[2001] QLC 53 LAND COURT

BRISBANE

8 JUNE 2001

Re: A97-29 Determination of Compensation - Resumption by The State of Queensland Starcke Pastoral Holdings Acquisition Act 1994

George Quaid Holdings Pty Ltd Claimant v.

The State of Queensland Respondent

(Hearing at Cairns)

J U D G M E N T

1. The property aggregation known as "Starcke" covered an area of 190,464 ha of which 24,464 ha had been converted to freehold tenure in 1989. The balance 166,000 ha comprising Pastoral Development Holding 14/2498 (the "PDH") was granted under the provisions of the Land Act 1962 on 1 October 1971. Following extensions of the term of the lease in 1986 and 1987 the PDH was due to expire on 30 September 2031. The claimant acquired the aggregation in 1972. An additional area of 9,583 ha, in the form of Occupation Licences (the "OLs") issued under the Land Act 1962. The combined holding of leasehold, freehold and OL lands, was until March 1994 utilised for cattle-grazing purposes. 2. The "Starcke" aggregation, including the OLs, is to be found on the east coast of the Cape York Peninsula, northerly from Cooktown and lying to the south of Cape Melville. The relevant local government is the Cook Shire Council ("CSC"). The OLs lie mainly to the south of the main aggregation. The freehold land has an elongated shape, which broadens to the north. It was carved out of the south-east sector of the original PDH, leaving leasehold lands of irregular shape to its west and severed areas to the east with the main body of the reduced PDH area in the north-west being of more even and expansive shape. 3. The Starcke Pastoral Holdings Acquisition Act 1994 (the Starcke Act) was proclaimed to commence on 11 March 1994. That statute provides (s.4) for so much of the 2 "Starcke" lands as would be prescribed by regulation to become "unallocated State land" within the meaning of the Land Act 1994, though in the original Starcke Act this was referred to as Crown land within the meaning of the Land Act 1962, a statute which was largely replaced by the Land Act 1994. The Starcke Act also provides for the termination of the OLs. A regulation under the Act was also published on 11 March 1994, the effect of which was to extinguish all private interests in the "Starcke" lands from that date. In effect this constituted a compulsory acquisition of the claimant's property described above: or a "resumption" in the language of this area of law. I will generally refer to 11 March 1994 as the "relevant date". 4. Section 5 of the Starcke Act provides for compensation for any dispossessed owner:- "5.(1) The State must pay to each person who held an interest in the acquired land immediately before the commencement of the regulation the reasonable compensation agreed between the state and the person.

(2) If the State and the person cannot agree on compensation, any compensation payable to the person is to be decided under -

(a) in the case of freehold land - the Acquisition of Land Act 1967; or (b) in the case of other land - the Land Act 1994."

5. The reference in this provision to the Land Act 1994 had in the original Starcke Act been expressed as a reference to the Land Act 1962. I can discern no substantive difference between these two statutes with respect of the relevant subject matter and will make reference henceforth in these reasons only to the Land Act 1994 on the matter of compensation. Section 221(1) of the Land Act 1994 refers to Part IV of the Acquisition of Land Act 1967 (the Acquisition of Land Act) as providing the statutory basis for the assessment of compensation for a "Land Act" lease resumed under Division 1 Part 3 of the Land Act 1994. Part IV of the Acquisition of Land Act includes s.20, which is relevantly expressed thus: "20. Assessment of compensation. (1) In assessing the compensation to be paid, regard shall in every case be had not only to the value of land taken but also to the damage, if any, caused by either or both of the following, namely -

(a) the severing of the land taken from other land of the claimant; (b) the exercise of any statutory powers by the constructing authority otherwise injuriously affecting such other land.

3 (2) Compensation shall be assessed according to the value of the estate or interest of the claimant in the land taken on the date when it was taken."

6. This provision also applies to compensation flowing from the resumption of freehold land (s.5(2)(a) Starcke Act). Compensation for the loss of both the freehold and leasehold "Starcke" lands is, therefore, to be determined in accordance with the provisions of s.20 the Acquisition of Land Act. I am of the view that the words "decided under" in s.5(2) of the Starcke Act are sufficiently broad to enliven the jurisdiction of this Court under s.26 of the Acquisition of Land Act which should be read together with other provisions of that Act relevant to the exercise of that jurisdiction. 7. The OLs utilised in conjunction with the "Starcke" aggregation were identified in the Starcke Act (s.3) as Nos. 14/471, 14/485, 14/487 and 14/573 Cooktown. The evidence is that the last-mentioned OL had been included in the PDH by 11 March 1994. It follows that the loss of that area of land is a matter that, for the purposes of assessing compensation, falls for determination as an integral part of the assessment of compensation for the loss of the PDH. The parties informed me that they had reached agreement concerning compensation with respect to the remaining OLs. Accordingly, compensation for those licences is not a matter which I need to consider further. Witnesses The following witnesses were called by the claimant: 8. George Quaid is a director and secretary of the claimant company and Southedge Daintree Pastoral Co Ltd, a company concerned with a development and subdivision project known as the Daintree Rainforest Freehold (the "Daintree"). Mr Quaid is also a registered valuer and provided his opinion as to the value of the resumed lands. He also gave evidence concerning the "Daintree" project and the "Starcke" aggregation. I will often refer to Mr Quaid in these reasons as the human agent through whom the two companies mentioned above generally operated. 9. Ian Samuel Beattie also gave evidence concerning the "Daintree" project, particularly the marketing of the lots produced there. He provided his opinion as to how the "Starcke" freehold land could be marketed in subdivision in the form of 240 x 100 ha lots, and his view of the expected prices and selling rate for lots produced there. Mr Beattie is a licensed real estate agent, auctioneer and a registered valuer. Through his management company he is a part-owner of Quaid Real Estate, an agency originally started by Mr Quaid, with whom Mr Beattie has worked for 28 years. 4 10. Timothy Donnelly Nevard describes himself as a "consultant specialising in environmental matters, particularly in the context of habitat creation and environmental enhancement." He holds a Bachelor of Science in Rural Environment Studies and a Master of Science in Agricultural Economics, both from the University of London. He provided evidence on "circumstances where high environmental values have been a principal reason for purchase of land by private sector and non-government organisations" and associated matters. 11. Kim Elizabeth Campbell is a qualified town planner and was at the relevant date for the assessment of compensation retained under contract as a consultant planner to the CSC. She had earlier (1990-91) been employed by CSC as the director of planning. She is presently employed by the "C & B Group". Her curriculum vitae refers to her authorship of certain reports as part of the Cape York Peninsula Land Use Strategy (CYPLUS). I understand CYPLUS to have been an expansive Government project concerned with the collection and synthesis of data and opinions that could provide a basis for resource and land use planning in Cape York. Mrs Campbell also holds a degree of Master of Science (Environmental Management). She gave evidence concerning the prospects of CSC approving the subdivision of the freehold "Starcke" land, a potential use which forms the basis of the claimant's claim for compensation for that land. 12. Lance David Dodds provided evidence concerning the design, construction and costing of the works that would be required in a subdivision of the "Starcke" freehold land into 240 x 100 ha lots. Mr Dodds is a member of a firm described as "planning consultants" and though experienced over a period of about 20 years in matters of road construction and such like, holds no relevant formal qualifications. He therefore utilised the services of a Mr Roy Garden, a civil engineer, to check his designs and workings. Mr Garden was not called. 13. Murray Alan Clive Bartsch, an engineer by profession, provided evidence concerning advices that he had provided to Mr Dodds concerning engineering requirements for the suggested subdivision of the "Starcke" freehold land. Mr Bartsch had been the Shire Engineer for the Cook Shire during the period 1990 to April 1999 and had been responsible for the assessment and determination of relevant and reasonable engineering conditions for subdivision applications within the Shire. 14. Greg Williams was relied upon by Mr Dodds to provide costings for the engineering works involved in the suggested subdivision of the "Starcke" freehold. Mr Williams is an associate member of the Institute of Municipal Engineering (Australia) and a qualified safety officer and is employed as the operations manager of the firm North 5 Queensland Civil Engineering Contracting Pty Ltd. He has worked in the Cape York and Gulf of Carpentaria region for in excess of 20 years, having been involved in some substantial projects there in recent years. 15. David Hubert Finney provided an environmental report concerning the "Starcke" freehold land and the potential impact of a subdivision of that land on the natural environment. Mr Finney is the Manager of Environmental Services with the C & B Group and holds a Bachelor of Science Degree and a Master of Agricultural Studies (Land Resource Management). 16. Terence Joseph Gould, a registered valuer, provided valuation evidence concerning the "Starcke" PDH, such evidence proceeding on the assumption that the PDH would be disposed of independently of the freehold. 17. Rodney Louis Brett, also a registered valuer, provided valuation evidence concerning the "Starcke" freehold, that valuation proceeding on the basis that that land had a highest and best use for subdivision into 240 x 100 ha lots. Whilst Mr Brett relied on the expertise of other witnesses called by the claimant, a particular point of interest is that he adopted the expected prices and selling rate for lots in the proposed subdivision as provided by Mr Beattie. The following witnesses were called by the respondent: 18. Jeffrey Ross Humphreys, a qualified town planner, was a consultant to the Douglas Shire Council for the period of 1991-94. Douglas Shire adjoins Cook Shire to the south. He was involved in the preparation of the Development Control Plan for the Daintree/Bloomfield area and was the leader of the consultancy team that prepared the Daintree Planning Package (also referred to as the Daintree Rescue Package), which I describe in further detail later in these reasons. Mr Humphreys gave evidence concerning the prospect of subdivisional approval being given over the freehold "Starcke" land. 19. Anthony Brian Symonds was, for the period 1992 to 1999, the Regional Manager of the Queensland Parks and Wildlife Service for the Far North Region, which region includes "Starcke". He was employed at the time of the hearing as a Policy Officer on State environmental issues with the Tenure Resolution Group, Department of the Premier and Cabinet. He gave evidence largely concerning the requirements of a Voluntary Conservation Agreement (VCA) under the Nature Conservation Act 1992 (the Nature Conservation Act"). 20. James Peter Stanton, Environmental Consultant, was called to provide evidence concerning the environmental values of the "Starcke" lands. Mr Stanton had in 1993 been 6 an employee of the State agency responsible for environmental matters and had at that time provided advice to the Government concerning the "Starcke" lands. 21. Lyndon Henry Schneiders, who is employed as a campaign organiser with the Wilderness Society Incorporated, gave evidence concerning that society's interest in the "Starcke" lands. 22. Paul Christopher Memmott is an anthropologist by profession and was called to provide evidence concerning Aboriginal interest in the "Starcke" freehold land and the manner in which such interest might arise as an issue in the case of any proposed subdivision of that land. Dr Memmott holds both a Bachelor Degree in Architecture with Honours and a Doctor of Philosophy in Anthropology and is a Fellow of both the Royal Institute of Architects and the Australian Anthropological Society. In 1996 he was engaged by the Cape York Land Council (CYLC) to carry out a scoping study with respect to the Indigenous Cultural Heritage Values of Cape York. The "Starcke" aggregation fell within that study area. 23. David Edward Byrne, a company director, cattle breeder and consultant to the CYLC, gave evidence concerning the interest of certain Aboriginal organisations and groups: in Cape York lands generally and in the "Starcke" lands in particular. Mr Byrne had between the years 1983 to 1993 been an adviser to the Injinoo Community Council in Far North Queensland; had from 1994 to 1999 been the Deputy Director of the CYLC and is currently an executive member of the Cape York Peninsula Development Association and a consultant to the CYLC. 24. Tony Alan Potter, a civil engineer and previously the Shire Engineer for the CSC for the period July 1980 to April 1990, provided evidence concerning the engineering requirements for a subdivision of the "Starcke" freehold into 240 x 100 ha lots. He also provided design and construction requirements for those works. Apart from a two-year period of his role as Shire Engineer, the Shire was under the control of an administrator appointed by the State. He acted as the Local Government engineer in the capacity of a consultant between 1976 and 1980. Mr Potter was an employee of the firm Sinclair Knight Merz (SKM) at the time of the preparation of his report. He had, as an independent consultant not employed by SKM, provided comments on engineering reports prepared by John Russell of SKM in June and November 1997. These reports were concerned with engineering requirements and costings for a 238-lot subdivision of the "Starcke" freehold. 25. Robert Wilfred Grigg, a senior estimator and Information Technology Manager for the firm CEC Construction provided evidence of the costings of the engineering works included in Mr Potter's evidence. Mr Grigg holds Certificates in Civil Engineering - 7 Design Office Technician and Construction Technician. Whilst Mr Grigg's firm had tendered for a number of projects in Cape York, it has not been successful in winning any. 26. Keith Rodley Bryars, a civil engineer, provided evidence concerning the relevant standard of the so-called "Southedge Road" in whose construction Mr Dodds had played an important role. 27. Leo Joseph Watts, a surveyor by profession and Queensland Manager of QASCO, a company concerned particularly with aerial photography, aerial surveying and aerial mapping, provided evidence in relation to the use of photogrammetry, a technique relied upon by Mr Dodds in his calculation of quantities of earthworks and in the dimension of catchment areas: two important topics involved in the engineering costs dispute between the parties. 28. Rodney Gordon Blomfield, a registered valuer in the employ of the Department of Natural Resources (DNR), provided a valuation of the resumed "Starcke" aggregation; that is, both the PDH and the freehold. His valuation approach did not include an assumption that the highest and best use of the freehold involved subdivision, but included the continued use of the PDH for grazing purposes with the prospect of a higher eco-tourism use on the freehold land in conjunction with grazing. 29. Michael Joseph Slater, a registered valuer, provided evidence intended to point to the lack of viability of subdivision and sale of the "Starcke" freehold land as 240 x 100 ha lots. The bulk of his evidence was concerned with a critique of Mr Brett's and Mr Beattie's evidence. Purpose of Resumption 30. The Acquisition of Land Act provides in s.9(6) that land acquired under that Act must, in the proclamation effecting the taking, mention the purpose of the acquisition. There is, scheduled to the Act, a list of relevant purposes. The Starcke Act did not include a provision similar to s.9(6) of the Acquisition of Land Act. There is, however, in the explanatory note to the "Starcke Bill" a stated reason for the legislation: "The Starcke Pastoral Holdings have been identified as having significant environmental values that should be preserved for posterity."

The explanatory note also said: "Objectives of the Legislation

The objectives of the Bill are to acquire environmentally significant lands comprising certain freehold parcels, Starcke Pastoral Development Holding and four Occupation Licences being the Starcke Pastoral Holdings in Cape York and to provide for the payment of compensation."

8 31. When the then Premier, Mr W Goss, foreshadowed the introduction of the Bill which was to become the Starcke Act in a speech to Parliament on 14 September 1993, the justification for the legislation outlined by him included the environmental values of the land and the Premier also mentioned that the land "encompasses the traditional Crown estates of two separate Aboriginal language groups". In addition, he said that whilst the Government was committed to acquiring the "relevant coastal section of the property", Cabinet's preferred position was to acquire all of the aggregation, given the "various regimes associated with freehold title, leases and occupational licences". 32. Mr Blomfield suggested that the purpose of the resumption also included mining, however, he did not elaborate on that and it was not a matter pursued by either side. For his part Mr Quaid saw the resumption as being the result of a "pact" between the Federal Government, the Aboriginal and Torres Strait Islander Commission (ATSIC) and the State Government to acquire the land, as I understand it, for the benefit of interested Aboriginal persons or groups. 33. It is often useful to have an understanding of the purpose of a resumption, particularly where issues of either injurious affection or enhancement flowing from the purpose of the acquisition of part only of a parcel of land are raised. No such issues arise in this case, so with respect to those matters I am not at any loss in not having placed before me, in formal terms, the actual purpose or purposes of the resumption. There is, according to the claimant, a correlation between the resumption of the land for environmental purposes and the highest and best use of the land, however, that is a matter that I found myself able to deal with later in these reasons without needing to decide the full ambit of the purposes for the resumption. Only Cabinet would know that full ambit. I am, however, of the view that given what the Premier had to say to Parliament (a theme reflected in the Second Reading Speech of the then Minister for Lands who introduced the Bill) and the explanatory note to the Bill, the environmental values of the "Starcke" aggregation, or at least the coastal part of it (however far that might extend), was a motivating factor in the resumption of the claimant's land. It is sufficient that I know that one of the purposes of acquiring the "Starcke" lands was associated with its environmental values - using the term "values" in a non-monetary sense. Claim for Compensation 34. The claimant, by a letter dated 26 May 1994 to the Director-General of the then Department of Lands sought compensation for the resumption in these terms: "Prior to acquisition date, my company was offering the subject property for sale both Nationally and Internationally at a set price of $US18,000,000.

9 Please accept this letter as a formal request for payment of the Australian dollar equivalent of the marketing price, plus interest calculated at the rate of 12.5% per annum from the date of acquisition.

In the event this compulsory acquisition has created a circumstance in which capital gains tax not applicable to free market sale proceeds becomes applicable, my Company reserves the right to seek from the Queensland Government, full reimbursement of the tax assessment in addition to the market price."

35. That claim was confirmed in a letter dated 5 December 1994 from the claimant's solicitor. On the third day of the hearing of the matter a document (Exhibit 22A) was tendered and was described by Senior Counsel for the claimant as providing the "details of our claim": "(Brett) Market Valuation of Freehold Land $15,000,000 (Gould) Market Valuation of Leasehold Land $1,285,000

Disturbance

(i) Tax advantage of Land $6,840,000* (ii) Plus: Acquisition Costs of new property $600,000* (iii) Plus: Legal and Valuation for Claim with Land Court (To be supplied or agreed) (iv) Plus: Negotiation Costs pre Land Court Claim (To be supplied or agreed)"

36. On the twelfth day of the hearing Mr Quaid provided a supplementary statement (Exhibit 55B) which included reference to a figure of $25,000,000, that figure apparently being the Australian dollar equivalent at the relevant date of the originally claimed $US18,000,000. In due course that figure was included in a further document (Exhibit 22B) and the claim for compensation was amended, with leave, to the following: " ( Freehold Land [$]25,000,000 ( Leasehold Land

(calculation in accordance with Ex. 55B)

And Legal & Valuation fees on negotiations (details supplied to Crown and negotiations proceeding)

And Legal & Valuation fees on claim (details supplied to Crown and negotiations proceeding)" (Note: dollar sign [$] supplied by me)

37. It will be noticed that the claim as amended makes no reference to the items of "tax advantage of land" nor "acquisition costs of new property", both of which were included in the "details of our claim" document (Exhibit 22A). Senior Counsel for the claimant 10 confirmed that these items were not part of the amended claim. Notwithstanding this, evidence was led concerning these two matters and the claimant made submissions in support of the matter of acquisition costs, though did not make submissions concerning the matter of tax advantage. I consider these issues further, later in these reasons. 38. It may be useful if I point out at this stage that the figure of $25,000,000 is not the product of adding the valuation figures of Mr Gould and Mr Brett, but is a figure settled upon by Mr Quaid independently. I will in these reasons, however, consider the Gould and Brett valuations before turning to the evidence on that matter provided by Mr Quaid. 39. The parties settled the disturbance items described above as legal and valuation fees "on negotiations" and "on claim". In addition I was advised that the State had acquired by agreement with the claimant, the cattle located on the resumed lands at the date of resumption. Apart from those matters, the State's figure for compensation was $4,150,000. That figure is the product of Mr Blomfield's valuation of the PDH and freehold lands including improvements. These improvements included "plant and equipment" ($4,800). As there was no debate concerning the legal nature of these items, I will treat them as fixtures and include them with other improvements as the State did. Mr Blomfield's valuation report also said that legal and valuation fees and "other items of disturbance" should be allowed. Advances against compensation in the amounts of $4,150,000 and $276,287.67 were paid on 6 December 1994 and 26 May 1999, respectively Approach to Compensation Assessment 40. The claimant valued the freehold land and the PDH land components of the "Starcke" lands separately on the assumption of different highest and best uses for each. Mr Gould valued the PDH as a grazing property with potential for some tourism use and settled on a figure of $1,285,000. Mr Brett placed a value of $15,000,000 on the freehold land on the basis that this land at the date of resumption "had the immediate potential to be profitably subdivided into 240 small sites each of about 100 hectares". Mr Slater provided evidence to the effect that the subdivision of the freehold land, as envisaged by Mr Brett, was not economically viable. 41. Mr Blomfield prepared his valuation of the resumed lands on the basis of the PDH and freehold lands together having a highest and best use of the grazing of cattle, but with the freehold portion having some potential for a higher use, probably an eco-tourism use in his view. His valuation comes to $4,150,000. Whilst there were many issues which separated the parties, the primary difference related to the matter of the highest and best use of the freehold land. The respondent's view is that this land should not be valued as land suited to subdivision for two main reasons: 11 1. A hypothetical prudent purchaser would entertain serious doubts that the CSC acting properly and guided by its Planning Scheme and relevant principles of town planning would approve the subdivision of the land.

2. On the assumption that subdivisional approval would be forthcoming, the subdivision would not be economically viable, particularly having regard to: the expected sale prices of the lots; the period over which such sales would be expected to occur; the costs of development; and the prospect of delay in receiving CSC approval.

42. Before dealing with those issues, it will be useful if I provide some relevant detail concerning the subject land, focusing particularly but not exclusively on the freehold portion at this stage; together with some relevant historical and background matters. The "Starcke" Lands 43. Cape York is a sparsely settled part of Australia which has often held the fascination of many Australians for its remoteness, rugged beauty and harsh environment and which invites the more intrepid amongst us to travel to the "tip" - the northernmost point on the Australian mainland. "The Cape", as it is called, has major towns at Cooktown and Weipa and smaller communities at Lakeland Downs, Laura, Coen and various Aboriginal communities dotted around the coastline. The Cape is served by a microwave telephone network, weekly aerial mail services, has Royal Flying Doctor Service coverage and amenities for travellers at roadhouses and camping grounds scattered along the Peninsula Development Road which provides vehicular access to the "tip". That road is of gravel construction except where it goes through some towns where it is sealed. A variety of structures provide for stream crossings. The road is commonly impassable during the wet season. The Cape has two quite distinct seasons: the "wet", which occurs during the period December to April and the "dry", which occurs during the balance of the year. The length and intensity of these two seasons varies somewhat, there being evidence that the wet season is becoming longer as a result of global warming, however, there is no prospect of even a casual visitor failing to recognise the prevailing season. Rain periods during the wet season are often long and intense, causing large parts of the Cape to become inundated, streams to flow fast and deep and coastal lagoons to fill and become populated by bird life, wild pigs and crocodiles. During the dry many streams cease to flow, lagoons retreat into saltpans, the birds emigrate and the crocodiles return to their lairs. The seasonal influences and the location of the Cape in the tropical region means that temperatures and relative humidity are often high leading to personal discomfort and a propensity for people to move about a little more slowly than those in the south and only when required. The "Starcke" freehold and PDH are part of this geographic region. 12 44. The Deed of Grant for the freehold land issued in 1989 following a process which traversed some 14 years commencing with the grant of a Special Lease over the relevant area. At the time of freeholding and at the relevant date for present purposes, the "Starcke" freehold land was undoubtedly the largest freehold parcel of land in Cape York. Freehold tenure may be generally contrasted with leases granted under the Land Acts 1962 or 1994 which may be for limited terms and subject to Ministeral control as to use, management, disposal and subdivision with the nature and extent of that control, depending on the type of lease. The shape of the freehold land was probably determined in 1975 or earlier, having regard largely to the view at the time as to the land which should be excluded from freeholding because of its environmental values. The result is a freehold parcel of "Irregular shape extending for a distance of about 52 km from south to north. Maximum width is 10 km reducing to 500 metres at the narrowest" (per Mr Brett). The elongated narrow section to the south might usefully be called the "tail", whilst the wider section to the north might be called the "body". 45. The freehold land is bordered in the north by the Jeannie River, whilst the Morgan River adjoins part of the southern boundary. The Starcke River is located just north of where the body and the tail meet. This river comprises the central drainage system and is said by Mr Brett to be "of sufficient size to provide ocean access". There is a reserve for landing purposes on the Starcke River to the east of the subject lands, though it was not suggested that access via the Starcke River added any measurable value to the lands. The eastern boundary of the body of the freehold includes ocean esplanade frontage land commencing with elevated dunes running south from the mouth of the Jeannie River. The Coral Sea is to the east and some distance offshore is Lizard Island, the site of an upmarket tourist resort. 46. To the west of the freehold tail is an escarpment and the Starcke National Park. There is also a small part of the PDH land which was, in the south, reduced to a quite poor shape for grazing purposes, if considered separately from the freehold land. To the east of the tail lie further parts of the PDH land in poorly shaped and isolated parcels: again, if the PDH is viewed separately. The PDH extends northerly from the Jeannie River in a manner that provides some coastal frontage to the east, but with that frontage reduced by the presence of the Cape Melville National Park. That park was in two portions; one at Cape Melville and the other at the Altanmoui Range, about midway between the mouth of the Jeannie River and Cape Melville. The PDH has a small frontage to Bathurst Bay, then the western boundary travels south and east in a series of steps which abut the eastern boundary of "Kalpowar" aggregation of pastoral holdings to the west, which separate 13 "Starcke" from the Lakefield National Park. In the result, the shape of the "Starcke" aggregation overall is quite irregular and elongated rather than compact. I deal more particularly with the class of country on the PDH when I consider the valuation of that interest. 47. The type and quality of the country in the freehold land will be considered in due course, however, might generally be described as "undulating open coastal forest interspersed with east flowing drainage systems", the bulk of it "unspectacular" in the description of the presenter of "The World Around Us" video tendered in evidence. These drainage systems often support areas of heavy vegetation including palms (livistona muelleri) and there are small, isolated pockets of rainforest. There is a higher range section towards the south of the body and some individual hills. One of these, "Round Hill", is quite prominent. It is located towards the east of the freehold land, to the south of the Starcke River. 48. Mt Webb National Park is to be found surrounded by the southern end of the freehold tail. This small park exhibits a stand of vine rainforest on soils derived from basalt and was said by Mr Stanton to be a rare example of such vegetation. A small area of rainforest extends through the freehold land from Mt Webb to the south-west and to the Morgan River. To the east and north of Mt Webb one finds a better quality of red soil country, which could be cultivated to support, for example, tropical orchard crops. Various fixed improvements were on "Starcke" at the time of resumption, most on the freehold, such improvements being suited to the use of the land as a cattle-grazing enterprise. These improvements and their value are dealt with later in these reasons. 49. The "Starcke" aggregation contains vegetation and landform types of interest environmentally, however, it is both the nature of the property, (and in this regard I particularly mention the freehold) and the environment in which it is found, that are of interest for present purposes. To the east is the Coral Sea to which the "Starcke" freehold enjoys a beach esplanade frontage of about 9 km. To the south of the mouth of the Jeannie River parabolic dunes are to be found. To the west is the Starcke National Park, which contains an impressive topography and vegetation and a small waterfall, though access into this park is physically quite demanding. According to the presenter of "The World Around Us" video, it would take a minimum of a four-day hike from the nearest four-wheel drive track to get to the waterfall. I was fortunate enough to view it from a helicopter during a view arranged by the parties. Cape Melville National Park to the north contains a remarkable formation of volcanic boulders and stones, in striking dimension and form, particularly when viewed from a helicopter. This park is also noteworthy for its population 14 of foxtail palms. Access to the vicinity of the park is possible by four-wheel drive vehicle during the dry season. From Cape Melville the coast sweeps to the west and through Bathurst Bay, then past Bathurst Heads, again to the south-west and then north around Princess Charlotte Bay. Offshore is the Flinders Island Group, which is quite prominent, whilst islands of lesser significance might be seen off the east coast of the PDH. To the east of the "Starcke" freehold and the small slither of PDH which runs along that eastern boundary is the Hopevale settlement contained in a Deed of Grant in Trust with an area of about 100,000 ha administered by an Aboriginal Community Council. At the eastern extremity of that land interest is Cape Flattery, the site of a silica mine. To the south of the "Starcke" lands is an area which includes the Endeavour Valley. This is more densely populated than other lands abutting the "Starcke" with some smaller agricultural, grazing and horticultural properties being found there. This area is drained by the McIvor River which runs roughly parallel to the Morgan River in this area. These smaller holdings which go down to about 32 ha can be readily contrasted with the larger holdings found in the Cape upon which cattle are grazed, though management of these herds might be said to be less proactive than in the more closely developed cattle grazing areas of the State. 50. My appreciation of the evidence concerning the "Starcke" lands and its surrounds was enhanced by the inspection by helicopter. Together with Counsel, Valuers Blomfield and Brett and Mr Beattie, I travelled from Cairns to Cooktown by fixed wing aircraft then by helicopter over the "Starcke" aggregation, Coen township, Cooktown and a property called "Silver Plains", which arises for discussion later in these reasons. We landed on a sand spit on the Nesbit River at the northern end of "Silver Plains", at the mouth of the Jeannie River and again on the "Starcke" freehold. I then travelled with Valuers Blomfield and Brett by road to the Cooktown Airstrip before returning to Cairns by air. Location, Access and Services 51. Relevant estimates of distance provided by the various witnesses vary, however, not to the point of controversy. The freehold extends for a distance of about 52 km from the Morgan River north with the southern tip of the freehold being situated about 85 to 90 km by road north of Cooktown, or about 50 km radially. Road access is provided from Cooktown via the Endeavour Valley Road which divides and provides a choice of access to "Starcke" via either the Isabella-McIvor Road or the McIvor Valley Road which travels close to Hopevale. Hopevale is accessed via another short length of road. The road to the Hopevale turnoff is "generally reasonably well maintained with the road north of this point receiving less use and generally a lower level of maintenance" according to Mr Gould. The McIvor Valley route is the slower of the two routes, but more secure in the wet season as it 15 benefits from a bridge over the McIvor River. Both routes converge near the McIvor River a few kilometres before entering "Starcke" and serve various established properties and communities in the area north of Cooktown. Driving time to the southern entrance to "Starcke" is 1 to 1½ hours from Cooktown, though access during the wet season may be cut at one or more of various stream crossings. 52. From "Starcke's" southern boundary a single constructed public road extends northwards through the freehold for a distance of about 40 km, then exits into the PDH and continues north to Cape Melville, passing through the abandoned "Starcke" outstation of "Wakooka". A track heads west through the adjoining "Kalpowar" property, then north- east to the coast or south-westerly to the Peninsula Development road - the main road connecting Cape York to points south. Access over the internal "Starcke" road is curtailed by the wet season which has a variable duration, though access is usually available May to December. Off-road access during the wet season is severely limited. 53. Evidence concerning access onto the "Starcke" land from the south was given by a range of witnesses, their evidence being largely influenced by their own experience in that regard or the experience of others whom they have consulted. The best understanding that I can gain is that during the wet season streams rise quickly following rain and fall at a rate dependent upon the length of time and the intensity of the rainfall event. The Morgan River at the southern boundary of the "Starcke" aggregation plays an important role in governing access to the land. The Morgan and the other "Starcke" rivers are not bridged, requiring crossing via the unimproved stream bed. Access into the stream is by way of cuttings in the banks. The Morgan River is a steep-banked stream and the soil type of the banks is such that when saturated it becomes boggy and untrafficable. Mr Bartsch said that he understood that the Morgan posed a barrier to traffic for a maximum period of seven days at a time during the wet season and evidence from Mr Dodds obtained from the "Starcke" Station manager tended to support that view, whilst Mr Stanton said that access would be denied for up to weeks at a time. I think it is safe to say that during the wet season access to "Starcke" would be denied for varying periods, but often for days at a time, dependent upon the severity of rainfall events. Similarly the Starcke and Jeannie Rivers would pose barriers for further internal movement on the "Starcke" property though the Jeannie does not come into play in access to the freehold. 54. The "Starcke" freehold had two unsealed light aircraft airstrips, one close to the original homestead at the property's southern extremity, the other centrally positioned north of the Starcke River. Both airstrips provided a means of direct access to Cooktown and Cairns. There is also an airstrip at the "Wakooka" outstation found in the northern part of 16 the PDH, however that had fallen into disuse by the time of Mr Blomfield's inspection in 1994. It was capable of rejuvenation by grading and reclearing. Cooktown has daily commercial flight connection with Cairns, the flying time being about 40 minutes. Driving time Cairns to Cooktown is about 4½ hours. In 1994 the road between Cooktown and Cairns was bitumen sealed for about half its length. Electricity does not extend as far as the subject land. Mail service and microwave telephone service is available. 55. Cooktown is a well-established historic township providing a variety of local shopping facilities, hotels, schools, police station, commercial airport, hospital, community swimming pool and service and machinery maintenance facilities. For more comprehensive services it is necessary to travel to Cairns. Cooktown has a population of about 2,000 and has its origins as a port in the 1870's servicing the gold mining at the Palmer River. The town now relies mainly on tourism. "Daintree", "Southedge" and "Starcke" - A Change of Plans 56. In 1971 Mr Quaid, through the Southedge Daintree Pastoral Co, acquired the Daintree Coastal Lowlands property, an aggregation of titles which I understand to have been mostly freehold, located on the northern side of the Daintree River and extending east to the coast. Part of this land was cleared and part was subject to rainforest regrowth. Much of it, however, was virgin rainforest and associated vegetation communities. Access to the land was by road from Cairns. The Daintree River was and remains unbridged with cross-river access being provided by ferry. That property was purchased for cattle fattening, with cattle to be produced on "Southedge", a leasehold pastoral holding purchased later that year. Mr Quaid acquired the "Starcke" aggregation in 1972 and said that he was involved in the purchase and development of other rural properties. 57. The year 1974 saw a substantial economic downturn in the beef cattle industry, generally referred to as a market "crash". As a result of this crash Mr Quaid ceased all development work on the abovementioned three properties and sold off surplus machinery, and cattle. It was during this time that Mr Quaid sought and was granted a Special Lease over that part of the "Starcke" aggregation which eventually became freehold pursuant to the terms of that lease. He said that freehold tenure provided a "safety net" in the event that cattle raising proved to be uneconomic. During the years 1975-78 he attempted to sell the "Daintree" lands to primary producers, but with limited success, a few individual titles only being disposed of. He had been seeking an overall price of $3,000,000 for the "Daintree" lands as a single parcel possibly for sugar-cane expansion, but said that there was no interest expressed in the whole parcel. 17 58. A decision was then taken to sell off the "Daintree" lands in subdivision. A profitable project ensued. Mr Quaid told me that he is not a land developer, but has had to resort to development and subdivision in order to dispose of properties: the first such project, as I understand it, being the "Daintree". I will return to discuss that project shortly. Some time after the purchase of "Southedge" and immediately following its freeholding, Mr Quaid became aware of the water storage potential of the property and constructed a large dam there which impounded about 150,000 megalitres of water on his estimate. I viewed part of that water body (Lake Mitchell) from a distance. A video tendered in evidence provided a more detailed understanding of the nature of the works involved. That construction was completed prior to 1989. At one stage Mr Quaid said that the dam was constructed for the purpose of irrigated farming but also said that the property is a potential "lakes resort city" site. "Southedge" is an inland property located just to the north of Mareeba township and about 100 km by road through Mareeba to Cairns. This distance and the indirect nature of the route disadvantaged the property for development purposes. Road access extending for about 32 km was therefore constructed by Mr Quaid from Wangetti on the coastal Cook Highway north of Cairns to provide direct access to "Southedge" from the coast, however, that road remains a private road. This road was generally referred to in evidence as the "Southedge" road. Its construction characteristics are discussed further under para 549 and following. Mr Quaid said that the road was built for the purpose of exposing "Southedge" as a viable "people place" of the future as it provided a direct connection between that property and the coast. That initiative was, it seems, successful as the property was subsequently designated as the Southedge Potential Urban Development Area by the Council. This private road was opened for public inspection on 30 November 1997 and Mr Bryars inspected the road on that occasion. The "commemorative brochure" publicising the public inspection event said in part: "Your support has been invaluable in helping to demonstrate overwhelming community support for opening Southedge Road as an arterial highway."

