observed, it was agreed between the parties and all of the witnesses called, that the floodway portion of the resumed land was not capable of development. There was, however, an issue as to whether the area, which effectively comprised the flood fringe, was developable. In order to determine whether the piecemeal approach should treat as one component only the floodway or the whole of the flood plain, it is necessary to determine whether the flood fringe was capable of development.
The northern boundary of Lot 802 is 56.98 metres in length and runs from the high water mark of the river to the north-western corner of Lot 802. The southern boundary of Lot 802 is 60.59 metres in length, extending from the high water mark of the river to the south-western corner of the Lot. The western end of the floodway within Lot 802 is approximately 33 metres from the high water mark along the northern boundary, and approximately 42 metres from the high water mark along the southern boundary. The pipeline easement effectively straddles the western edge of the floodway line so that it intrudes roughly 5 metres into the flood fringe portion of Lot 802.
The respondent contends that there are a number of constraints on development of the proportion of Lot 802 which comprises flood fringe. It is of course necessary, in assessing the value of the land taken, and in that context the development potential of the land, to ignore the increase or decrease in value attributable to the proposed public works, or in other words to ignore the reservation of the land.
The respondent contends that regardless of the reservation of the land, constraints on the development of the flood fringe proportion of the original Lot 349 flow from its proximity to the Swan River. At the date of the taking (5 April 2005) the Swan River Trust Act 1988 (WA) (SRT Act) was in operation. The impact of that Act on the potential development of the subject site was the subject of evidence from Mr Paul Stephens, who is the manager - statutory assessments with the Department of Environment and Conservation which services the Swan River Trust.
At the date of the taking, cl 30A of the Metropolitan Region Scheme (MRS) made pursuant to s 32 of the former Metropolitan Region Town Planning Scheme Act 1959 (WA) (MRTPS Act) had effect as though its provisions were enacted by the MRTPS Act.
Clause 30A of the MRS, as it was at 5 April 2005, provided:
(1)Without limiting clause 30 of this Scheme, where an application for approval relates to -
(a)a development of land -
(i)any part of which is in the management area within the meaning of the Swan River Trust Act 1988; or
(ii) that is not in that management area but abuts waters that are in that area;
the commission should give full particulars of the application to the Minister for Waterways; or
(b)a development -
(i)of land that abuts that management area but does not come with paragraph (a)(ii); or
(ii)that in the opinion of the Commission is likely to affect waters in that management area,
the Commission shall give full particulars of the application to the Trust and in determining the application shall have regard to any recommendations the Trust may make.
By cl 30A(2) of the MRS, the Minister for Waterways was required to give notice to the Minister for Planning specifying the manner in which an application that comes within para (a) subclause (i) should be determined. By cl 30A(3) the Commission was prevented from determining the application otherwise than in accordance with the notice from the Minister for Waterways subject to subclause (4). Subclause (4) provided that, if any difference or dispute arises in relation to an application within subclause (1)(a), the two Ministers were to resolve the matter in such manner as they determined, and the Commission was obliged to determine the application in accordance with the direction which followed that determination.
The SRT Act applies in respect to the land and waters described in Sch 1 to that Act. Schedule 1 describes the area by reference to a plan which generally comprises waters of several rivers, including the Swan River, reserved under cl 12 of the MRS as waterways, and land adjoining those waters that are reserved as parks and recreation areas under that clause. A difficulty therefore arises in applying the provisions of the SRT Act to the development capacity of the original lot if, as is required, the reservation is to be ignored.
The SRT Act is described as 'an act to establish a body with planning, protection and management functions in respect to the Swan and Canning Rivers and certain adjoining lands, and for connected purposes'. Section 5 of the SRT Act deals with its relationship to other acts. It is expressed not to limit or restrict the performance of a function conferred by the Health Act 1911 (WA), the Environmental Protection Act 1986 (WA), or written laws relating to the conservation of wildlife or indigenous flora or navigation or regulation of shipping or boating in the port of Perth. To the extent that a provision of the SRT Act conflicts with a power conferred on a local government, s 5(3) of the SRT Act provides that the provisions of the SRT Act prevail where the matter relates entirely to waters comprised in the management area, but provisions of the SRT Act do not apply where the matter relates to land in the management area and the Trust agrees with the local government that it is not likely to effect the waters.
Section 7 of the SRT Act sets out the functions and powers of the Swan River Trust. While those functions include oversight of development within the management area, they are largely concerned with the management and protection of the waterways and abutting land. The functions are broadly, in my view, directed to the conservation and protection of the waterway, the provision of public access and the protection of public enjoyment of the waterways. The Trust relies on the provisions of cl 30A of the MRS which provide a mechanism for control of development, not only in the management area (which includes reserved land) but also on land abutting waters in the management area, or development likely to affect waters in the management area.