59. Whilst the claimant preferred to characterise the road as a private road, as it is, it is apparent that it was constructed in order that it might become a public road. In a comment on the potential use of the "Southedge" property the commemorative brochure said: "Around 25% of the entire surface area of Southedge can be utilised to form several large freshwater lakes. Two have already been created, the largest being Lake Mitchell which covers over 3,000 ha and has a 50 km shoreline.

Of the remaining 30,000 ha, half is ideally suited for elevated, lake-view residential development leaving the remainder available for Southedge 18 'greening' projects such as golf courses, sports grounds, tourist resorts, educational colleges, parks and reserves."

60. Whilst Mr Quaid said that he recognised the "remarkable similarities" between the "Starcke" and the "Daintree" lands (lands then in the process of subdivision and sale) in 1989 when freehold tenure over part of the "Starcke" property was granted by the State, he elected not to subdivide it nor to expend funds on "Starcke" in the substantial manner that he did with respect to "Southedge". Instead, he decided to offer the "Starcke" freehold and PDH for sale overseas, not as land with subdivision potential, but as a parcel whose freehold component had potential as a "frontier tourist development" and possibly a game park. His intention, he said, was to attempt to sell the land as a single parcel and he planned to market it that way for up to one year. He called that "phase one" of his plan to sell "Starcke". He said that after that period, had no sale eventuated, he intended, as phase two, to carry out a subdivision project on the freehold portion. At the conclusion of that project the PDH and OLs would be sold with an expectation that the subdivided freehold would enhance the value of the PDH. 61. The "Starcke" aggregation was advertised for sale in the "Wall Street Journal" appearing in the United States Edition on 26 February 1993 and in the European Edition on 12 March of that year. Advertising costs totalled $30,000. The asking price was $US18,000,000, which was then equivalent to $A25,000,000, according to Mr Quaid's calculations. Mr Nevard thought the wording of the advertisements to be suited to the American market, but thought it needed some adjustment for Europe. Mr Quaid received responses to his advertisements and also purchased a "prospect list" from Dalgety Real Estate in February 1993 for $5,000. In total he had collected a list of about 140 prospects and has since formed the view that the possibility of a successful sale was high. On 19 April 1993 the "Courier-Mail" published an article which referred to the Wall Street Journal advertisements. The article included comments attributed to the then Minister for Environment and to a spokesman for the Wilderness Society in which concern was raised about the prospect of "wilderness" land being sold overseas. Mr Quaid's solicitor counselled him against entering into sale negotiations with overseas prospects given the apparent State Government interest. No further advertisements were published, however, Mr Quaid persisted unfruitfully to promote the sale of "Starcke" to or through ATSIC, though there is no evidence of any asking price for such a sale. 62. The State's interest in the "Starcke" aggregation became clearer on 10 September 1993 when the Minister for Environment wrote to the claimant opening negotiations for the purchase of all or "a substantial part of 'Starcke' for National Park purposes". Mr Quaid 19 responded by advising his asking price of $US18,000,000. Less than a week later on 16 September, the State Government tabled in Parliament the "Starcke Pastoral Holding Acquisition Bill", which lay on the table pending the outcome of negotiations between the State and the landholder. These negotiations took on the character of discussions about compensation instead of price, according to Mr Quaid. I will now return to a more detailed discussion of the "Daintree" project which followed from Mr Quaid's decision to sell those lands in subdivision. The Daintree Project 63. Following the unsuccessful attempt to sell the "Daintree" land as a single holding, 34 existing rural titles south of the Alexandra Range were sold to individual buyers. In the late 1970's another 40 to 50 mostly cleared lots of 2 to 4 ha in the Forest Creek area just north of the Daintree River were sold. I assume that the uncleared lots were vegetated with either rainforest or rainforest regrowth. Mr Beattie said these later sales were priced at $10,000 to $17,500 though I note elsewhere in his evidence he said that sales in 1979-80 averaged about $34,300, whilst in 1980-81 prices averaged $19,000. Sales in 1979-80 (21 lots) and 1980-81 (25 lots) were mainly 1 to 2 ha lots sold to local buyers. Following these sales Mr Quaid decided to embark on a marketing campaign, which commenced in 1981- 1982 and wound down during the 1989-90 financial year. At the time that decision was taken the State was initiating a project to construct a road from the Daintree River to Cape Tribulation to the north and there was well-publicised protest concerning that project and its suggested threat to the natural environment. Consequently, the name "Daintree" became nationally known as a significant tropical rainforest area. The marketing campaign was, therefore, able to capitalise on the momentum established by the recognition of the name "Daintree" and what it represented in the minds of interested persons in the Australian community. Mr Beattie was given the marketing and sales task. He decided to manage the marketing campaign himself but sought advice from Dr Peter Kenny, a Sydney-based market psychologist, that advice having as its central tenet the proposition that what might be perceived on first blush as negatives associated with the Daintree area, should be presented as positive features. Mr Beattie said that key aspects of the marketing campaign therefore featured these aspects of the "Daintree" property:-  isolation - limited access by river ferry, need to use four-wheel drive vehicles;  last frontier - chance to be a pioneer, virgin rainforest, unspoiled beaches;  environment - responsibility of the individual;  voluntary community - choice of lifestyle, a place that need only be shared with a few others.

20 64. The subdivision was titled "Daintree Freehold Rainforest" and the product was described in the marketing campaign as "a few acres of rainforest near beaches and creeks". Such words as title, lots, estate, properties and such like were jettisoned, as they might conjure up the stereotypical rural residential subdivision which most people would know about - the so-called "Beaudesert type" rural residential subdivision, in the language of Senior Counsel for the claimant. 65. The actual product was typically a 1 to 2 ha rainforest block, fronting a gravel road. Some had creeks, some had been cleared, many were populated with regrown rainforest, a few had views and some were near the beach, particularly at the picturesque Cow Bay. A few sites had outstanding features. I will return to discuss them below, but will record here that the marketing campaign was not directed to the sale of those blocks. It focused on the typical 1 to 2 ha product and targeted the local Cairns market as well as other parts of the State, the country, Papua New Guinea and New Zealand. The marketing campaign cost $5,823,444 of which $2,553,279 comprised commissions and bonuses. This leaves $3,270,165 as having been spent on actual marketing. A total of 860 lots were sold during the main marketing period. If, for the sake of simplicity, I disregard the marketing expenditure spent outside this period, the cost per lot would be about $3,802. Expressed as a cost per lot for the whole of "Daintree", the cost is around $3,540 per lot. 66. The marketing campaign:  Advertisements appeared in newspapers, usually timed to coincide with money flows; for example, following crop harvests in a particular area.

 Video promotions were sent to prospective purchasers. I viewed such a video which was put into evidence.

 A salesperson was placed in the area where advertising was carried out in order that there might be immediate and personal follow-up to any sales inquiries.

 Contracts were usually entered into subject to satisfactory inspection.

 Prospective purchasers were flown to Cairns to enable an inspection. The cost of airfares was charged to these individuals only in circumstances when a sale did not eventuate.

 Potential purchasers were required to undertake an inspection of the relevant "Daintree" lots in which they had expressed an interest. That inspection involved the prospect sitting with a sales person on the 1½ hour drive from Cairns to the Daintree River, followed by the inspection and the trip back to Cairns.

21  Attractive vendor finance was made available to facilitate the immediate conclusion of sales.

 In addition to the promotional video mentioned above, there were visual promotion products in the form of a brochure which included high-quality photography depicting a "coastal paradise"; a poster; mail cards and an agent's newsletter.

67. In appealing to those who might be attracted to the relative isolation and natural environment of the "Daintree" blocks, Mr Beattie said that the marketing campaign emphasised the absence of certain improvements which added to the perception of isolation:  no bridge across the river - ferry access only (initially it carried only six vehicles at a time and operated for limited hours);  the roads are sometimes impassable;  no electricity;  no town water;  no shops;  no school;  no houses;  no employment.

68. The evidence showed, however, that the marketers of the "Daintree" equivocated in painting the area as a rugged pioneering destination. Sales brochures that were tendered noted that a kiosk, a restaurant and a general store with fuel outlets were in the area and would keep residents "comfortably supplied with essentials". I understand that these facilities were not available when the land was first introduced to the market, but that such features were, as they became available, included in any new editions of the brochure. Mr Beattie said that it was important that intending buyers were not misled by a brochure - that they saw what they were expecting to see, on inspection. That version of the brochure in evidence advised that the town of Mossman was a 45-minute drive away with a high school, hospital and shops - 15 minutes further on was Port Douglas and Cairns with its international airport was less than a 2-hour drive. This information was included in all brochures from the outset. Roads were described in brochures as all-weather between Mossman, Port Douglas and Cairns and with well-formed country roads throughout the Daintree area. It was also said that electric power would eventually reach the area. 69. The marketing campaign bore fruit increasing the sales from the earlier levels to the following:

22 Year No of Gross Average Marketing Expenditure * Sales Realisation Price (including commissions and bonuses) 1981-82 48 sales $841,997 $17,542 1982-83 143 sales $3,446,000 $24,097 $389,379 1983 1983-84 65 sales $1,756,642 $27,025 $365,873 1984 1984-85 115 sales $3,301,916 $28,712 $647,294 1985 1985-86 123 sales $4,089,125 $33,245 $720,582 1986 1986-87 96 sales $5,229,475 $54,474 $761,106 1987 1987-88 99 sales $4,589,225 $46,356 $720,231 1988 1988-89 116 sales $5,473,473 $47,185 $989,441 1989 1989-90 55 sales $5,017,525 $91,228 $491,086 1990 * This expenditure was apparently recorded for calendar years. No figures were provided for the 1982 year apart from commission and bonuses of $84,200.

70. Further sales took place up to 1996-97 when the State purchased the 24 remaining lots for a total of $5,700,000. Mr Blomfield had provided an indicative valuation of those lots at $4,912,000. following negotiations this figure was increased to take into account commercial timber on some lots, interest and Mr Quaid's stated view that the initial valuation was conservative. 71. In addition to those 24 lots the State purchased eight lots held by the developer as mortgagee in possession. State purchases were part of a combined State/Commonwealth "buy back" program discussed at para 72 and following. The number of "Daintree" lots sold by the developer totalled 943, including the 24 lots sold to the State. The sales for the intervening years were as follows:

Year No of Gross Average Marketing Expenditure * Sales Realisation Price (including commissions and bonuses) 1990-91 5 sales $581,500 $116,300 $249,974 1991 1992-93 5 sales $435,000 $87,000 $65,806 1992 1993-94 2 sales $140,000 $70,000 $60,435 1993-94 1995-96 1 sale $575,000 $575,000 $230,447 1996 * This expenditure was apparently recorded for calendar years except for 1993-94.

23 I note that the last year of promotional advertising expenditure was 1992, however, advertising costs for 1991 ($1,632) and 1992 ($3,767) were nominal compared with the previous years of: 1983 $34,286 1984 $127,596 1985 $189,059 1986 $151,006 1987 $163,903 1988 $96,825 1989 $177,483 1990 $55,000

Daintree Planning Package 72. In September 1994 a report entitled "Daintree Planning Package - Final Report" under the authorship of Mr Humphreys' firm was submitted to the Douglas Shire Council. That report resulted from a study conducted into an area of approximately 30,000 ha of land extending north of the Daintree River and incorporating the majority of freehold properties and tourist sites central to the issues raised and addressed in the report. Those issues were concerned with Aboriginal values, access, traffic patterns, tourist trends, the needs and attitudes of the residential community and for the purposes of present discussion I mention, in particular, environmental values. 73. The study was undertaken to identify actions needed to preserve the study areas environmental assets, provide for a sustainable and prosperous eco-tourism industry primarily based on the Wet Tropics World Heritage Area (WTWHA)and to address the needs and rights of local residents and landowners. 74. The following quotations, which deal with environmental issues in the study area, are taken from pages 2 and 3 of the Final Report: "The wet tropical rainforests of North Queensland are of outstanding universal significance being a relic of the Cretaceous rainforests, a formerly widespread vegetation type which has been reduced through climatic change to occupy only a fraction of the Australian continent (Russell 1985). Through the impact of land development, only 20,000 km² remains in Australia, over one-third of which is in the WTWHA. The Daintree-Cape Tribulation area is the last extensive area of lowland rainforest in the wet tropics still linked a continuum with the main upland rainforest massive (Werren, 1993).

Not all of the valuable rainforest in the study area is included in the WTWHA. Due to the inherent difficulties in government management of privately owned lands, the WTWHA largely excludes freehold lands. Significant forest areas lie on the remaining 7,500 ha approx. of the study area, mostly freehold allotments, outside of the WTWHA. These forests are 24 recognised as exhibiting environmental values equal to, and in particular cases, surpassing those of the World Heritage listed forests.

These forests have in places already been degraded through agriculture, tourism and residential development. At present there are no comprehensive controls on vegetation clearing and development rights exist to erect dwellings. So, there is the potential for further widespread degradation to the extent that all of the remaining rainforest on these properties may be cleared and such clearing impacts the forest beyond the boundaries of these properties in what may be termed a 'shadow effect', whereby forest on the new edges created by clearing and exposed to unfavourable conditions, degenerates, forest beyond this is then exposed, the edge regresses further, and so on. Residential settlement may effect further direct detrimental impacts on the environment through domestic animals, fencing, erosion, pollution and weed infestation, as well as indirect impacts through increasing the demand for facilities and services, the development of which would further impact upon the environment.

To a lesser degree, growing tourism and a lack of facilities and regulation of tourist activities are also resulting in environmental degradation.

Thus, there exists a very real threat for significant immediate loss of biological and scenic values, and conceivably devastating flow-on impacts on the wider environment. Action is necessary to protect the area's environmental assets."

75. At page 69 of the Final Report the consultant authors discuss strategies and record the following: "It is imperative that an effective scheme be tailored to address the problem of the continued degradation of the highly significant biophysical values of the Daintree-Cape Tribulation area. Ideally, conservation of the natural values of the study area would be best achieved by a phasing out of incompatible area- demanding landuses such as pastoral and other agricultural activities. Low density residential landuse, at a scale promised by the existing cadastral boundaries, is also inimical to the protection of landscape quality, the preservation of biodiversity and antagonistic to the tourist industry which these sustain."

76. The report then goes on to introduce the proposition of returning identified lands to public ownership and placing them under protected tenure. In due course this action was endorsed and became known as the "Daintree Buy-back Scheme", a scheme authorised and financed by a combined State/Commonwealth initiative. The purchases from the "Daintree" developer in 1996-97 took place as part of this scheme. In addition, landowners were invited to express interest in selling land to the State as part of the scheme. Lands offered under that arrangement were evaluated and, if they satisfied the main criterion as being of significant environmental value, negotiations were entered into and sales effected in the manner that might usually take place in the marketplace. Mr Blomfield was involved 25 in the valuing of the lands offered for sale, as well as those sought from the developer by the State. The Market and Marketing 77. The experience of the "Daintree" project is important in the claimant's view. First, it was said that a lot of the marketing goodwill at the "Daintree" would have carried forward to a new campaign of marketing the proposed 240 lots produced from the "Starcke" freehold. More importantly, it was said by Mr Beattie that the "Daintree" campaign served as "both a precedent and a blue print" for the marketing of what was called the "Starcke Freehold Wilderness". Before considering the merits of that proposition, there are preliminary matters that invite discussion:  to what extent was the "Daintree" project successful?  To what extent was success owed to the marketing campaign? - did the buoyancy of the market play a role? - was there a market for the "Daintree" lots in existence before the marketing campaign started?

78. I will consider these questions in the above order. Before I do, however, I will mention that Mr Blomfield and Mr Slater acknowledged that benefits did flow from the marketing campaign. Mr Slater thought that both prices and rate of sale at "Daintree" would have benefited, whilst Mr Blomfield thought that the effect would have been confined to the rate of sale there. Notwithstanding these views, the question remains as to the extent of the effect of the Beattie marketing campaign with the claimant placing that effect higher than did the respondent. 79. The profitability of the "Daintree" project is important in the claimant's case for a number of reasons. In particular, it is said to demonstrate the success of the Beattie marketing campaign. It was suggested by the claimant that the "Daintree" project generated a substantial profit for the developer, that profit said to have been in the order of $31,000,000. It was the claimant's case that the sale prices and rate of sale achieved at the "Daintree" during the period of the marketing campaign were attributable to that marketing campaign, managed by Mr Beattie. 80. The claimant, through Mr Beattie, referred to the profitability of the "Daintree" project in simplistic terms as follows: Total gross realisation $42,373,528

Costs: Surveys and engineering 415,959 Road construction, external Contributions and maintenance 3,810,146 Rates and land tax 858,552 26 Legal Costs 181,742 Plus: Marketing 5,823,444 $11,089,843

Net realisation $31,283,685

81. This net figure is not, however, all profit as it does not take into account the cost of land nor interest on funds invested. Mr Slater provided a discounted cash flow (DCF) exercise, which purported to reveal the profitability of the "Daintree" over its full 18-year period. That exercise assumed a land cost of $3,000,000 which was the price Mr Quaid had placed on the land as cane expansion land. Assuming a highest and best use of subdivision, the land cost ought to have been higher with a consequential reduction in profit. Mr Slater also assumed an average sale rate throughout the full 18 years of the project, whereas the more expensive lots sold later in the process. He also assumed development costs were spread throughout the project, whereas the larger component of such costs would ordinarily be expended towards the start of the project. He assumed no "lost" sales through mortgagee action. His exercise employed an interest rate of 9.65% which was the opportunity cost rate not the applicable commercial rate. Mr Slater said that each of the above assumptions favoured the claimant in terms of maximising the calculated profit. On the basis of these figures he calculated an internal rate of return (IRR) after interest of 40.4%, but said that this would have been lower had less favourable assumptions been made. His profit and risk rate as calculated was 297.6%. His calculated profit was $27,137,369. 82. The claimant's view is that Mr Slater's exercise reveals a very profitable undertaking even disregarding its criticisms of the exercise, the most important of which was that the exercise does not portray the peculiar aspects of the "Daintree" project. Two of these aspects are said to be important. First, the project did not have the benefit of the Beattie marketing campaign until after the initial two to three years of selling had taken place. Second, after the conclusion of the marketing exercise, selling was confined to what Mr Quaid referred to as the "scraps". Whereas Mr Slater's DCF was prepared on the basis of the full 18 years of the "Daintree" project, it was the claimant's view that a more accurate representation of the real potential of the marketing campaign would have been achieved were Mr Slater's exercise confined to the period of the project which coincided with the marketing campaign. 83. The "scraps" referred to by Mr Quaid included some lots with special features that Mr Quaid said he intended to hold, then sell after the year 2000, though one of these blocks did sell during the post-marketing period for $575,000. His asking price was $750,000 for 27 this lot. There were 24 other lots totalling 500 ha which Mr Quaid's organisation priced at a total of $13,000,000. Mr Quaid said that it would not have been practicable to mount a marketing campaign for these few lots. That seems sensible to me. 84. The State Government embarked upon the "Daintree" buy-back plan in 1996. The purpose of that plan was to purchase individual subdivided lots at the "Daintree" in order to protect the environmental values of those blocks. The outcome of that plan was that the 24 lots covering 500 ha priced by Mr Quaid at $13,000,000 were purchased by the State for a total of $5,700,000 during 1996-97. There was a substantial number of other purchases from individuals. Mr Quaid said that he accepted the $5,700,000 price because he was concerned at facing another "Starcke Act", the suggestion being that the final figure was lower than market value. Mr Blomfield carried out the valuation of the "Daintree" lands for the State and expressed the view that sales included in the 24-lot State purchase were priced in accordance with the market. The evidence referred to by him tends to support that view. In addition, there is the fact that Mr Quaid was able to sell 24 lots in bulk to the one purchaser - an occurrence which will often attract a price discount, though there was no suggestion from either side in this case that this explained the difference between asking price and the final price. The highest and best use of these lots probably would not have been in contention. Given this and the fact that there were over 900 other sales in the "Daintree" project on which to rely, for the purpose of valuation, Mr Quaid's view that these lots really had a value of $13,000,000 ought to have been capable of support by valuation evidence being provided in the usual manner. 85. Mr Slater's DCF exercise of the "Daintree" appropriately reflects the profitability of the project, based on its actual history but on the assumptions made. The profit shown by the DCF exercise is clearly high, showing an average return after interest for each year of the project at 40%. Nothing from the respondent's side suggests that the project was anything but profitable. The pointed question is, however, the extent to which that level of profit is attributable to Mr Beattie's marketing campaign. I turn now to consider the question of the market conditions. 86. Mr Blomfield gave evidence of the relevant real estate market in North Queensland enjoying boom conditions during the 1980s and suggested that this would have contributed to the success of the "Daintree". He saw March 1994 as being a flatter market period. Mr Brett said in reference to the Australia-wide market that the buoyant period would have been more in the mid to late 1980's and even into 1991. He thought it fell after that but that by 1994 was in the middle of a period of substantial growth. I understand Mr Blomfield's view of the market to be more pertinent to the issue of market conditions that were 28 encountered at "Daintree" and would have been encountered in marketing the "Starcke" freehold lots. I note Mr Brett's opinion that the middle to late 1980's were the more buoyant part of the "Daintree" marketing period. Whilst I accept this evidence, this does not lead to a conclusion that the input of Mr Quaid and Mr Beattie to the "Daintree" success ought to be totally discounted. The level of sales was lower before and after the campaign, a coincidence arguably attributable to the effect of the campaign, if not exclusively. 87. Mr Blomfield expressed an opinion that a market of the type exploited by the "Daintree" project was emerging before and together with the marketing campaign there. He referred to Camelot Close at Cape Tribulation as a subdivision project which he said revealed the existence of the relevant market. Cape Tribulation is about 33 km north of the Daintree River ferry and about 13 km north of the northern end of the "Daintree" development. Camelot Close was the name of one of the roads in the subdivision, others being named Nicole Drive and Zena Close. However, the parties generally referred to the subdivision as "Camelot". The subdivision in this area was being undertaken, on Mr Blomfield's understanding, at around the time the initial "Daintree" lots were sold into the local market. Camelot was preceded by a small subdivision at the beachfront of Cape Tribulation and to the north of that. Mr Blomfield said that lots developed and sold there and in Camelot were 1 to 2 ha and were very comparable with the main product in the "Daintree" project. He said that the Cape Tribulation and Camelot lots were not supported by a marketing program such as that undertaken for "Daintree" , where the size of the project was substantially larger. Prices started in Camelot Close at $12,400 in 1978 and the highest price paid was $150,000. This is far short of the highest priced lots at "Daintree", however, no comparison on a lot to lot basis was provided to me. I might mention here that I had the advantage of a driving inspection of the "Daintree" subdivision and those sale properties referred to as Camelot. This inspection was carried out in the company of counsel and Mr Beattie. It assisted me in my understanding and appreciation of the evidence. My inspection led me to the view that the higher priced "Daintree" lots were substantially superior to the Camelot lots. 88. In response to that evidence it was suggested that Mr Blomfield may have simply had the advantage of hindsight. He had arrived in North Queensland in 1988 towards the end of the "Daintree" marketing program, therefore saw the successful project, not the raw land that Mr Quaid had available in 1979, with even fewer facilities than later became available. It was also submitted that Camelot was a quite different project from the "Daintree", as is demonstrated by the fact that there were 12 sales only from the Camelot 29 project during the period 1978-82, with the later sales levels indicating some benefit being derived from the publicity flowing from both the protest activity and the "Daintree" marketing campaign. A perusal of the evidence of Camelot transactions provided to me supports the view that values there increased substantially between 1978 and 1991. 89. I think it undeniable that Camelot sales did demonstrate that a market existed for the type of product available at "Daintree", though one not aggressively pursued by the Camelot developer. In addition, I note that buyers were found for the "Daintree" product with the sale of 34 existing rural titles south of the Alexander Range in the mid-1970's and the sale of lots during the period when marketing expenditure was low (up to 1981-82). The original "Daintree" sales were not all rainforest blocks, but I understand that they were broadly comparable with lots sold after the marketing campaign started in that post- marketing lots included predominantly rainforest lots but with some which included clearing and some with regrowth. This also appears to be the case with the Camelot lots which sold before and after the "Daintree" marketing campaign. I note also that Mr Beattie said that the sale of lots to the local market during 1979-1981 prompted a significant number of inquiries for the purchase of small acreage virgin rainforest before the marketing program was undertaken. Before drawing a conclusion on the question of the benefit of the Beattie marketing campaign at "Daintree", there is some other evidence to which I will refer. 90. I have earlier set out schedules showing sales rates and income achieved at "Daintree" and marketing expenditure costs. I have analysed those schedules further to reveal the following:

Year Average Cost per Sale Cost as a % of Income

1982-83 $2,722 11.30% 1983-84 $5,628 20.83% 1984-85 $5,628 19.60% 1985-86 $5,858 17.62% 1986-87 $7,928 14.55% 1987-88 $7,275 15.69% 1988-89 $8,529 18.08% 1989-90 $8,928 9.79%

91. It can be seen that the cost of sales generally increased during the main marketing period there, but the cost expressed as a percentage of income from sales shows a quite uneven performance. If I consider promotion and advertising costs alone the trend is even 30 less clear in the case of costs per sale, but appears to show a fairly consistently reducing cost when expressed as a percentage of income:- Year Average Cost per Sale Cost as a % of Income

1983 $239.76 .995% 1984 $1,963.01 7.26% 1985 $1,643.99 5.73% 1986 $1,227.69 3.69% 1987 $1,707.32 3.13% 1988 $978.03 2.11% 1989 $1,530.02 3.2% 1990 $1,000.00 1.1%

92. The cost of advertising and promotion expressed as a percentage of income tends to indicate the recognition and acceptance in the marketplace of the produce at "Daintree". What it may also reveal is that in spite of the focusing of the campaign on the 1 to 2 ha sites, it was also attracting purchasers to the larger more expensive sites. The rate also supports the view put by Mr Slater and Mr Blomfield that the more expensive sites tended to sell later in the campaign. 93. Given the above discussion, I cannot accept that the marketing campaign at "Daintree" had the effect of taking a totally disinterested market and transposing it into a successful outcome. It is my conclusion that the existence of the relevant market and the prevailing market conditions contributed substantially to the project's outcomes. I am prepared to accept, however, that the marketing campaign played a significant role in the success of the "Daintree" project. The weight of the evidence also leads me to conclude that the campaign contributed to both the rate of sale and sale prices. I provide further reasons for this last-mentioned conclusion under the heading "Lot Pricing and Rate of Sale". The "Daintree" Marketing Plan as a Blueprint for "Starcke"? 94. The suitability of applying a marketing campaign at "Starcke" which was based on that employed at "Daintree" was not a matter that I understand to have been seriously challenged by the respondent. Differences in the application of the campaign at "Starcke" were not spelled out in detail, however no better blueprint than that provided by "Daintree" was put into evidence. Both Mr Blomfield and Mr Slater were of the view that the "Daintree" marketing exercise was a special feature of that project and effective in its outcome. This is not to say that they agreed that it could be applied to a project at "Starcke" to similar effect - far from it - but the marketing plan, as a plan, was well regarded. 31 95. I have no difficulty, therefore, in holding that the marketing plan for the "Daintree" would, as was suggested by the claimant, provide a suitable blue print for a marketing plan for a large-scale subdivision located away from urban centres, such as the proposed "Starcke" project would be. Some practical changes would inevitably be needed, but the essential elements of the marketing program could be maintained. The claimant tendered a video and a brochure which indicated part of the type of publicity that could be associated with "Starcke". These marketing tools are clearly borrowed from the "Daintree" model. 96. Mr Beattie said that the main differences between the planning and marketing of the "Daintree", on the one hand, and the "Starcke" on the other, would be the number of lots and the narrowing of the target market to reflect the higher prices being sought. There is no need to comment on the first point of difference here. As to the second - a number of points need to be discussed involving consideration of whether the only differentiation between the "Daintree" buyer and the "Starcke" buyer would be based on affordability or capacity to pay. I return to discuss this point of difference below under the heading "Lot Prices and Selling Rate". I will now turn to discuss one aspect of Mr Beattie's "Daintree" marketing campaign - the strategy described by Mr Beattie as turning negatives into positives. 97. I do not find that strategy as either remarkable or as being unique to the "Daintree" project. Nor does the adoption of such a strategy imply that all negatives are capable of such transformation. In this respect I understand marketing to involve a manipulation of information as part of a process of providing the market with a need-satisfying product. Notwithstanding skilful manipulation, the information, that is the facts about a parcel of land, remain unaltered. These facts remain largely observable and allow a potential customer to be excluded from the market. They may remain part of the vacant land market, but not part of the relevant segment - the so-called "target market". The greater the number and significance of unacceptable facts about the product, the greater would be the number of people excluded from the market segment. 98. Whilst the theme of the "Daintree" marketing was clear as promoting "a few acres of rainforest near beaches and creeks", the content of the marketing program was not so restrictive as to intrude on what "dreams", as Mr Beattie put it, potential purchasers might have, be it a retirement cottage, a family home, a business opportunity or the chance to own an attractive piece of the natural environment. Whatever the dreams of the individual, there may be some negative aspects of a parcel of land which will always remain as negatives, but whose significance might be discounted because of the presence of perceived positives. To take an example, from a different context: a house near a noisy railway line may be 32 attractive to a certain class of purchaser because of its price. The railway line noise remains a disability, a negative, but that negative has the effect of bringing the property into the buying range of certain buyers - people who subscribe to the ubiquitous Australian dream of owning their own home. No competent marketer would prudently assume that all perceived negatives could be turned into positives. Some observable facts or features can be presented as positives to the target market, whilst others will have the effect of narrowing the market considerably unless compensated by, for example, the attractiveness of price. "Daintree" as a Precedent? 99. In the case of the "Starcke" freehold, the marketing issue also confronts the question of whether there was a market segment comprising people who would be prepared to buy the proposed lots at the prices asked (or as adjusted by me having regard to the evidence), or who had such a latent desire to so purchase: one which a marketing campaign may unearth. That question is explored throughout the evidence of Mr Beattie, Mr Nevard, Mr Slater and Mr Blomfield and I will come to that, however, will first concentrate on the evidence associated with the "Daintree" experience, and in this regard I am particularly interested in exploring Mr Beattie's suggestion that the "Daintree" was a "precedent" for a "Starcke" subdivision of the type proposed. I should make it clear that Mr Beattie relied upon what I might say is a usual meaning of the word "precedent". That is, he was of the view that the fact of the successful marketing campaign at "Daintree" and the suggestion of similarities between the "Daintree" property and the "Starcke" freehold property led to a conclusion that he could safely predict the successful development and marketing of the "Starcke" at the prices he proposed and at the sale rate he also proposed. 100. Mr Brett, it will be recalled, relied on Mr Beattie's conclusions on these matters. In these circumstances my acceptance, rejection or modification of Mr Beattie's opinions is of critical importance to the outcome of Mr Brett's valuation. 101. It was the claimant's view that had the respondent resumed the "Daintree" land in, say 1979, it would not have approached the matter of compensation with a vision of that land being sold off in the form of 943 subdivided lots as a project such as Daintree Freehold Rainforest. The State would probably have, just as in the present case, it was submitted, viewed the land as a grazing property. The State's opinion, it was suggested, would have been influenced by the fact that there was no historical example, which would have provided support for a suggested highest and best use of the "Daintree" land as land capable of subdivision and sale. In short, the "Daintree" project was unique not only to North Queensland and to the State as a whole, but in a national context. 33 102. In such circumstances a suggestion by the claimant that the "Daintree" land had the subdivision potential that subsequent events showed to be present would have been met by the criticism that such a suggestion involved "a feat of imagination". Counsel for the claimant extracted that quotation from Sri Raja Vyricherla Narayana Gajapatiraju Bahadur Garu v. Revenue Divisional Officer, Vizagapataam (1939) AC 302 (Sri Raja) at 312. The claimant's proposition is that a subdivision and marketing program took place at "Daintree" which demonstrates that a similarly successful exercise could be conducted at "Starcke". It demonstrates that because the material similarities between the two are such as to make the analogy or comparison valid, it was submitted. As such there is no "feat of imagination", at least not in a complete sense. 103. I think it important for me to say at this point that the evidence as to the prospects at "Starcke" should be viewed from the perspective of the hypothetical prudent purchaser envisaged by Isaacs J in Spencer v. The Commonwealth (1907) 5 CLR 418 (Spencer) at 441. "To arrive at the value of the land at that date, we have, as I conceive, to suppose it sold then, not by means of a forced sale, but by voluntary bargaining between the plaintiff and a purchaser, willing to trade, but neither of them so anxious to do so that he would overlook any ordinary business consideration. We must further suppose both to be perfectly acquainted with the land, and cognizant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property."

I have a vision of such a person, considering a purchase of the "Starcke" freehold, being presented with the evidence and with the witness attempting to influence the hypothetical purchaser to adopt his point of view. In the present topic the question becomes one of whether this prudent person would be influenced to conclude that the "Daintree" experience is sufficiently relevant to his consideration of the "Starcke" freehold that he would conclude that the success of the "Daintree" could be replicated there. Now in considering this matter the question which the hypothetical purchaser has in the forefront of his thoughts is not "why not", but "why" should the example of "Daintree" be treated as a precedent in an assessment of the prospects for a subdivision of the "Starcke" freehold into 240 x 100 ha lots. As I deal with the issues that arise for decision by the putative prudent purchaser, I need to bear in mind that I must assume a realistic view of the prospects for the land, but one that is charitable to the claimant rather than uncharitable. This does not mean 34 that all doubts should be resolved in favour of the claimant, but that such doubts as would otherwise deny a fair assessment of compensation should be resolved in the claimant's favour. Talbot J expressed that proposition this way in McBaron v. Road and Traffic Authority (NSW) (1995) 87 LGERA 238 at 244-45: "It is appropriate to seek to do justice by adopting a generous approach in favour of the resumee to ensure that just compensation is paid so far as the Act allows. Therefore any discretion should be exercised in favour of the Claimant where practicable in order to achieve a just result."

104. In the case of the suggested "Starcke" freehold subdivision there are no directly comparable subdivisions nearby. In the claimant's view, however, the "Daintree" experience is sufficiently comparable to lead the intending developer to the view that a similar marketing campaign would lead to similar success. A prudent developer in attempting to obtain guidance from the marketplace as to the prospects of success of his venture will look for other projects so similar to his own that the guidance they offer will be valid and reliable. He will not look for different sized lots, in an area of different vegetation/topography, with different access to service centres and in a different price range. He may not find the perfect project which provides secure guidance and so may have to settle for one or more with fewer dissimilarities than others. 105. An intending purchaser of the "Starcke" freehold would, I accept, be aware that the "Daintree" project would be an example to which he could direct his mind in considering the prospects of a successful subdivision project at "Starcke". He would know that there would be little benefit in investigating urban subdivision or rural residential subdivisions such as those near Beaudesert or other rural centres. The scope of the "Daintree" project, its situation in North Queensland and its proximity in time would invite consideration of it. The usefulness of the approach turns very much, however, on the points of similarity and their validity and the significance of these points. The object of the comparison exercise would need to be kept in mind. As a general proposition, it is to do with predicting the success of the "Starcke" freehold subdivision. That success will turn on a number of factors which will comprise the real points of focus for the prudent purchaser:  the market  the selling prices  the rate of sale

106. Other matters such as the process of gaining local government approval, expected construction costs and suchlike would be the matter of separate lines of inquiry. I now come to the claimant's suggestion of similarities between "Daintree" and "Starcke" . 35 107. The first issue of significance is the assumed market. With the sales comparison approach frequently used by valuers in the process of valuing land, the sales evidence, is itself, evidence of a market assuming no contrary evidence to say that the market has disappeared or severely contracted either because of being satisfied or partially satisfied since the time of the sales. In the exercise relied upon by the claimant in employing the "Daintree" exercise as a suggested precedent, there can only be said to be a market for the "Starcke" product only if it is so similar to the "Daintree" product to lead to the conclusion that there is a market. That is, of course, unless the claimant is able by other means, such as a market survey, to demonstrate the existence of the relevant market. 108. Both Mr Quaid and Mr Beattie said that in 1989 once the "Starcke" freehold title had been granted, the similarities between the pre-marketing circumstances at the "Daintree" and those existing at the "Starcke" became apparent. In Mr Beattie's report tendered in evidence he described the similarities in this way: "(i) Both englobo properties had been held for many years under the same stable of ownership, and utilised for primary production. (ii) Both were held under freehold title and not mortgaged.

(iii) Both were located in semi-remote coastal locations.

(iv) The public perception of both the Daintree and the Starcke regions is that they are situated in areas of great environmental value which also offer opportunities for exploration, adventure and seclusion.

(v) In both cases there was virtually no pre-marketing evidence of sales of smaller properties which could be classed as truly comparable to the proposed subdivided lots.

(vi) Both contained aircraft landing strips.

(vii) In both instances marketing objectives would include rates of sales very much greater than could be achieved by relying on the natural demand from within the Far North Queensland market, and I knew the vendor was capable and willing to fund the significantly higher costs associated with interstate and, if necessary international marketing."

109. It may be convenient before I address the above points if I provide a brief description of the "Starcke" product. I have mentioned thus far that the valuation prepared by Mr Brett of the "Starcke" freehold land is based on the proposition that the land had immediate potential for subdivision into 240 lots each of about 100 ha. A plan was provided by the claimant showing a proposed subdivision layout and it was that plan which provided the focus for the evidence of the various witnesses. 36 110. Each of the proposed lots had a minimum road frontage of 500 metres. The lots were proposed to be accessed by a road system extending to a total distance of about 95.4 km with internal roads feeding off the main or "spine" road as it was called by the witnesses. That spine road ran roughly north-south between the Morgan and Jeannie Rivers and followed the existing road for much of that distance, but was otherwise located to ensure appropriate lot yield and lot dimensions. 111. The layout included no provision for public use land, however, there does appear to be some public access to the foreshore, according to Mr Potter. There is no provision for community infrastructure in the form of sport, education or health facilities and suchlike, nor for commercial facilities such as retail or fuel outlets. Two airstrips and two residences on the "Starcke" freehold were designed to be contained within four of the proposed lots. 112. It will be understood that in terms of vegetation the lots would mainly be open savannah with some cleared areas and some with regrowth. Few would have some rainforest or stands of livistona muelleri. The following break-up of lots revealing other features is taken from Mr Beattie's report: 14 with beach esplanade frontage; 22 with estuarine river frontage; 15 with inland river frontage; 34 with or close to rugged rocky escarpments and coastal wetlands; 15 in hilltop or high hillslope positions; 16 with frontage to coastal wetlands; 10 with vine forest in the Mt Webb area; 4 in red soil plains country; 7 with lowland rainforest; 10-15 adjacent to dune fields; 15 in stunted woodland/dune fields; 1 Round Hill; 1 White Sand Hill; 1 South Starcke Airfield - near red plains country; 1 North Starcke Airfield; 1 Oil Palms and "Opera House"; (a house in elevated position) 1 Starcke Homestead. The balance is open forest eucalypt country.

113. If I adopt the development works proposed by the claimant for the proposed subdivision:- the lots will not be supplied with water bores nor reticulated electricity. Access will be via a gravel road with a net flood immunity status of less than Q1. That is, it will be overtopped by floodwaters, yearly. Access to Cooktown via the Isabella-McIvor road will not be upgraded beyond a point about 7 km south of the Morgan River. This would mean that access will usually be by 4WD vehicle. Causeway crossings will be constructed over the Morgan and Starcke Rivers. These crossings will be untrafficable 37 frequently each year during the wet season but will otherwise provide a safe, easy crossing. Access may be available via one of the two grass airfields. Lots will be subject to a VCA where they exhibit environmental values worthy of protection or where they can act as a buffer to such areas. This brings me back to the list of items which Mr Beattie said comprised similarities between "Daintree" and the "Starcke" freehold. 114. As to item (i) - unified ownership of the land earmarked for development would be an advantage over land whose ownership is fragmented. Not only would the process of development and the allocation of costs and revenue be simpler, it would also make it easier for a marketer to establish a consistent and single relationship with the one owner. 115. As to item (ii) - the advantage of freehold tenure over a lease from the Crown importantly means that as long as the demands of the local government and any other statutory requirements as to planning are met, subdivision or development would not be inhibited in the same manner as would arise in the case of a Crown lease granted, for example, for grazing or some such limited purpose. The fact that the land is not encumbered by a mortgage is no doubt of significance to the owner, but is not, in my opinion, a factor which goes to the potentiality of the land for it may be sold to a person with the resources to develop it to its highest and best use. I discuss the relevant principles later in these reasons. 116. As to item (iii) - the issue of location of "Starcke" and its comparison with "Daintree" in that respect is a matter of great importance in this case. It is discussed below under the heading "Location". 117. As to item (iv) - I accept that this is so. Such a feature would be an aid in marketing "Starcke" lots in that there would be a high recognition factor in the community. The notoriety associated with the demonstrations in the "Daintree" area would also be expected at "Starcke" were development proposed: with a consequential increase in profile of the area, hence the project. 118. In a promotional video which Mr Beattie had prepared to show the features associated with the suggested subdivision, most of the features focused on were not on the "Starcke" freehold land. That was seized on by the respondent as in some way indicating the comparative absence of natural attraction on the "Starcke" freehold. A mock-up promotion brochure was similarly criticised. 119. Whilst the freehold land is not without some attractions, it is clearly the case that the features in the region of the land provide it with so much more than does the land itself. I have discussed these features earlier at para 49 and will not repeat them here. Whilst some attention needs to be given to the characteristics of the individual lots proposed to be 38 produced, it is not valid to disregard the significant features of the neighbouring landscape. Certain features such as the rock mountains of Cape Melville will be relevant because of their proximity, even though they may be out of view of all of the "Starcke" freehold and frequently inaccessible. Other features such as the escarpment or a stream will, however, lend more immediate value to certain proposed lots. 120. The respondent led evidence concerning Aboriginal interest in the "Starcke" lands generally, including the freehold. I discuss that evidence below commencing at para 346 and following. It was suggested by Dr Memmott that the nature of Aboriginal interest was such that there could be large rallies and protests in the "Starcke" area, including a blockade of the public road into "Starcke", such actions being designed to either limit or stop development or lead to the satisfaction of what the Aboriginal people might see as justified claims. I use the word "claim" in a general sense. The claimant's position is that the assumed developer would form a view that such action could only be of benefit to the marketing of the subdivision just as similar protests by environmental groups in the case of the "Daintree" were capitalised on by Mr Quaid to promote his development there. I think that in the case of the "Daintree", the publicity coincidentally promoted a particular aspect of Mr Quaid's land and provided a useful platform from which his own marketing campaign could be launched. I see the prospect of Aboriginal protest at the "Starcke" as being characterised somewhat differently by observers. I very much doubt that potential purchasers resident in urban centres in the south would be attracted to land the subject of Aboriginal protest in the way that they apparently were to land said to contain virgin rainforest. I think there is another important distinction with the experience at "Daintree". In "Daintree" the high profile conflict was associated with the Cape York Tribulation Road. Mr Quaid was not the builder of the road but was able to capitalise on the notoriety generated. Here the hypothetical purchaser of the "Starcke" freehold would be a protagonist with respect to any Aboriginal protest or action, therefore I would think, would attempt to contain any conflict. He would not be simply capitalising on the publicity exposed by a conflict between other parties. 121. As to item (v) - I have already observed that the market for small lots in the Daintree/Cape Tribulation area was not an untested one (para 89). I discuss this issue with respect to the proposed "Starcke" lots under the heading "Lot Prices and Selling Rate" later in these reasons. 122. I will come to a discussion of items (vi) and (vii) in due course. I will, however, add one similarity to Mr Beattie's list: both the "Daintree" and proposed "Starcke" projects could be described as larger than normal subdivisions in their respective localities; and 39 were presented not as delivering a product that satisfied some utilitarian purpose, but appealed more to the sense of adventure of purchasers. Neither project is suburban, but each has a unique and interesting location. Mr Brett said that both "Daintree" and "Starcke" projects are of sufficient size to support a substantial national marketing campaign. Lesser projects cannot do this. 123. Whether the "Daintree" experience constitutes a precedent which would confidently guide a hypothetical prudent purchaser to say that the "Daintree" success would be repeated is a question which turns on the identification of the similarities and differences between the two projects. I have listed the features said by the claimant through Mr Beattie to be similarities. I observe that except perhaps for (iv) (environmental values) and (vi) (airstrip on both properties) the listed similarities give little inkling as to the product of each site or the identified market for that product; or the differences between each site as might be perceived by the prudent purchaser as being differences which the suggested market would consider relevant. 124. In drawing a general comparison between the "Daintree" lands and the "Starcke" freehold, Mr Beattie identified the main differences as being the size of the intended allotments, vegetation types, location, anticipated price and to these the respondent added that there were differences in topography. Notwithstanding Mr Beattie's identification of these differences, he did not in his written report discuss the significance of these differences in the context of his view that "Daintree" was a precedent for "Starcke". I infer from his evidence that he thought these differences to be material, but it was only the price difference that received further treatment in his report. I will now discuss this list of differences including the critical issue of "location". Size and Price 125. The bulk of the "Daintree" lots were 1 ha to 2 ha in size, though with some larger sites with special characteristics such as beach or creek frontage, as well as some special lots which I will discuss in detail below. At "Starcke" the lots are designed to be about 100 ha each. Mr Beattie acknowledged that the target market for blocks of such a different size compared with the "Daintree" would comprise a different type of purchaser. He was, however, unable to confidently describe the segment of the market that would be attracted to the larger sized "Starcke" blocks, other than to say that demographic, investment and marketing surveys would be employed to assist in targeting potential buyers with high levels of disposable income. He said also that he would target specific institutions including Governments and conservation foundations. 40 126. His identification of the difference in size between "Daintree" and "Starcke" as being a matter of relevance in identifying the target market was in the end explained by Mr Beattie as amounting to nothing more than a difference in price/affordability. Mr Slater thought that size would be a point of discrimination in the market, but said that price would be of greater significance. Mr Beattie said that the marketing campaign for the "Daintree" targeted the market for the 1 ha to 2 ha blocks and incidentally attracted inquiries which led to the sale of the higher priced blocks. These blocks were not higher priced only because of size but because of features such as the presence of a beach, creek, elevation, views, and suchlike. 127. I would have thought that size would matter to potential purchasers, some finding 100 ha of land to be an attractive proposition whilst others would find it daunting to have to care for such an area in a tropical environment. I have no evidence which points in any sophisticated way to how the profile of the potential purchasers of "Starcke" might take account of the size factor. I have the impression, however, that the larger size as a single factor would have the effect of narrowing the market from the breadth of purchasers who were found at the "Daintree". The more relevant point, however, is that the size of lots is a material difference between "Daintree" and the "Starcke". I can now focus more closely on the issues of price difference between "Daintree" and "Starcke". "Daintree" selling prices were these: YEAR TOTAL LOTS SOLD GROSS REALISATION 1979/1980 21 $720,750 1980/1981 25 $475,900 1981/1982 48 $841,997 1982/1983 143 $3,446,000 1983/1984 65 $1,756,642 1984/1985 115 $3,301,916 1985/1986 123 $4,089,125 1986/1987 96 $5,229,475 1987/1988 99 $4,589,225 1988/1989 116 $5,473,473 1989/1990 55 $5,017,525 1990/1991 5 $581,500 1991/1992 NIL NIL 1992/1993 5 $435,000 1993/1994 2 $140,000 1994/1995 NIL NIL 1995/1996 1 $575,000 1996/1997 24 (sold out) $5,700,000 943

TOTAL GROSS REALISATION $42,373,528

41 The suggested "Starcke" prices are these: 38 lots @ $95,000 $3,610,000 46 lots @ $125,000 $5,750,000 34 lots @ $155,000 $5,270,000 27 lots @ $185,000 $4,995,000 20 lots @ $215,000 $4,300,000 36 lots @ $245,000 $8,820,000 12 lots @ $275,000 $3,300,000 12 lots @ $300,000 $3,600,000 11 lots @ $375,000 $4,125,000 2 lots @ $400,000 $800,000 2 lots @ $500,000 $1,000,000

240 lots $45,570,000

128. Now whilst the largest group of the "Daintree" blocks were in the 1 ha to 2 ha category at prices up to $30,000, the average price for the whole of the lots sold was $44,490, the average being lifted by some higher priced lots. 129. Whilst the average suggested price of the 240 lots at "Starcke" is $189,875 (say, $190,000), the lot prices may be analysed differently. It was pointed out by the claimant that the average price for about half of the lots (49.2%) was $124,000. That, however, focuses on the lower prices and invites the observation that the balance of the sale price calculates to around $254,000. 130. A prudent purchaser comparing Mr Beattie's suggested prices for "Starcke" and those achieved overall at "Daintree" would, in my opinion, draw a conclusion that each development is concerned with quite different markets. That conclusion would be reinforced by the differential in lot sizes. The claimant's viewpoint as explained by Mr Beattie and Mr Brett was not, however, that one compared lot sizes and prices overall, but that the "Daintree" exercise revealed a particular segment of the relevant market. I take that point up below under the heading "The 'Starcke' Market". 131. One other point of difference between "Daintree" and "Starcke" that the prudent purchaser would have drawn to his attention is that during the main sales period at "Daintree" the real estate market was experiencing "buoyant" conditions. There was a high level of confidence in the market and there were many proposals for developments such as tourist resorts that did not, however, translate into a finished product. By the early 1990s and certainly by 1994, according to the evidence, a more sober and stable atmosphere had descended onto the market. Vegetation and Topography 132. From what I can gather from the evidence, the "Daintree" land was originally nearly all rainforest. Part was cleared and most of the early sales to local purchasers were of 42 cleared lots. Some cleared areas have, however, regrown since sale and my inspection showed me how difficult it is now to pick the difference between virgin rainforest and rainforest regrowth. The "Starcke" freehold has been described earlier and may immediately be contrasted, rather than compared, with the "Daintree". Whilst some small parts of the "Starcke" are rainforest and others, such as the livistona muelleri stands, the parabolic dunes, or a sea view, have an intrinsic attraction, I have great difficulty in accepting that the remaining blocks dominated by stringy bark eucalyptus savannah would be seen as being as attractive as cleared rainforest blocks, virgin rainforest blocks or rainforest regrowth blocks. In the claimant's case this difference between the two projects was simplified in this way - "Daintree" was selling into the environmental market, whilst "Starcke" would sell into the wilderness market: both segments of the same larger market, as I understand it. Mr Nevard suggested to Mr Brett that there are "dry" people and "wet" people (the bulk of the "Starcke" sales would be to "dry" people). Whilst it may be the case that there are some "dry" people who would prefer not to own a piece of rainforest or a block of largely cleared land in a rainforest environment, I think that it would place an obvious gloss on reality to suggest that the "dry" land of the "Starcke" would be as attractive as the "wet" land of the "Daintree". The claimant stressed, however, that a purchaser at "Starcke" would not simply be purchasing the environment of a particular lot, but would be acquiring a piece of land in a broader environment. That is, there would be environmentally significant blocks in the subdivision, the Coral Sea to the east, Cape Melville National Park to the north, and "Starcke" National Park to the west and a virtual wilderness beyond those features. Different but similarly significant features would be visible/accessible from the lots at "Daintree" . In any event, and this is the important point, vegetation differences between the two are clear: Mr Beattie said as much. Mr Brett acknowledged that the purchasers at "Starcke" would have a different experience from those at the "Daintree". 133. Mr Beattie said at one point that he thought that there would be similar buyers at "Starcke" to those at "Daintree" because many of the lots sold at "Daintree" were of a similar price to those proposed at "Starcke" and many were not rainforest - therefore resembled the "Starcke" vegetation. The deficiencies in such reasoning is clear. 134. The respondent drew attention to the topography at "Daintree" , particularly in the coastal area, being of elevated hills, whereas the "Starcke" topography is generally flatter, though with a large elevated area in the region of the Starcke River. Although a large number of "Daintree" lots would enjoy elevation, I think that the evidence points to a small proportion, only, enjoying views of the ocean without the need for substantial clearing of 43 the rainforest. Also, whilst most of the "Starcke" lots could be described as flat, the views would generally include interesting topography. 135. Mr Blomfield expressed the view that the proposed product at "Starcke" was so different from that sold at "Daintree" as to make comparison between the two inappropriate in valuation terms. In drawing that conclusion, he drew a distinction between the "rainforest, beaches, creeks, the reef" at "Daintree" and what he described as the "wilderness" at "Starcke". He also mentioned differences in price and timing, which I take to be a contrast between the more buoyant 1980's and the 1994 market. Mr Slater said that the main differences between the two were price, accessibility (by which he meant "location" as discussed under the next heading) and vegetation. 136. I conclude that the hypothetical prudent purchaser of the "Starcke" freehold would find it difficult to accept that the difference in vegetation types combined with topography is not a factor that distinguishes the "Daintree" from the "Starcke". He would know from Mr Beattie that people emerged from the marketplace seeking virgin rainforest blocks when they became aware of land being sold at "Daintree". He would know that the "Daintree" market was sufficiently strong to support sales over a number of years. He would, at the very least, be concerned as to whether the marketplace would reveal a similar interest in the blocks to be created at the "Starcke". I think that he would conclude that the "Daintree" vegetation/topography would be more attractive in the marketplace than what "Starcke" offered. Location 137. The locational differences between the "Daintree" and the "Starcke" lands may be considered from two perspectives. First: clearly the "Starcke" is not in the vicinity of the "Daintree", but is in a different location therefore it is not open to suggest that a subdivision at "Starcke" would simply be another subdivision in the same geographic area, therefore would comprise a natural repetition of what had gone on before. There was, of course, no such suggestion of an intimate locational similarity between the "Daintree" and the "Starcke", the claimant submitting only that there is a similarity in both properties having coastal locations north of Cairns. It is in the context of that suggested locational similarity that the second perspective emerges. The claimant's view was that the "Starcke" subdivision, whilst in a different location from the "Daintree", enjoyed similar "locational attributes", to use my language, or were "equivalent" to quote Mr Beattie. In Mr Blomfield's view, whilst "Starcke" is located in Cape York, "Daintree" is not. A map of Cape York in evidence seemed to support Mr Blomfield's understanding, though I doubt 44 that an intending purchaser would have placed much weight on arbitrary lines of distinction. 138. "Daintree" was promoted in its marketing campaign as being "secluded not remote" having ready access to Mossman and Port Douglas and being not far removed from Cairns, which provides the facilities of a regional city together with an international airport. The respondent drew attention to the distance between Cairns and "Starcke" compared with the distance between Cairns and "Daintree" as a demonstration of the lack of the equivalence suggested by Mr Beattie. Driving time to the Morgan River southern boundary of "Starcke" would be 5½ to 6 hours from Cairns, depending on conditions. The owner of a lot to the north of the "Starcke" subdivision would have a substantially further distance to travel. Driving time between Cairns and Daintree is only 1½ hours, but then requires a ferry crossing. 139. The claimant's response to that suggested criterion was two-pronged. First, there was the mention of the two airstrips on "Starcke", as well as other airstrips located at Hopevale, Cape Flattery and the "Kalpowar" Pastoral Holding to the west. Access via airstrips at Hopevale, Cape Flattery or "Kalpowar" might be useful in cases of need, but use of these facilities on an ongoing basis would be neither guaranteed nor practical. Second, it was the claimant's view that the important access comparison is not to compare Cairns to "Daintree" with Cairns to "Starcke", but with Cooktown to "Starcke". Let me take those two points in order. 140. The respondent suggested that once the lots on which the two airstrips are located were sold, those airstrips would be lost to public use. Mr Beattie said that the purchaser would be assumed to wish to continue to operate such airstrips for business purposes. That had been the case at "Daintree" in the case of the single airstrip block there. Mr Beattie did not, however, put forward any method by which such usage could be guaranteed, excepting perhaps during the marketing period, though he said it would be encouraged. Nor was there any evidence as to the economies and practicalities of a lot owner continuing an airstrip operation for public usage. Such matters as usage, maintenance and legal liability would need to be considered. I do not think that a prudent purchaser of "Starcke" would accept Mr Beattie's assurance that Cape York etiquette would ensure continued access to the strips though such etiquette was acknowledged by Mr Blomfield. There are also practical considerations such as the manner by which those lot owners arriving at one of the airstrips would be transported to their property. Would they store vehicles at the airstrip, for example? The distances between airstrips and the most distant blocks is much greater at "Starcke" than at "Daintree" 45 141. It may well be that the issues raised above concerning the airstrip access could be addressed, but in what manner and at what cost did not emerge in the evidence notwithstanding that the issue was raised by the respondent with Mr Beattie, the claimant's first witness. Mr Humphreys suggested that it may be preferable for airstrips to be in public ownership. 142. As to the suggestion that Cooktown would be to "Starcke" what Cairns is to "Daintree": the two centres can be considered comparable in the sense that they both provide a level of service, but, on any measure, the range and types of service available at Cairns, including the facility of the international airport, are greater than at Cooktown. Whilst no comparison was made between Mossman and Cooktown, I would suggest that these two centres would probably exhibit greater similarities than a comparison between Cairns and Cooktown. 143. A lot owner at "Starcke" who lived beyond Cairns or who visited their land on occasions only, would need to either drive from Cairns or fly from Cairns to Cooktown, then drive from there, assuming that access via the grass airstrips at "Starcke" was not available. Whatever the answer may be as to how the owner would travel to "Starcke", it is clear that accessing "Starcke" is a different proposition from accessing "Daintree". How such a difference would impact on potential lot purchasers is not known and there was very little from Mr Beattie to guide me on that question. He had formed the view that whilst there are locational differences, the differences are irrelevant. The basis for that opinion appears to be that access to "Daintree" was not as good in 1979 as it is now and therefore the perception of isolation would be similar at the "Starcke" in 1994 as it had been at "Daintree". 144. I accept that the access to the "Daintree" at the time of my inspection of that project was superior to that available at the commencement of marketing. I am of the view, however, that it is not correct to equate that initial access with the access to the "Starcke" freehold following upgrade as proposed by the parties. Access to "Daintree" had been via the sealed Captain Cook Highway to a point where a 3 km unsealed road provided access to the site of the ferry. Once across the river there was an unsealed road to the north. This road travelled over the Alexandra Range and would be untrafficable for two or three days each year. The standard of road suggested by the claimant for "Starcke" would probably be cut more frequently, particularly at the causeway river crossings proposed. In addition, the external road, if upgraded to the short distance, only, suggested by the claimant, would pose an access problem for "Starcke" residents. 46 145. Mr Beattie thought a property called "Silver Plains", introduced in the valuations of Mr Gould and Mr Blomfield, located on the coast to the east of Coen and north of "Starcke" was too remote for development in the same manner as suggested for "Starcke". The evidence is that the relevant site on "Silver Plains" would be about 8-9 hours from Mareeba and 87 km from Coen, a smaller and less attractive settlement than Cooktown, but one with facilities such as general store, fuel outlet, hotel, medical services, etc. Unquestionably "Silver Plains" is more remote than "Starcke" , however, there is nothing, apart from Mr Beattie's opinion, which points to the degree of remoteness at "Starcke" being acceptable in the market, but that of "Silver Plains" being unacceptable. This is a viewpoint which is not immediately able to be reconciled with Mr Beattie's assertion that lot buyers would be buying Cape York wilderness - a commodity not "just down the road from a city". Implicit in Mr Beattie's criticism of the location of "Silver Plains" is an acknowledgment that location is a matter of significance and that it is an issue worthy of consideration with respect to "Starcke". 146. Mrs Campbell said that tourist visitation to the "Daintree" Cape Tribulation area was at a level that provided business and employment opportunities at "Daintree". The "Starcke" freehold compares unfavourably in that respect. Mr Brett saw them both as "semi-remote", adjoining National Parks and in areas of environmental interest well exposed by the media. 147. Mr Blomfield said that his research into the matter of location suggested to him that the maximum that one could expect people to travel by road was two hours from an international or "wide-bodied" airport such as Cairns. That information appears to have been originally provided to him by the marketing agents for one of his sales - Kirrama - discussed later. He said that he had conducted other enquiries to similar effect. I find it difficult to accept that the advice from a range of sources would have displayed such consistency on such a matter. I also note that at Kirrama a tourist resort was proposed, not a development of the type at "Daintree" or as suggested for the "Starcke" freehold. 148. Counsel for the respondent attempted to encapsulate his side's view of the locational differences between "Daintree" and the "Starcke" in the phrase - "In the case of 'Daintree' isolation or remoteness was but a perception whereas at 'Starcke' it was a reality." Whereas Mr Beattie could not bring himself to agree with such a statement, Mr Brett saw it as being "self evidently correct", but a matter that he thought could be addressed in a marketing campaign. I acknowledge the benefit of appropriate marketing in portraying a property in its best light, however, I think that the objective fact is that "Daintree" and "Starcke" are in locations which are sufficiently different to raise a serious question in the mind of a 47 hypothetical prudent purchaser as to whether the subdivision and marketing experience in one can be taken to be a valid guide for the other. In my view he would conclude that "Starcke" is significantly inferior to "Daintree" in this respect. Before I draw my conclusion following consideration of the above discussion, it will be useful if I expand upon a matter of prime importance in this case - the expected "Starcke" market for the 240 lots proposed there by the claimant. The "Starcke" Market 149. It was Mr Beattie's contention that not only does the "Daintree" experience point to the existence of what he called an "environmental" market, but that there are certain lots which sold at "Daintree" which point to a part of that market being willing to pay high prices for lots with special features. It is this segment of the market that he suggests would be attracted to the "Starcke" lots. I will take those two points in reverse order. 150. The marketing at "Daintree" was targeted at the 1 to 2 ha market, whereas it actually unearthed interest in higher priced lots. These fell into the 8 ha lot size priced around $75,000 as well as certain lots with special features:  The airport property sold at $1,900,000 for a 123.6 ha site. The purchaser had plans to develop the land into an airpark style of subdivision based on the intended use of the airport by the purchasers, together with a tourist accommodation. I viewed this site.

 A lot of 2.86 ha but with secluded ocean frontage was purchased for $1,500,000. The lot is located at the mouth of Baileys Creek and did not have dedicated road access. I viewed this extremely attractive site from the air. The purchaser also purchased another lot for $451,000 to provide access with part of the access being over State land. Presumably this second lot could be devoted to some use other than as a mere access route.

 An area of 67.56 ha located fronting the ocean on the southern side of the Alexandra Range sold for $1,200,000. The purchaser had in mind a tourist facility which was later developed and, according to Mr Blomfield, is a very successful venture. I viewed this site from a lookout facility some distance away.

 The lookout facility mentioned above is part of a block of 37.56 ha which sold for $250,000 in January 1982. It was later purchased by the State (for $780,000 on Mr Beattie's understanding). I viewed this property.

 A hilltop rainforest block of 5 ha sold for $350,000. I viewed this property from the road.