The respondent submits that the proximity of the taken land to the Swan River constitutes a 'prior ineluctable quality' of the nature discussed in Queensland v Murphy (1990) 64 ALJR 593. It is submitted that, even if the land were not reserved, its development would have been somehow constrained because it lies within the flood plain of the river.
The requirement to discount any increase or decrease in value attributable to the proposed public work is generally taken to be the application of the Pointe Gourde principle (see Pointe GourdeQuarrying &TransportCoLtd vSub-Intendent of Crown Lands [1947] AC 565) (Pointe Gourde). The Pointe Gourde principle frequently requires assumptions to be made by valuers based upon a hypothetical situation. In this case, ignoring the reservation of the land leads to the necessity to hypothesise whether and how the SRT Act and the MRS might apply absent the reservation of the site. In my view cl 30A(1)(a)(ii) would have been applicable to the flood plain portion of Lot 349, such that any development proposed on that lot would have required reference to the Minster for Waterways under the MRS. That is because, on the hypothesis that the land was not reserved, it would have been land 'that is not in the management area, but abuts waters that are in that area'.
Mr Stephens identified a number of policies of the Swan River Trust. One of those is policy SRT/EA3.
Clause 3.1 deals with development within the floodway. It provides:
The Trust will not support development of land that is within the floodway where such development may affect the normal flow of the river during floods and/or degradation of the natural features of the area. Minor development, such as small barbeques or pergolas, may be considered where the structure does not impinge upon the flow of the water. Any such structure proposed within the floodway will be required and [sic] incorporate design features to allow the free flow of floodwaters.
Clause 3.2 deals with development within the flood fringe. It provides:
The Trust will require all development proposed within the flood fringe to incorporate design features to minimise flood damage during a major flood event. Development applications on the flood fringe must comply with a minimum habitable floor level of 0.5 metres above the relevant 100 year ARI flood level to provide protection from flooding.
It follows that cl 3.2 of policy SRT/EA3 would not prohibit development of the land within the flood fringe area provided that the area was retained with adequate fill to ensure that the finished floor level of any development exceeded the minimum height requirement of the policy. That was the view shared by the two planning experts who gave evidence, Mr Adam and Mr Sharkey.
In relation to subdivision, cl 3.4A SRT/EA3 provides:
Where subdivision is proposed on land including the flood plain, the Trust will advise that each resultant lot should include a building envelope of land outside the flood fringe.
If that provision required that the building area be outside of the area comprising the flood fringe in this case, that would have a significant effect on the possibility of developing Lot 349 in the manner suggested by Mr Adam. Mr Stephens said, however, that the policy simply required that a building envelope be provided at a level above the level of the 1:100 flood level (which is the level that comprises the flood fringe). That proposition was not disputed by any of the planners. Therefore, if as proposed by the applicant, the land was filled to the requisite height for the purpose of subdivision, then cl 3.4 of SRT/EA3 would not prevent the subdivision.
Swan River Trust Policy SRT/D3 deals with Development Setback Requirements in relation to MRS Parks and Recreation reserves along the Swan River - cl SRT/D3.2 provides that residential development setbacks should be 10 metres or 20% of the average depth of the lot, whichever is the lesser, from the boundary of the parks and recreation reserve.
In his written witness statement, Mr Stephens expressed the view that, assuming the land was not reserved, the flood fringe area of the land would not be able to be developed. That conclusion was based in significant part on assumption that the land either side of the lot would be the subject of reservation, and thus a 10 metre setback from the side boundaries would have been required to meet the requirements of the Swan River Trust policy SRT/D3 dealing with development setback requirements. The proposition was based on the erroneous assumption that the requirement to ignore the reservation was confined only to reservation on Lot 349, and not of the whole reservation along the foreshore in the general area.
It was also suggested by the respondent in argument that, if there were a requirement for environmental reasons to have a buffer, even though the land was not reserved for Parks and Recreation, cl SRT/D3.2 should still be applied to require a further 10 metre setback to development from the edge of the buffer. That is a proposition I would not accept. It amounts in effect to a suggestion that there should be a setback from a setback, and confuses the underlying purpose of the suggested buffer or setback for environmental reasons as discussed below.
Mr Stephens readily and quite properly accepted that if no reservation existed on either side of the subject lot, and a 30 metre setback from the river was provided in the area comprising the floodway, then no further setback requirements would limit the development potential of the flood fringe.
Although the application of the Swan River Trust policies would require appropriate retaining, fill and habitable floor levels, nothing in those policies absolutely prohibits development within the flood fringe portion of the land.
The respondent relied upon a number of environmental constraints that are said to exist over Lot 802, including the flood fringe area, as preventing development of the flood fringe area. Each party called an environmental expert. The applicant relied upon the evidence of Mr Phillip Bayley, an environmental scientist. The respondent relied upon the evidence of Mr Andrew Mack, an environmental consultant and principle of Cardno.
In the process of conferral prior to hearing, Mr Bayley and Mr Mack reached a substantial level of agreement on a number of matters. They considered whether the potential existence of acid sulphate soils might be a constraint on development, and agreed that while it would be necessary to investigate the existence of acid sulphate soils and provide relevant management measures if they were found to exist, the potential presence of acid sulphate soils would not constitute a fatal bar to the development of the land.
Both experts noted that the Swan River and the adjoining land, including Lot 802, constitutes an environmentally sensitive area as defined under the Environmental Protection (Clearing of Native Vegetation) Regulations 2004 (WA). In their oral evidence, they agreed that the effect of the land being an environmentally sensitive area is that certain exemptions from the requirement for obtaining a clearing permit would be lost. They agreed that, however, in practical terms, that situation did not significantly impact on the capacity to develop Lot 802.
The experts also agreed that the existence of shallow ground water on the site would require suitable investigation and management but would not be a bar to development of the site. They reached the same conclusion in relation to the fact that the land fell within Aboriginal Heritage site 02548, (being the Swan River). Although application would be required to the Aboriginal Cultural Materials Committee under the Aboriginal Heritage Act 1972 (WA), neither environmental expert considered that there was any known basis upon which approval to develop would not be given under that Act.
Mr Mack and Mr Bayley also agreed that, in the absence of the reservation of the parks and recreation, a buffer distance or setback would be required from the high water mark of the river to any development.
The basis for the requirement for a buffer arises pursuant to the Water and Rivers Commission Report, RR 16: Determining Foreshore Reserves (WRC 2001) and the respondent's development control policy DC 203: Public Open Space in Residential Areas. The experts referred to a 'default buffer distance' being a reference to a 50 metre wetland buffer generally applied as a starting point for wetland setbacks by the Department of Environment and Conservation. Mr Bayley said that that buffer distance generally applied to terrestrial wetlands, rather than waterways, and Mr Mack accepted that the default buffer would not have been required, but rather there would have been an assessment of the 'science' as to the appropriate buffer distance.
Mr Bayley undertook an examination of the particular site with a view to determining what, in his opinion, would have been required as a buffer distance. He concluded that an area of 35 metres to 40 metres from the high water mark, being a line which roughly approximated the western edge of the pipeline easement, would have been required. Mr Mack had reservations about whether Mr Bayley's assessment of the appropriate buffer, or setback, was accurate. He did not accept that the environmental and physical features of the lot change significantly at the point suggested by Mr Bayley. He considered that a greater buffer might have been imposed, although he did not express a view as to precisely where the buffer or setback line may have been required. In view of the fact that Mr Bayley undertook a site specific analysis of the necessary setback, and the general nature of the concerns expressed by Mr Mack, I accept Mr Bayley's evidence on this point.
Having regard to the various policies referred to, and to the evidence of the environmental experts, it is reasonable to accept that a setback approximately in the position identified by Mr Bayley, would have been required in relation to the development of Lot 349 on the basis of environmental considerations. At the southern end of that Lot, the setback would have been approximately 1 metre west of the western boundary of the pipeline easement. Whether any greater setback for development may have been required having regards to other factors, in particular the existence of the pipeline easement, is a separate matter to which I will now turn.
Mr Dean Solmundson is the engineering services manager and principle engineer at WestNet Energy - Gas Distribution Division. WestNet Energy is the current name of the asset manager for AlintaGas Networks Pty Ltd (AGN) which owns the gas distribution network in Western Australia which includes the pipeline which traverses Lot 802 and as previously noted, is known as the East Perth lateral or is otherwise identified as HP105. HP105 has a current operating pressure of 4,000 kPa and constitutes a 'high pressure gas pipeline' to which various Australian Standards dealing with construction and management apply. Mr Solmundson said that, because the maximum allowable operating pressure (MAOP) exceeds 2,000 kPa, the pipeline is located within an easement. The easement width is nominated by reference to the minimum required physical space to enter a property with appropriate machinery, excavate down to the pipeline and repair as required. As previously noted, the width of the easement on Lot 802 is 5 metres.
As of April 2005, the asset manager for AGN was known as Alinta Network Services Pty Ltd (ANS). Mr Solmundson has held his current role as principle engineer of gas distribution for the various entities charged with the management of the pipeline since 2000.
AGN, through ANS, was one of the authorities with whom the Commission consulted when a person applied for subdivision or development of land in close proximity to HP105. The purpose of the consultation is to ascertain whether, in ANS's view, a development application ought to be granted, and if so, subject to what conditions.
Mr Solmundson described a process of assessment which would be undertaken by ANS in accordance with the appropriate Australian Standards.
Paragraph 6.4.3 of AS2885.3-2001 required that operating authorities have systems in place to ensure that no building or structure was allowed within a safe distance from the pipeline, as determined by the pipeline design and a risk assessment which was required to be completed. He said that particular development applications would be assessed on a case-by-case basis. Uninhabited structures such as sheds, carports or garages were sometimes permitted to be built within 15 metres of a high pressure gas pipeline, although not in the easement. He said that ANS setback requirements for uninhabited structures would take into account the size and footings of the structure compared to the depth and location of the pipelines. In general, he said that ANS would usually require a minimum 5 metre setback to the pipeline even for uninhabited structures.
Mr Solmundson was asked to consider the likely response of ANS to the hypothetical planning proposal for the former Lot 349 prepared by Mr Adams. He observed that the proposed hypothetical lots 10, 11 and 12, were located over the easement for HP105. He indicated that it was not clear whether residential dwellings were proposed to be located within the easement on top of HP105, but said that if that were the case then ANS would advise the respondent not to approve the proposed subdivision because of the potential risk to life and property from uncontained pipeline failure, and because ANS would not be able to conduct routine maintenance excavations down to the pipe.
If the residential dwellings were not proposed to be located within the easement, but near the easement, ANS would have flagged the fact that the proposed development was next to a high pressure gas pipeline and advised the requesting party that an approved locator would need to be engaged to confirm the exact location and depth of the pipeline in relation to the proposed development. The requesting party would have been provided with a letter or email instruction advising it that ANS would not permit any proposed development next to a high pressure gas pipeline without a full AS2885 risk review being conducted. He expressed the opinion that it would be difficult to see how engineering approval would have been possible for construction of any non‑extreme fire rated walls or building openings facing the direction of HP105 without considerable setback, having regard to the risks associated with pipeline failure. He expressed agreement with an observation of Mr Mack that ANS would have required a minimum setback of over 15 metres from HP105, in addition to extreme fire and blast rated walls and reinforced concrete slabbing over the pipeline.
Mr Solmundson was taken to in crossexamination correspondence between the State Energy Commission and Mrs I Sonego concerning placement of the East Perth lateral gas pipeline. Mrs Sonego owned property located further south along Joel Terrace which also had a boundary on the Swan River. In particular, Mr Solmundson's attention was drawn to an assertion in that correspondence that the pipeline had been designed to standards well in excess of the minimum requirements stipulated in the Australian Pipeline Code, thus 'virtually eliminating' any chance of accidental rupture of the pipe. The correspondence was clearly intended to reassure Mrs Sonego as to the extent to the risk associated with placement of the pipeline across her land. In doing so, the author of the correspondence observed that Mrs Sonego's house would be approximately 40 metres from the alignment of the pipeline. In its letter of 8 July 1985, the State Energy Commission said:
The easement agreement between the Commission and yourself, as the property owner, will restrict development within the easement boundaries on your property, however, the possibility of landscaping that section of your property is not excluded under the easement agreement provided the proposed landscaping is approved by the Commission.
Reference is also made to the fact that the pipeline across Mrs Sonego's property was to be concrete encased for additional safety. Mr Solmundson's evidence was that the concrete casement did not extend in the direction of Lot 802. There is nothing in the correspondence between Mrs Sonego and the State Energy Commission which detracts from the thrust of Mr Solmundson's evidence.
Mr Solmundson was also cross-examined in relation to his failure to make reference to Planning Bulletin 87 issued in October 2007 by the Commission. Planning Bulletin 87 (PB 87) is entitled 'High Pressure Gas Transmission Pipelines in the Perth Metropolitan Region'. Mr Solmundson was a member of the gas pipeline working group which formulated PB 87. He made no reference to the PB 87 in his written witness statement.
PB 87 is expressed to apply to subdivisional development 'within the vicinity of the Dampier to Bunbury natural gas pipeline corridor and the Parmelia gas pipeline easement'. Table 1 of the PB 87 provides setback distances based on generic quantitative risk assessment undertaken in 2004, by consultants on behalf of the pipeline working group. In respect to residential development or subdivision for that portion of the Dampier to Bunbury natural gas pipeline between Muchea and Kwinana, the residential setback is specified as 0 metres. The setback specified is 'to the edge of the pipeline corridor/easements'.
Mr Solmundson explained the absence of any reference to the PB 87 in his evidence in chief on the basis that the East Perth lateral is a different high pressure gas pipeline from the Dampier to Bunbury natural gas pipeline, notwithstanding that the East Perth lateral runs off the Dampier to Bunbury Natural Gas Pipeline. The Dampier to Bunbury Natural Gas Pipeline is in different ownership, has different specifications and is generally placed within an easement or corridor ranging from 30 metres in width in the metropolitan region to 100 metres in width outside the metropolitan region. His view in that regard differed from the view taken by both Mr Sharkey and Mr Adam, and by engineers who have considered the cost of potential development of Lot 349, all of whom assumed that the PB 87 was applicable to the East Perth lateral.
Even if one accepts that the Dampier to Bunbury Natural Gas Pipeline as referred to in the PB 87 does not encompass the East Perth lateral, it is difficult to reconcile the setback requirements under PB 87 with the setback requirements contemplated by Mr Solmundson for development on the former Lot 349.
Mr Solmundson's evidence was that the pipe diameter for HP105 was 273.1 millimetres, with a steel pipe wall thickness of 9.3 millimetres and a pipeline design pressure of 6,900 kilopascals. The depth of soil cover over the pipe is 1.2 metres. According to Table 3 of the Appendix to PB 87, the relevant portion of the Dampier to Bunbury Natural Gas Pipeline has a diameter of 660 millimetres, and a wall thickness of 12.7 millimetres, with a depth of cover of 1.2 metres. Mr Solmundson said that the operating pressure of the Dampier to Bunbury Natural Gas Pipeline is 8.48 megapascals as distinct from the operating pressure of HP105 which is 4 megapascals.
Even if one assumes an effective 15 metre setback from the pipeline to the edge of the Dampier to Bunbury Natural Gas Pipeline easement in the metropolitan region, Mr Solmundson's evidence was that, subject to detailed risk analysis, a setback of over 15 metres would be required from HP105, and even then extreme fire and blast rated walls of any development would be required, along with reinforced concrete slabbing over HP105. That is so notwithstanding that, according to the correspondence from the State Energy Commission in 1985, the pipe wall thickness exceeds the requirements of the appropriate standard.

What might be the outcome of a development application of Lot 349 may be the subject of some uncertainty. It is apparent, however, that the planners and engineers involved in considering development proposals for this site all assumed that PB 87 would be applicable, and that development, or at least subdivision, up to the edge of the easement, would have been permitted by the respondent. The recommendation from ANS for which Mr Solmundson would have been responsible, carries no statutory authority. In my view, based upon the assumption that PB 87 applied to lateral connections to the Dampier to Bunbury Natural Gas Pipeline, and that the Commission, being the proponent of that planning bulletin, would have applied its terms accordingly, I am of the view that a reasonable and informed purchaser would have assumed a capacity to develop, subject to any environmental or other constraints, up to the boundary of the pipeline easement.
Each of the planners who gave evidence assessed the development potential of Lot 349 prior to resumption and assuming no reservation. The plan ultimately focused on by the applicant's valuers was prepared by Mr Adam. That plan was for a grouped dwelling development comprising 12 lots. It assumed that the lot boundaries of the three lots closest to the river, referred to as Lot 10, Lot 11 and Lot 12, would straddle the whole width of the pipeline easement, and thus the pipeline itself. In my view, it is unlikely that that strata plan would have received approval. PB 87 applies to subdivision as well as other development. In my view, it is likely that the objections by ANS to lots extending over the pipeline easement would be likely to be upheld by the respondent. The layout of the three eastern most lots, and especially Lot 11 and Lot 12 would make it very difficult for construction to be confined outside the easement area. Even if that were possible, the fencing or other developments across the three narrow lots would create significant difficulties for access to the pipeline for maintenance purposes, even putting to one side the risk factors which were of concern to Mr Solmundson.
In my view, a hypothetical purchaser would not assume a capacity to develop by way of strata lot subdivision over the easement boundary.
That position is reinforced by the conclusion I reached earlier as to the buffer distance which the applicant's own environmental expert, Mr Bayley, considered would have been required from the Swan River. As it happens, that buffer distance ends approximately 1 metre to the western side of the western boundary of the pipeline easement. That requirement, together with the existence of the easement, leads me to the firm conclusion that a development of the type proposed by Mr Adam would not have been possible in relation to Lot 349 in the absence of the reservation of the land.
None of the plans prepared by the various witnesses identify with precision the area of land situated between what is now the eastern boundary of Lot 801 and the setback line identified by Mr Bayley. It is possible to approximate that area utilising the scaled site plans prepared in drawing KAA1 revision E which formed an attachment to Mr Adam's witness statement. Doing the best I can utilising the dimensions on those plans, and accepting that the accuracy of the 1:500 scale may be slightly affected by the copying of those plans, I calculate that the developable portion of Lot 802 comprises 330 square metres of the total area taken of 1,080 square metres.
In my view, the appropriate way to assess the value of the land taken is to use the piecemeal approach for the reasons previously explained, and to assess a value of 330 square metres of the land taken as developable land, and the balance of 850 square metres on the basis that it was incapable of development other than by way of minor structures for recreational purposes.

The development capacity of Lot 349 before the taking

The parties relied upon two alternative scenarios for the development potential of the land prior to the taking and ignoring the resumption. As already indicated, the applicant relied upon a group dwelling development with strata title lots prepared by Mr Adam. Mr Adam's plan gave rise to 12 strata lots. I have already indicated that I do not consider that the land was capable of development having, as Mr Adam proposed, three strata lots straddling the pipeline easement.
It would have been possible to develop Lot 349 with the strata subdivision proposed by Mr Adam save that, instead of the three lots proposed at the eastern or river end of the lot, it would be possible to have two lots. By my calculations, two lots of approximately 215 square metres could be placed at the eastern end of Mr Adam's group dwelling proposal in place of the three proposed lots without any development over the setback line proposed by Mr Bayley.
An alternative grouped dwelling development on the former Lot 349 was put forward by Cardno BSD through Mr Sharkey. He considered possible configurations of grouped dwellings having regard to the possibility that the 10 metre setback suggested in Swan River Trust Policy SRT/D3.2 was applied, with an alternative if it were not applied. Given the conclusion I have reached that no additional 10 metre setback would be required if the setback suggested by Mr Bayley were applied, Cardno's proposed unit configuration based upon that assumption represents a possible development option. That proposal is found in Figure 4 attached to Mr Sharkey's statement. It provides for a row of 12 grouped dwellings extending along the northern side of Lot 349 from Joel Terrace to the setback from the river. The Cardno plans were subject of criticism by Mr Adam who considered that no great imagination had been applied to dealing with the difficulties inherent in the long narrow site. He observed that the 12 units proposed in the Cardno plan were relatively small, and the indicative layouts of the units 'very amateurish'. He considered that the indicative design layout was below contemporary standards and that the design was one which would not be acceptable in the kind of market that would be contemplated in that location.
Mr Adam's indicative designs contemplated development at the first floor level above the driveway extending down the southern boundary extending down the lot. The consequence was that the areas of the dwellings proposed were substantially greater than those proposed in the Cardno plan.
It is apparent that Mr Adam brought to bear his qualifications as an architect as well as a planner in investigating the development potential of the site. Mr Sharkey acknowledged that he approached the task in accordance with his own expertise, which is in planning, and did not endeavour to undertake any detailed design analysis of the units that might be constructed on the strata lots proposed. Given the premium riverside location of the lot, I am of the view that the approach taken by Mr Adam is to be preferred. I accept Mr Adam's opinion that the capacity to develop larger lots with significantly better residential amenity is likely to result in greater value of the lots upon which the residential development would occur, and thus to represent the highest and best use of the land.