 Another hilltop property of 28 ha with panoramic 270-degree views to the mouth of the Daintree River sold for $575,000 for a private retreat. Mr Blomfield described this as a magnificent site comprising two developed homesites. 48

 A syndicate intent on developing a tourist resort purchased 7 x 1 ha lots for a total of $882,500. These lots were amalgamated and approval for a tourist resort was obtained. The site is located a short distance from the picturesque and unimaginatively named Cow Bay. I viewed this site. Mr Blomfield said that the site was offered to the State for purchase under the "Daintree buy-back" scheme, but was not purchased. It is still available for sale.

 A parcel of 27 ha populated with oil palms was purchased by the developer of the well-known Mirage Resort at Port Douglas for $600,000. The palms were removed and relocated to provide a palm-lined avenue at Port Douglas. The property was then resold. I viewed this property.

151. Other special sales were included in Mr Brett's valuation, but without detail as to the nature of the land or the purchasers' intentions. These included:  58.9 ha purchased for $400,000  37.63 ha purchased for $275,00  8.09 ha purchased for $237,500  175 ha purchased for $175,000  27.63 ha purchased for $250,000.

152. Mr Beattie said that the market revealed in the purchase of the larger, higher priced lots at "Daintree" was the market that would be targeted at "Starcke". He particularly had in mind the type of purchaser at "Daintree" who purchased lots for $75,000 and upwards. Bearing in mind that it is Mr Beattie's contention that the "Daintree" experience shows the existence of a "conservation/environment" market and that this market would be attracted to the "wilderness" at "Starcke", it is clear that some of the higher priced lots at "Daintree" could not be relied upon as pointers to this market. The examples of the purchase to obtain access to the oil palms; or the purchases to establish tourist facilities or an airpark cannot, in my view, be referred to in support of that contention. Such specific purpose sales might be useful examples if similar uses are validly proposed on "Starcke" lots and if some form of comparison is offered, but not otherwise, in my opinion. Other blocks which sold for high prices at the "Daintree" with residential occupation as their probable use do, however, indicate that very attractive lots in that locality were able to attract high prices. 153. The logic that then moves to the conclusion that the market at "Starcke" would be found in this class of buyer was not, however, revealed to me. It is not an easy matter to separate discussion on this topic from that dealing directly with the suggested lot prices at "Starcke" . In both topics Mr Beattie's reasoning seems to suffer from a degree of circularity, thus: "I perceive the market at 'Starcke' to be drawn from the same pool as paid higher prices ($75,000 and upwards) at 'Daintree' so the prices suggested at 'Starcke' 49 (averaging $190,000) are pitched to that market." Having said that, I need to record that Mr Slater appears to offer some slim support to Mr Beattie in that in full knowledge that the average price of "Daintree" lots (including the higher priced ones) was in the order of $44,000, he suggested an average "Starcke" price of $75,000. 154. I should quickly point out that there is nothing in Mr Slater's evidence to suggest that he drew his conclusion following consideration of the "Daintree". He thought there was no useful guidance from that source. The degree of apparent agreement displayed is therefore coincidental, nevertheless, sufficient for me to draw a conclusion in the claimant's favour. In doing that I need to emphasise that I do so because of the state of the evidence, not because I find Mr Beattie's evidence on this point to be convincing. By this I mean that if the evidence of the State led through Mr Slater, as it was, is that the average price for "Starcke" lots would be $75,000; and there is no evidence or argument to say it should be lower than that: I can draw a conclusion as to the target market. I can conclude, on the evidence, that the target market at "Starcke" would be focused in that segment of the overall market willing to pay higher prices than the "Daintree" average for remotely located lots of the type proposed at "Starcke". This brings me back to the second, though I understand, more important characteristic of the target market for "Starcke" identified by Mr Beattie. That is what he called the "environmental" market - though the term "wilderness" market was also employed. Environmental/Conservation/Wilderness Market 155. I note that the term "environmental" market was not defined in the evidence. This term, or phrases similar to it, were often employed particularly by the claimant's side as if they had a single identifiable meaning. I noted, however, that whilst the terms "environment" or "conservation" were consistently used with respect to "Daintree", the term "wilderness" was often used in connection with "Starcke". Mr Blomfield was comfortable with the use of "wilderness" as a descriptive word for the "Starcke" lots. 156. The claimant submitted that the State had acquired the "Daintree" lots purchased in the buy-back scheme as "environmental" value land, therefore, had acknowledged the existence of such a market. It was also the claimant's case that the Premier had made it clear in his speech foreshadowing the introduction of the Starcke Act that "Starcke" had a high environmental value and that its acquisition was desirable to ensure that it was not inappropriately developed. Inappropriate development would have involved some use higher than a grazing use, it was suggested. 157. Mr Quaid said that there is a connection between environmental values and commercial values. By way of example he said that protecting a certain property in a 50 Central Business District by the application of Heritage restrictions will usually result in a diminution in value of that property, but an enhancement in the value of its neighbours. He said also that environmental protection laws, such as tree clearing restrictions or habitat protection, reduced the amount of land available for primary production on a farming/grazing property and therefore affected its value. 158. These two examples demonstrate two simple propositions: one, that land value will be influenced by the environment (both man made or natural) in which it is found and may be affected by changes to that environment; two, the value of land may be influenced by the economic use to which it can lawfully be put. Such obvious propositions do not, however, greatly assist in the consideration of the issues in this case. 159. The third proposition that Mr Quaid referred to (and it was one often repeated in the claimant's case) was that the subdivision and sale of lots in the "Daintree" demonstrated the existence of an "environmental market". He referred to three bases for that view. First, that whereas he had been willing at one stage to sell the "Daintree" land to the sugar industry or other rural users for $3,000,000; in the end the subdivision produced a net yield of $31,000,000. Second, "Daintree" demonstrated that where environmental values are present, intensive marketing will generate high market demand at prices far in excess of rural values. Third, previous rural values in "Daintree" did not provide a guide to fixing "Daintree" lot prices. 160. I have commented elsewhere on the claimed $31,000,000 profit of the "Daintree" and will simply note here that in comparing the $31,000,000 figure with the asking price of $3,000,000, Mr Quaid is really comparing two different things. Be that as it may, it is demonstrably the case that a subdivision and resale of the "Daintree" lands was the highest and best use of the land. That may not have been known by Mr Quaid when he first tentatively offered the "Daintree" lands for sale in 1979, but it soon became apparent and is now accepted by both sides. Accordingly, the subdivisional value will be greater than the value of the land for farming pursuits. Now that is a feature that is not confined to "Daintree". Farming lands are usually purchased on a price per ha basis, but when land is purchased, subdivided and sold as hobby farms or rural residential lots, for example, the price of the lots will generally reflect value as "a site" (Knieling v. The Crown (1978) 5 QLCR 162). If such sites are analysed on a price per unit area basis, they will usually show a substantial increase in value from the previous farming value. Where this is not the case, the subdivision of the land would not be a profitable undertaking. 161. Much of what happened at "Daintree" was simply a particular application of these general propositions. The particular attributes of "Daintree" that attract attention were the 51 environmental features and the fact that the single lot residential "lifestyle" or "retreat" market was largely untapped in the mid to late 1970s. Camelot sales at Cape Tribulation showed that there was a market, but the level of demand was unknown. The early sales at "Daintree" pointed, however, to there being an extensive market. The realisation of this, the notoriety of the environmentalists' demonstrations and the decision to embark upon a marketing campaign, as well as the happy coincidence of the 1980s ' real estate boom, and the attractiveness of the product, all contributed to the accelerated emergence of the market. 162. The product is clearly part of this and in that respect the phrase "a few acres of rainforest near beaches and creeks" provides a most attractive image. It was one not available anywhere else in Australia and it was in a location not inaccurately described as "secluded not remote". It can easily be contrasted with what Counsel referred to as the Beaudesert-type subdivision in which the dominant vegetation would generally be represented over vast areas of country. The "Daintree" represented a rare opportunity for individuals to buy a piece of freehold rainforest: and they purchased it for a range of reasons, according to Mr Beattie. Some wanted to live there, others wanted to start businesses, while some purchased it just for the pleasure of owning it. I would think that it can also be said that they bought because they liked both the land and the environment in which it is found. 163. Now the word "environment" can be used in a number of senses. I want to make it clear that in the present discussion I am using it in the sense not of indicating some scientific significance, but of indicating the flora, fauna and topographic features such as streams and beaches, that is the "natural environment"; and the man-made elements of buildings and roads, etc, that is the "built environment", in which a piece of land may be found. A block in a Beaudesert subdivision is in a certain environment, just as much as a block at "Daintree" is. The purchaser at Beaudesert will take into account the environment, amongst other things, such as price and location in deciding to purchase there. So will the "Daintree" purchaser. Both subdivisions have environments. The "Daintree", however, had a natural environment that was in short supply in the marketplace. It is rainforest and freehold. Of course, rarity is not a selling point if it is unattractive, except perhaps to the eccentric. "Daintree" rainforest freehold was both rare and attractive and was not remote from service centres. 164. I undertook the above discussion to tease out my understanding of the term "environmental market" which I will use hereon to signify the natural environmental aspects. I want to make it clear that I accept the proposition that the presence of environmental values can be an important factor in the saleability of land in the general 52 marketplace and can mean that certain land will be sought after. Environmental significance is not of itself, however, a factor that would endow a parcel of land with broad saleability. 165. A lynchpin of the claimant's case was that the "Daintree" lots sold into that "environmental" market in spite of Mr Beattie's evidence that people purchased land there for a range of reasons, that is, with different purposes or aspirations in mind. Some purchased to live there soon after purchase, with others intending to move there some day. Others bought for business purposes and some simply to own a piece of rainforest or palm grove or suchlike. Mr Beattie said that the predominant purchaser at "Daintree" was the "environmentalist buyer" - yet they paid the same prices as the dwellers, the weekenders and those who carried out clearing on their land. That evidence suggests to me that the "environmental" market is a very catholic one, however, some further analysis of the evidence is warranted. 166. Mr Beattie said that he had unearthed in the "Daintree" project a market interested in conservation; interested in the environment. Mr Brett expanded on this by saying that Mr Beattie said such buyers - and he was referring to actual buyers at "Daintree" - have "interest in … conservation, interest in the wilderness, interest in large spaces … interest in retaining what is there". The hard evidence in support of the contention that such a broad interest differentiated this market segment is slight. Mr Beattie referred, for example, to some lots that simply could not be built on in the Palm Road area. The vendor advised the purchasers in writing of the building situation, yet people still purchased the sites. I walked onto such a lot which was heavily vegetated with fan palms. A nearby lot which looked similar in all material respects had a track constructed into it - suggesting an intention to use the land. Nevertheless, I accept that the evidence supports a conclusion that such blocks were probably purchased for the purpose of holding and conserving. That is, they were purchased for their intrinsic natural environmental values. 167. Mr Beattie gave evidence of one purchaser from CSR who told him that he purchased the land simply to keep. He paid $57,000 for that lot which I inspected. It is a rainforest block with an attractive creek at the front boundary - a creek that would need to be crossed to access the property. This is good evidence of someone buying land for conservation purposes, though not in the higher price range. 168. There are many blocks at "Daintree" not built on by the purchasers at the relevant date. Whilst these were referred to by Mr Beattie as supporting the view that the owners purchased for environmental reasons, he also acknowledged that some might be built on in 53 the future. Something more than a lack of building activity would be needed to call this evidence in as supporting the existence of an environmental market. 169. Mr Beattie spoke of purchasers who would construct a small track into a block and build a house in a small cleared area there. They wished to preserve as much of the rainforest on the block as possible. Others preferred not to buy in the rainforest, but to buy cleared blocks but in the broader rainforest environment. Some of the purchasers contributed to one of the sales brochures:  "I have spent most of my life in big cities. My Daintree freehold purchase has given me the opportunity to start a new life - the virgin rainforest, the beaches, the waters, look you just can't describe it … it's absolutely magic."

 "My property is about 1 kilometre from Cow Bay beach and my rainforest is magnificent. I love it - it's so quiet and peaceful and beautiful, a world of its own.

I'm biased. I get stuck on words like 'magnificent' and 'beautiful', but how else can you describe those big trees, the rainforest canopy, and long beaches."

 "We bought a property on Cooper Creek, at the foot of Thornton Peak. The combination of a fantastic climate, beautiful creek the lush green rainforest and close to the Barrier Reef … it's a lifestyle that once we would never have dreamed possible."

170. These quotations are reflective of much of the text of the "Daintree" promotional video where such words as tropical rainforest and beach frequently appear together, with mention of coconut palms, mango trees, ferns, orchids, creeks and a range of tropical fruit. The image is tropical, green and, to my mind, a touch romantic. Interestingly, one of the speakers on the video speaks of "a little element of isolation" - a phrase that I would find difficult to apply to the "Starcke" freehold. 171. Mr Blomfield suggested that most purchasers at the "Daintree" purchased for the "lifestyle" - one I would think that was contributed to in no small way by the natural environment there. He was involved in valuing land as part of the "Daintree buy-back" scheme and during that process interviewed a large number of purchasers. He formed the impression that whilst purchasers at "Daintree" had a particular feeling for the environment there, he did not understand a predominant motivation to be to protect that environment. Rather, he concluded that it was the use to which purchasers could put the land - a residence, a place for retirement, a weekender - which he saw to be paramount. The situation of the land in its attractive environment was an added advantage to his understanding, though he did acknowledge that a few purchased with conservation of the 54 natural environment in mind. He said that many of those who sold to the State under the "buy-back" scheme hoped for capital growth and for further services to be provided at "Daintree". 172. It was suggested to Mr Blomfield under cross-examination that in the "buy-back" scheme the State was paying prices based on the highest and best use of such lots being environmentally significant land predominantly to be used as home sites. Mr Blomfield acknowledged that there were environmental values associated with the purchased lots; that being a purpose of the "buy-back" scheme; however, he said that he had valued the lots on the basis of their highest and best use being a rural homesite or retreat. One such lot "Mt Hutchinson" had a value of $1,200,000 placed on it by Mr Blomfield as part of the process of acquiring unsold lots from the developer. He acknowledged that as being a high value, but said that it was supported by the sales evidence. The property encompassed the entire "mountain" and afforded 360-degree views which took in the Cow Bay area and Thornton Peak. 173. This brings me to a point which I think to be significant. First, I note that prices for the "buy-back" scheme were based on Mr Blomfield's valuations adjusted to some extent as part of the process of negotiation. There is no evidence that his valuation method included as an influential factor relative differences based on environmental values. Second, Mr Beattie's differential in pricing at "Daintree" was not explained as being based on environmental values but on size, proximity to the beach, presence of a creek and, as I understand it, elevation. These are all matters that I would think to be of importance to the purchaser of a rural homesite or retreat. 174. Mr Beattie's experience with the "Daintree" project extended over almost 18 years of which about seven years were covered by the marketing campaign, followed by four to five years of reduced sales activity. Mr Beattie and his sales team would have been exposed to a range of learning experiences during that period and, whilst Mr Beattie adverted to these, it was Mr Brett who suggested their significance. He referred to these experiences as comprising "research" and put the view that even if I were to hold that the "Daintree" project and its marketing success did not lead to a conclusion that the "Starcke" project would have achieved sales prices and a sale rate similar to that projected by Mr Beattie, I could place reliance on Mr Beattie's opinion on such matters. That proposition raises two concerns from me. 175. First, any opinion depends on the existence of the facts that support that opinion and the reasoning applied to those facts. There was no cogent factual evidence led, such as evidence in the form of a survey of purchasers at "Daintree" or the collection of similar 55 data, which underwrote Mr Beattie's opinion. That is, there was nothing that I would think could be described as evidence of "research". Second, any opinion expressed by Mr Beattie as to the anticipated success at "Starcke" would need to be discounted to take into account what I would call his marketer's enthusiasm for the project. He appeared to find it difficult, during his evidence, to adopt a dispassionate perspective about "Starcke": to put himself in the position of the hypothetical prudent purchaser of the proposed lots. 176. Whilst Mr Beattie was put forward by the claimant as a marketing "expert" (though I do not recall him being described as that) in truth he was really a man with marketing experience: and with his experience at the "Daintree" being the point of emphasis. I do not wish to be critical of Mr Beattie, who presented as an earnest and industrious witness. I would generally characterise his evidence, however as being:  largely based on the proposition that "we did this at 'Daintree' so we can do it again at 'Starcke'";

 deficient in that it tended to gloss over important issues such as the characteristics of the market for the "Starcke" blocks;

 with that deficiency probably resulting from an insufficient study of or reference to an appropriate theoretical framework;

 and probably influenced by the "can do" attitude of a market operative peppered with a natural enthusiasm.

177. Though he is a registered valuer, his evidence was given from the perspective of the marketer, not tempered with the objectivity usually conveyed by the expert. More than once he understood questions about certain issues as questions about how he would as the marketer deal with an issue, not how the market would perceive the issue. For example, he saw the possible sale of blocks with airstrips on them as an issue to be confronted, so that selling of blocks could continue; not an issue of access for potential purchasers. Further discussion of Mr Beattie's "research" is warranted. 178. Mr Brett said that Mr Beattie had not simply identified a market interested in the "Daintree" rainforest near creeks and beaches, but had identified a wider market interested in "issues to do with the environment and wilderness." There was, as I have said, no direct evidence that Mr Beattie had, in any refined way, done that. What he may have done is draw a conclusion from his "Daintree" experience that there was such a broad market and that therefore there was a segment which could be identified with "Daintree" and another that could be identified with lots such as those suggested at "Starcke". There was nothing cogent, however, to point to such a segment (assuming it existed), being prepared to pay 56 very high prices. Why not marginally higher prices as Mr Slater opined, or even lower prices? 179. It is apparent from the evidence that many of those who purchased "Daintree" lots were attracted by the setting - the more attractive the setting due to the presence of a creek, the beach or elevation, the higher the price. Particular mention is made of the rainforest in the advertising material and, in the comments of purchasers provided to me as set out above. Much less reference is made to the issue of conservation or environmental protection. Anyone visiting the "Daintree" cannot help but be impressed by the rainforest the streams and the beach. Its adjacency to a National Park and its topography which provides a number of features, such as Thornton Peak, also add to the landscape - or to use a term of somewhat elastic meaning, the "environment". 180. Purchasers were happy to buy land in that environment. Some purchased untouched rainforest blocks, whilst others bought blocks cleared, partly cleared or subject to regrowth. Whatever the characteristics of the individual lots, they were all part of the lush "Daintree" landscape. Now it also seems to be the case that some were influenced by the knowledge or the belief that the rainforest at "Daintree" was of such significance, ecologically, that it was land of intrinsic natural environmental value. To some that appears to have been the sole motivation to purchase - and I refer in particular to those at Palm Road and the purchase by the man from CSR. Whether those purchasers would have been as interested in buying marine plain country such as at "Inkerman" discussed below at para 720 or endangered mangrove country or some other environmentally significant country, is not discernible from the evidence, however a small measure of commonsense tells me that they would generally not - or few of them would. Nevertheless, Mr Beattie told Mr Brett that within the group from which these "Daintree" purchasers came, there is a larger group with interest in the environment. How Mr Beattie formed that view is not made clear in the evidence, however I assume that it came from conversations he had with purchasers or advice he received from his salesmen. Important questions, to my mind, which were not answered were: in any rank-ordering of matters of significance in the purchasers' minds what was the ranking of environmental values? Was it the case that purchasers were primarily motivated to buy "Daintree" lots because of the environmental value of the lots or did they have some other need such as the need for a house site or a rural retreat with environmental value being a secondary consideration? Did those whom I assume told Mr Beattie that they had an interest in the natural environment tell him that it was an interest in the natural environment, as such, or was their interest perhaps amounting to passion, confined to what they saw at "Daintree"? What was it that convinced him that the buyers at 57 "Daintree" were part of a group which included potential purchasers of the "Starcke" lots and that the defining characteristic of that group was its abiding interest in the environment? 181. Now the importance of such questions to the intending purchaser of the "Starcke" freehold is that he needs to form a view as to whether the behaviour of the so-called "environmental" market at "Daintree" will be replicated at "Starcke". If he were, for example, to consider buying land for a suburban residential subdivision, he could be guided by the volume of sales of land of similar quality in the area. He would know that he would be offering his product to the same market, that is, to those intending to construct new residences on the lots. He may even be able to focus his attention more closely on first home buyers, young marrieds, or some other identified market segment. In a beachside area he may focus on retirees. 182. In contrast to such scenarios Mr Beattie's evidence as to the "environmental" market must, I think, be seen as anecdotal and inconclusive. He appears to have employed supposition and impression to separate a large, broad and active "environmental" market from those attracted specifically to "Daintree", much as one might attempt to separate the smile from the Cheshire cat. Notwithstanding this, the prudent purchaser would be aware that over the past 10 to 20 years there has been a growing interest in conservation matters and in the natural environment. There is, I would think, also a growing inclination in people wanting to experience the natural environment. Some, in spite of the well- publicised urban drift, will want to live outside towns and cities or visit occasionally - even to a block of land purchased for that purpose. 183. Mr Nevard's report, viewed at its most favourable to the claimant, included evidence to this general effect. Mr Nevard gave evidence of lots being sold into a market which was attracted because of the environmental values nearby or on the land itself. Barn Elms (in the United Kingdom) and "Daintree" were two of his examples. He said that Cape York is a well-known place nationally and internationally because of its natural environment. In his view it would be an appropriate strategy to promote such environmental features to achieve the "highest market", as he put it. That makes eminent good sense to me. One could not expect the "Starcke" lots to be promoted as a rural residential subdivision: the lots are too big and there is no nearby urban area that might be associated with such a development. The lots could not generally be used as productive farms nor as locations for commercial enterprises. Their best feature is their natural attributes and their association with more significant natural features in the region. I also accept Mr Nevard's evidence that conservation organisations may elect to buy subdivided 58 lots which have high environmental value and conserve such lots. I do not accept, however, that any such organisation would pay more than a purchaser seeking, for example, a rural retreat. 184. The prudent purchaser could therefore act on a conclusion that there are people who are interested in, or who might be influenced to be interested in, the purchase of land because of its natural environment or its proximity to important natural features. "Daintree" would confirm to him that, amongst other relevant considerations, the attractiveness of the natural environment is a relevant feature in the marketplace. I say "confirm" because I think it would be self-evident that such attractiveness would be acknowledged in the broader market. He would also act on a conclusion that within this broad group of people there is a segment willing to pay prices at a level higher than the "Daintree" average. 185. The critical next question, however, is whether in the broad group identified, there is of sufficient mass to lead a prudent purchaser to the belief that the "Starcke" subdivision could attract sufficient purchasers at such prices and at such a rate that the project would be profitable. A prudent purchaser would not, I think, be willing to proceed in the unqualified hope that the broad group that I have described would yield the purchasers who would meet his expectations. He would look for some indicator. Mr Beattie and Mr Brett would offer "Daintree" as that indicator. 186. The prudent purchaser would, I conclude, agree that the "Daintree" experience is the best indicator he can find. He would not, however, accept "Daintree" as sufficiently comparable in important material respects to point, in the unsophisticated manner employed by Mr Beattie, to success at "Starcke". There are material differences in lot size, pricing, vegetation, topography, location and timing in the market. These are all matters that would counsel a prudent purchaser against employing the "Daintree" experience in any general way to indicate anything more than what might be possible at "Starcke". I would contrast this situation with that which might apply, for example, in the case of a suburban subdivision as discussed earlier. He would, however, have evidence that a well-designed and properly executed marketing campaign can be effective in supplementing the level of values and the rate of sale that could be expected from purchaser-driven local demand, particularly with respect to a remotely located subdivision project. He would hold out a hope that the environmental values of the land, coupled with its situation in the vicinity of natural sites of interest, would provide an attraction to potential purchasers of lots there. 187. The prudent purchaser would also consider the uncertainties and deficiencies in the "Daintree"/"Starcke" comparison as presented by Mr Beattie and adopted by Mr Brett. He 59 would reason that it would be prudent to cater for such matters by adjusting Mr Brett's assessment of the risks attendant on the project. He would not feel that a proposed subdivision of the "Starcke" freehold into 240 x 100 ha lots would be an isolated "feat of imagination", but that something of this general type had previously been done at "Daintree". The prudent purchaser of the "Starcke" freehold would, however, look more closely at the evidence revealed at "Daintree" in considering the actual results he could expect at "Starcke". I return to this aspect when I discuss "Lot Prices and Selling Rate" below. I now turn to consider the proposed "Starcke" freehold subdivision in a more direct way. The "Starcke" Freehold Wilderness 188. Before I come to a detailed discussion of certain aspects of the proposed subdivision, there is an introductory matter that I should mention. No subdivision of the order of that proposed for the "Starcke" freehold by the claimant had previously been considered by the CSC or it seems by any local authority in Australia. Subdivisions in the "Rural (General Farming)" zone had taken place in various locations in the CSC area, however, they were generally confined to two to three blocks or up to seven blocks in the case of a State Government sponsored subdivision at Portland Road. A substantial development had been approved by CSC at a location referred to as Quarantine Bay located about 5 km south of Cooktown. That proposal had first come to the Council in about 1980, according to Mr Bartsch. He said it was initially proposed to develop about 1,000 lots (or about 2,000 lots according to Mrs Campbell), a resort and a marina. The proposed lots ranged in size from 800 to 2,000 m² with others of 4 to 5 ha, all much smaller than what the claimant proposes for the "Starcke" freehold where there is no proposal for a resort and marina. The scope of the proposal at Quarantine Bay was later reduced though, as I understand it, the development was partly progressed only. 189. The Quarantine Bay project points to CSC not being inexperienced, at least in the 1980s, in considering a large-scale development proposal. The Quarantine Bay project could not, however, be cited as a project similar in material respects to the "Starcke" freehold proposal. They are quite different propositions. I cannot see that a prudent developer could draw from the history of Quarantine Bay any useful indicators as to the manner in which CSC would approach a "Starcke" subdivision application. On the evidence that I heard, there is no other useful precedent within the Shire. 190. An aspect of the claimant's case which invites mention at this stage is that it was submitted as significant that from a town planning perspective the claimant relied upon Mrs Campbell, who was the consultant town planner at the relevant date and at the date Mr 60 Brett prepared his valuation; and on Mr Bartsch, the Shire engineer at the relevant date and at the time in 1996 when Mr Dodds initiated his engineering design and costing work. Mr Dodds consulted with Mr Bartsch at that time - I come to that in more detail later. 191. There is merit apparent in the proposition that it was the actual relevant Council officers who were consulted, however, there are three provisos to that merit, in my view. First, any opinion expressed by Mrs Campbell or Mr Bartsch must remain subject to examination particularly with respect to the factual and legal basis for their respective opinions and the validity of any reasoning. Second, Mrs Campbell's report did not go so far as to anticipate what reasonable and relevant conditions might be applied to any approval, nor the outcome of the required Environmental Impact Statement (EIS). Third, given the unique characteristics of the "Starcke" freehold subdivision proposal, neither the planner nor the engineer could reliably have recourse to a history of the manner in which CSC had dealt with similar proposals. There is a fourth issue that also arises and that is the issue of credibility/bias. 192. Mr Bartsch said, with a touch of levity, that he would not recommend engineering conditions for a development which might frighten off a developer, otherwise he might be the next person to leave. Mrs Campbell also gave evidence that such conditions as a requirement to upgrade external access would be the first that the CSC would delete, in her experience. I understand that Mr Bartsch saw his role as involving issues much wider than those of an engineering nature and that both he and Mrs Campbell saw the need to, in effect, second-guess the CSC's attitude with respect to a particular application. Their individual experience as Shire employees no doubt conditioned them in this regard and is, I think, illustrative of the importance that they would place on the pro-development attitude of the Council. 193. I have difficulty, however, in concluding that the prudent purchaser would not be concerned with the unique nature of his proposal. He would also need to be convinced that the Council would be unconcerned that limited engineering requirements as proposed by Mr Dodds and considered acceptable by Mr Bartsch would not be seen by the Council as leading to a downstream liability for it. I come to this point in some detail, below. Town Planning 194. The "Starcke" freehold was zoned "Rural (General Farming)" under the now superseded Town Planning Scheme for CSC which was gazetted on 19 June 1982. The relevant statute at the date of resumption was the Local Government (Planning and Environment) Act 1990 (the P & E Act). At the relevant date CSC had commenced preparation of a new Planning Scheme. The new draft scheme was adopted by Council at 61 its meeting of 13 and 14 July 1994 with public display having commenced on 29 July 1994 for a three month period. The draft scheme was amended prior to gazettal in April 1997. In order that the subdivision of the "Starcke" freehold as proposed by the claimant might proceed, the approval of CSC would be needed. Subdivision of land within the Cook Shire was regulated by Chapter 24, which was gazetted on 17 June 1982. Chapter 24 provided that within the "Rural (General Farming)" zone the minimum allotment area was 100 ha and the minimum frontage to a gazetted road for such allotments was 500 metres. 195. I note, in passing, that at the time of the gazettal of Chapter 24 the "Starcke" freehold was not yet in existence, the land at that time comprising a lease from the State. I note also that at the time of the display of the draft planning scheme and at its later gazettal the "Starcke" freehold land, along with the PDH and the OLs, had been resumed under the Starcke Act. 196. Mrs Campbell and Mr Humphreys provided reports and gave oral evidence dealing with their respective assessments of the prospect of the CSC, at the relevant date in 1994, approving subdivision of the freehold land in the manner proposed by the claimant. Whereas Mrs Campbell predicted that such a subdivision application would have been "well received" by the Council and would have been expected to be approved, Mr Humphreys identified a number of considerations which he said would have provided "substantial reasons why the proposal would have been refused". Notwithstanding the strength of that view, the respondent asked not that I find that subdivisional approval would have been refused but that a hypothetical prudent purchaser would have entertained "very pronounced reservations as to whether the Council acting reasonably, would ultimately approve the application". 197. Another issue of importance on the topic of planning is the timeframe within which an assumed purchaser of the freehold as at 11 March 1994 would reasonably have anticipated obtaining approval of application to subdivide. Time is considered on the assumption that such an approval was forthcoming. Mrs Campbell expressed the view that such approval would be forthcoming by August 1994, whilst Mr Humphreys opined that a prudent purchaser would allow a period of at least six months for the preparation of an EIS following determination by the Chief Executive of the terms of reference for the EIS, together with a further period of at least 12 months for decision by the CSC. This totals over 18 months, however, the respondent raised the spectre of that timeframe being extended to cater for the needs of the Hopevale Aboriginal community and the prospect of conflict coming from that source. I return to this aspect below. 62 198. I will first of all deal with the question of the prospect of approval. In considering that question I am guided in principle by what was said in Olsson v. The State (unreported 16 June 1998): "… I must consider not whether a local authority would approve or not approve such a development including a rezoning where required, but how a hypothetical prudent purchaser would view a question of this nature."

199. As part of his evidence Mr Humphreys said, and I think correctly, that a subdivision proposal of the type proposed at "Starcke" was not "as of right". There was evidence, however, that there was a non-expert view that if the minimum lot sizes and frontages provided for in the town plan were complied with then the subdivision was, indeed, "as of right". That evidence included a statement in a memo of 4 April 1997 prepared by Mr Jon Russell, engineer from SKM, that his "brief reading (of the relevant town planning documents) indicates that the proposal to subdivide on the property, put forward by Quaid, is as of right" (my emphasis). That memorandum was responded to by a colleague in SKM, with town planning qualifications as I understand, who expressed a qualified though positive view as to the prospects of subdivisional approval being forthcoming. A rather similar view came from Mr Blomfield who had consulted a Mr McColl, the town planner for CSC in mid-1994 and had, as a result of that contact, concluded that the "Starcke" freehold would have been able to be subdivided into minimum 100 ha lots. As in the case of the SKM opinion on this matter, Mr Blomfield did not provide detailed reasons in support of his conclusion nor any reasons provided by Mr McColl, nor any steps in the process to approval that might have involved a risk of the approval either not being forthcoming, being subject to onerous conditions or being different in form from what was proposed. 200. Whilst the evidence from Mr Blomfield and from the memoranda taken from the SKM file are relevant in my consideration of the prospects of town planning approval being forthcoming, they cannot in the circumstances of the expert evidence provided by Mrs Campbell and Mr Humphreys, be treated as paramount. The claimant submitted that Mr Blomfield's inquiry of the CSC was of the type that would be carried out by a prudent purchaser, therefore the results of that inquiry should be adopted. Reference was made to the words of Else-Mitchell J in Edinburgh Pty Ltd v. The Minister (1962) 8 LGRA 45 at 51: "It seems to me, as it seemed to Hardie J in Hurdis v. The Minister (1957) 2 LGRA 132 at 136 that 'it is reasonable to anticipate that a prospective purchaser would make enquiries from the responsible authority and/or other sources' on the permissible uses to which the land might be put."