Value of the undevelopable land

As already observed, I have included that 850 square metres of the taken land would have been incapable of development because it would have fallen within the buffer or setback area which would have been required by the Swan River Trust, regardless of the reservation.
Mr Packer and Mr Pember each expressed an opinion as to the value of undevelopable land by reference to certain comparable sales. By reason of the methodology used by Mr Dix, he did not separately consider the value of the undevelopable portion of the land on a piecemeal basis.
For this purpose, Mr Packer had regard to three transactions. All were purchases by the Commission of riverfront property. The first was Lot 1A (Lot 801) Thirlmere Road, Mt Lawley. The property comprised 8,449 square metres, and was sold to the Commission in January 2001 for $2,357,813, or $279 per square metre. The land lies a short distance to the north of the subject site. Approximately 2,500 square metres was zoned 'Parks and Recreation' and fell within the 1:100 year floodway and flood fringe. The remainder of the land was said by Mr Packer to have had some development potential but no access. Mr Packer acknowledged that the sale was old, and attributed a rate 'more in the order of $375 per square metre to be applicable as at the date of taking'.
The second sale was No 2 (Lot 804) Mitchell Street, Mt Lawley which comprised 1.1604 hectares and was purchased in May 2002 for $815,000 net of GST, indicating an overall rate of $70.23 per square metre. The land is located within the 1:100 year floodway along a similar stretch of the Swan River to the north of the subject site and is similarly impacted by the same gas pipeline easement. Mr Packer adjusted the sale price to take account of the age of the sale to suggest a rate in the order of $95 per square metre as at the date of taking.
I note that Mr Packer increased the rate per square metre for the Thirlmere Road property by approximately 34% to take account of increased value between January 2001 and April 2005. The increase in relation to the Mitchell Street property is approximately 35%, although it relates to a shorter period, namely from May 2002 till April 2005.
The third transaction relied upon by Mr Packer is the sale of Lot 235 Grandstand Road, Ascot in October 2007, some two and a half years after the date of taking. The Grandstand Road property comprises 8.4547 hectares and was purchased for $6,459,000 net of GST, indicating an overall rate of $76.40 per square metre. Mr Packer said that this much larger parcel is situated in an inferior section of the Swan River and predominantly comprised 1:100 year floodway land incapable of development.
From that sales evidence, Mr Packer concluded that a rate of $125 per square metre would be appropriate as at the date of taking the land which had no potential for development irrespective of its reservation or zoning.
How Mr Packer arrived at the rate of $125 per square metre, from sales evidence suggesting adjusted rates of $375, $95 and $76.40 (two and a half years after the sale) is not apparent from his report. In his oral evidence, Mr Packer explained that the figure for the Thirlmere Road property applied to land approximately 70% of which was developable, and thus commanded a higher price than land which was entirely undevelopable. Rather, he placed greater reliance upon the Mitchell Street transaction in May 2002, which he considered inferior because of its location compared to the subject site.
Mr Pember had regard to the same transactions in assessing his opinion as to the value of the undevelopable land. His assessment was that transactions where the Commission had negotiated settlements for parks and recreation land ranged anything between $30 a square metre to $110 a square metre. He then reviewed a number of sales of properties along the river from Maylands to South Guildford and Bassendean, and analysed that larger blocks demonstrated values of between $200 and $345 per square metre or thereabouts. Those larger blocks all had development potential. As a result, Mr Pember concluded that the value of the undevelopable portion of the applicant's land must necessarily be something less than $200 per square metre. Having regard to the purchases by the Commission of floodway and flood fringe land, he assessed the value of the undevelopable land at $110 to $120 per square metre.
Mr Dix was critical of the other valuers, having regard to transactions involving the Commission, on the basis that, while they were negotiated settlements, they were overlaid by the spectre of possible compulsory acquisition. Mr Pember's evidence was that he was involved in some of those transactions, and was aware that the vendors had their own independent valuation advice upon which they relied in the course of negotiations.
In Flotilla Nominees Pty Ltd and Western Australian Land Authority [2003] WASC 122 (Flotilla), Pullin J, relying upon Merivale Motel Investments v Brisbane Expo Authority (1987) 64 LGRA 108 concluded that sales to a resuming authority can, if scrutinised with care, be taken into account as a comparable sale if the comparable sales method is being applied (at [27]). In this case, on the basis of the evidence that the sales were achieved through negotiations where each party had the advice and assistance of its own valuer, it is reasonable to have regard to those sales for the purposes of assessing the value of the undevelopable portion of the lots. Having concluded that it is appropriate to separately value the undevelopable portion of the land, there is, in fact, no other evidence by which an assessment of the value of the undevelopable portion can be made. I accept the opinions of Mr Pember and Mr Packer that the land at Mitchell Street, Mt Lawley, and Grandstand Road, Ascot, is sufficiently comparable to inform the decision as to the value of the undevelopable portion of the subject site. Both sales involve land within the floodway which was incapable of development. The Grandstand Road, Ascot land was said by Mr Pember to be in an inferior section of the Swan River, thus explaining the lower value for that land than the value assessed by both Mr Pember and Mr Packer for the subject site.
In the circumstances, I accept that the undevelopable portion of the taken land should be assessed at a value of $125 per square metre, being the higher of the two figures identified by the two valuers concerned.
Mr Dix disagreed with the piecemeal approach to valuation of the undevelopable portion of the land, preferring rather to attribute a value achieved by valuing the whole of Lot 349 and then apportioning the value of the taken land based upon the proportion which its area bears to the area of the whole of Lot 349. In seeking to justify that approach, Mr Dix said (at T:217):
There is no question of a doubt in my mind that the foreshore land on the unaffected basis adds significant value, regardless of its elevation or development potential ‑ but adds significant value to any potential subdivision, and includes part of that land ‑ includes potential for development. It is conductivity with the river, the use of the foreshore, all of those issues that are spoken about in my report that add value …
There is no issue between the experts that the high watermark boundary, with the resultant private access to the river, adds value to the whole of Lot 349. The loss of that direct access results in a diminution in value of the developable portion of the land. Compensation for that loss does not, however, sound in the value of the undevelopable portion, but rather in the damage suffered by a claimant due to severance of the land from the adjoining land, or a reduction in the value of that adjoining land, which is compensable under s 241(7) of the LA Act.
It follows that I would assess the value of the undevelopable portion of the land taken, being 850 square metres, at $106,250.

Value of developable portion of the land taken

I have previously concluded that, of the 1,080 square metres of land taken, 330 square metres was capable of development. In order to assess the value of that portion of the taken land, it is necessary to assess the value of the developable portion of Lot 349 before the taking and then apportion that value on the basis of the area taken.
As previously observed, Mr Pember and Mr Packer considered that the value of Lot 349 prior to the taking could be assessed having regard to comparable sales of Engobo parcels of land in the general locality of the subject site. Mr Dix did not consider that there were any reasonably comparable sales of Engobo parcels, and accordingly assessed the value of Lot 349 utilising the hypothetical subdivision method.
In Maurici v Chief Commissioner of State Revenue [2003] HCA 8; (2003) 195 ALR 236 at 241, the High Court described the comparable sales method as the traditional, and usually unexceptional method of valuing land. The comparable sales method requires that there be comparable sales of sufficient volume to justify a deduction or inference as to values: See Western Australian Planning Commission v Arcus Shopfitters Pty Ltd [2003] WASCA 295 per McLure J at [51] (Arcus Shopfitters). In Arcus Shopfitters, McLure J noted the description of the comparable sales method given by Wells J in Brewarrana Pty Ltd v Commissioner of Highways (1973) 32 LGRA 170 when he said (at 179 - 180):
It is general valuation practice for sales characterized as comparable sales to be used as bases for the valuation of lands said to be similar. But allowances must always be made before such sales can be so used. No two parcels of land are identical in all respects: the sale price of any given piece of land is not necessarily the price at which it ought to have been sold, or the same thing as its true value. Before using any allegedly comparable sale, therefore, the valuer must consider whether, having regard to the circumstances … appertaining to the parcel of land in question, and to the transaction of sale, there are sufficient similarities to the circumstances appertaining to the subject land and to the notional sale presupposed by the test formulated in Spencer v The Commonwealth of Australia … to warrant a court's reasoning from the sale price paid under the allegedly comparable sale, with or without other evidence, to a value for the subject land. Adjustments must, of course, be made every time reasoning of that kind is undertaken. For example, in relation to the land itself and the circumstances appertaining to it, it may be necessary to consider such matters as topography, location, size, shape … land use (actual and potential), scope for, and difficulties of, development, …; and in relation to the transaction of sale, the valuer must weigh such things as the character, business and relationships of the parties, their motives, the terms and conditions in their contract of sale, and any other special considerations that induced or may have induced them to conclude the contract at the selling price agreed, as well as the dates when the contract of sale and the transfer were concluded or effected.
It is generally accepted that the best evidence market value is that of comparable sales evidence of other land with similar attributes: See Commonwealth v Arklay (1952) 87 CLR 159 at 170. Generally, a hypothetical subdivision analysis is utilised where comparable sales evidence is not available (see Flotilla). It may also be appropriate to utilise the hypothetical subdivision analysis as a method of checking the value obtained by way of analysis of comparable sales.
It is necessary, therefore, to review the sales relied upon by Mr Packer and Mr Pember in their assessment of the value of Lot 349.

No 28 and No 46 Joel Terrace

Mr Packer considered a number of properties in the Joel Terrace precinct. They included No 28 and No 46 Joel Terrace sold in February 2005 and November 2005 respectively. All three valuers agreed that because of their inferior location, and in particular their proximity to the Western Power switch yard which is located at the southern end of Joel Terrace, they were significantly inferior to the subject site.

No 58 (Lot 374) Joel Terrace

Number 58 (Lot 374) Joel Terrace, East Perth (Lot 374 Joel Terrace) is located south of the subject site, but on the eastern side of Joel Terrace overlooking the Swan River. It is an elevated site adjacent to a large park known as Banks Reserve. The land comprises 1,490 square metres and is zoned, like the subject site, Residential R60. It sold in October 2006 for an amount of $2,620,000, which represented a value of $1,750 per square metre. The land had development potential for six units. Mr Packer considered the land comparable to the subject site. Mr Packer said that there had been an unprecedented growth in value in the period between April 2005 and the sale of Lot 374 in October 2006. He adjusted the value achieved for Lot 374 back to $1,150 per square metre as at April 2005, a figure which he considered reasonably comparable to the value of Lot 349 at that time.

Mr Pember considered that Lot 374 Joel Terrace was reasonably comparable to the subject site. Applying market escalation figures derived from the Landgate Property Services Value Watch Report, he assessed the value of Lot 374 Joel Terrace as $1,138 per square metre as at April 2005. Whilst Mr Pember acknowledged that there were high power transmission lines going through the block immediately to the south of Lot 374 Joel Terrace, he considered that any residential development could be oriented away from the power lines and that the impact of the power lines would thus be minimised. Mr Pember considered the property to be a fair comparable to the subject site.
Mr Dix expressed concern about the reliability of discounting sale figures backwards, saying he would prefer to be in the position of adjusting forward on the basis of how a market anticipates change. That is not a concern which I would share. In my view, the capacity to assess the rate of market change after the event is no less reliable than assessing changes from sales occurring before the valuation date. I note that Mr Dix himself took account of sale prices adjusted backwards in his analysis of sales of subdivided lots at 6 ‑8 Fourth Avenue.
Mr Dix considered Lot 374 Joel Terrace a very tight development site with quite steep contours. He considered the transmission line to be an impediment on the sale. On the basis that the property appears to have been purchased to be developed with six survey strata lots, Mr Dix calculated a value of $279,440 per unit as the value attributed to each lot, based on Mr Packer's adjusted price as at April 2005.

No 128 - 130 Joel Terrace

Number 128 - 130 Joel Terrace sold in June 2003 for $1,300,000. The land is zoned Residential R60, and has an area of 1,595 square metres. The land initially comprised two battleaxe parcels which were subsequently re-subdivided as four surveyed strata lots, three with a river outlook. Mr Pember considered that sale to be useful in as much as it was used as a development site in the same street. He acknowledged that there was a timing difference between the sale and the date of valuation of Lot 349. The sale of No 128 - 130 Joel Terrace realised a figure of $815 per square metre and Mr Packer considered the timing difference was adequately covered by his adoption of a rate of $1,150 per square metre for the subject site as of April 2005.
Mr Packer also had regard to the subsequent sales of the four survey strata lots into which the property at No 128 - 130 Joel Terrace was subsequently subdivided. One of those lots, Lot 4, did not enjoy exposure to the river, being located behind the other lots. Mr Packer utilised the differential in the prices paid for the individual strata lots to conclude that properties enjoying a direct river outlook would enjoy a 25% premium over lots without that outlook.
Mr Pember considered that the sales of the strata lots gave a good indication of the difference between the value of blocks with exclusive river frontage compared to those without. He assessed the variation at 15% and utilised that evidence in assessing the injurious affection to the land after the taking.
Mr Dix analysed this sale, which comprised two vacant lots formerly known as Lot 27 and Lot 28, which was sold by auction in June 2003. Lot 27 comprised 696 square metres, and sold for $550,000, or $790 per square metre. Lot 28 had an area of 899 square metres and sold for $750,000 or $834 per square metre. The lots were located adjacent to the parks and recreation reserve on land remaining after resumption of the reserve. The purchasers of the lots subsequently amalgamated the two lots into Lot 100. Access to Joel Terrace was via a battleaxe leg. Mr Dix calculated the developable portion of Lot 100 at 1,307 square metres. He also observed that part of the land, which ultimately became Lot 4, contained a heritage listed tree which hindered development, and caused delay in development approval being obtained from the local government.
Mr Dix calculated, having regard to transactions concerning a property in Cantle Street, Highgate which sold in February 2003, again in May 2004, and then again in May 2005, that there would have been an increase of 57% between 2003 and 2005 in real estate values. On that basis, he concluded that as at May 2005, the value of the land at No 128 - 130 Joel Terrace would have been $1,280 per square metre, based on the price achieved in June 2003.
The four subdivided lots were sold off in February and March 2006. Lots 1, 2 and 3 abut the parks and recreation reserve and occupy elevated positions with views to the river. Mr Dix considered that the configuration of the lots restricted the quality of the potential developments on the lots.
The prices achieved for the lots were as follows:
•Lot 1 (351 square metres)   $600,000 ($1,709/square metre) 7 March 2006;
•Lot 2 (350 square metres)   $625,000 ($1,786/square metre) 9 March 2006;
•Lot 3 (351 square metres)   $600,000 ($1,709/square metre) 25 February 2006; and
•Lot 4 (313 square metres)   $480,000 ($1,534/square metre) 25 February 2006.
These sales pre-dated registration of the strata plan, which, Mr Dix suggested, reflected a strong market in 2006 and confirmed the rising market of 2005.
Mr Dix did not consider that the comparable sale price between Lot 4 and the other three lots provided a reliable basis for establishing a differential between blocks enjoying direct access to the river, and those not having that direct access. His reasoning was that Lot 4 had limitations on development caused by the significant tree which was protected under the local planning scheme, and was sold to an adjoining owner.
In Arcus Shopfitters, McLure J [55] referred to various authorities which suggested that a sale to an adjoining owner must be viewed with caution, and while it need not be excluded from consideration as a comparable sale, it needs to be carefully analysed. I am not satisfied that sufficient is known about the sale of the adjoining owner, and the impact on that sale or peculiar circumstance of the significant tree, to support conclusions as to the differential in prices based upon direct access to the river, at least without other evidence which might lead to the same conclusions.

No 6 - 8 Fourth Avenue, Maylands

The property at No 6 - 8 Fourth Avenue comprised 5,279 square metres. It sold in December 2003 for $3,600,000 (excluding GST). It is zoned residential R50. The land is on the southern side of Fourth Avenue and was a steeply sloping block. It commanded good views of the river. The land between the southern boundary of the lot and the river comprises a park known as Bardon Park. After the purchase, which was by a developer, Mirvac Fini, the land was developed as a small lot subdivision with extensive benching which provided extensive views of the river from each subdivided lot. Very considerable earth works and retaining walls were necessary for the development. The sale in December 2003 realised a rate per square metre of $682. The site adjoins the Maylands Yacht Club.
Mr Packer considered the site slightly inferior, but noted that the sale was reasonably dated. He noted that he had adopted a rate for the subject site significantly greater than $682 per square metre paid for No 6 ‑ 8 Fourth Avenue and taking into account the time difference, he considered the sale of No 6 ‑ 8 Fourth Avenue to support his ultimate conclusion.
Mr Pember also took account of that sale. He considered that the purchaser, being an experienced developer, would have taken account of the necessary site works. He assessed an adjusted rate per square metre for No 6 8 Fourth Avenue as of April 2005 at $800 - $820 per square metre. On the basis that he considered the subject site to be 'substantially incapable of full development opportunity' a lower rate per square metre would be applicable even though the subject site had exclusive water access and a superior address. Given that I have not accepted Mr Pember's assumption that the whole of the reserved land would have been incapable of development, Mr Pember's conclusion as to the comparability of the subject site and No 6 - 8 Fourth Avenue cannot be relied upon.
Mr Dix also analysed this sale, and he considered the site inferior to the subject site for a number of reasons. His investigations revealed that the site was encumbered by a main sewer running diagonally across the lot. Subsequent agreement was reached by the purchaser with the local government to transfer the sewer main onto the land comprising Bardon Park. The uncertainty, as at the date of purchase, as to whether that arrangement could be made, would have increased the risk associated with the development of the land, and thus depressed the price.
Mr Dix also noted that development costs would have been very significant because of the retaining required. He also considered the proximity of the land to the Maylands Yacht Club would have a detrimental impact on value because of the public use of the yacht club and because of after hours functions held there.

No 88 - 90 Guildford Road, Mt Lawley

No 88 - 90 Guildford Road, Mt Lawley comprises 5,593 square metres of land zoned residential R50. The land fronts Guildford Road which carries heavy traffic. The site falls away from Guildford Road, but is elevated above the level of the river and enjoys views of the river, albeit from a significantly greater distance than the subject site.
In March 2005, a contract for the sale of No 88 - 90 Guildford Road was entered for a consideration of $4,050,000 (including GST) or $3,681,018 (excluding GST). That provided a value of $658 per square metre net of GST. The land is zoned residential R60.
The contract of sale was to become unconditional in May 2005, with settlement due in August 2005. The transaction has not been completed, apparently because of difficulty in removing a caveat over the land which has resulted in proceedings in the Supreme Court.
Mr Packer considered No 88 - 90 Guildford Road, Mt Lawley as inferior to the subject site because of its location on Guildford Road somewhat removed from the river. He considered it relevant to the basket of evidence available. Mr Pember agreed with Mr Packer that the contract price was relevant for comparison purposes. He acknowledged that the land was not riverfront, but considered that adjustments could be made to take account of the superior location of the subject site.
Mr Dix had no regard to the transaction in relation to No 88 ‑ 90 Guildford Road. He took the view that, the sale not having been completed, there is no sale for comparison purposes. Mr Dix suggested that in neither of Mr Packer's nor Mr Pember's reports had either valuer made any assessment of the development potential for the land. That assertion is not, however, accurate. Mr Pember, in his initial report, noted that the zoning permitted up to 28 units, that the property was contracted to be sold with an approval in place for 23 units. Mr Pember calculated the value of the land, nett of GST, at $160,079 per unit. I note that there is a slight discrepancy in the land area of No 88 ‑ 90 Guildford Road in the reports of Mr Packer and Mr Pember. The difference is minor and of no significance.
Mr Dix said that, if, contrary to his view, regard were had to the contract for sale, he would regard No 88 - 90 Guildford Road as inferior to the subject site because of its location on Guildford Road and consequential access difficulties, but he acknowledged that the site did slope away from the road and had distant views of the river.