63 201. In reliance on this authority, Hyam in his text (The Law Affecting Valuation of Land 1995) said that it is a well established principle that before making a valuation, a valuer should make enquiries of the appropriate authorities as to "permissible land uses" and associated matters. I do not think that either His Honour or the learned author was of the view that a valuer could not rely, for example, on the advice of a qualified town planner rather than conducting direct enquiries. In Boland v. Yates Property Corporation Pty Ltd (1999) 74 ALJR 209 (Boland) Callinan J dealt with the issue in this way. "An intending prudent developer of a project such as the respondent here had in mind would inevitably require investigations, studies, plans and information of the kind to which I have referred and which would necessarily involve the services of professionals such as town planners, engineers and others, not only perhaps to obtain, or enhance the chances of obtaining, planning approval but also to place itself in a position to satisfy financiers if it has to borrow to complete the development, and prospective tenants or licensees that a tenancy or a licence in it would be an obligation worth incurring." (at 265)

202. I need not go into that matter further now as it seems to me that Mr Blomfield's inquiry lacked the detail one might expect of a prudent purchaser. I think that the advice given to Mr Blomfield could be placed no higher than evidence in support of the proposition that CSC would have been willing to give consideration to most development/subdivision proposals. This brings me back to the real contest and that is the one between Mrs Campbell's opinion and that provided by Mr Humphreys. 203. In summary, Mrs Campbell's opinion is:  There was no conflict between the application and the CSC Planning Scheme such that refusal of the application would be warranted.

 Preservation of the environment and cultural significance of the "Starcke" land could be achieved by the imposition of conditions of approval, combined with the entering into VCA's over environmentally sensitive areas, such agreements being authorised by the Nature Conservation Act 1992.

 The CSC would probably have been of the view that the subdivision would yield significant benefits to the Shire by virtue of an increased rate base, upgrading of access roads, attraction of State Government grants and the economic multiplier effect of an increased population base.

204. In addition, it was submitted on behalf of the claimant that a developer with a "more than average knowledge of town planning matters" (which I take to be a reference to a hypothetical prudent purchaser - Spencer) would consider that there is a number of relevant matters which would suggest that approval for the subdivision would be forthcoming: 64  The proposal was in conformity with the requirements of the policy on engineering requirements for subdivision adopted by the CSC.

 The CSC had a "track record" of being in favour of development.

 Inquiries which an intending developer might make of the town planner and shire engineer for CSC would have disclosed that those officers would have recommended subdivision approval be granted subject to the imposition of relevant and reasonable conditions. (This refers to Mrs Campbell and Mr Beattie).

 These Council officers would have expressed the view to the intending developer that the CSC would be favourably disposed towards approving the subdivision proposal.

205. The opposing view put by Mr Humphreys identified a number of issues he thought to be of concern from a town planning perspective:  The proposed subdivision would be contrary to the Statement of Intent of the "Rural (General Farming)" zone which applies to the freehold land.

 The uncertainty as to the nature of the uses to which the subdivided "conservation" lots would be likely to be put makes it difficult, if not impossible, to assess the application by reference to the checklist of considerations which local governments are obliged to address under s.5.1(3) of the P & E Act.

 The land is remote from the services and facilities that would be expected to serve a population of the size potentially resident on the proposed lots. The services Mr Humphreys had in mind included "education, health, community and emergency services, as well as economic services such as shops, fuel outlets and bank facilities".

 The proposed project makes no provision for community facilities or infrastructure (including reticulated electric power) which would be expected of a development serving the potential population envisaged by Mr Humphreys.

 The imposition of conditions as a tool would be unlikely to result in the preservation of areas of environmental significance and the proposed subdivision would exacerbate the difficulties of preserving the values of those areas. Mr Humphreys expressed the view that the use of VCA's, though superficially appealing, lacks practical appeal.

206. This may be a convenient place to provide an outline of the process of obtaining an approval of a proposed subdivision:  The first matter to consider is whether there is a requirement to prepare an EIS. This matter is considered in detail below. 65  Following the completion of any required EIS, a subdivision application is to be lodged with the Council including sufficient information to address the matters contained in s.5.1 of the P & E Act and chapter 24 (subdivision of land) of the Shire Planning Scheme.

 Council then considers and assesses the application in terms of the P & E Act and Planning Scheme requirements.

 Council then decides to either approve the application, approve it subject to conditions or refuse the application.

 The applicant has a right of appeal to the Planning and Environment Court against refusal or against imposed conditions.

207. Before coming to the matters between the parties which invite detailed discussion, I will deal with some matters which may be dealt with as a group, though this is not intended to diminish their importance. It may be useful if I start with a discussion of the issue of the expected population at the "Starcke" freehold subdivision. 208. Mr Humphreys suggested that the final population at the "Starcke" freehold subdivision could be 500 to 700 people. Mr Bartsch said 600. If the standard of 80% of the lots being occupied is employed as it was in the Daintree Planning Package, the final population at "Starcke" would be around 422 people; that is, 240 lots by 2.2 persons per dwelling (ppd) by 80%. The evidence tends to show that the rate of population growth at "Starcke" may be lower than "Daintree" with its superior employment prospects and accessibility to Cairns, however, Mr Humphreys suggested that the rate of take-up at "Daintree", and I assume "Starcke", would be greater were reticulated power supplied. It is not supplied at the "Daintree" and is not proposed by the claimant for the "Starcke" freehold subdivision. At "Daintree" the take-up rate was 25 lots per year or 2.34% per annum. Applying this percentage take-up rate to "Starcke", the number of lots occupied after 10 years would be 56. The population would be 107 assuming an average of 1.9 ppd or 124 on the basis of 2.2 ppd. Assuming an occupation rate of 2.2 ppd at "Starcke", it would take about 34 years based on the "Daintree" projection for an ultimate population of 422 to be reached. If the take-up rate at "Starcke" was 25 lots per annum, using the absolute figure not the proportionate "Daintree" figure, an ultimate population of 422 at "Starcke" would be achieved in 7.68 years. 209. This issue was relevant to the matter of expected road usage in particular, but also to certain other matters. The claimant, through Mrs Campbell, leaned to the view that whilst, according to Mr Beattie, sale rate for the proposed lots at "Starcke" would be such 66 that the lots would be disposed of in two years after selling commenced, the take-up rate would be very slow and the ultimate population would be around 422. 210. The estimation of a final population at "Starcke" is a matter of guesswork unaided by the prospect that permanent occupation of all of the proposed lots was not envisaged by either Mr Beattie or Mrs Campbell - nor I would think, by Mr Humphreys. Nevertheless, the evidence does point to an ultimate population ranging between 422 and 700. I think that a round figure of 500 could be adopted for planning purposes. 211. The expected rate of occupation of the "Starcke" lots is also a matter of guesswork. Even if the rate of take-up at "Daintree" was considered a suitable indicator, the figures from that source reveal a take-up period of between 7.68 and 35 years, depending on the manner in which the "Daintree" figures are used. 212. I do not think, however, that a Local government properly advised, would in some way modify its decision, including applicable conditions, based on the proposition that a large and influential population would not be in place for many years. Such an approach could be seen as deferring the inevitable demands of such a population for the consideration of a later administration. The Local government would, I think, have regard to what the ultimate population might be. 213. CSC, through Mrs Campbell, would have been aware of the call for electricity by some residents at "Daintree" at the time of the lodging of the "Starcke" subdivision application, which would have been at its earliest in August 1994, though later according to the respondent. The "Daintree" Planning Package Report is dated September 1994 but was commissioned in response to the public prominence that the call for electricity had achieved in the "Daintree". Whether CSC would have expected the same level of concern for reticulated power at "Daintree" to emerge at "Starcke" cannot easily be determined. The claimant submits that there are important differences between "Starcke" and "Daintree". I will return to this topic. 214. Both town planners considered that an EIS would be required. Mrs Campbell anticipated no difficulties with the outcome of an EIS, though recognised that a number of issues would need to be addressed in that process. Mrs Campbell appeared not to have fully directed her mind to the types of issues that an EIS would need to address. It seemed to me that she saw the provision of an EIS as a task that needed to be performed but that whatever issues it identified would be dealt with by the imposition of suitable conditions. She did not take her analysis to the point of offering a view in her written report as to the prospect of the outcome of an EIS having any impact on the proposed development. Mr 67 Humphreys was much less confident than Mrs Campbell that the outcome of that process would be positive in terms of its effect on the prospect or the form of subdivision approval. 215. It will be useful if before I continue the present discussion I make reference to s.5.1 of the P & E Act which provided for subdivision applications which are made to a local government. Section 5.1(3) is of particular interest and provides, relevantly, for the purpose of these reasons: "(3) In considering an application to subdivide land a local government is to assess each of the following matters to the extent they are relevant to the application -

(a) the proposed use of each of the proposed allotments; (b) whether any of the proposed allotments would be unsuitable for use because of existing or possible inundation, subsidence, slip or erosion; (c) the size, shape and utility of each of the proposed allotments; (d) the impact of the proposal on the environment (whether or not an environmental impact statement has been prepared); (e) whether public utility services should be made available to the proposed allotments; … (h) any possible traffic generation and the effect of this upon the road system in the locality; … (s) the provisions of the Planning Scheme which regulate the subdivision of land; … (u) such other matters, having regard to the nature of the application, as are relevant."

Proposed Use 216. The matters listed (b) to (u) inclusive above, fall for consideration later in these reasons, however, s.5.3(a) is presently relevant. The intended or proposed use of land is a relevant consideration of a local government in consideration of an application for subdivision. 217. As of right uses of the "Rural (General Farming)" zone at the relevant date included:  Agriculture;  animal husbandry;  dwelling houses;  forestry;  home occupations;  trade storage buildings;  host farms;  nurseries;  advertising signs; and 68  home activities.

Prohibited uses included:  child-care centre;  commercial premises;  educational establishments;  funeral parlours;  general industries;  health centres;  hospitals;  institutions;  liquid fuel depots;  manufacturers' shops;  multiple dwellings;  off-street car parks;  professional offices;  service industries;  shops;  showrooms;  transport depots;  transport terminals;  warehouses and  waterfront industries.

218. All other purposes not specified as "as of right" or "prohibited" were permissible in the zone, with Council consent. Mrs Campbell's report says that the proposed lots would be "conservation allotments", though also employed the term "environmental subdivision". Neither of these terms appear in the CSC Planning Scheme: in particular, they are not found in columns 3 or 5 of the Table of Uses for the "Rural (General Farming)" zone. These are terms that may be attractive to potential buyers when employed as part of a marketing campaign, but do not convey to a local authority, to me or to a referral agency concerned with an EIS, a sense of what uses might be expected on the lots. Mrs Campbell said that the lots could be put to any of the uses which the zone allows as of right and that she saw as appropriate as consent uses for some of the proposed lots, such uses as service station, general store, caravan park, kiosk and refreshment service. Such uses could serve a residential population plus travellers in the area, in her view. She added that no developer could guarantee that the land would not be put to any of the as of right uses, or for that matter the consent uses. 219. Generally speaking, it would be clear to a local authority what the ultimate uses of subdivisional lots will be. Land zoned "Residential" will, when subdivided, be put to residential uses, "Industrial" land to industrial uses and so on. It is not clear, however, in the present case having regard to the evidence given and that lack of clarity is not aided by 69 the adoption of the term "conservation allotments" as if it conveyed the same level of understanding as such terms as "residential lots" or "industrial lots". The term does not. 220. What is quite clear is that there is no obvious unsatisfied demand in the marketplace for 240 lots of such land nor that the "Starcke" project is designed to meet that demand. Put another way: there is no evidence which tells me that there are people in Cook Shire wanting land upon which they can carry out a particular use or a range of uses. The claimant's witnesses, and I refer particularly to Mr Beattie, made it clear that the demand would be generated by the marketing campaign. What information, given the evidence from the claimant, would the applicant for subdivision make available to the local government to address the question of the probable use of the lots? The answer really is that there is very little reliable evidence from which the local government could discern the probable uses of the land, yet it is a matter for the Council to ensure that services appropriate to the intended uses are provided and that the uses are consistent with its Planning Scheme. 221. It is common ground that apart from a few of the proposed blocks in the better quality country near Mt Webb, the individual 100 ha lots would not be able to support any farm enterprises except perhaps for aquaculture or hydroponic farming. There was scant market-based evidence which indicated that lots of the type proposed would be sought out for such uses. It was also common ground that the "Starcke" freehold land at the time of resumption was not of sufficient size or quality to constitute a separate economic cattle grazing unit but would, together with the PDH support a viable grazing enterprise. The evidence was that a herd of 2,500 head, minimum, would constitute an economic unit. The PDH could stand alone as a grazing property, however, for this to occur would need to be provided with structural improvements most of which are presently located on the freehold land. 222. Mr Finney assumed in his report that "the major land use of the proposed lots would have been rural lifestyle living, with very limited non-commercial grazing. Limited horticultural pursuits may have been attempted on the small areas of suitable soils in the southern areas of around Mount Webb". This was often referred to as the red soil country. 223. Mrs Campbell's suggestion as to the possible uses of "Starcke" lots appears to be at odds with the other evidence of the claimant as to the target market for the "Starcke" lots and with Mr Finney's evidence. The intention is to source purchasers from "areas within certain suburbs of major cities, eg, Toorak in Melbourne and Mosman in Sydney" and targeting "professional people such as doctors, architects, building contractors, farmers, senior company executives/directors and small and medium size business owners" and 70 "people with previous investment experience in various categories of property, equities and collectables", as well as "specific institutions including government and conservation foundations" (all per Mr Beattie). I would doubt that such purchasers would be inclined, particularly at the prices proposed by Mr Beattie, to devote purchased lots to the types of uses which would be at odds with rural lifestyle living or use as a rural retreat, though I could imagine the prospect of some supplementary activities such as nursery and home occupations emerging. 224. Mr Beattie gave a clear pointer to the possible uses of the proposed lots that he had in mind. In short, it was his view that some lots would be developed for pure residential purposes on a permanent or holiday basis; others would be simply held as part of the wilderness and not developed, whilst some might be put to rural uses and others to business uses, following town planning consent or possibly a rezoning. The impression I gained from the claimant's side was that all purchasers would not necessarily live on the lots as in the case of a "Beaudesert-type" subdivision, or work nearby. The common theme that ran through the evidence from the claimant was that the use of the proposed lots need not purely be seen through the eyes of the economically-minded rural producer. The evidence was that the rural market was replaced at "Daintree" with the type of purchaser who bought for the environmental values of the land and put it to the range of uses described by Mr Beattie. Given the claimant's view that "Daintree" was a precedent for a subdivision development at "Starcke" it followed, according to Mr Beattie, that there would be a similar experience at "Starcke" with respect to the uses that would eventuate. Now by saying this, I do not suggest that the claimant's case is that there would be a proportionate transplant to "Starcke" of the type of uses experienced at "Daintree", but the flavour of uses would be similar. Some variations would be obvious. On my understanding, because there would be fewer people at "Starcke", there would be less prospect for profitable service uses to emerge. There would also be less prospect of lots being used as weekenders for people employed in the employment-rich Cairns area. There would be very limited opportunity for farming uses at "Starcke" compared with the "Daintree" land which Mr Quaid at one stage sought to be sold for sugarcane production. 225. Mr Finney's reasoning, which employed a process of exclusion to arrive at his conclusion as to the probable use of lots, made good sense to me. That Mrs Campbell and Mr Beattie, to a lesser extent, were not drawn to the practicality of his reasoning may have been a product of their "conservation/environmental lot" mindset. The respondent, on the other hand, attempted to capitalise on the apparent inability of these two witnesses to offer a clear vision of the probable uses of the lots, by suggesting that the application to 71 subdivide could not be properly evaluated. I think that a prudent purchaser considering the "Starcke" freehold as a possible subdivision project would be comfortable in communicating to the CSC and to referral agencies involved in the EIS process, that the lots would be sold to people many of whom would be expected to construct residences on there and to live there or visit for the benefit of the rural lifestyle, albeit in an area of environmental interest. He would comfortably adopt Mr Finney's description, though in marketing the lots would revert to such descriptions as "conservation lots" or "environmental lots" or the "Starcke Freehold Wilderness" . In reflecting my conclusion on this point below, I will refer to the lots as "rural lifestyle" lots or "retreats" which was a term introduced by Mr Blomfield. 226. The claimant proposed that the environmental values of the "Starcke" freehold be protected by way of a registered VCA on each lot as required. I discuss this matter in further detail below. The effect of a VCA on a particular lot will act as a limitation on the extent of uses or the manner of management of the land. Now whilst Mrs Campbell said that the uses of the lots will be found in the wide range of as of right uses found in the Table of Zones, it is not totally clear to me whether the application of a VCA on a particular lot would effectively deny the implementation of certain of the as of right or consent uses that are available, however I suspect that it generally would. CSC Attitude 227. It was the view of both Mrs Campbell and Mr Bartsch that CSC had been favourably disposed towards development within the Shire. The respondent noted the evidence that local government elections were carried out in March 1994 resulting in a turnover of about 50% of the elected councillors. Whilst this event may raise a question as to whether the Council's past attitude towards development might continue, I think that the straitened financial circumstances which confronted the Council would have been a major influence on a continuation of Council attitude. Mr Potter said that the Council was pro- development and had been - even under administration. Mr Blomfield's inquiries led him to conclude that the CSC would have been supportive of an application for subdivision or development. The Shire Council has suffered a reduction in rate revenue as a result of the creation of many National Parks in its area. The Shire covers about 113,000 km², has a population of only 4,000 and suffered a "tight" annual budged, according to Mr Bartsch. According to him and Mrs Campbell, the CSC saw land development and population increase as means of improvement of the economy of the Shire. Certainly there is evidence to illustrate that CSC was concerned at the loss of the "Starcke" lands as rateable land. 72 228. There is a suggestion in the claimant's case that given the freehold tenure of the "Starcke" freehold , it provided a rare opportunity for development - an opportunity not available in the case of State leasehold land or such State land as National Parks. 229. Extra revenue would come from local authority rates and from annual grants through the Grants Commission based on an increased population and the additional length and standard of roads resulting from a "Starcke" freehold subdivision. In addition to these direct revenue benefits, Mr Bartsch said that there would be an economic multiplier effect from the increased population, though he acknowledged that some of that effect would be enjoyed in Mareeba and Cairns. The so-called multiplier effect is often mentioned in the media and has, I accept, a factual or a theoretical basis. I assume it would apply in the case of the "Starcke" development with the extent of its application being dependent on the final population and level of occupation of the lots there. On some of the predictions in the claimant's evidence as to lot take-up at occupancy the multiplier effect would be slow in coming. Of course, the economic multiplier effect is based on the assumption that existing services and facilities are adequate and are suitably located to meet the increased demand. 230. Mr Potter had in his written comments regarding the November 1997 SKM engineering report expressed the view that "it may be that this subdivision would be of economic benefit to the long-term development of the area". That tentative opinion was not, however, supported by Mr Humphreys who said that he did not understand the economic rationale for the creation of the "Starcke" allotments. 231. Mr Bartsch acknowledged that there would be costs to the CSC associated with the suggested development, but thought that the benefits would outweigh those costs. Notwithstanding this opinion, he was strongly of the view that he ought not to recommend to CSC the imposition of engineering requirements that would have had the impact of reducing the potential costs to CSC, for example, the bitumen sealing of the spine road, the extent of upgrading of an external road and possibly the connection of electricity to the site. I say "possibly" in relation to electricity because this is not usually a local authority expense. Mr Bartsch reasoned that if conditions relating to bituminising, the extent of upgrading of the external road and the need for electricity, the developer might be "frightened off". I return to this issue later in these reasons. 232. Now I have no real doubt that the rate base and the access to government grants would be increased and that it would probably be the case that the costs associated with the increased population in the form of road maintenance and the like, would not exceed the increased stream of revenue, as long as the conditions of development are appropriate. 73 233. The respondent's position on this issue is that the local government ought not to be directing its mind to such issues as the rate base and government grants, but should have regard to such issues as how pupils on the new subdivision might be educated; whether new or extended bus services are required; whether there is going to be a demand for community health services; whether the Department of Environment is going to have to manage an increased area in a more costly way, particularly given the claimant's VCA proposal; whether there is going to be an increase in impacts on the National Parks and consequent cost repercussions; and whether, in short, the cost benefit equation when looked at broadly would favour development. I accept that it is appropriate for the local government to adopt such a broad view, however, am confident that a local authority and in particular the CSC, which the evidence shows has a shrinking rate base, would be interested in the prospect of increasing that rate base and State road grants. To disregard that influence would be unrealistic. 234. Mr Humphreys agreed that CSC was disposed to development, but said that such a disposition ought not be treated as overcoming the need for the local authority to act responsibly in its consideration of the assumed subdivisional application. He observed that the Council would formally become aware of the nature of the subdivision proposal and its potential repercussions when it became aware of the terms of reference of the EIS. The contents of that document would, it is suggested, have a salutary effect on any otherwise unbridled enthusiasm for development. Mrs Campbell said that consideration of the EIS would probably have been carried out "in house", however, it would have the advices of the various State referral agencies to consider as part of that process. 235. I accept the evidence that CSC is pro-development and that an application of the type proposed would, at least initially, have been "well received". A prudent purchaser would have readily discovered that, but would have also been aware that the proposal to subdivide an area of 24,000 ha into 240 x 100 ha lots could not be classified as being an every-day proposal dealt with historically by the CSC. I must emphasise that, in the present context, I see this as being a particularly important point. A hypothetical developer could not look down the road and compare his proposal with a similar development there. They would have the assurances of Mrs Campbell and Mr Bartsch, but no example upon which to tie those assurances. They would be aware that the application would need to be considered according to law and in accordance with the Planning Scheme. 236. The pro-development attitude of the CSC needs to be understood not only in the sense that it would be inclined to allow subdivision rather than refuse it, but also in the sense that it would be mindful of the need for the subdivision project to be successful and 74 not become a source of embarrassment in the future. It would be aware of the notoriety that came to be associated with "Daintree" resulting in the Daintree Planning Package. It would be concerned not to have the largest subdivision in its Shire become notable for its residents' agitation for reticulated electricity, sealing of the spine road, and upgrading of causeways to bridges; or if the environmental values of the area, including adjacent areas, were compromised by the introduction of weed species or dogs and cats. A purchaser would not prudently assume that the attitude of the CSC would displace the need for the application to be dealt with in accordance with due process, but would form the view that in its consideration of borderline matters the local authority would be more inclined to resolve such issues in favour of the application proceeding than against it. I now turn to consider the concerns raised by Mr Humphreys with respect to the "Starcke" freehold subdivision proposal. Statement of Intent - Proposed Use 237. At the relevant date the Statement of Intent of the "Rural (General Farming)" zone provided: "The intent of this zone is to accommodate the grazing and extensive farming areas in the Shire, whether or not they are suitable for more intensive primary production, and to ensure the continued viability of farm enterprises by allowing a wide variety of rural pursuits and to conserve land for future agricultural use where suitable or as buffer zones between conflicting land uses."

I have underlined what I understand to be three separate "intents" within the statement. Each is joined by "and" though it is clear, in my view, that the statement ought to be disjunctively. 238. It may also be of assistance if I set out the relevant general principles of town planning law that I understand to be applicable in the circumstances of the Statement of Intent issue, those principles being of relevance to the local government in Cook Shire in its consideration of any subdivisional application. Within a planning scheme a Statement of Intent for a zone provides "guidelines as to the planning intention of the respondent … as set out in the legal provisions of the Town Plan and is helpful in determining how a discretion should be exercised." (per Row DCJ in Wilson v. Brisbane City Council (1980) QPLR 121 at 123 - my emphasis). The tenor of His Honour's description of the role of a Statement of Intent is found also in the language employed by Skoien SJDC in Craig v. Brisbane City Council and Anor (1998) QPELR 281 at 294: "Statements of Intent are intended to be a guide only in the often difficult task of reconciling competing circumstances and considerations. They are not inflexible. ……they apply to a wide range of permissible uses in a wide 75 range of situations and should be applied with commonsense and discrimination." (my emphasis)

239. It follows that a Statement of Intent ought not be construed with the same rigor as one would bring to bear on a statutory provision. Nevertheless, some sensible understanding of the intent of a zone would be needed in circumstances where it is appropriate to take the intent into account in dealing with the town planning issue. Row DCJ provided in Gunning v. Brisbane City Council (1985) QPLR 165 a useful perspective in this regard: "A perusal of the Statement of Intent broadly establishes the planning concepts of the Respondent in relation to various uses … To an extent, the Statement of Intent therefore plays a significant part in relation to the expectations of people as to the use which may be made of land within the City of Brisbane." (at 169)