Valuer's approach to englobo sales

Relying principally on the sales identified above, Mr Packer assessed the value of what he took to be the developable portion of the land at $1,150 per square metre before the resumption. On the basis that the developable area was 2,189 square metres, being the area that became Lot 801, he assessed the value of that land at $2,517,350.
If Mr Packer's rate per square metre is applied to the area that I have found likely to be regarded by a purchaser as developable (2,519 square metres), a value of $2,896,850 results. The value of the land taken would, on that basis, be the sum of $106,250 (850 square metres x $125) and $379,500 (330 square metres x $1,150), being $485,750.
Mr Pember's conclusion, based upon the analysis of the above sales, and particularly 88 ‑ 90 Guildford Road and Lot 374 Joel Terrace, was that the developable portion of 2,189 square metres was valued at $1,100 per square metre. If that rate is applied to 2,519 square metres, the value becomes $2,770,900, and the value of the taken land is the sum of $106,250 and $363,000, being $469,250.
As previously mentioned, Mr Dix did not consider the sales relied upon by the other valuers to be capable of sufficient analysis to draw reliable comparisons. Accordingly, he utilised the hypothetical subdivision method to determine the value of the land.
Mr Pember undertook a hypothetical subdivision analysis to check the values that he had assessed. It is necessary to turn to those analyses.

Mr Dix's hypothetical analysis

Mr Dix based his hypothetical analysis on the plan prepared by Mr Adam in the unaffected scenario (Drawing KAA 1 Revision E, Site Plan 3). As already observed, that plan envisaged a total of three group dwellings, three of which (Lots 10, 11 and 12) are oriented to the east and abut the common open space comprising the foreshore area. I have already concluded that it would not be possible to develop three lots on that area because of the environmental constraints of the site. I have also concluded that it would be possible to have two lots with the required setbacks instead of the three lots provided for in Mr Adam's plan. Adjustments to Mr Dix's calculations will be necessary to take account of that conclusion.
Lots 1 and 2 both have a frontage to Joel Terrace. Because the land slopes down to the river from Joel Terrace, these lots would enjoy views across the river over the roof tops of developments on the other lots.
Lots 3, 5 and 7 adjoin the northern boundary and are L-shaped. The lots are retained on their eastern boundaries and, according to Mr Dix, would have views available to the north‑east.
Lots 4, 6 and 8 are smaller lots of approximately 160 square metres. Each lot has a common wall to the adjoining Lots 3, 5 and 7 respectively. Each lot extends over the adjoining access way which runs down the southern side of development, providing approximately 27.5 square metres of floor space above the access way at a first floor level. Some views would be available from the upper level.
Lot 9 is a larger lot which also includes airspace over the roadway. It would have views to the river because of the height differential over the proposed Lots 10, 11 and 12.
Mr Dix's summary of the gross realisations of the proposed lots is set out in the following table:

Lot No

Size in square metres

Assessed Value

Rate/square metre

1

165

$450,000

$2,727

2

165

$450,000

$2,727

3

198

$480,000

$2,424

4

160

$380,000

$2,375

5

195

$500,000

$2,564

6

160

$400,000

$2,500

7

195

$520,000

$2,667

8

160

$420,000

$2,625

9

225

$700,000

$3,111

10

244

$1,150,000

$4,713

11

237

$1,100,000

$4,641

12

228

$950,000

$4,167

$7,500,000

To support the conclusions as to the likely gross realisation of the proposed lots, Mr Dix had regard to certain sales of subdivided lots in the locality. Among those were the subdivided lots on 128 ‑ 130 Joel Terrace, which are discussed above. He also considered the sales referred to below.

Lot 2 (No 1) Bream Cove

Bream Cove is a small subdivision on the western side of Joel Terrace. Lot 2 Bream Cove is a vacant R20 site of 345 square metres.
The property sold as vacant land in March 2001 for $270,000 ($783 per square metre), August 2002 for $290,000 ($841 per square metre) and again in September 2003 for $350,000 ($1,014 per square metre). It subsequently sold with improvements in March 2005, and again in August 2005.

Lot 3 (No 2) Bream Cove

This property is also on the corner of Bream Cove and Joel Terrace, opposite Lot 2 Bream Cove. The vacant R20 site of 352 square metres sold in March 2002 for $230,000 ($653 per square metre), January 2003 for $320,000 ($909 per square metre) and again in February 2004 for $390,000 ($1,108 per square metre).
Based on the increase in value derived from the sale in Cantle Street, Highgate, which is referred to above, Mr Dix assessed the value of Lot 3 Bream Cove as at May 2005 at $435,000, or $1,236 per square metre.

Lots 81, 84 and 201 Kirkham Hill Terrace and Lot 82 Elizabeth Street, Maylands

Lots 81, 82 and 84 Kirkham Hill Terrace were subdivided from a parent lot in 2003.
Lot 81, on the corner of Kirkham Hill Terrace, comprised vacant land of 309 square metres and sold in May 2003 for $174,000 ($563 per square metre) and resold in April 2006 for $587,000 ($1,900 per square metre).
Lot 82 Elizabeth Street was sold as a vacant lot of 304 square metres in May 2003 for $174,000 ($572 per square metre) and resold in January 2006 for $580,000 ($1,908 per square metre).
Lot 84 Kirkham Hill Terrace, a vacant 333 square metre lot sold in January 2003 for $172,000 ($517 per square metre) and resold in July 2003 for $179,000 ($538 per square metre), and again in November 2003 for $220,000 ($661 per square metre), and, finally, in November 2004 for $257,000 ($772 per square metre). Mr Dix calculated the increase between January 2003 and November 2004 at 49.42%.
Lot 201 Kirkham Hill Terrace was a vacant lot of 344 square metres. It sold in June 2003 for $235,000 ($683 per square metre) and resold in November 2004 for $265,502 ($772 per square metre). That was an increase in the period June 2003 to November 2004 of 12.98%, but Mr Dix dismissed that rate of increase as not supported by other evidence, and attributed the relatively low increase in value to an assumption that the purchaser in June 2003 did not understand that the views of the river enjoyed across adjoining vacant land would be obscured by development of those lots.
Mr Dix compared the value achieved for Lot 84 Kirkham Hill Terrace in January 2003 with the sale of Lot 3 (No 2) Bream Cove to conclude that there was a differential of 68.96% in the value of land in Maylands (the Kirkham Hill Terrace property) and Mt Lawley (Lot 3 Bream Cove). It is apparent that Mr Dix applied that differential as a premium, which he described as the suburban locality premium, in assessing the realisable value of subdivided lots on the subject land.

Subdivided lots - No 6 ‑ 8 Fourth Avenue, Maylands

The sale of 6 ‑ 8 Fourth Avenue as an englobo lot in December 2003 is discussed above. That land was subsequently subdivided and sales of the subdivided lots occurred in 2007. Mr Dix discounted the rates achieved in 2007 to the valuation date of the discount rate of 8%, which he calculated disclosed a rate of $2,195 per square metre in mid‑2005. Mr Dix's report shows that there were 14 sales of the subdivided lots at 6 ‑ 8 Fourth Avenue between March 2007 and February 2008. All but one of those sales occurred between March and June 2007. The prices achieved on those sales ranged from $2,241 per square metre for a 377 square metre lot (Lot 510) in June 2007 to $2,774 per square metre for a 337 square metre block (Lot 507) in March 2007. The final sale was a second sale of Lot 504 in February 2008 which achieved a rate per square metre of $3,067. Lot 504 had previously been sold in April 2007 and had achieved $2,400 per square metre.
The increase in the price achieved for Lot 504 is an increase of 27.79%. In discounting the values achieved in 2007 to assess a reasonable value in mid‑2005, Mr Dix justified his choice of a discount rate on the basis 'that the market peaked in the third quarter of 2006 and sales stabilised before starting to weaken in 2007'. That observation is not consistent with the experience of the two sales of Lot 504.

Part Lot 36 (No 104) Joel Terrace

Mr Dix reviewed, but did not consider relevant, a sale of an improved duplex property which comprises Lot 1 on Strata Plan ST15537. Mr Dix did not consider the sale relevant because of the difficulty in assessing the value of vacant land from an improved sale. I accept the difficulty in that respect. It is interesting to note, however, in the context of consideration of the value of land on the eastern side of Joel Terrace, as this land was, that the sale price of $705,000 represents an improved land value of approximately $2,220 per square metre for a property with a 7‑year‑old dwelling of rammed earth, timber frame and tiled roof. That sale took place seven months before the date of the taking, and raises immediate questions as to the accuracy of the much higher value attributed to the unimproved lots on the subject site in Mr Dix's hypothetical subdivision.

Premium for land abutting foreshore reserves

Mr Dix assessed what he described as a premium for sales abutting a foreshore reserve. He had regard to the sales of subdivided lots at 6 ‑ 8 Fourth Avenue, and to a number of sales of riverside properties in Mosman Waters, in the Town of Mosman Park, a beach resort in Dunsborough, and Minim Cove in the Town of Mosman Park and sales in 1994 of a subdivision in North Fremantle. He concluded that the evidence disclosed a percentage premium within the range of 34.5% to 108.5%.
A figure of 34.5% was taken from the upper level of the range identified by Mr Dix for properties in different parts of the subdivision at 6 ‑ 8 Fourth Avenue. He assessed that range between 11.92% to 34.48%.
The figure of 108.5% is based upon a sale of two lots in a 52‑lot subdivision in Foundry Court, North Fremantle. Lot 72, which achieved a rate of $873 per square metre in November 1994 is situated on the top of the escarpment with expansive views across the river to East Fremantle. The other lot compared, Lot 53, is located directly behind Lot 72, separated by a subdivisional road. Mr Dix assessed that the premium for Lot 72 is for the views of the river.