240. Mrs Campbell described a Statement of Intent as "a broad statement that sets out the flavour of development which may be found within that particular zone" - a description quite in accord with the authorities to which I have referred above. The real question is, however, assuming the particular Statement of Intent to be relevant at all, what the people of Cook Shire would expect would be the use to be made of land zoned "Rural (General Farming)". Mr Humphreys says, in effect, that the proposed "Starcke Wilderness" project falls outside what those reasonable expectations would be, whereas Mrs Campbell's view is that the proposal is not in conflict with the Statement of Intent. In saying that, she said that a Statement of Intent "is most often used in assessing applications for Council consent to particular developments to see how best they fit in with that statement and similarly in rezoning applications one would have regard to the Statement of Intent". She said that it is "not a primary consideration … in (considering a) subdivision application", but said that she would "look to see whether a proposal cuts across the statement or offends it in such a way that should be fatal to the application". She said also that the Statement of Intent is not irrelevant, but is a matter to which she would give the weight she thought necessary or appropriate for a subdivision application. In the case of such an application she said a Statement of Intent has little relevance because the ultimate use is decided by the purchaser of the property and the table of zones lists the uses to which the land may be put. That is a view which does not coexist comfortably with the fact that at the relevant date Mrs Campbell had prepared a draft planning scheme for the Shire and had in the Statement of Intent for the broadened "Rural" zone expressly referred to subdivision requirements. 241. In Cherrabun Pty Ltd v. Brisbane City Council (1985) QPLR 205 (Cherrabun) Quirk DCJ held that the Statement of Intent of the zone from which the relevant land was 76 sought to be rezoned could not be relied upon as a basis for refusal of the application. The peculiar facts of that case were, however, put into context by His Honour in Residential Developments Australia Pty Ltd v. Brisbane City Council (1990) QPLR 121 (Residential Developments) in which he emphasised that Cherrabun involved a proposed use that was not in contemplation in the Planning Scheme, therefore the attempt in the Statement of Intent to effectively prohibit a rezoning should not be obeyed. In the Residential Developments case he paid particular regard to the Statement of Intent of the land and held that the intent did not support the proposed use. Wisseman v. Gatton Shire Council (1985) QPLR 223 is another example, though perhaps one again of peculiar facts, when the Statement of Intent was referred to in a rezoning application. 242. Prangley & Crofts Pty Ltd v. Brisbane City Council (1983) QPLR 108 is an example of a situation where consent to use land for a permitted use was refused on appeal, that appeal being decided in part because the proposed use contradicted the intent of the zone. Kanland Pty Ltd v. Brisbane City Council (1999) QPELR 285 is another. There are numerous examples where the intent of the relevant zone was called in support of allowing consent uses (for example, Mackay v. Brisbane City Council (1992) QPLR 65 and Hua Sheng Co Pty Ltd v. Brisbane City Council (1991) QPLR 99). 243. An application for subdivision is not an application with respect to the intended use of land (Smith v. Randwick MC (1950) 17 LGR (NSW) 246 at 251 and Stubberfield v. Redland SC (1993) 81 LGERA 13 at 17-18), but simply with respect to the way the owner may dispose of or deal with the land. Nevertheless, an apparent change of use of land following subdivision and the appropriateness of that use, having regard to broad planning considerations, was held to be both open to consideration and decisive in Heilbronn & Partners Pty Ltd v. Pine Rivers SC (1992) QPLR 181. That case is, I think, authority for the sensible proposition that the requirements in s.5.3(a) of the P & E Act can direct the local authority in an appropriate case to such broader planning considerations as implementation criteria for zones and Statements of Intent. Certainly, the Statement of Intent was thought appropriate for consideration in Bartlett v. Gatton Shire Council, 18 December 1992 (O'Sullivan DCJ), a case concerned with a subdivision application. I would suggest that in most cases the application of a Statement of Intent to a subdivision application would not be called for because the use of the land would have been settled by a rezoning or would be clear in the existing zoning and having regard to the attributes and location of the land. This does not mean, I think, to refer to Mrs Campbell's evidence, that consideration of the Statement of Intent ought not be a "primary consideration" in all cases of subdivision application, but that it will be of importance in some. The question is 77 whether this is such a case. I think it is because of the change in use that subdivision will bring about. 244. Mrs Campbell, though not clearly saying that the Statement of Intent would be relevant in the present case or for that matter of importance in subdivisions generally, did express the opinion that the proposed subdivision was not in conflict with the Statement of Intent. I understand her opinion to be that the range of uses of the lots resulting from the proposed subdivision at "Starcke" would not offend the Statement of Intent of the zone. That is not an opinion expressed in her tendered report, but one provided during cross- examination. 245. The first port of call in a consideration of this issue is to canvass the probable uses of the subdivided lots. I have done that earlier and have noted Mrs Campbell's view that a developer cannot guarantee that the land would not be put to any of the as of right or consent uses. It follows that the CSC would, in its consideration of the application and as required by s.5.1(a) of the P & E Act, have regard to the broad range of allowable uses on the land as zoned focusing, I would think, on the most probable uses. 246. It may be useful if, before I proceed with the present discussion, I make the point that the 15 to 18 lots on the red soil country near Mt Webb could possibly be devoted to agricultural/horticultural pursuits and could also possibly be capable of subdivision into smaller lots than the 100 ha proposed, according to Mrs Campbell. If that were the case it would be difficult to see that the various concerns raised by Mr Humphreys would apply to those lots, though I must say the real potential of those lots for intensive horticultural or agricultural uses is not a settled matter on the evidence I heard. Mrs Campbell said that the area of the red soil lots has been identified on CYPLUS maps as being an area of soils suitable for horticultural use as an extension of the fertile area to the south of the Morgan River. The suitability of land from a scientific perspective to be devoted to one use or another is highly significant, however, the economic suitability of land to be devoted to a use such as a tropical orchard turns also on various economic factors being satisfied, such as proximity to markets. I think that in all probability the evidence would show that an upgrading of access across the Morgan River by the construction of a causeway would place the red soil lots in a similar market to those lots upon which horticultural and agricultural enterprises are conducted south of the Morgan River. Now whilst I have no clear opinion about the prospect of those uses emerging successfully, I think that for the applicant for subdivision to seriously suggest such a use an EIS would need to address the question of the "utility" (s.5.1(3)(c)) and by that I mean the viability of these lots for those uses. 78 247. I will refer now to those parts of the Statement of Intent in issue and will consider the first of those: "to accommodate the grazing and extensive farming areas of the Shire". I understand the reference to "grazing" to be predominantly, if not exclusively, concerned with cattle grazing in the broad-acre or range manner of such enterprises in the Cook Shire. I would think that for a use of land to be described as "grazing" the type of use envisaged would be one where the dominant use is the grazing of cattle though, to facilitate that use, the owner and/or his employees may be resident on the land. A parcel of land of 100 ha in the "Starcke" freehold area on which cattle are grazed and on which the owner resided would properly be described as a residential use, rural residential or hobby farm, not a grazing property. Cattle grazing grass on a property does not make it a grazing property, or one with a grazing use, any more than would a dog would classify its owner's house as a kennel. I am influenced in this conclusion by the inclusion of the word "grazing" with the term "extensive farming". The evidence is also clear that none of the possible uses for the individual 100 ha blocks could be characterised as "extensive farming". 248. It will be convenient if, at this point, I dispose of the third intent for it is the second intent which is of greater interest in this discussion. The third intent in the Statement of Intent is "to conserve land for future agricultural use where suitable" or as a buffer zone. This intent received little useful treatment before me probably because a subdivision of the land is of not relevance to such an outcome. In passing I will comment on a submission for the claimant to the effect that Mr Humphreys agreed with Mrs Campbell that the CSC could properly consider a subdivision into lots for "conservation" purposes, rather than for, for example, viable rural production. I do not understand Mr Humphreys to have said that, but to have agreed that a specific conservation proposal for land with a particular conservation objective would not be inconsistent with the Statement of Intent. This is quite a different proposition from one where the intention is to identify 240 lots as "conservation lots" and market them as such without a particular conservation goal in mind. 249. The second intent expressed in the Statement of Intent is: to "ensure the continued viability of farm enterprises by allowing a wide range of rural pursuits". Mrs Campbell suggested that such uses as "fencing contractors and those types of rural pursuits", including machinery contractors, stockyard contractors and the like, would be the type of rural pursuits envisaged in this intent. These would generally be consent uses, however, would be consistent with the relevant Statement of Intent in Mrs Campbell's opinion. 250. Mr Humphreys placed emphasis on this part of the Statement of Intent being construed to allow the types of uses proposed by Mrs Campbell not on separate titles, but on existing farms. He said he inferred the intent "to be referring to the desirability of 79 allowing a range of activities to be carried out at a farm", but did not see "it as being something which in any way encourages the establishment of independent enterprises". As I understood Mrs Campbell's evidence, she agreed with the proposition that the intent included a broadening of farm revenue sources by allowing activities which would generate supplementary income. She referred by way of example to "home activities" and "home occupation" which were as of right uses in the zone. Her view was, however, that the intent would have extended to cover separate titles being created by subdivision to accommodate uses independent of existing rural enterprises, but in support of them. Evidence of a town planner's opinion as to the construction of a planning scheme is inadmissible (Yu Feng Pty Ltd v. Maroochy Shire Council (1996) 92 LGERA 41). What is admissible, however, is evidence of the advice a town planner would give a client as to the construction of a planning scheme. That is the way in which this evidence was received. 251. I must say that Mr Humphreys' understanding of the Statement of Intent in this regard does have merit. It is difficult to form the view, in a broad-acre farming area, of individual allotments being subdivided and devoted to the types of uses suggested by Mrs Campbell as contributing to the continued viability of the individual farm enterprises in the area. Mr Humphreys' view, as I appreciate it, is that such a broad range of uses would be allowed to be carried out on existing farm properties as sources of supplementary income and thus as contributors to the continued viability of those farm enterprises. If I look at the as of right uses in the "Rural (General Farming)" zone, I notice the inclusion of home occupations, host farms, nursery, advertising signs and home activities, all uses which seem to me to be supplementary to the conduct of the broad-acre grazing pursuits which dominate the relevant area. One could not imagine the erection of an advertising sign, for example, (following subdivision and the production of an individual 100 ha lot) as being expected, either in Cape York or elsewhere in this State. Neither would it be consistent with this intent, for example, to argue that if 240 x 100 ha lots are subdivided a large number of them would be developed for rural lifestyle purposes and could additionally be used for home occupations, nurseries, home activities and so on. Apart from the obvious difficulty in demonstrating the prospect of such ancillary uses emerging, the true position would be that such blocks would be rural lifestyle blocks, not farm enterprises. 252. Mrs Campbell's interpretation might lead one to conclude that individual allotments could be created for the purpose of facilitating the establishment of a use which supports rural industry. If it were economic, for example, for a farm mechanic to establish a business on a 100 ha lot subdivided from the "Starcke" freehold and from that base to service a range of properties, then it may be that the Statement of Intent does support that 80 type of use, assuming that the viability of farm enterprises would positively benefit from such a business/service being established. It may well be, in the example I have given, that the viability of farm enterprises could be aided by the provision of such services close to hand. I cannot, however, take from the evidence a conclusion that there would be a wide range or large number of such small businesses that would readily be located remotely from Cooktown. Also, I cannot accept that the Statement of Intent would be directed towards the establishment of a large number of individual rural pursuits such as nurseries, which are not directly servicing or connected to existing farm enterprises, but which, it might be argued, could contribute to the general economic health of an area and, therefore, to the viability of existing farm enterprises. 253. I am of the view that a subdivision of the type proposed is one that would generate a question in the collective mind of a responsible local government as to whether such a project is consistent with the Statement of Intent of the zone. To answer that question the proponent would be asked to provide information relevant to that inquiry, that information being directed to the intended or probable uses. In the evidence that I heard from Mrs Campbell the information available would probably be insufficient to allow the Council's inquiry to be answered. 254. If I put that concern aside and consider the conclusion I have drawn as to the suggested uses, I think that the Council could properly from the view that whilst evidence may be able to be found to support a limited subdivision consistent with the Statement of Intent there is no evidence, and I think none could probably be found, that there would be a predictable range of uses for the 240 lots which are consistent with the Statement of Intent. 255. It may be that some of the lots could be taken up for such rural support uses that Mrs Campbell described, though I find it difficult to accept that this would be a practical outcome for there would be a limited call on such services in a subdivision where there are few or no farming properties. Perhaps some of the red soil lots in the south could support viable rural enterprises in their own right, however, the evidence on that is inconclusive. The subdivision of a number of lots could well be justified, but the difficulty is: how many? And in answering that question (though it is relevant to a wider issue than just the Statement of Intent), a further question arises: why should the lots have areas of 100 ha? The answer to that question would appear to be that there was no demonstrable requirement for that - the area of the proposed lots simply results from a direct application of the content of Chapter 24, not from a considered view as to what area is needed for particular uses including rural lifestyle uses, though it may be that some uses will emerge from the list of as of right uses or those that may be permitted to which a 100 ha block will be suited. My 81 perusal of that collection of possible uses leaves me in considerable doubt however that this would be so - particularly when I take into account the claimant's view that reticulated electricity should not be provided. A third question to be asked: why in that location? That is, for example, if rural support services are needed to service a wide area, should they be located so distant from Cooktown and its infrastructure and services; and: is the "Starcke" freehold the natural or at least a desirable location for such services? Nothing in the evidence causes me to answer these questions in favour of the subdivision proposed. 256. I therefore entertain a serious doubt that this particular intent in the Statement of Intent envisages a subdivision in the manner proposed by the claimant whether Mr Humphreys' or Mrs Campbell's understanding of the Statement is adopted. 257. There is another matter that arises in connection with the Statement of Intent issue. Mr Humphreys suggested that the question of the "need" for the proposed lots is a relevant consideration. Given his understanding that the intent of the zone is that land should be used for the purpose of rural production, Mr Humphreys asks if there is some other community benefit or need which justifies the subdivision for non-farming purposes. In his view, no such need is demonstrated. This is not a matter included in s.5.1(3) of the P & E Act and though it may be that the list of items included there is not exhaustive, I cannot see that any exploration of need would generally be invited in a subdivision application. The Size, Shape and Utility of each of the Proposed Allotments (Section 5.1(3)(c) P & E Act) 258. The issue of use already discussed above is clearly relevant to this provision; however, the term "utility" provided a point of particular interest for the parties. The respondent's position was that, with the possible exception the 15-18 red soil lots in the south, the proposed lots would not provide sufficient land area for economically viable rural holdings given the type of country and its location. They therefore lacked "utility" for such uses. Mr Humphreys also expressed the view that lots of 100 ha lack utility for use as residential lots. He said that if there was a reason to establish a settlement in the "Starcke" area, the allotments would be smaller and there would be provision for a range of community facilities. I think that comment goes outside the requirement of s.5.1(3)(c) which I understand to be concerned with the utility of each individual lot. That is: can the lots effectively and usefully be put to use as residential lifestyle lots? I have some appreciation of the other concerns raised by Mr Humphreys in the context of the "Starcke" proposal amounting to a subdivision for residential purposes, albeit one in a suggested "wilderness" location; however, those concerns arise as a broad planning question not one 82 which properly arises as a question arising under s.5.1(3)(c). I consider that broad question under the "Proposed Use" heading below. 259. Mrs Campbell suggested that the matter of utility may not have application in this type of "larger rural subdivision". She suggested that it was of greater significance in an urban context. I will give my sense to that view. I would think that in a rural subdivision where there is, for example, a subdivision of a larger farm into two smaller farms, the considerations generated by s.5.1(3)(c) would not arise. I would think also that it would more frequently arise in urban subdivisions. However, it does, I think, properly arise where it is apparent that farming uses may not be supported by the size, shape or utility of the proposed lots. That view, though not based on the P & E Act, was thought relevant by Byth DCJ in Tropico Syndicate Pty Ltd v. Pine Rivers Shire Council (1968) 19 LGRA 352. I would understand Mrs Campbell's response to such a conclusion to be that, consistent with the Statement of Intent (as she sees it) there may be as of right uses which can adequately be carried out on the proposed lots. I do not, however, accept that the predominant use of the proposed lots would, with limited exception, be anything but that of rural lifestyle or retreat uses. One other freehold use is the suggestion from the claimant that the 15 - 18 lots in the better quality red soil country in the south of the proposed subdivision could be put to some horticultural or crop use. This would need to be addressed by an EIS and it would also need to address the suitability of the lots for other economic activities such as aquiculture, hydroponics and such like. Nevertheless it is possible that certain lots could be shown to be suited to such uses. Indeed, many lots may be shown to be suitable for aquiculture or hydroponics or even plant nurseries; however, the evidence does not point to such uses applying to more than a few of the lots, if any. That is, there is no evidence of demand for such uses or that the demand generated by marketing would be for such uses. 260. The claimant submitted that the question of the lack of viability of the 100 ha lots should not arise because the applicable scheme (s.13(1) of Chapter 24 of the 1982 CSC Scheme) sets the minimum allotment size at 100 ha. That submission must fail for a number of reasons. First, the Statement of Intent can be a relevant factor in the consideration of a subdivision application and can provide a reason why a subdivision application should not be approved. Second, the P & E Act provides in s.5.1 for the local authority to direct its mind to a range of considerations where these are relevant. The Scheme cannot explicitly or implicitly displace that statutory provision. Third, there is no evidence to suggest that the local authority had a history or an expectation in 1982 of subdivision of the order of what is proposed for the "Starcke" freehold. At that time the 83 land which became the "Starcke" freehold existed in the form of a lease from the State. Such leases may not be subdivided in the manner of freehold land. 261. Under the present heading I should simply consider the question of whether the proposed lots individually have utility for their intended use. After all, s.5.1(3)(c) refers to "size, shape and utility of each of the proposed allotments", not the subdivision as a whole. Now, again, the difficulty in establishing the uses of the lots complicates the matter, however, I will consider the matter on the basis that the most probable use would be residential lifestyle or retreat. There is no evidence to suggest that there is some lack of utility in the lots that would render them unsuitable for such residential use. Certainly their size at 100 ha each is much greater than is needed for such use, but that does not inexorably lead to a lack of utility. One interesting aspect of the size question is that in suggesting that the spine road should not be bitumen sealed, that electricity should not be provided and that community and commercial facilities need not be provided in the design of the subdivision, the claimant relied in part on the fact that the proposed lots were large and were spread over a considerable distance. I consider those matters elsewhere in these reasons. The point for consideration in the present context is, however: if the proposed lots were smaller, though sufficiently large to accommodate a rural lifestyle, would they not be better serviced? In that context, the utility of the proposed lots for residential purposes is open to question. 262. I question that people intent on utilising lots at "Starcke" essentially for rural lifestyle purposes, whether permanently or intermittently, would prefer such large blocks. Mrs Campbell said that the size of the lots would provide privacy from neighbours, thus would contribute to the enjoyment of the environment. Occupants could generate their own power without annoying neighbours. Now whilst the size of the blocks is more a product of the minimum subdivisional requirements in the zone than the adoption of a preferred size, I conclude, on balance, that the blocks would have utility for the type of residential lifestyle use one might expect. 263. In passing I should comment on a suggestion by the claimant that if a VCA (in the case of a block near Mt Webb National Park) provided for the protection of the rainforest, then not only would such a block be said to have utility for that purpose but would be consistent with the Statement of Intent where it refers to a buffer. I think that view confuses the intended use, which would be residential lifestyle, with a particular aspect of the manner by which that use is manifested. 264. Mrs Campbell said at one stage that she saw no difficulty in the subdivision being carried out for the purpose of providing 100 ha grazing properties, even if a viable 84 enterprise could not be carried out on such lots. Mrs Campbell's view is that as economic viability is not included as a factor for consideration in the Planning Scheme applicable at the relevant date, it is not a matter for consideration. It followed, it was suggested, that subdivision down to 100 ha was available not only in limited circumstances such as those where a 100 ha lot was viable as a unit for rural production. That is an extreme view that I cannot accept. Not only would this be the antithesis of "orderly development for the general convenience and benefit of the public" (per Muirhead AJ in Brown v. Idofill Pty Ltd (1987) 64 LGRA 218 at 227-228), but it would be a definitional absurdity to refer to such lots as "grazing" properties. 265. The claimant also submitted that the freehold land would not support a viable grazing enterprise by itself as it stood at the relevant date, so the subdivision into smaller 100 ha unviable grazing lots is of no practical consequence. That argument may be said to have greater force having regard to the fact that the freehold land is actually held in four surveyed parcels at the relevant date, each capable of independent sale. I think, however, that a properly informed local authority may observe that the freehold land as it existed at the relevant date had a greater potentiality for use as grazing land, together with the adjoining PDH, than it would were it subdivided as proposed. 266. Mr Humphreys expressed the view that the "Starcke" freehold proposal represented "fragmentation" rather than "subdivision". He saw "utility" and "viability" as being related concepts on the facts of this case and saw them also as being connected with the concept of "fragmentation". He said, "If you allow viable parcels to be fragmented then they can no longer perform that role and that is a relevant matter for the Council to have regard to in dealing with a subdivision application". In his view, if subdivision leads to a loss of "utility", that is viability, for a pre-existing economic purpose, then it should be considered as "fragmentation". Mrs Campbell's view was that "fragmentation" was a concept more correctly concerned, for example, with the fragmentation of land on the urban fringe which creates difficulties for urban expansion. I gather she was concerned with, say, the subdivision of land into rural residential lots, thus making it difficult to effect a more intensive urban subdivision. Whatever term is employed, it seems to me that both the issue described by Mrs Campbell and that described by Mr Humphreys are capable of being relevant dependant on the facts. 267. The claimant understood Mr Humphreys' viewpoint to place reliance on State Planning Policy 1/92, which was initiated by the State Government to ensure that following its introduction planning schemes specifically address the need to preserve areas of good quality agricultural land. Section 4 of the Planning Guidelines which are incorporated in 85 the Policy deals with the assessment of planning applications and clause 4.2 of those Guidelines refers to the prospect of there being instances where the relevant land is effectively "committed" for development or subdivision by the Planning Scheme. In such circumstances of "commitment", the State Planning Policy requirements to preserve good quality agricultural land would not apply. It was submitted, for the claimant, that the provisions in the CSC Planning Scheme applicable at the relevant date did provide a commitment for the subdivision of this land down to a minimum of 100 ha and that that pre-commitment negates Mr Humphreys' argument with respect to fragmentation and lack of viability. In any event, it was submitted that the proposed subdivision would not result in a fragmentation of good quality agricultural land as the only land that might meet that description, being the red soil country near Mt Webb, can readily be subdivided down to economic units of 100 ha or even smaller. I express elsewhere the uncertainty as to the economic prospects of this red soil country, however, that is not a reason for not accepting the claimant's submission on the matter of the State Planning Policy. 268. I accept the claimant's submissions with respect to the non-application of the State Planning Policy, however, do not accept that Mr Humphreys' opinions concerning fragmentation of the "Starcke" freehold cannot be supported on some other basis. Mr Humphreys' view, consistent with his understanding of the Statement of Intent, is that the local authority would require the applicant to demonstrate the viability of the proposed lots for primary production purposes. He said that the draft 1997 Planning Scheme expressly required an applicant for subdivision approval to demonstrate the viability of the proposed allotment size for the intended primary production purpose and the draft 1994 Planning Scheme provided to like effect. It was his view that those provisions accord with good town planning principles. 269. There are two reasons why economic viability of the lots may be of relevance. First, there is a connection with the Statement of Intent discussed earlier. Second, putting aside the Statement of Intent, there is the question whether the lots will eventually be put to uses which do not result in the "blighting" of the area. Although in planning there is a distinction between "community" and "individual" economics in relation to planning applications, only the former is a material planning consideration (Kentucky Fried Chicken Pty Ltd v. Gantidis (1979) 140 CLR 675 especially (Kentucky Fried Chicken) at 687 per Stephen J). Although the individual financial success of a particular development will, generally speaking, be of no town planning consequence, in some cases it will because of the nature and size of the proposed development, for example, a large shopping centre which would have the potential to have either a blighting effect on other shopping centres 86 or, if it were to fail, a blighting effect on the land so developed. I could find no authorities dealing with this blighting proposition directly, however, the principle of the Kentucky Fried Chicken case would, I think, be applicable in that respect. Nevertheless I must express doubt that a subdivision of the "Starcke" freehold could foreseeably become a blight in the form, for example, of a collection of failed farms or grazing properties. It is not proposed by the claimant that they be promoted as that. I must say, also, that I very much doubt that the proposed "Starcke" lots, apart from the few at the southern end, would attract purchasers intent on establishing grazing or cropping enterprises. Even the most casual inquiry would reveal to an intending purchaser that such ventures would certainly fail. Any such activities could be conducted only as incidental to, for example, a residential lifestyle use. 270. The net result of my consideration of the evidence under this heading is, however, that a prudent purchaser would be concerned as to whether a properly advised local government might see justification for refusing an application to subdivide. Services and Facilities 271. Both Mr Potter and Mr Humphreys noted the absence of community services and facilities such as a school, a community hall, health facilities, shops and fuel outlets, etc. According to Mr Humphreys, the absence of such services and facilities does not invite a description of the proposed "Starcke" subdivision as being one involving orderly planning. 272. Mrs Campbell thought that the "Starcke" subdivision would be initially recognised as being part of the rural hinterland of Cooktown, so would rely on that town as being the service centre for the subdivision. She said that demand for services of a commercial nature, and for that matter those that are community based, would be difficult to predict given the uncertainty of the population that would ultimately be accommodated at the "Starcke" freehold lots or the rate of occupation of the lots. She suggested that commercial uses would be developed as the demand arose and that by a process of rezoning or the provision of consent of the local government, such uses could be established at "Starcke". Mr Bartsch's approach to the matter was a little different and, as I understand it, would be in conflict with the practicalities of Mrs Campbell's proposal. Using the example of a general store, he raised the question as to where it might be conveniently located. Mr Beattie explained how at "Daintree" commercial facilities, such as the Floraville Tea Gardens emerged over time in response to demand. Some points of comparison between the "Starcke" proposal and "Daintree" readily appear - the "Daintree" population would be much larger than that anticipated at "Starcke"; the lots at "Daintree" are smaller, therefore it would be possible to locate such facilities as a general store in a position where it would be 87 expected to enjoy custom; and there is a high level of tourist visitation to the "Daintree"/Cape Tribulation area, thus providing additional income to commercial facilities established there. Given the size of the proposed allotments at "Starcke", there is no natural location for such a use. A general store located in the centre of the population density might not enjoy trade from lot owners to the south who might find it more convenient and more attractive to travel into Cooktown. 273. There is evidence that a school bus services Hopevale, thought I do not have evidence as to whether a service such as this might reasonably be extended to the advantage of all of the "Starcke" lots. There is, however, dormitory accommodation available in Cooktown for students who are not able to attend school on a daily basis, so it may be that the children of any residents at "Starcke" could utilise that accommodation facility. I do not know whether that facility would be attractive to the class of purchaser the claimant expects. 274. There are centres in the Cape where populations smaller than the maximum predicted for the "Starcke" subdivision have such services as medical facilities, primary school, sports oval, post office, general store and suchlike. Such centres as Coen, Laura and Hopevale were mentioned as having such facilities and the respondent sought to draw comparisons between the anticipated population at "Starcke" and these centres. Hopevale, for example, has a population of between 825 to 1250, Coen 250 and Laura 100, though as Mrs Campbell pointed out, population in areas near to these towns also use facilities supplied by the towns. If "Starcke" was viewed as a settlement it might, on a projection of a 500-person population, be the second-largest population centre in the CSC area, given that Hopevale is not part of the CSC, though would be third in line if Hopevale were to be included. 275. There was considerable debate as to whether "Starcke" should be termed a settlement, a centre or, to employ Mr Bartsch's terminology, a region. Certainly the subdivision proposal is not one that would invite characterisation of the proposed outcome as being a town, nor a centre, however, it seems to me that region is a little too broad. The most comfortable description for the proposal is, I think, a settlement, however, whatever terminology is employed, it is clear that the proposal cannot easily be compared with such towns as Laura, Coen, Hopevale or Cooktown. 276. I accept the claimant's view that comparison between the proposed "Starcke" "settlement" and other towns in the CSC may not be validly made except perhaps to point out differences. The claimant's position, put through Mrs Campbell, is that these other centres are old established towns and their facilities have fluctuated over time. Mr Bartsch 88 observed that some of the facilities in these towns would have enjoyed the patronage of tourists and, therefore, such usage would have contributed to their commercial viability. The towns of Laura, Coen and Hopevale are closely settled on small allotments, quite unlike the "Starcke" proposal where the lots are very large and the distances between them are great, being up to 90 km. 277. I think that the response of the claimant to this issue demonstrates the incongruity in planning terms of a development of the type proposed. The response is that required services would be established on a demand-driven basis, yet paradoxically suggests that finding an appropriate location for such services as a general store would be a matter of difficulty. The contrast between the "Starcke" proposal and Laura, Coen, Hopevale and "Daintree" suggests to me that the nature of this proposal in its location and given the class of land involved, would, if approved, be a most unusual planning decision. That is, not only are services absent or distant, but the eventual provision of many would be difficult, if not unwise, commercially. It would be quite a different matter were the subdivision concerned with the production of a more intensive form of economic land usage - and I have in mind farming. This is because such a project would generate a stable population with its own economic drive and demands and would provide greater predictable business volume for a person intent on undertaking a commercial venture there. Similarly, if a more intensive residential subdivision were to be developed, then the features of distance and lot size would not present as an inhibition to the development of commercial enterprises. The adoption of 100 ha lots is quite clearly based upon the subdivision provisions in the Town Plan which apply in the zoning, yet the application of those would lead to the production of a settlement, which would be denied services that might be expected in other circumstances. Economic Benefits 278. Mrs Campbell expressed the view at one stage that the subdivision of the "Starcke" freehold may have certain economic benefits in the form of a strengthened primary industry sector supporting rural service industries in Cooktown. I do not accept the veracity of that opinion. I was not provided with any cogent evidence to suggest that there was a pent-up demand for ventures such as aquiculture and hydroponics or other similar undertakings which are largely independent of land quality. Indeed, even the proposed 15 lots or so in the better quality country at the southern end of the subdivision plan do not have demonstrated viability as individual economic horticultural or farming units. They may be viable but I was not presented with evidence that would lead me to such a conclusion. Evidence referred to by Mrs Campbell in support of concluding that the highest and best 89 use of these lots was for horticulture or farming units was provided by reference to about 50 lots to the south of the Morgan River with areas ranging down to 32 ha and some smaller. Some of these lots have apparently been put to economic farming and horticultural use, but the detail of this was scant. Whilst to the untrained eye a conclusion might be drawn that the red-soil lots in the south of "Starcke" could comprise economic farm units, this is not to say that they could be so categorised. Indeed, Mr Slater thought them not to be viable units, though he did not support that opinion with market or other evidence. Certainly, as I have said elsewhere, there was no obvious economic farming use for the bulk, if not all of the proposed "Starcke" lots. None would support grazing - the most common farming activity throughout the Cape. 279. Let me deal with one suggestion made by Mr Bartsch. His evidence, if I can summarise it, was to the effect that some of the "Starcke" freehold land was of such quality that it was clearly farming land. For land to be recognised as farming or horticultural land, it needs to be so recognised by those who purchase land for that purpose. An independent academic exercise which focuses on the quality of the land is of no value unless that quality would be sufficient to attract experienced persons who would purchase the land to take advantage of its quality. Reticulated Electricity 280. By virtue of s.5.1(3)(e) of the P & E Act the CSC would be required to consider whether "public utility services should be made available to the subdivided land". Section 1.4 defines "public utility services" to include electricity. It was Mr Humphreys' contention that electricity should be provided to the lots at the developer's expense and although that cost did not appear in Mr Potter's cost estimates, Mr Potter said that the cost of reticulated power "would likely need to be developer funded". Reticulated electricity is not provided by the Local government but by FNQEB, now Ergon Energy. Mrs Campbell said that there may be a cost to landholders where electricity is being extended to an area. She did not elaborate on that, however, I understand from the evidence that the electricity authority may require contribution from a developer if it would not otherwise be economic for the electricity to be provided. That contribution may lead to the developer paying the full cost and that appears to be the suggestion of Messrs Humphreys and Potter. 281. The claimant emphasised that the advice that a prudent purchaser would have been given had he consulted Shire officials would have been clear. Mr Bartsch said that he did not believe that he would be asking for reticulated power for the subdivision because it is common in the Shire that people do not have reticulated power and the proposed lots would be sold on that basis. Mrs Campbell referred to a subdivision of seven lots carried out by 90 the Department of Natural Resources at Portland Roads, quite some distance north of the "Starcke" lands. Reticulated electricity had not been provided there. Mr Potter said that the population at Portland Roads totalled only 20 to 30: a number which is probably too small to warrant reticulated power. In contrast to Portland Roads, the respondent pointed to settlements at Laura and Coen with populations less than predicted at "Starcke"; and to Hopevale with a population of 825 to 1250 where electricity is provided. Those centres are smaller in area than the proposed "Starcke" freehold subdivision and would more easily be serviced by electricity. I do not think that reference to the objective standards in Cook Shire discussed thus far assists me greatly in drawing a conclusion on this issue. Certainly, an ultimate population at "Starcke" of 500 people or more is of a size, notwithstanding its spread-out nature, that would invite serious consideration of the question of electricity. It is not an issue to be put into the Portland Roads pigeonhole. 282. Mrs Campbell said that the Council would not impose a condition requiring power on a "rural subdivision" under any circumstances, having actually passed a policy that such a condition not apply. That policy was not tendered in evidence, unfortunately, so I am left with a question as to what would be considered a "rural subdivision". Presumably, the policy is consistent with s.5.8(4) P & E Act, which provides: "(4) A local government is not to approve an application to subdivide land where the application relates to land proposed to be used for purposes other than for a bona fide rural purpose, unless -

(a) at the time the application is made electricity is available to the proposed allotments; or

(b) an agreement exists between the applicant and the relevant electricity authority for electricity to be made available to the proposed allotments within 6 months from the date when the plan of survey is approved by the local government under its seal (or within such longer period as is acceptable to the local government); or

(c) the relevant electricity authority advises the local government in writing that it is not reasonable to require that electricity be made available to serve the proposed allotments."

283. I received no submissions as to the possible application of this provision to the instant case. I would have thought that this provision might have been relevant to the issue, possibly together with the policy referred to by Mrs Campbell. For my own part, I would doubt that the bulk of the probable uses anticipated at "Starcke" would properly be described as "bona fide rural purposes". In saying that, I place some reliance on Logan v. Burnett Shire Council (1995) QPLR 153 where Quirk DCJ equated the grazing of cattle 91 with the term "bona fide rural purposes". It is my appreciation that of the uses to which the "Starcke" lots might be put, only the fertile lots near Mr Webb, the possible hydroponic or aquiculture uses, or perhaps some use incidental to a broad-acre farming use (eg farm mechanic), could be described as being suited, if not "proposed", for "bona fide rural purposes". It follows, if the statutory provision under discussion applies, and I think it may, that the subdivision ought not be approved unless s.5.8(4)(c) could be satisfied. I have no evidence to say what the relevant electricity authority might advise the local government in terms of that provision. I have evidence that the nearest electricity is at Hopevale some 36 km from the "Starcke" freehold boundary. This appears to me to be a considerable distance to convey electricity. Mr Potter said that it would cost around $7,000,000 to $8,000,000 to provide reticulated electricity to the proposed subdivision. I would not be surprised to discover that the relevant electricity authority would provide a statement to the effect that s.5.8(4)(c) is satisfied. It is difficult to see that the electricity authority would consider that it could recoup in tariffs the cost of in excess of $30,000 per lot to supply electricity unless the developer contributed to that cost. My discourse on this statutory provision was prompted by Mrs Campbell's mention of the Council policy on the matter of electricity. I was not referred by the parties to that statutory provision but that is not a matter of concern to me because, even if s.5.8(4)(c) is satisfied, this does not impose upon a Local government a requirement to approve a subdivision application. CSC would still need to consider whether it would require reticulated electricity. 284. There is another matter which the respondent urges would be a matter of real concern for CSC and that relates to the "Daintree" subdivision where the developer did not supply electricity. In spite of the fact that the "Daintree" lots were sold without reticulated electricity, though with a suggestion in a brochure tendered in evidence that it could be provided in the future, landowners there were at the relevant date of the present matter and before that, agitating for the supply of that utility. A survey carried out as part of the work in preparing the Daintree Planning Package showed that in early 1994 82.4% of the Daintree landowners were in favour of power reticulation. The landowners were exerting pressure on the State and Local Governments for the supply of this service. Both Mr Potter and Mr Humphreys referred to the "Daintree" experience and the possibility that provision of power may have become an issue with some of the residents in "Starcke" in the future. 285. Hopevale, as I have said, is the nearest point from which reticulated power might be taken to supply the "Starcke" lots and that is some 36 km to the south. The claimant stressed that there were 1,000 lots at the "Daintree" comprising mainly 1 to 2 ha lots with power being available across the Daintree River just to the west of the most southerly part 92 of the development and, therefore, to compare the "Daintree" with "Starcke" would be inappropriate. There is an obvious tension between that proposition and the claimant's emphasis on the "Daintree" providing a precedent for the "Starcke". Nevertheless there is, I think, some merit to the argument. The "Daintree" subdivision is much more closely settled than would be the case at "Starcke" and its ready proximity to the sophistications of Port Douglas and Cairns can readily be contrasted with Cooktown. 286. "Daintree" is an example of the level of concern that the unavailability of electricity will generate in a community, notwithstanding that allotments might have been originally purchased on the basis of them being untrammelled by the trappings of urban society. That concern can translate into pressure on local and other authorities and it is the prospect of that pressure resulting in a requirement for the Government to provide those services partly out of its own funds that would exercise the mind of a properly advised Council. CSC would have been aware of the "Daintree" experience and would not prudently dismiss it out of hand. When I consider the evidence that I heard, including the range of possible uses on the "Starcke" subdivision discussed by witnesses on the claimant's side; and the absence of any market survey work having been carried out; it is clear that the local government in Cooktown would be making a decision concerning the subdivision application without a clear view as to the type of purchaser that might be coming into the Cook Shire community. Would they be the rugged types of folklore, if not reality, who demand nothing but to be left alone by a government, or will they be tertiary educated "movers and shakers" who may not only develop expectations concerning such things as the provision of reticulated electricity, but will have the capacity to promote their viewpoint in a sophisticated way? Mr Bartsch said that the population at "Starcke" would warrant Council representation - a means of being heard. 287. The "Daintree" Planning Package Report reveals that desire for power is much less amongst those people on blocks at Cape Tribulation, some 13 km distant from the northern end of the main area of development of the "Daintree". It was suggested by the claimant that this extra degree of remoteness from civilisation clearly affects those residents' perception of what they need and desire. I am not sure such a conclusion can easily be drawn. There may be such issues as the sense of community amongst the Cape Tribulation residents or the concern about the environmental effect of overhead powerlines travelling from the "Daintree" to Cape Tribulation or some such similar matter. Undoubtedly, the Cape Tribulation's residents' perception of their own remoteness would be a factor, however, it may not be the only factor which influenced the difference in their attitudes. I do not think that a research-based picture of a typical purchaser would decide the matter. 93 288. The question really turns, I think, on the ultimate use of the lands and therefore the probable expectations of the lot owners. A prudent purchaser of the "Starcke" freehold would have no ready answer to these questions, however, would form the view that the local authority would have a concern as to what the answers to these questions might be in pursuing its deliberations on the application to subdivide. Mr Beattie expressed the view that the type of purchaser who would want electricity and suchlike would not be interested in buying at "Starcke". I understand how, in a marketing sense he could form that view; however, a properly advised Local government would be aware that the "Starcke" lots would change hands over time and even if the original marketing was so powerful as to exclude those who might develop a desire for better services over time, there could be no guarantee about subsequent purchasers. 289. Mr Beattie also drew attention to the environmental intrusion of overhead electricity lines and poles into the area. That is a matter which I think would be taken into account by CSC, however, I find it difficult to accept that this would be a decisive issue in a subdivision where clearing, roads and drainage facilities would already scar the environment. A low voltage powerline would not be as intrusive. In short, the hypothetical prudent purchaser must be concerned that there remains the possibility that the developer will be required to contribute to the cost of the installation of reticulated electricity. I do not put that, on the evidence that I heard, at any higher level than a possibility; however, it is one with a potentially costly downside that should feature in the assessment of risk associated with the project. Environmental Impact Statement 290. Both Mrs Campbell and Mr Humphreys acknowledged that there were aspects of the land that would trigger the need for an EIS. A prudent developer would be aware that an EIS would be required and would be expected to address wider issues than the natural environment. Even though it may have been a natural feature such as tidal lands which triggered the need for an EIS, section 8.2 of Part E of the P & E Act requires, in relation to a subdivision application, that a local government "is to take into consideration whether any deleterious effect on the environment would be occasioned by the implementation of the proposal, the subject of the application." 291. Section 1.4 of the Act defines "environment" thus: "'environment' includes -

(a) ecosystems and their constituent parts including people and communities; and (b) all natural and physical resources; and 94 (c) those qualities and characteristics of locations, places and areas, however large or small, which contribute to their biological diversity and integrity, intrinsic or attributed scientific value or interest, amenity, harmony, and sense of community; and (d) the social, economic, aesthetic and cultural conditions which affect matters referred to in paragraphs (a), (b) and (c) or which are affected by those matters."

The process involved with respect to an EIS is one where the proponent would first contact the CSC and discuss the proposal with the Shire Planner and the Shire Engineer. No application would be lodged at that time but would be lodged together with the EIS once completed. The process which follows is in accord with s.2.1 of the P & E Act: 1. The applicant for the development proposal must contact the Chief Executive of the Department administering the P & E Act to obtain the terms of reference of the required EIS.

2. The Chief Executive consults with all referral agencies (other government departments and agencies, the local government) in formulating the terms of reference, within a time frame of 20 days.

3. The Chief Executive advises whether an EIS is necessary and what the terms of reference are.

4. The applicant prepares the EIS in accordance with the terms of reference and includes the EIS as part of the information supporting the application to the local government.

5. The local government forwards the application to the Chief Executive and to any referral agency nominated in the terms of reference together with a request for comments.

6. The referral agency comments are forwarded to the local government.

7. Under the legislation prevailing at the relevant date, the local government considers and decides upon the application.

292. The evidence indicated that State referral agencies might have included the Departments of Environment and Heritage, Family and Community Services, Education, Health, Transport and Primary Industries. The three issues presently of moment in this case are: the effect of the proposed development on the natural environment, on the Aboriginal cultural landscape and on the Hopevale community itself; and on the Cook shire or a particular locality. I have largely dealt with the third item in my earlier "town planning" discussion. I discuss the other two issues in detail later in these reasons. I will confine myself for the moment to discussion of more general matters. 293. Mr Humphreys suggested that the terms of reference for the required EIS would be likely to include the following: 95  Description of proposal in terms of site location and site access, design concept, source of water supply, waste water disposal system including fire protection, site drainage and erosion control, site contamination and extent of vegetation clearing/retention.  Topography.  Hydrology including potential for groundwater contamination.  Fauna and Flora survey.  Social Impacts including Cultural Heritage survey of site and identification of sites of Cultural Heritage significance in the vicinity of the site, access to health, education and retail services and the level of service available at those facilities.  Transport issues.  Assessment of the impact of the proposed development upon the Aboriginal Cultural Heritage values of the area.  Environmental Management Plans during construction of the subdivision and following construction.  Consultation with Cape York Land Council and local Aboriginal communities,. Department of Family and Community Services and Department of Environment and Heritage.

294. Mrs Campbell included draft generic terms of reference in her report which, together with other evidence, tended to support the list of items suggested by Mr Humphreys. The important difference between the parties was less concerned with the topics required to be addressed in the terms of reference, but more with the level of detail needed, the time that might be taken and the probable cost. I will come to time and cost in due course. As to the issue of the level of detail needed in the investigation: that will be dependent on the likely extent and scale of the potential impacts. In this regard the referral agencies can provide guidance, however, to a large extent the investigation process is in the hands of the development proponent, as is the risk that there may be a request for further information if the EIS falls short of what is found to be needed. 295. One difficulty that will confront the proponent and the referral agencies in considering the potential impacts and therefore the terms of reference for the EIS is the intended use of the subdivided lots. The terms "conservation lots" or "environmental subdivision" would be unhelpful, whereas resort to all of the as of right uses in the zone and to the consent uses consistent with the Statement of Intent of the zone may lead to quite monumental terms of reference. For my purposes and having regard to the evidence that I heard, I have reasoned that the bulk of the lots would be used for lifestyle residential purposes and that there may be other uses. I cannot say that my process of reasoning would be adopted by the Chief Executive, nor that that officer would not ask the proponent to be more specific. The difficulty with that, as Mrs Campbell pointed out, is that the developer cannot guarantee the use that will be made of the lots. For completeness, I 96 should point out that the proponent is not required to lodge an application to the Chief Executive detailing the complete project proposal; however, the less complete the information provided, the greater the risk that the EIS terms of reference will range beyond that which would otherwise be required. 296. Mrs Campbell stressed that the final decision on the application for subdivision, taking into account the EIS and the advices of the various referral agencies, was a matter for CSC not the State Government nor any of its agencies. Mr Humphreys, on the other hand, said that the State would be vitally interested in Cultural Heritage and natural environment issues, and in whether the proposed subdivision is an economically sustainable, sensible form of development taking a long-term perspective. The role of the State agencies in the EIS process would therefore, in his view, provide a check to the idea that the subdivision application ought to be approved as a matter of course. He expressed the view that a prudent purchaser would assume that, notwithstanding CSC's predisposition to development, it would act responsibly in considering the EIS. I accept that view. 297. Both parties tended to focus more on the EIS process and subject manner than on the possible outcomes. That is an understandable approach in the absence of a reliable crystal ball. One departure from that in the claimant's evidence was the proposition that natural environment issues could be disposed of by the imposition of appropriate development conditions to cater for the development phase and the entering into of a VCA or a number of them under the provision of the Nature Conservation Act to cater for ongoing environmental management of the subdivided lots. It was also suggested that ongoing land management conditions could be imposed. Apart from the specific VCA example, I am left with the difficulty of deciding what view a prudent purchaser might take of the outcome the EIS process might have on the subdivision proposal. Mrs Campbell recognised in her report that the EIS may have resulted in modification of the proposal to mitigate potential impacts and acknowledged in cross-examination that the outcome of the EIS could have led to refusal of the application. Mr Brett's valuation proceeds on the assumption, however, that the subdivision plan would be approved as proposed. 298. My consideration of this broad issue is undertaken by a consideration of the individual issues of importance raised by the parties. The first of these is the "Natural Environment", whilst the second is concerned with "Cultural Heritage and Aboriginal Issues". My discussion will deal with the nature of these issues and how they may be treated in the process of an intending developer seeking subdivisional approval.

97 Natural Environment 299. The EIS terms of reference would probably have, in regard to the natural environment, been directed towards the consideration of a range of matters, including:  the potential impact of the proposed development on adjacent areas of importance viz the Starcke National Park, the Mt Webb National Park, the coastal lowlands to the east;  potential impacts on water bodies and water courses within and outside the development area;  potential impacts on some limited vegetation communities within the "Starcke" freehold; and  potential impacts on land forms such as the parabolic dune system located south of the mouth of the Jeannie River.

300. Evidence of the environmental values of the freehold came from a variety of sources. The source most frequently referred to by the claimant was the then Premier Goss under whose administration the Starcke Act became law and the "Starcke" lands were taken. A media release dated 6 September 1993 attributes the following to the Premier: "'The Government's advice is that this land represents significant conservation values,' said Mr Goss.

There are unique rainforest scrubs, coastal dunes, coastal rainforest vegetation, magnificent maintain (sic) areas and a host of new plant species.

Such an acquisition would add substantially and significantly to the State's national park estate which already stands as world class."

301. These words were expanded upon in Hansard of 14 September 1993 where as part of a Ministerial statement, the Premier said (pp.4192-4193): "The land in question, which is an outstanding natural area yielding a host of new plant species, including a number of unique rainforest scrubs, was offered for sale in the United States for US$18m. Within the freehold, there are particularly scenic coastal dunes south of the Jeannie River and a mountain spine backdrop runs the full length of the holding.

Advice from the Department of Environment and Heritage is that the holding is within a distinct environmental province of Cape York, and it contains many ecosystems not represented within the State's existing national park estate. The freehold area contains the distinctive parabolic high dune systems of white silica sand, which is poorly represented within Queensland's parks. Also, there is a unique palm woodland of livistona muelleri, regarded as the best example of its structural type known on the cape. Littoral rainforest scrubs also occur within the coastal dune system. Of the total area, only two sections have been substantially disturbed in the past - 4 000 hectares south of Hummock Creek to the Starcke River and an area of about 500 hectares near the homestead. Advice is that both areas will regenerate in time.

98 Of particular conservation interest is the occupational lease which contains a very complex area of sand dunes, marine plains, salt flats, swamps and gallery riverine forests, as well as a spectacular headland at Barrow Point. This area contains a newly identified eucalypt species. The Sandstone Ranges, which run the length of the holding, house ecosystems not seen in the parks on the peninsula. There are small rainforest communities which are botanically significant. For example, one 15 hectare patch has yielded three new species. In other parts, species occur as distinct populations with affinities to species occurring in south-east Queensland."

302. I note that the Premier was generally referring to the "Starcke" aggregation, not to the freehold area which was not separately identified except with reference to the "parabolic high dune system" (which I take to be in the north on the coast south of Jeannie River) and the "unique palm woodland of livistona muelleri". I do not understand that the "Sandstone Ranges" referred to are found on the freehold, though the "15 hectare patch" may be. The Occupation Licences, which were said to be of "particular conservation interest", are not freehold. 303. What the Premier had to say appears to have resulted from a selective use of the advice said to have been provided, his selection not being based on the needs of the present case but on his audience and his purposes. I cannot read into his words a view held by the Government at that time that the "Starcke" freehold, overall, had a high conservation value, but it is apparent that it was thought that part of the freehold merited conservation. Interestingly, the bulk of the PDH has since resumption, been declared as National Park, whilst only that part of the "Starcke" freehold to the south of the Jeannie River and towards its mouth and the beach has been included in the Cape Melville National Park. That area appears to include the parabolic sand dune area. To the south of that the bulk of the body of the freehold has become subject to a VCA between the State and the Aboriginal landholders. That land, as well as most of the freehold tail and parts of the previous severed parts of the PDH were, in 1999, granted to Aboriginal landholders pursuant to the provisions of the Aboriginal Land Act 1991. The VCA does not appear to cover land near the Mt Webb National Park, however, it appears from Exhibit 88 that that park may also have been extended. 304. On p.4193 of Hansard the Premier said: " The major question facing the Government is whether to purchase just the significant coastal part of the holding or to purchase the entire 225 000 hectares. The Government is committed to acquiring the relevant coastal section of the property. Because of the various regimes associated with freehold title, leases and occupational licences, it is more practical to acquire the whole of the holding. This also means that we can protect the conservation values with certainty. Therefore, Cabinet's preferred position is 99 to acquire all of the Starcke Holding and use special legislation to effect the transaction."

305. No further explanation is provided as to what comprises "the significant part of the coastal part of the holding". It is difficult to see, however, that stringy bark eucalyptus savannah, which Mr Finney said comprised most of the freehold lots proposed, would be encompassed by such a description. The most that I can make out of the Premier's words is that part of the freehold was thought to have conservation value, but that it was to be acquired as part of a package because of administrative convenience - and I would think, to hopefully simplify the compensation issue. I have already observed that environmental values would have been taken into account when the freeholding Special Lease was granted in 1975. 306. The "advice" referred to by the Premier was not provided to me, however, Mr Stanton gave evidence that in September 1993 he was, as an employee of the Department of Environment and Heritage, asked to provide advice on the potential of the "Starcke" aggregation for National Park purposes. His advice was that the "Starcke" lands when considered as an extension of the existing adjacent National Park would provide the basis for a National Park outstanding in both a regional and a national context. In a written statement tendered in the present matter he said that the extended National Park would provide a landscape, geological and ecosystem diversity that was excelled by only one other area of Cape York. The park would, he said, have an unexcelled length of coastline, much of it of highly scenic quality. In addition there are a number of biological and landscape features spread throughout the "Starcke" lands, some of which were found on the freehold. He said it was important to note that no case was made that all parts of the "Starcke" lands were of environmental significance. Those known outstanding features of the freehold were:  the scenic and habitat values of the dunes south of the mouth of the Jeannie River;  the extensive community containing the palm livistona muelleri; and  the rainforest on basalt near Mt Webb.

307. The active parabolic high dune system is representative, he said, of a few extensive similar landscapes between Cape York and Cooktown. There is to be found on the "Starcke" dune system an excellent development of a type of rainforest, being a geographically isolated occurrence of this ecosystem. 308. The large area just south of the lower reaches of the Jeannie River containing dense stands of the palm livistona muelleri provides habitat of considerable scenic value. The Mt Webb National Park, which was before resumption enclosed within the freehold, protects a 100 tall complex vine forest developed on soils from basalt and, according to Mr Stanton, is possibly the rarest ecosystem on Cape York Peninsula. A large part of that ecosystem is outside the National Park, though contiguous with it. 309. Mr Stanton's report before me was not apparently prepared for the purpose of considering the issue of the environment in the context of the proposed subdivision, though he did, in his evidence, refer to dogs, cats and weeds as being potential threats to the environment should the land become subdivided and settled. The report by Mr Finney, on the other hand, did have that purpose as its basis. At one point Mr Stanton's report says that future management of a National Park north of a point 15 km from the southern boundary of "Starcke" would, following subdivision of the "Starcke" freehold be difficult to impossible. In writing that, he had in mind the subsequent declaration of a National Park over land which included a large part of the PDH. I must, however, disregard that declaration as being a purpose of the resumption ((Pointe Gourde Quarrying and Transport Co. v. Sub-intendent of Crown Lands (Trinidad) [1947] AC 565). He said further that settlement near the existing Mt Webb National Park could threaten that park by, in particular, the destruction or reduction of the rainforest country in that area of the freehold. This is a matter that properly falls for consideration as well as the concern he raised about feral animals and the introduction of exotic plants and the prospect of their spread into the pre-existing Starcke National Park. Mr Humphreys expressed the view that the "Starcke" subdivision proposal "would be likely to result in an unacceptable impact on the natural environment". In expressing that view he relied on Mr Stanton's report, however, that report was largely not directed towards a consideration of this issue. Mr Humphreys may have arrived at a different view had he read the June 1997 SKM report. 310. That report, based on available information, expressed the view that the suspected or known presence of rare or threatened fauna species would not be likely to limit a development in "study area", which I understand to be the freehold land. The report went on to say, however, that the presence of flora of high conservation value may limit the areas in which clearing may occur and that similarly the suspected presence of fauna of conservation significance may place limitations on construction activities. That report concluded that, notwithstanding these reservations, a development generally of the form proposed by the claimant would be unlikely to be prohibited on environmental grounds. I understand that the claimant's proposal at that time was for a 238 lot subdivision largely similar to the 240 lot plan put into evidence. 311. It may be helpful if I provide a glimpse of the important environmental elements of the freehold land as seen by Mr Finney. His report descended into a greater level of detail 101 in its description of the environmental characteristics of the freehold land than did Mr Stanton's. Nevertheless, their respective identification of notable environmental features were quite similar, with some small points of difference. Mr Finney mentioned the presence of dune lakes in the dune fields at the northern end of the property and said, in an inconclusive way, that these lakes may be significant. He said that the closed forests, of which I understand the Mt Webb National Park to be an example, accounted for approximately 5% of "Starcke's" area and were mainly associated with Mt Stuckey and Mt Webb. Mt Stuckey appears to me to be in the Starcke National Park, not in the "Starcke" freehold. He described the rainforest in the dune system south of the mouth of the Jeannie River as comprising "small pockets of littoral rainforest". 312. In his report Mr Finney included a letter from the Australian Heritage Commission dated 28 November 1991 to Mr Quaid making it clear that the "Starcke" freehold lands were not considered to be of sufficient conservation value to warrant inclusion on the Register of the National Estate. Nevertheless, Mr Finney saw the prospect of some potential impacts on conservation values from the proposed subdivision:  loss of native vegetation due to clearing;  increased access by public to National Parks and areas of high conservation significance;  potential introduction of weeds;  potential for soil degradation or erosion;  changed fire regime;  potential over-grazing;  changes in drainage systems.

313. His report went on to say that most of the proposed allotments are in eucalypt woodland, which is not considered environmentally sensitive. He assessed approximately 18 of the proposed allotments, however, as containing areas that have been mapped as rainforests, although a number of these also include cleared areas. The principal threat to the conservation values present on the "Starcke" freehold, in Mr Finney's view, is the clearing of rainforest areas particularly that which connects with the Mt Webb National Park and provides wildlife corridors whose loss would represent a serious loss of habitat and habitat connectivity. He referred also to an Alexandra Palm Swamp and a small area of Daintree Fan Palm Forest both of whose loss would be significant. 314. He included in his report reference to the other rainforest areas mentioned by Mr Stanton and to riparian vegetation which ought to be maintained. He went on to say that drainage works, which might impact upon the freshwater wetlands close to the eastern margin of the freehold, should be controlled by appropriate conditions in order that those wetlands not contract, with the potential of increasing saltwater intrusion. 102 315. Mr Finney said that approximately 20 of the proposed allotments are located within the dune system near the mouth of the Jeannie River and in that area there is significant potential for erosion. He suggested that the imposition of conditions restricting such activities as road construction and housing in the active dune fields would be appropriate. He also raised the prospect of CSC ensuring protection of this area through an easement instrument or access restriction condition. I return to this suggestion below. 316. Whilst raising a concern about the prospect of increased access to National Parks and surrounding areas, Mr Finney suggested the possibility that increased access to and within the "Starcke" freehold allotments, when developed, may decrease activities such as the illegal poaching of native animals and plants as a result of the greater exposure to human scrutiny and inquiry. That suggestion assumes that there would be a resident population on the "Starcke" lots, together with visitation by those concerned about conservation. 317. He said that coastal water quality issues would be unlikely to be significant owing to the low impact character of the proposed development and the limited size of the catchment. In any event, it was suggested from the claimant's side that, had the property remained as a grazing property, the use of herbicides and fertilisers (as described in evidence by Mr Blomfield) had the potential for greater impact than the use of chemicals following a more intensive occupation of the lands following subdivision. Mr Stanton, on the other hand, said that a subdivision, such as was proposed by the claimant, would vastly increase soil disturbance and exotic weeds would soon follow. He said that it was practically inevitable that anyone wanting to cultivate or change the nature of land use would use some sort of fertiliser which, when introduced into a relative nutrient impoverished system, would both facilitate the spread of exotic species and impact on offshore areas. It seems to me that it is difficult to foresee whether the use of agricultural chemicals would be greater with or without subdivision given the uncertainties as to the intensity of use that would be associated with the subdivided lots. Up to 240 house gardens would probably result in a high use of such chemicals, whilst 240 residential retreats would certainly not. 318. Mr Finney said that a number of weed species such as rubber vine (cryptostegia grandiflora), giant sensitive plant (mimosa pigra) and giant rats tail grass (sporobolus pyramidalis) are not presently on "Starcke" freehold, but if introduced could thrive. His view was that it was inevitable that such environmental weeds would eventually invade the "Starcke" area, whether it remained as a grazing property or was subdivided. Mr Stanton mentioned a range of other possible weeds. Mrs Campbell suggested that the enforcement 103 of noxious weed control obligations on landholders would be easier with the proposed new road system in place, whereas Mr Stanton voiced the opinion that an increased population would bring more weeds into the area. Mr Stanton's opinion does appear to reflect the Australian experience. 319. Mr Finney expressed the view that the proposed subdivision may assist in the ecological management of fires through provision of a system of firebreaks in the form of roads. That was a view with which Mr Stanton strongly disagreed, saying that a network of roads and firebreaks would be more ecologically damaging than any wild fire could be. I note also that the road construction technique proposed by Mr Williams would leave a windrow of cleared vegetation along the road corridor. I think that Mr Dodds' original proposal to remove cleared timber would be preferred. The Dodds' method of road construction also proposed the excavation of "borrow pits" which would be located about 150 metres apart along the road corridors. Whilst these would be visually unattractive, I was not told of any environmental implications which might be associated with them. 320. Mr Finney said that as grazing for commercial purposes would be unlikely to be undertaken on the proposed lots, extensive clearing would probably not take place. There was, however, the prospect that novices may allow lands to be overgrazed. Mr Finney said that the 100 ha lots would probably be suitable for a combination of residential development and low intensity grazing or limited horticulture. He mentioned the fertile red volcanic soils towards the south which could be devoted to horticultural or commercial agricultural uses, however, said such uses would be limited to that area. He said the proposed lots in that area contained sufficiently large cleared areas to allow potential purchasers to undertake a variety of agricultural and horticultural activities without the need for further clearing. 321. Mr Finney concluded his report by saying that in his view the proposed "Starcke" subdivision would not be considered likely to have resulted in an unacceptable increase in impact on the natural environment over impacts from the existing land use at the time of resumption. Part of the argument, as I understand it, is that prior to any subdivision there would have been no legal mechanism available for ensuring the environmentally sustainable use of the land as a large-scale grazing enterprise, apart perhaps from obligations with respect to the control of noxious weeds. It was suggested that there would be no means of control of the use of herbicides and fertilisers and that there would have been the potential for uncontrolled clearing. Of course, such clearing would need to be economic. I have no useful evidence to indicate that large-scale clearing would be economically viable on the "Starcke" freehold although it had been carried out in the past. 104 The cleared areas have since regrown to some extent and there has been an incursion of noxious weeds. 322. Mr Finney expressed the view that the combination of appropriate CSC approval conditions and a VCA based management regime would be more likely to have resulted in lower level impact on the environment than would the ongoing grazing management. That opinion is not supported by clear reasoning in his report or in his evidence-in-chief and appears to be based on a worst case scenario in the event that the grazing enterprise had continued, contrasted with a best case scenario in the application of the VCA mechanism and subdivision conditions. Whether such a viewpoint could be maintained to the satisfaction of a referral agency involved in the EIS process is a matter to which the hypothetical prudent purchaser would need to direct their mind. The opposing view would be that the increased population would bring with it increased threats. That view would be strengthened if it were to be shown, as was contended by the respondent, that the VCA mechanism was impractical. I discuss that issue later in these reasons. 323. It will be convenient if at this stage I dispose of one matter: the imposition of conditions which would apply during the construction phase. I find no difficulty with the suggestion that appropriate conditions could have been imposed on the subdivision approval to deal with the construction work. Areas of natural environmental importance could be avoided if conditions of the type proposed by Mr Finney were imposed. I recognise that the extent and nature of required conditions would turn on the final EIS contents. I have, however, formed the view on the available evidence, that natural environmental values could probably be catered for in that way without any substantial alteration to the plan of subdivision. Sites of significance are few and are usually grouped together. I am much less certain in the case of culturally significant sites, given the paucity of information available in that regard and the extent and nature of Aboriginal interest in the area (discussed below in para 351 and following). It may be that such sites would be encountered in the road and drainage system as presently devised and that alteration, even substantial alteration may be warranted. 324. Mrs Campbell agreed with Mr Finney's view that the issues of the natural environment could be effectively dealt with by the imposition of reasonable and relevant conditions by the CSC, including a particular condition that before lots were sold a VCA be in place with respect to any lot where environmental protection was desirable. Areas of environmental or cultural significance identified by the EIS could also be made subject to conditions setting out "appropriate management arrangements". I deal with matters of cultural significance later in greater detail. Mrs Campbell expressed the view that 105 environmental issues would, as a general rule, be unlikely to warrant refusal of an application. The imposition of management conditions would usually be adequate. I understand her suggestion to be that VCA's would comprise part of such management conditions, whilst other ongoing management conditions could be imposed to deal with matters not covered by VCA's. She said, also, that the subdivision of the land would afford a greater opportunity to manage the land because of the opportunity to impose conditions and put VCA's into place and because 240 landowners would have greater resources overall to manage the environment than would one owner. It was Mr Humphreys' view, on the other hand, that it would be far more likely that appropriate environmental management would be achieved through one owner than 240 owners, some of whom may be absentee owners. I would think that with respect to certain matters such as the introduction of weeds and feral animals that would be so, however the potential use of the VCA mechanism could provide a more effective tool in environmental management than prevailed before resumption. It needs to be kept in mind that the land was freehold, thus was not subject to the level of State intervention available under the Land Act 1962 in the case of leasehold land. I will return to the VCA issue, shortly. 325. The only point I should add, for completeness, is that the Beach Protection Authority has an interest in the area and would recommend that there be no development in erosion prone beach frontage areas. Mr Quaid was aware of this and thought it not to be a matter of concern for the type of development under consideration. I accept this opinion. 326. As I have recorded above, Mrs Campbell said, in reference to environmental values, that the Local Government could impose conditions to the approval for subdivision, such conditions being designed to ensure the ongoing protection of such natural features. Such conditions would, as I understand it, complement the use of the VCA mechanism discussed further below. One point of discussion in this regard was with respect to vegetation: the suggestion from Mrs Campbell being that some limitation could be placed on the clearing of certain areas or destruction of certain species. Other required conditions could be identified in the EIS process. 327. The respondent's view of that suggestion was two-pronged. First, it was suggested during cross-examination, but not pressed in address, that the imposition of such conditions at subdivision stage was unlawful as conditions as to use were not relevant to subdivision. I assume that reliance was being placed on Jeteld Pty Ltd v. Toowoomba City Council [1995] QPLR 285, a case decided after the relevant date for the present case, though presumably a correct statement of law as at the relevant date. The claimant's position is that it would be open to an intending developer to strike an agreement with the Council that 106 such conditions be imposed. That could be a practical outcome to avoid any legal issue, however, even if that were the result, the second prong of the respondent's view on the matter comes into play. 328. Mr Humphreys pointed out that conditions of subdivision intended to limit and influence the manner in which the allotments are used are not notified on the title to the land. As such they may not be drawn to the notice of third party purchasers and in the course of time may be unnoticed, forgotten and disregarded. I accept this view. The longevity of such conditions is dependent on their being directly associated with a proprietary interest. This brings me to, perhaps, the most significant of the suggestions made by the claimant as to the ongoing management of the land so as to preserve its environmental features and values. This is the VCA - a mechanism that is directly associated with a proprietary interest in the manner revealed in the following discussion. Voluntary Conservation Agreement (VCA) 329. The legislation providing VCA's came into effect in February 1993, therefore the option for VCA's to be employed as at March 1994 was available. Mr Symonds' evidence shows that immediately the legislation came into effect the Department of Environment and Heritage prepared pamphlets concerning VCA's and had these available for interested land owners. Mr Symonds also gave evidence that the Department envisaged that local governments could make entering into a VCA a condition of a development approval. Section 45(1) of the Nature conservation Act provides: "45.(1) If the Minister and land-holders concerned agree on -

(a) a proposal that an area should be a protected area; and (b) the class of the protected area: and (c) the management intent for the area;

the Minister may, on behalf of the State, enter into a conservation agreement in relation to the area with the land-holders."

The term "protected area" is defined in s.43:

"'protected area' means -

(a) a Nature Refuge; or (b) a Coordinated Conservation Area; or (c) a Wilderness Area."

330. Each of those types of protected area is provided for further in the Act. The claimant did not identify which type would be relied upon in the present case, however, I would think it would be a "nature refuge" or a series of them, given my understanding of the evidence and of the Act. For present purposes it is sufficient to point out that for the 107 Minister to enter into a VCA, the relevant area must be declared a "protected area" of one of those classes. Section 22 provides: "Management principles of Nature Refuges

22. A Nature Refuge is to be managed to -

(a) conserve the area's significant natural resources; and (b) provide for the controlled use of the area's natural resources; and (c) provide for the interests of land-holders to be taken into account."

331. Clearly, any VCA must be drawn to be consistent with these principles. Section 45(5) provides that a VCA may contain terms that are binding on successors in title. I infer that a VCA may also contain obligations enforceable between the original parties only. Some process difficulties may arise if the nature of the issues is such that an original party ought to be a lot purchaser. Such matters as house location, constructed access and the like come to mind. Section 134 provides for the Registrar of Titles to maintain records showing that the land is subject to a VCA. Section 51 provides for any VCA so recorded to be binding on any successors in title. Sections 47 and 48 provide for termination and variation of VCA's respectively. 332. Mr Symonds provided evidence concerning the process involved in developing a nature refuge proposal and a VCA. I will not detail all of the steps, but will note that: 1. It does involve a large number of bureaucratic steps internal to the responsible Minister's department.

2. There would usually be both a desk-top and a field work assessment.

3. The final terms of the VCA must be approved by the Minister who will be provided with appropriate legal advice.

333. Mr Symonds said that the department would take advantage of any field work carried out by a reputable environmental consultant as part of the preparation of an EIS. Presumably the department would provide guidance in this regard as a referral agency in the EIS process. Such an arrangement would, I think, tend to accelerate the department's assessment process, but would probably enlarge the EIS work required. I should mention at this point that the time line for obtaining the required subdivision approval, which appears in Mrs Campbell's expert report, does not cater for any delay in arranging for VCA's or in any extension of the EIS process. It may be that final VCA arrangements with the Minister could be made whilst construction of the project proceeds, however, it could not be expected that the Council would seal the subdivision plan until the final arrangement was settled. 108 334. Mr Symonds gave the impression of being enthusiastic about the use of VCA's, though was quick to point out that the processes involved and the terms of any VCA must be fit for the purpose and that purpose would relate to the environmental values and features intended to be protected. As an example of how broadly a VCA might need to be drawn, Mr Stanton expressed the view that the protection of high conservation value areas, particularly rainforests, would usually require protective measures on adjoining areas. If the VCA regime was confined to the rainforest area only, it would not be fit for the purpose. Mr Schneiders said that his organisation endorsed the use of VCA's in such circumstances. 335. Mr Symonds said that the evaluation by the State of a nature refuge proposed would place importance on the use to which the lots would be put. He extended the concept of use of the relevant land to include the layout and manner of construction of roads, dwellings, dams and such like. That suggests to me the need for a VCA which at the outset covered the whole of the freehold with individual lot VCA's to follow in due course. Mr Symonds explained that there would be a need to look at consistency across all of the blocks within any proposed nature refuge to ensure there was not any inconsistency in terms of protecting the environmental value concerned. He said also, without expressing a concluded view with respect to the subdivision under consideration, that the Department would be unlikely to pursue a VCA if activities associated with the possible uses would be likely to compromise the integrity of the VCA. The respondent said that given the range of as of right uses of the proposed "Starcke" blocks, the drafting of suitable VCA's would be difficult, even impossible. I accept that it would be difficult. The process and logistics would also be quite demanding as there would be a need for a number of VCA's over different parcels of land. 336. I have, earlier, mentioned the suggestion by Mr Finney that such activities as road construction and housing construction should be restricted in active dune fields. Perhaps "restricted" should be "prohibited". It seems to me that the type of limitation on use proposed by Mr Finney could properly be the subject matter of a VCA. He also suggested that access to this area should be restricted. To the extent that this restriction might apply to the landowner, it could also be the term of a VCA, I would think. Mr Finney suggested the use of an "easement" instrument, however that suggestion was not further pursued by the claimant, probably because of the apparent legal difficulties that would be involved and because there would be no general right of access to private property in any event. Any invitee of the lot owner would be subject to the terms of the VCA if it was drawn appropriately. 109 337. Mr Humphreys thought it significant that VCA's comprised a relatively new instrument at the relevant date. There was no example able to be referred to where either CSC or any other local government had employed the VCA as a control mechanism. That, however, is not a point that concerns me, nor would it concern the well-advised prudent purchaser, in my view. It would only be a matter for concern if the reasons why VCA's had not been previously utilised (assuming that to be the case) were reasons that would militate against their use in the case of the proposed "Starcke" subdivision. Mr Finney said in his report, that a VCA had been prepared by the Department of Environment over part of the resumed land and he appeared to suggest that the existence of that agreement gave legitimacy to his proposal that a VCA arrangement would be satisfactory in the case of the proposed subdivision of the freehold land. Mr Finney had, it was subsequently revealed, made reference to an evaluation document only, not to a concluded VCA. Nevertheless, Mr Symonds said that a form of VCA was in the process of being drafted (with the latest version, bearing a date 28 March 2000), over what I previously called the "body" of the freehold. 338. Mr Finney's suggested use of VCA's was presented on the basis that the mechanism would probably be adopted. He did not scrutinise the relevant legislation nor the administrative process involved. Nor did he direct his mind to the utility or acceptability of VCA's to either purchasers or the authorities, or in particular to the Minister responsible for the Nature Conservation Act. I understand Mr Brett's valuation to have proceeded on the basis that the VCA proposal would be accepted and that there would be no deleterious impact on the subdivision layout, potential lot uses and marketability of lots. 339. Mr Symonds' evidence, in particular, leads me to conclude that at the date of resumption a prudent purchaser could not conclude with confidence that the Minister would be willing to enter into a series of VCA's which would apply to the proposed subdivisional allotments. This does not mean that the Minister would not, once the appropriate investigations are carried out, happily accept the VCA mechanism as applying to some or all of the proposed lots. The outcome is simply an unknown until the appropriate environmental investigation is completed. In addition, given that an evaluation procedure would be required, there can be no certainty as to the ultimate content of any VCA, including activities that might be appropriately prohibited on any lot. 340. The evaluation procedure would itself be a lengthy exercise, given the requirement to consider the overall development and individual allotments. Mr Symonds said that evaluation was critical to the declaration of a nature refuge and the preparation of a VCA. The evaluation document referred to above, which covers the freehold and adjacent lands 110 and which is intended to apply to the final occupants of that land, took six months to prepare, though the amount of time actually devoted to the exercise during this period was of the order of six to eight weeks. Presumably, by arrangement with the Minister's department, that investigation and evaluation could be initially prepared by the developer as part of the EIS process. The final evaluation and a decision on the appropriateness of the VCA proposal would then rest with the Minister. 341. I cannot, as I have mentioned above, say with any confidence what the outcome would be. On the evidence that I heard, however, I have formed the view that those parts of the natural environment of the "Starcke" freehold warranting protection are not large. To those areas would be added some buffer areas and areas whose management might impact on the areas requiring protection. If all of these areas were reduced to a map, I do not know what that map would look like, however I lean to the view that those areas could be adequately protected by a VCA regime. 342. Mr Humphreys expressed the view that the enforcement of conditions included in a VCA, or a series of them, would be very difficult. He said that such work would involve State resources, and probably those of the local government. I would think that the significance of the issue of resources would turn on two things: the extent of the requirement and the value in return. The VCA mechanism appears to me to be intended to take advantage of the environmentally conscious nature of the landholder who would buy the land in full knowledge (or assumed knowledge) of the nature of the obligations involved. Given that a VCA is intended to provide for environmental safeguards to co- exist with the prevailing land use; and given that there would be no economic benefit in the modification of the environment of most of the proposed "Starcke" lots: it might be assumed that there would not be a large call on government enforcement resources, considering the proposed lots overall. Whilst the environmental aspects of the "Starcke" freehold and the possible threats to those values from the use of the subdivided lots would not be fully known until the EIS is completed, I would think, having regard to the evidence of Mr Finney and Mr Stanton that continuing government interest could be focused on certain particular sites. I refer, for example, to the parabolic dunes and the rainforest near Mt Webb. The demand for resources may not, therefore be high if they are concentrated on such areas. Perhaps an auditing approach could be applied to less significant areas. 343. The respondent submitted that if VCA's were considered to be unduly restrictive by purchasers, then there may be an impact on value or on the attractiveness of the land for purchase. It was the claimant's view that the natural environment was not an issue to be overcome, but that the qualities of the natural environment of the "Starcke" freehold and its 111 surrounding neighbourhood would, in large part, be the reason for the development of the "conservation subdivision". The suggestion is that the hypothetical developer would be desirous of promoting the environmental values of the land as part of the marketing of the subdivision and would know that any controls placed over the use and management of the land would serve only to stress to any potential purchaser of an allotment, the environmental qualities of the land. The draft VCA intended to cover the now "transferable land" granted under the Aboriginal Land Act 1991 was referred to by the respondent as representing the types of restrictions on use that could be involved. Interestingly, a schedule to that draft agreement makes reference to the 1998 evaluation report referred to by Mr Finney. I will not set out in full the restrictions listed, but will say that the application of similar restrictions to landholders who purchased blocks following subdivision would severely limit the usage of those blocks, but would not exclude residential occupation. I note that the draft VCA was designed specifically with the Aboriginal occupants in mind and not a subdivision of the type proposed by the claimant. Mr Symonds did say, however, that as a general guide the terms of a VCA would be concerned with ensuring that the relevant parts of the landscape would remain largely unmodified by the operations of man and by the introduction of new species. 344. I accept the claimant's view that a VCA could well be seen as a positive factor by potential purchasers intent on preserving the environment on purchased lots and in having some assurance that other lots would be similarly preserved. After all, whilst the lots are said to be located in a wilderness, each owner would have 239 neighbours. Some people in Mr Beattie's target group may, however, baulk at having a VCA limiting future options as to the use of a purchased lot. The view that I have formed in the end is that whilst a VCA regime may reinforce part of the market, it would not enlarge it. On the other hand it may tend to contract the market somewhat by excluding those who would not be comfortable with the imposition of a VCA. 345. I have already noted the time needed to arrange the VCA regime and the associated costs. I will cater for these factors in my adjustment of Mr Brett's DCF. Other matters discussed above which give rise to uncertainties will need to be catered for in the estimation of risk associated with the project. Cultural Heritage and Aboriginal Issues 346. Three issues fall for consideration under this heading: 1. The existence and location of archaeological (Cultural Heritage) sites that might be affected by settlement of the area when subdivided. These sites would in the main be exclusively of importance to Aboriginal people. 112

2. The impact of the subdivision on the local Aboriginal community, particularly at Hopevale, including if Hopevale were to become a service centre for the resident population.