Mr Dix's assessment of subdivided lots

In order to assess the likely value of the subdivided lots on the subject site, Mr Dix's starting point was to attribute a value to Lots 1 and 2 which front Joel Terrace. He accepted that 'at first glance' the values he attributed were high for Joel Terrace. The reason for that was said to be the availability of views of the river achievable by reason of the design of the proposed development. He arrived at the figure of $450,000 for each of those lots, apparently on the basis of a premium over and above Bream Court.
I have considerable difficulty in accepting the figure assessed by Mr Dix for the values of Lots 1 and 2, when considered against the values achieved for Lots 2 and 3 Bream Cove. Mr Dix accepts that Lot 2 Bream Cove had a pleasant outlook south‑east over Joel Terrace to Banks Reserve, with glimpses of the Swan River from a first floor level. Lot 3 was said to have an inferior view to Lot 2. As Mr Pember observed, the lots in Bream Court are green title lots, which are more desirable than strata lots. They are approximately twice the size of Lots 1 and 2 of Mr Adam's proposed subdivision. As I have already observed, Mr Dix's values per square metre for Lots 1 and 2 are considerably higher than the rate achieved for an improved property at 104 Joel Terrace on the same side of the road. I accept Mr Pember's view that the values attributed by Mr Dix to the proposed Lots 1 and 2 are too high.
Having assessed the value for Lots 1 and 2, Mr Dix then had regard to Lot 9. He attributed a value of $700,000 to that lot, which was 225 square metres. That value was based on an adjusted value from the sale of Lot 2 in the subdivision of 128 ‑ 130 Joel Terrace. It will be recalled that that lot, being 350 square metres, sold for $625,000, or $1,786 per square metre, on 6 March 2006, some nine months after the taking in what Mr Dix described as a strong rising market during that period. Mr Dix concludes that the proposed Lot 9 would have a value of $700,000, or $3,111 per square metre for a block of 225 square metres. It can be accepted that the subject site, in the unaffected scenario, has the advantage that the foreshore land would form part of the land covered by the strata scheme, and could be utilised by the strata owners as common property. In that sense, the land has an advantage over the subdivided land at 128 ‑ 130 Joel Terrace. On the other hand, Lot 2 at 128 ‑ 130 Joel Terrace directly abuts the parks and recreation reserve, and overlooks it to the river. By comparison, the proposed Lot 9 would have (on my findings) two lots between it and the foreshore land. While some views would undoubtedly be available from the proposed Lot 9, those views would to some degree be limited by the development on the lots immediately to its east. Lot 9 is approximately two‑thirds the size of Lot 2, 128 ‑ 130 Joel Terrace. The value attributed by Mr Dix to Lot 9 is $75,000 more than the price paid for the much larger Lot 2 nine months later in a rising market.
Having adopted a value of $700,000 for Lot 9, Mr Dix then applied a premium of 65% to the base rate of $700,000 to ascertain the value of the proposed Lots 10, 11 and 12. That premium is because those lots abut the foreshore area. Those values, which represent a rate per square metre of between $4,167 and $4,713 can be considered against the sale of subdivided lots at 6 ‑ 8 Fourth Avenue. Those latter lots, all of which were substantially larger than the proposed lots on the subject site, and all of which enjoyed commanding views of the river, with some adjoining recreation reserve, achieved prices of $705,000 to $975,000 some two years after the date of the taking. In the case of the lot which achieved a sale price of $975,000 (or $2,686 per square metre) the lot was 363 square metres in area compared to the largest of the lots in the proposed subdivision, being Lot 10, which is 244 square metres. Mr Dix has adopted a figure almost double the figures generally achieved on a per square metre basis in the sales of 6 ‑ 8 Fourth Avenue two years after the date of taking in a market which had risen quite significantly over that period. His figure is achieved by applying a foreshore premium approximately double the highest premium achieved for foreshore blocks at 6 ‑ 8 Fourth Avenue, a short distance away. While the extent of views from the higher blocks on the subject site may be more restricted than from higher blocks at 6 ‑ 8 Fourth Avenue, I do not accept that a rate derived from sales in Mosman Park, North Fremantle and Dunsborough should be accepted, because they occur in very different localities. The range of premiums identified by Mr Dix suggests that a range of factors specific to particular sites may have a significant effect on the different prices achieved in particular locations.
In the circumstances, I do not accept the values attributed by Mr Dix to the potential gross realisation of the subdivided property.
That conclusion is reinforced by the observations made by Mr Pember in relation to sales of strata lots at 146 Joel Terrace. That strata plan comprises 21 two storey grouped houses developed down the property to the parks and recreation reserve, with four lots situated across the site at that boundary. The lots enjoying exclusive and uninterrupted views to the river over the parks and recreation reserve were Lots 18, 19, 20 and 21. Mr Pember said that each of those lots has a pleasant courtyard to the front overlooking the river.
Lot 19, comprising a 172 square metre unit over a site of 273 metres was purchased for $660,000 in November 2005, reflecting an improved value rate of $2,374 per square metre over the site area.
The adjoining Lot 20 has a development and site area equivalent to Lot 19. It was purchased for $605,000 in April 2005, reflecting $2,216 per square metre as an improved value over the site area.
Lot 21, being an end unit with additional yard, was purchased for $780,000 in April 2006. It is also a unit of 172 square metres occupying a site area of 302 square metres. The sale reflected $2,502 per square metre improved value over the site area.
Those sales show improved values per square metre well below the unimproved values attributed to the proposed subdivision by Mr Dix. In relation to the lots immediately adjoining the parks and recreation reserve with views of the river, Mr Dix's unimproved values are around double the improved values of the strata units at 146 Joel Terrace.

Mr Pember's gross realisations

Mr Pember undertook a hypothetical analysis as an addendum to his valuation. It was, however, based upon the Cardno plan, and not Mr Adam's plan which had been assessed by Mr Dix. That plan consisted of one lot of 170 square metres fronting Joel Terrace, which Mr Pember assessed at $345,000 ($2,025 per square metre). There were then 10 lots fronting the access road, each of 110 square metres. Mr Pember assessed those lots at a value of $220,000 or $2,000 per square metre. There was then a final lot fronting the foreshore, being 784 square metres, which Mr Pember assessed at $2,245 per square metre, giving a value of $1,760,000 for that large lot. Mr Pember assessed the gross realisable value of the Cardno subdivision at a total of $4,305,000. Those values were arrived at by Mr Pember having regard to the sales of the subdivided lots at 128 ‑ 130 Joel Terrace, the sales of the subdivided lots in the group housing development at 146 Joel Terrace, referred to above. In addition to consideration of those transactions, Mr Pember had regard, in assessing the value of the large lot with river frontage, to sales of larger lots in Joel Terrace in 2003.
Putting aside for the moment a premium for the privacy and security of foreshore ownership, the values assessed by Mr Pember reflect, in my view, a more realistic expectation of the prices that would have been achieved by subdivision into strata lots of the subject site unaffected by the taking.
As already observed, Mr Pember's assessment of a hypothetical subdivision was based upon a plan which I have concluded does not represent the optimal development of the land, since it does not involve development of the whole of the developable portion of the land, and does not represent the optimal configuration of a subdivision, which I have determined is better represented by Mr Adam's plan modified to take account of the reduced developable area from that assumed by Mr Adam.
For the sake of endeavouring to check the values suggested by Mr Packer and Mr Pember by way of comparable sales of englobo land, I have considered the gross realisable value of the lots which I consider represent the optimal subdivision of the land, applying the rates per square metre assessed by Mr Pember. The resultant gross realisation is as set out in the following table.

Lot No

Size in square metres

Assessed Value

Rate/square metre

1

165

$334,125

$2,025

2

165

$334,125

$2,025

3

198

$396,000

$2,000

4

160

$320,000

$2,000

5

195

$390,000

$2,000

6

160

$320,000

$2,000

7

195

$390,000

$2,000

8

160

$320,000

$2,000

9

225

$450,000

$2,000

10

215

$526,750

$2,450

11

215

$526,750

$2,450

$4,307,750

The resultant gross realisation, a figure of just in excess of $4.3 million, is very close to the figure assessed by Mr Pember in relation to the Cardno plan. The reason that the figures are so similar is that Mr Pember, whilst treating the flood fringe part of the taken land as undevelopable, included it in the eastern lot as curtilage to any residence that would be developed on that land. It was on that basis that the lot he assessed had an area of 784 square metres, of which some 330 square metres extended into the floor fringe in the unaffected scenario.
There was a large measure of agreement between Mr Pember and Mr Dix as to the appropriate costs to be applied in the hypothetical analysis. There was an issue between them in relation to GST, but for present purposes, it is unnecessary to express any concluded view on that issue. I am content to adopt Mr Dix's assumption that if the land were developed by the owner who had previously lived on the land as his principal residence, liability for GST would not be factored into the assessment of the value of the land to him.
Mr Dix and Mr Pember substantially agreed that selling fees would amount to 5%, and that profit and risk should be calculated at the rate of $12%. They both applied a rate of interest of 8%, although Mr Dix treated interest separately on development costs and the cost of the land, whereas Mr Pember apparently treated interest against the whole of the costs. For the purposes of the present exercise, I am content to accept Mr Pember's much lower interest figure. Mr Pember attributed far lower development costs than did Mr Dix. Mr Pember accepted that no detailed assessment of development costs has been undertaken in relation to the Cardno plan which he was assessing. On the other hand, Mr Dix had the benefit of detailed costings in relation to the Adam's plan which resulted in a development cost per lot of $70,033. Those costs were fully assessed by engineers, they were the subject of unchallenged evidence, and I would adopt them for the sake of the present analysis.
Mr Dix and Mr Pember differed in relation to the likely rates and taxes payable, with Mr Dix assuming a much higher rate. They both agreed that the actual burden of rates and taxes would be heavily dependent on timing. Again, for the purposes of the present analysis, I am content to assume Mr Pember's lower figure is correct.
Mr Pember suggested that any development approval would require a cash contribution in lieu of the dedication of public open space on the subdivision. That assumption was contrary to the planning evidence, and accordingly I would not bring to account any requirement to pay cash in lieu of public open space as a cost of development.
The cost of stamp duty on the transaction was not in issue.
On the basis of those observations, and rounding the figures to acknowledge the inevitable lack of precision in calculations of this nature, the hypothetical analysis which is appropriate here is as follows:

HYPOTHETICAL SUBDIVISON ANALYSIS

Gross Realisation	$4,300,000
Selling Fees (5%)	215,000
Profit Risk	428,000
Interest	93,000
Development Costs ($70,000/lot)	770,000
Rates and Taxes	9,000
Stamp Duty	177,000
$2,590,000

The figure achieved in relation to hypothetical subdivision is relatively close to the values assessed by each of Mr Packer and Mr Pember, and somewhat less than the values achieved if their value per square metre is applied to the whole of the area which I have found to be developable.

Conclusions as to value

The analysis of the evidence set out above leads me to the conclusion that Mr Packer's value of the land, unaffected by the taking, should be accepted, subject to the addition of a premium that reflects the exclusive river frontage of the unaffected site. I accept that the reliance by both Mr Packer and Mr Pember on the sales at Lot 374 Joel Terrace and Lot 128 - 130 Joel Terrace was reasonable and appropriate, save that neither of those properties had the benefit and advantages of direct river frontage and a high watermark boundary. The conclusions which Mr Pember and Mr Packer reached seemed to me to be consistent with the broad picture of values obtained from the various sales of englobo parcels considered by all of the valuers, including Mr Dix, none of which enjoyed a high watermark boundary and ownership of the flood plain area enabling private use of that area. The values adopted by Mr Packer and Mr Pember are generally supported by the hypothetical subdivision analysis set out above, although that analysis is also based on comparisons with sales of subdivided lots which did not enjoy the advantage of ownership by the strata company of the foreshore land.
Putting aside the advantage of the high watermark boundary, I prefer the figure of $1,150 per square metre as a basis for calculation of value, over the figure of $1,100 per square metre suggested by Mr Pember. Mr Packer adopted that figure by applying something of a premium for the subject site over his adjusted value of the sales at Lot 128 ‑ 130 Joel Terrace. I agree that the subject site, in its unaffected state, was superior to Lot 128 ‑ 130 Joel Terrace because of more easily developable contours, its accessibility from Joel Terrace, and the absence of issues concerning the significant protected tree. Mr Pember's figure does not, in my view, adequately account for those benefits.
All valuers agreed that the land in its unaffected state enjoyed an advantage of security and privacy by reason of the ownership of the foreshore land to the high watermark. They agreed that the severing of that land, and the result of public use of that land, resulted in a loss of those benefits. They all agreed that that loss of benefit sounded in a reduction in value of the remaining land. Conversely, the unaffected land must attract a premium in value compared to land that does not enjoy that attribute.
There was broad agreement between the valuers as to the extent of the reduction in value from loss of foreshore ownership. Mr Dix estimated a reduction of approximately 15% as a result of a loss of privacy, exclusivity and security. His basis for the conclusion of that percentage was not fully explained.
Mr Pember assessed the loss of privacy and exclusive access to the river as having an impact of up to 15% - 20% on the value of the land. He based that conclusion on the differential between the sales of Lot 1, Lot 2 and Lot 3 at Lot 128 - 130 Joel Terrace compared to Lot 4. I have already concluded that the sale of Lot 4 being to an adjoining owner, I would be reluctant to place much reliance on the evidence of that sale.
Mr Packer also had regard to the differential between Lot 4 of the subdivision at Lot 128 - 130 Joel Terrace when compared to the three other lots in that subdivision with unimpeded river views. However, he also observed a similar differential in unit/townhouse developments such as Lot 146 and Lot 166 Joel Terrace in respect of river facing and rear units from 15% - 25%. He adopted a factor of 20% as the likely reduction in value of the remaining land after severance of the foreshore land.
In the absence of any direct comparable evidence of sale of lots with exclusive river foreshore in the immediate locality, there is necessarily an element of speculation as to the extent of the premium to be attached to direct foreshore access. However, all of the planners and valuers considered direct foreshore access to be a valuable attribute of the subject site. To the extent that the valuers were able to assess the extent of that reduction in value, they suggested figures of 15% - 25%. In my view, based on the broad agreement of the valuers, it is appropriate to accept the figure of 20% as the likely reduction in the value of the land by reason of the loss of direct foreshore access. It follows that the unaffected value will be 125% of the affected value.
As I have previously observed, Mr Packer's adopted rate of $1,150 per square metre for the developable portion of the taken land produces a value for that portion of $379,500. Applying a factor of 1.25 to take account of the foreshore premium, it becomes $474,375. To that must be added the value of the undevelopable portion ($106,250), which gives a value of $580,625 for the land taken. That is the value I find for the purpose of s 241(2) of the LA Act.

Section 241(7) - Injurious affection or severance

I have found that Mr Packer's value of $1,150 per square metre represents the value of the developable portion of the land absent the advantage of a high watermark boundary. In its unaffected state, the land would have a value of 125% of that figure. It has lost that premium as a result of the taking.

The area of Lot 801, being the land remaining after the taking, was 2,189 square metres. The value of that area of land, but for the foreshore premium, would, therefore, be $2,517,350. Applying a factor of 1.25 gives a value in the unaffected state of $3,146,687. The diminution in value of the remaining land by reason of the severance of the land taken is therefore $629,337. That is the figure that I find represents the reduction in the value of the remaining land by reason of severance.

Solatium

Pursuant to s 241(8) and s 241(9) an allowance of up to 10% of the amount of compensation otherwise awarded can be added to the award to compensate for the taking without agreement, or, what is commonly referred to as solatium. An amount in excess of 10% can be awarded if the Tribunal is satisfied that exceptional circumstances justify a higher amount. No exceptional circumstances exist in this case. In my view, there is no reason to depart from the usual practice of awarding solatium in the amount of 10% of the total award of compensation.

Interest

Pursuant to s 241(11), interest is payable on the amount of compensation at the rate payable in respect of judgment debts as determined under s 142 of the Supreme Court Act 1935 (WA). That rate of interest is 6%. By reason of s 241(12), interest is payable only on the outstanding amount from time to time, where, as in this case, an advance payment of compensation has been made under s 248. In this case, the applicant accepted an advance payment of $946,000 together with interest on that amount at the rate of 6% per annum from 5 October 2005 until the date of payment, 27 June 2006.

The award of compensation

On the foregoing basis, the compensation to which the applicant is entitled is as follows:

Section 241(2)

Value of land taken

$580,625

Section 241(7)

Severance

$629,337

Section 241(8)

Solatium at 10%

$120,996

Total

$1,330,958

Under the LA Act, interest is payable on the award of $1,330,958 at the rate of 6% per annum from 5 October 2005 to 7 July 2006 (the date of the advance payment). Interest is then payable at the same rate from 8 July 2006 on the balance of $348,958 until settlement. In this case, the respondent has paid part of the interest due with the advance payment. Credit is therefore to be given for that sum.
There is liberty to either party to apply in relation to the question of costs within 21 days of the date of these reasons.

Orders

1.The respondent is to pay the applicant compensation in the sum of $1,330,958 (less any advance payment already made) together with interest on the sum of $384,958 from 5 October 2005 to the date of payment at the rate of 6% per annum.
2.Either party have liberty to apply in relation to the question of costs within 21 days of the date of these orders.

I certify that this and the preceding [189] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________
JUDGE J CHANEY, DEPUTY PRESIDENT

Lot No	Size in square metres	Assessed Value	Rate/square metre
1	165	$450,000	$2,727
2	165	$450,000	$2,727
3	198	$480,000	$2,424
4	160	$380,000	$2,375
5	195	$500,000	$2,564
6	160	$400,000	$2,500
7	195	$520,000	$2,667
8	160	$420,000	$2,625
9	225	$700,000	$3,111
10	244	$1,150,000	$4,713
11	237	$1,100,000	$4,641
12	228	$950,000	$4,167
$7,500,000

Section 241(2)	Value of land taken	$580,625
Section 241(7)	Severance	$629,337
Section 241(8)	Solatium at 10%	$120,996
Total	$1,330,958