3. Whether the traditional owners of the "Starcke" land attached values to that land that would be compromised by the subdivision or settlement.

347. Whilst the respondent characterised each of these issues as being matters of concern to an intending developer, Mr Beattie said that the developer would know that the presence of sites of significance to Aborigines on the freehold land provide a marketing advantage for the development and, therefore, such developer would be prepared to accept any reasonable and relevant conditions necessary to preserve and protect such sites. Whilst there is some merit in this point I think it tends to over-simplify what, in the following discussion, presents as an issue of some concern and complexity. 348. In addition to the possible direct impact upon the subdivision, for example by the exclusion of land to protect an archaeological site of significance, the respondent raised the issues of the costs and delays involved in carrying out the relevant survey and consultation work. The respondent said, also, that there was an issue as to whether, in this process, local Aboriginal groups would be inclined to exercise such legal rights as were available to them to oppose the development, or even to adopt extra-legal strategies by way of opposition to the development or in support of particular outcomes that they might hope for. 349. The central issue is, of course, how a hypothetical prudent purchaser would consider these issues, both in terms of how any concerns may be able to be addressed by reasonable and relevant conditions and what significance such a person would attach to the suggested threat of legal or extra legal action being taken. 350. I will deal first with the Cultural Heritage issues (item 1 above). Three example terms of reference for EIS's said by the respondent to demonstrate the importance of Cultural Heritage issues were contained in Mr Humphreys' report. Each of the examples is relevant, however, I will refer to the third example, only. 351. This example related to an application to subdivide land in the "Rural (General Farming)" zone of Cook Shire, requiring details of "past and current usage of the site and surrounding area, including identification of known Aboriginal or non-Aboriginal cultural or historical sites, ie cemetery reserve area". These terms of reference also required information to be provided to "detail if there were any places of cultural significance, including … historical, spiritual and social significance of the site", and whether the development would have any likely effect on Cultural Heritage places in and near the vicinity of operations. They also directed that "in preparing the EIS the 113 applicant/consultant should consult affected and interested groups including CYLC and local Aboriginal communities with an interest in the area". There was also a requirement for consultation with the Department of Family and Community Services in relation to "Social Impacts or effects on Aboriginal communities". It was not suggested that the relevant terms of reference for a "Starcke" EIS would be in the same form. The example does, however, provide a pointer to the prospect that there would be a level of interest in similar issues. 352. In Dr Memmott's opinion there would be a requirement to carry out a Cultural Heritage survey to identify the location of sites satisfying the definitions of "Landscapes Queensland" and "Queensland Estate" in the Cultural Record (Landscapes Queensland and Queensland Estate) Act 1987 (Cultural Record Act). Both classes of site are protected by that Act. Dr Memmott mentioned another statutory vehicle for the preservation of culturally significant sites, namely the Aboriginal and Torres Strait Islander Heritage Protection Act 1984 (Commonwealth), which may be employed to protect sites of a sacred nature not otherwise covered by the State legislation which concentrates on "relics", that is, items produced by the actions of humans. The Commonwealth Act extends to sites of a sacred nature. Mrs Campbell acknowledged the need for a Cultural Survey and for consultation with the Aboriginal community to determine ways of protecting identified cultural sites. Dr Memmott said that there are 50 Aboriginal clans (or descent groups) with established traditional connections to land in the "Starcke" region and he expected that a Cultural Heritage survey would unearth a number of archaeological findings on the freehold land. In addition he was aware that there were two sacred sites on the "Starcke" freehold land, as well as areas of spiritual significance, such as birth places, burial places, initiation places and such like. He estimated that, conservatively, there would beat least 100 sites of Cultural Heritage significance there. He suggested that, therefore, 100 of the proposed 240 subdivision lots would be affected, however, I cannot understand how such a conclusion could be confidently drawn. Perhaps this conclusion was a product of his evidence that it is not simply the location of a particular cultural site which might trigger the protection by the Cultural Record Act, but wider protections might also be implemented. I still remain sceptical, however, that it would be possible to predict how many sites may be affected. Sites could be grouped, or may be found on proposed roads: albeit an issue of perhaps greater significance. 353. Dr Memmott raised the possibility of an approach to the Australian Heritage Commission to intervene on behalf of traditional owners to register the "Starcke" area or part of it as a "cultural landscape" and to apply to UNESCO to have the land nominated on 114 the World Heritage List as a "cultural landscape". This was the process that was apparently employed in the case of Uluru and the Devil's Marbles (Kata Tjuta), which were referred to by Dr Memmott. I have referred earlier to a letter provided by the Australian Heritage Commission to Mr Quaid dated 28 November 1991, in which he was advised of the Australian Heritage Commission decision to not include any part of the "Starcke" freehold land on the Register of the National Estate. I would doubt, therefore, that a prudent purchaser would have any real concern about any action by the Australian Heritage Commission including any action to make an application to UNESCO. Apart from that, I would think that if Uluru and the Devil's Marbles constitute examples of the type of site that might excite UNESCO action, there is nothing to suggest any sites of similar iconic significance are located on the "Starcke" freehold. 354. A prudent purchaser would form the view that a Cultural Heritage survey would be required and that such a process would involve expense and delay. Had he taken the advice of someone like Dr Memmott he would form the view that there was a real prospect that important Cultural Heritage sites would be discovered as a result of such a survey. He would also be concerned that some such sites might impact on the subdivision and road layout and possibly on the use of some of the lots or part of them and on the process of road construction and drainage. I doubt, however, that a hypothetical prudent purchaser intent on marketing a largely residential lifestyle subdivision presented as "conservation lots", would see a high risk in the intrusion of heritage sites into the use of the bulk of the lots. I do not see their use as being at all intensive. It seems to me that most lots would contain sufficient land to enable a residential lifestyle or retreat use without the need to intrude on sites of cultural or spiritual significance. Dr Memmott said that in the case of stone artefacts they may be moved to a location that was consistent with the development proceeding. 355. It may well be, however, that some lots such as "Round Hill" are severely impacted and even excluded from development. I refer to this example because it was specifically mentioned by Dr Memmott and because of its prominent and unusual features. He referred to it as a sacred site. A prudent intending developer would make allowance for what he sees as the prospect of adjustment or loss of lots in the manner in which he calculates the price that he would be willing to pay for the land. 356. Dr Memmott foresaw the prospect of a negative impact of a "Starcke" subdivision on the Hopevale community itself. He described this impact as including such things as entry by "Starcke" residents onto the Deed of Grant in Trust, in which the Hopevale community is located, to engage in such activities as shooting, taking palm trees and 115 interfering with the landscape in various ways. He also said that some people might drive into the Hopevale township, bring alcohol and drugs into the community, as well as guns, or possibly drive round and stare at the inhabitants, take photographs and making racist or derogatory comments. Dr Memmott did recognise that there may be some members of the Hopevale community who would welcome the economic benefits of an increase in trade there from legitimate visitors. Nevertheless, he said that, given his long experience in such matters, the potential negative impacts would be of concern to the community. Such issues may be perceived as significant to the people of Hopevale, not only because of the nature of the suggested potential intrusions, but also because of the prospect of a notable change in their relatively isolated and protected environment. 357. The Hopevale community is self-governed, with respect to local issues, under the Community Services (Aborigines) Act 1984. The Hopevale Community Council has enacted a by-law requiring non-resident visitors to obtain a permit before entering the settlement unless they have specific lawful business there. The road into Hopevale is, however, a public road. Mrs Campbell said that whilst Hopevale is self-managed and distinct in its Aboriginality, people there interact with the wider community in a range of ways, including non-Aboriginal visitation to Hopevale and to the popular Elim Beach beyond. Hopevale residents also visit Cooktown and other centres and the settlement is serviced by a school bus from Cooktown. 358. I accept Dr Memmott's evidence that a level of concern may be raised with respect to possible impacts on Hopevale, however, I do not see it as a matter that would, of itself, touch on the validity of the proposed "Starcke" freehold subdivision, or on the prospect of local government approval. A prudent developer would both conduct a Social Impact survey and would, as part of that process, discuss these issues with the Hopevale people and would offer compensating concessions and/or means of limiting unwarranted intrusion onto the Deed of Grant in Trust land. The local government could supply conditions which, for example, required the erection of appropriate signage and the provision of information to the initial purchaser of each of the subdivided lots. Mr Potter suggested, as part of his proposed engineering works, the upgrading of the Isabella-McIvor road. If this were to occur, it would take the bulk of the traffic away from the road past Hopevale except when the McIvor River was in flood and the McIvor Valley road was chosen by travellers. It would also reduce the prospect of people going into Hopevale to obtain fuel or suchlike in an emergency. They would be more likely to go to the Endeavour Falls Tourist Park which supplies such services, though limited in comparison with Hopevale. Another option raised by Dr Memmott was the provision of a general store building and 116 fuel supply facilities on the McIvor Valley road. This would allow an economic benefit to the Hopevale residents without the need for those using the store facilities to travel in to Hopevale. I am not sure of the economies of such a proposal, but the suggestion does indicate that there are a number of ways of dealing with the issues. They do not all involve the provision of financial benefits, but could involve such things as the adjustment of subdivision plans to exclude sacred sites excised under a Cultural Heritage Management Plan to be developed and the employment of Aboriginal Rangers. 359. Although the concerns raised by Dr Memmott may be real, and I accept them as such, I think that conditions that might be accepted by or imposed upon the developer by the local government could only be those required to recognise the legal rights of the Hopevale community, and the desire that residents of the subdivision be encouraged to be good neighbours. A local government could not, I think, impose conditions to deal with staring, taking photographs or making inappropriate comments. These concerns, however, do tend to indicate the possibility of the Aboriginal community pursuing one or more of the legal or extra-legal avenues discussed below, either because they may prefer the proposed subdivision not go ahead at all, or because their concerns may not be adequately met by concessions from the developer or by local government conditions. This leads me to the third main point raised by Dr Memmott and this relates to the traditional owners of "Starcke" and their possible concerns about subdivision. It was with respect to this aspect that Mr Byrne's evidence also has relevance. 360. Dr Memmott said that the traditional owners of the land in the "Starcke" area, including the freehold, were predominantly members of the Guugu-Yimidhirr language group within which there are a number of clan estates. He said that traditional owners had worked for a succession of pastoralists who have owned the "Starcke" aggregation, including the claimant company. I understand also that traditional owners were historically allowed access to "their" land for hunting and other cultural activities. Access to the land via work and traditional activities has served both the expression of the connection the traditional owners hold with the land and the retention of knowledge of the traditional geography of the land and of cultural sites. Traditional owners would, in Dr Memmott's view, have been gravely concerned about the potential environmental impacts of a subdivision of the "Starcke" freehold, as well as the loss of recreational access to the land for themselves, their spouses and relatives and the economic contribution that hunting on the land would have made to the members of the Hopevale community. He was of the view that Aboriginals would be concerned at losing control over their neighbourhood. Dr Memmott made it clear that the traditional owners' concerns would not, however, have 117 been confined to utilitarian matters, but expressed the view that a subdivision development of the type proposed "would have adverse effects … importantly on their spirituality and the raisin d'etre of their cultural being, their self and group identification with the sacred places and Dreamings in their estates". The effect of that, he suggested, would have been a "strong negative psychological impact on the Indigenous people, undermining customary cultural values, weakening the leadership and authority of Elders, and in my view contributing to psychological problems as manifested in the excessive drug use, violence, and suicide which are characteristics of many Indigenous communities today". He said that he thought it unlikely that the traditional owners would have agreed with a subdivision proposal. He had often heard protestations against any "Starcke" development from, I understand, the traditional owners. Mr Byrne supported Dr Memmott's view on this aspect. Dr Memmott said that the traditional Aboriginal owners would be concerned at the environmental impact that the proposed subdivision would have on "Starcke". They would have a keen interest in the EIS process from this perspective alone. 361. Putting aside the prospect of Aboriginal opposition to a subdivision proposal, the claimant's response to the concerns raised by Dr Memmott and Mr Byrne had two main limbs. One of these was to emphasise that the land, the subject of the suggested subdivision, was freehold and therefore title to that land was exclusively in the hands of the registered proprietor who would not be obliged to take account of the interests of the traditional owners, who had no statutory right of objection to a subdivision proposal under the P & E Act. Notwithstanding the content of that first limb, the claimant also suggested the prospect of negotiation by a prudent developer with the traditional owners leading to agreement on certain matters that would act to not only preserve but enhance the access of those people to the subdivided land. It was suggested that terms could be contained within the VCA regime which recognised the right of access for hunting purposes and for the conduct of cultural activities at appropriate times. It was also pointed out that such access would be facilitated by the constructed roadwork as well as existing esplanades along the beach frontage and along the Starcke and Jeannie Rivers. I take that suggestion by the claimant as an acknowledgment of the real interest that Aboriginal traditional owners would have in the "Starcke" land and also that there are practical means available which might be adopted by those traditional owners in association with a prudent developer in producing appropriate solutions. Such a positive, constructive approach would, I think, increase the likelihood of Aboriginal acceptance of a proposed subdivision. The process of getting to such a position would not be a simple one, however, and I will address that shortly. In passing I question the enforceability of any access rights contained within a 118 VCA, however, as that was not a matter pursued by the respondent, I will leave it as a matter of detail that might be addressed by means not yet drawn to my attention. 362. Mrs Campbell gave evidence of a long period of good relations existing between the Aboriginal and non-Aboriginal communities in the relevant area and of a level of harmonious inter-racial interaction. She said that given that experience, she would not expect a high level of Aboriginal concern with respect to a development such as the "Starcke" freehold. I should mention that Mrs Campbell's view of this matter is qualified by her time as a Cooktown resident and her involvement in developing community settlement plans for four Aboriginal communities. In addition, I note that her Master of Science thesis (for the degree awarded in 1994) was on Aboriginal management of land and involved a case study of Cape York. Nevertheless, she did not place her own evidence with respect to the residents at Hopevale any higher than being one of general observation. Of somewhat greater potential significance is the cooperative involvement of the Hopevale Aboriginal community in a study of the catchments of the Endeavour, Morgan and McIvor Rivers - an area covering part of their traditional land. The study had in mind the development of agricultural and horticultural enterprises in that area. The significance of that cooperation is not easy to appreciate, however, it did not appear to involve a 240 lot subdivision or similar. Evidence also relied upon by the claimant included an interview presented as part of a video tendered in evidence. In that interview an Aboriginal man from Hopevale spoke of co-operating with non-Aborigines and allowing them to come through the "Starcke" area. He was not, however, asked in the video about a proposed subdivision. Mr Blomfield said that he would anticipate no significant problem from the Aboriginal community in developing the "Starcke" land; however, he did not profess any expertise on the matter nor did he conduct specific investigations. No prudent developer, in my view, would assume on the basis of such anecdotal evidence or the other evidence referred to in this paragraph that a history of harmony would translate into acceptance of the "Starcke" proposal. 363. Dr Memmott said that Mr Quaid was disliked by the Hopevale Aborigines and that this would contribute to their opposition to a subdivision. I will disregard that evidence, however, as my task is not concerned with a proposed subdivision to be carried out by Mr Quaid but by a hypothetical developer (Spencer). I make clear below (para 874 and following) that any increase or diminution of the value of the land arising from the claimant's ownership of it, should, apart from any "special value" be disregarded. 364. Given the evidence on the matter of Aboriginal interest/concern presented before me, I would suggest that a prudent developer would do two things: one, he would seek to 119 consult and negotiate with the Aboriginal community and two, he would seek the expert advice of someone such as Dr Memmott. He would not proceed on the bald assumption that there was really no issue. He would be well aware of the degree of Aboriginal interest and that this interest had been revealed in various public demonstrations well prior to the relevant date. 365. Dr Memmott's evidence was that about eight Aboriginal groups would need to be involved in negotiations in order to achieve some finality. He suggested that use of the CYLC as a negotiating body would be advisable and said that considerable diplomacy would be required by the developer to maintain good relations with all interested Aboriginal groups and to avoid internal conflicts emerging between and within these groups. He said that CYLC was involved in negotiations for the Cape Flattery mining project to the east and abutting the Hopevale land area. In his view, the process of negotiation would take about six months, but could lead to considerable improvement in the protection of Cultural Heritage sites of significance to the Aborigines and in access to those sites for them. Having heard the evidence, I think that this is not an inflated time estimate, but one that should prudently be taken into account. With eight Aboriginal clans whose traditional land included the "Starcke" freehold, negotiations would be complex, however a prudent developer would proceed on the basis that mutually satisfying outcomes would be able to be produced from these negotiations. In addition, however, the prudent purchaser should not assume an outcome that favours him, but should allow for the risk of his having to give concessions that directly impact on the project, increasing its cost and/or reducing its profitability. This is not to disregard the prospect of failure; however, I would think that a prudent developer would invest in a sound Cultural Heritage survey and a Social Impact survey as well as adopting a deliberate negotiation model, but still allow something for the risk of delay or failure. I doubt that he would adopt a "crash through or crash" mentality. According to Dr Memmott, resort to legal or extra-legal action of the type discussed below usually results from deficiencies in the consultation/negotiation process. 366. There was some suggestion from the respondent that there may be practical difficulties in setting up negotiations and that there may even be an unwillingness on the part of some Aborigines to negotiate. Should such a stalemate emerge following bona fide efforts by the developer, then the CSC would, Mrs Campbell said, reluctantly comply with its statutory obligations to decide the application without the input from Aboriginal sources. The hypothetical developer would also be aware, however, of the other avenues discussed below, which may be availed of by concerned Aboriginals even if it is apparent 120 that responsibility for the failure to negotiate cannot be sheeted home to the developer. That would act as a brake on the developer in his dealings with the Council. 367. Experts such as Dr Memmott would be usefully involved in negotiations so as to both avoid pitfalls and identify and pursue opportunities. Dr Memmott is, I think, eminently qualified to speak on this topic. When I first read his expert report I formed the impression that his objectivity was tainted by an apparent desire to put the strongest possible set of strategy options together for the assumed benefit of the Aboriginals and against the interests of the hypothetical developer. Such a view was, it seems, justified as Dr Memmott said that there was an underlying assumption in his report that it was concerned with supplying strategies leading to the protection of Aboriginal sites. During his oral evidence he appeared to gain an appreciation that the Court would be better served in its work if he adopted a balanced approach. I think he achieved this. Having heard his oral evidence and considered his qualifications, I have concluded that his opinions, subjected to some judicious dilution, should be more highly regarded by me than those of Mrs Campbell on this topic. 368. The claimant argued that the views put by Dr Memmott and Mr Byrne would not be as cogent as evidence, for example, from a Hopevale inhabitant and therefore ought, as I understand it, be largely disregarded. I do not accept that submission, first because the claimant elected to match the evidence of Dr Memmott and Mr Byrne with the evidence of Mrs Campbell only and, second, because of what I would anticipate to be the difficulty in a Court room environment of obtaining a representative view of the people of Hopevale as to what really is a hypothetical proposition. 369. The claimant also pointed to two items of evidence, which it was suggested would lead a hypothetical developer to the view that the Aboriginal interest issue would be a matter of low moment. Reference was made to the fact that Mr Quaid had twice in 1993 written to ATSIC requesting advice as to whether there was any interest in the purchase of "Starcke", however, neither of those letters was answered. A prudent person would, in my view, not conclude that the only explanation for the failure to respond to Mr Quaid's letters was a lack of interest in the land. Indeed, there may have been great interest but not directed to Mr Quaid in the form of a courteous response, but down other avenues. 370. Reference was also made to Hansard at p.4193 where the then Premier said: " The land also encompasses the traditional clan estates of two separate Aboriginal language groups. These clans are said to number almost 200 people, and some elders are reported as remembering traditional life on land currently within the holding."

121 371. Whilst the claimant's submission was that the Premier's words evidenced a tenuous connection between the Aboriginal elders and the "Starcke" lands, I think when the quotation is considered as a whole that it argues in favour of the existence of stronger ties. I take this up further below, but point out now that the people at Hopevale are not simply interested neighbours, but people with a strong historical and cultural connection with the "Starcke" lands. That is the evidence of Dr Memmott. That evidence is supported by the grant to an Aboriginal group of the bulk of the formerly freehold land under the provisions of the Aboriginal Land Act 1991 following the resumption. CMB No. 1 Pty Ltd v. Cairns City Council (1999) 1 QdR 1 is authority for the proposition that whilst a Court is required in a case such as this to apply foresight, it is not precluded from taking into account events that have occurred after the relevant date to the extent that they confirm a foresight. 372. I do not intend by the above comments to elevate the potential concerns of the people at Hopevale to a level which might be seen by the hypothetical developer as a substantial threat to local authority approval. In the case of a subdivision application, the P & E Act accords no rights of objection or appeal to third parties and the right to be consulted as part of the EIS process does not amount to a right of veto (Lockhart River Aboriginal Council v. Cook Shire Council and Longboat Investments Pty Ltd, (unreported, Planning and Environment Court, Brisbane 9/2/1998, Quirk DCJ). Nevertheless, there will be both cost and time involved in the preparation of that part of the EIS dealing with the consultation, including a Social Impact assessment study, as well as the Cultural Heritage survey mentioned earlier. I come to these aspects shortly. 373. I expect that a prudent purchaser would be confident that the nature and extent of the expected Aboriginal interest would not be sufficient to jeopardise approval of a subdivision application. The application would be considered on the basis of town planning considerations, whereas none of the issues said to be relevant to the Aboriginals could be so characterised. I must stress, however, that this does not mean that the interests of the Aboriginal people ought not be reflected in the form of approval or in associated conditions. The Council would be expected to take notice of the EIS in the form of the Cultural Heritage and Social Impact surveys and the advices of the relevant referral agencies. That could lead to imposition of conditions of the type discussed earlier, including conditions generated as a result of negotiations between the Aboriginals and the intending developer. The EIS terms of reference would require such negotiations. In addition, CSC would seriously consider adjustments to the subdivision layout to protect sacred Aboriginal sites. I entertain a doubt, however, that the Council would require the developer to grant rights of access to Aboriginals who wished to hunt, recreate and conduct 122 ceremonies on the "Starcke" lots. The Council could not be expected to enlarge a claimed traditional ownership into a legal right recognised under law. Such an access arrangement would, I think, be left to the initiative of the developer who would provide such a concession only if his negotiations led him to do so - together with any fear of protracted litigation, which I discuss further below. Legal and Extra-legal Avenues 374. The respondent, particularly through Dr Memmott and supported by Mr Byrne, raised a number of legal options that the Hopevale people might avail themselves of if they were so inclined. Before I come to those options, I should make some mention of the CYLC. That body had been formed in October 1990 and was concerned about Aboriginal land matters throughout Cape York. The "Starcke" lands are within the Land Council's area of interest. There was evidence which I accept that the CYLC was proactive in the promotion and protection of Aboriginal traditional land interests leading up to March 1994. I need not detail its activities. It is a body well known to both State and Commonwealth Governments and respected as having a legitimate role with respect to Aboriginal land interests. It is a "representative body" under the Native Title Act 1993 (Commonwealth) (the Native Title Act). The CYLC was at the relevant date led by Mr Noel Pearson, an articulate, forthright person qualified as a lawyer and with a traditional connection to the "Starcke" lands. The CYLC would have been expected to assist the traditional owners in dealing with the processes involved in either resisting the subdivision of the "Starcke" freehold as proposed by the claimant, or in negotiating to protect Aboriginal interests were that project to proceed. This brings me back to the legal options. 375. One option raised by Dr Memmott was the possibility of lobbying the Coordinator- General and Premier's Departments to take carriage of the EIS process. When it was pointed out to him that the Public Works Organisation Act 1971 would not authorise such a process, he said that he thought that because of the political interest in the relevant area, new legislation might be enacted to enable the outcome that he proposed. I recognise that the prospect of a government acting in such a fashion is not without precedent, however, something more than the mere suggestion of such an option being available would be needed before an intending developer would allow for such a risk. 376. The other legal remedies canvassed by the respondent included:  an application to review a decision of a local government under the Judicial Review Act 1991 (the Judicial Review Act);

 application for a declaration at common law as to the invalidity of the decision of a local government; 123  application for an injunction to restrain a developer proceeding to develop land in breach of the Cultural Records Actor the Aboriginal and Torres Strait Islander Heritage Protection Act 1984 (Commonwealth);

 lodgment of a Native Title claim under the Native Title Act.

377. The Judicial Review Act confers a right to apply to the Supreme Court for a statutory order of review. Such right may be availed of by a "person who is aggrieved" by a decision of an administrative character made or proposed to be made under an enactment (ss.20(1), 21 and s.4). The procedural grounds upon which a decision may be reviewed include, in statutory form the principles often expressed at common law, that is: "taking an irrelevant consideration into account" or "failing to take a relevant consideration into account, exercising the power for a collateral or ulterior purpose, or in bad faith, and failing to accord with the rules of natural justice" (ss.20(2), 21(2)). 378. The Court of Appeal in Resort Management Services v. Noosa Shire Council (1995) 1 QdR 311 held that a decision of the local government to proceed with a proposed amendment of its planning scheme was a decision of as administrative character. An application to subdivide land is an application made within the existing provisions of the planning scheme, which would not, in consequence of that application being approved, result in an amendment to the scheme. A decision of the local council to approve the "Starcke" subdivision application would therefore clearly be a decision of administrative character proposed to be made under an enactment, that is, the planning scheme. I am of the view that the residents of Hopevale and, indeed, the CYLC, would have standing to qualify as "a person who is aggrieved" under the Act. 379. A party concerned with a local authority decision in circumstances where there is no statutory right of objection provided by the P & E Act and, therefore, no right of appeal to the Planning and Environment Court, would almost universally prefer proceeding by way of an application to review under the Judicial Review Act, given the comparative expedience and inexpensiveness of that route when compared with an application for declaration or injunction. In circumstances, however, where the permitted limitation period provided for in the Judicial Review Act has expired, these other remedies may be sought. 380. An application to review under the Judicial Review Act does not of itself act as a stay, therefore, any approval of the application to subdivide the "Starcke" freehold could be acted upon by the intending developer notwithstanding that an application to review had been made. The risk that such a developer would be undertaking were he to proceed would, in the respondent's submission, be the risk that were the Council to be ordered by 124 the Court to reconsider its decision, it may subsequently decide to refuse permission to subdivide, with the consequence that the expended money on development works would be wasted. The respondent referred to Cape York Land Council Aboriginal Corporation and Charlie v. Boyland (unreported, Court of Appeal, 30 May 2000 [2000] QCA 202) in which the application was to quash a decision of the Executive Director, Department of Environment, which provided approval for the erection of a tourist accommodation building on land leased under the Land Act 1962. The applicants failed at first instance, but were successful on appeal. The decision objected to was made on 11 February 1997 and the judgment of the Court of Appeal was handed down on 30 May 2000. The example demonstrates, according to the respondent, the type of delay that might be involved if an Aboriginal person made such an application with respect to a proposed "Starcke" freehold subdivision. 381. It is the respondent's submission that a prudent purchaser intent on subdividing the "Starcke" freehold would not proceed to incur the substantial costs of development pending finalisation of any legal proceedings, whether by way of an application for declaration or injunction or an order to review under the Judicial Review Act, until such legal proceedings were finalised. It was further submitted that even if such a developer considered that he could successfully resist such proceedings, he would factor the potential for considerable delay and costs into his cash-flow calculations. 382. Mr Brett, in carrying out his valuation, relied on Mrs Campbell in support of his conclusion that, because of the "quite co-operative history" of the relationship with the local Aboriginal community, he would expect a purchaser to allow a delay of no more than one or two months for the contingency that legal proceedings of the type described above might be commenced against a decision of the Council approving the subdivision. He emphasised the proactive nature of Mr Quaid and suggested that development would proceed, notwithstanding the risk suggested from the respondent's side. 383. Mr Quaid supported the view put by Mr Brett. The proper test to apply is not, however, the viewpoint or the attitude of a particular businessman. What I have to take into account is the view of the assumed hypothetical prudent purchaser. He would be cognisant of the "co-operative history" but would also be aware of the advice of Dr Memmott and Mr Byrne or other such experts and would also have the benefit of legal advice concerning judicial review and the other legal options. He would not assume that legal action would be taken and then value of the land on the basis of the anticipated costs and delays, but would consider the risk of that eventuality. I think on the evidence that I heard he would place the risk on a higher plane than was indicated by Mt Brett. 125 Native Title Claim 384. The land in question here was freehold at the relevant date. The claimant's simple proposition is that despite any belief on the part of the traditional owners as to whether they still had a right of access over the land, a potential developer would reasonably believe that native title had been extinguished over that freehold land. 385. The then Premier reported to Parliament on 14 September 1993 his advice that "any claim to Native Title based on the High Court's Mabo decision would not succeed because all land within the Starcke Holding was formerly Pastoral Lease. Accordingly, any Native Title in the entire area would have been extinguished." The Premier apparently saw no need to mention the view that freehold title also extinguished Native Title. In a letter to the Cattleman's Union (Queensland) in August 1994 he repeated his advice concerning the primacy of Pastoral Leases. The Premier's advice probably represented the prevailing view at the time, following the judgment of the High Court in Mabo v. State of Queensland (No. 2) (1992) 175 CLR 1 (Mabo No. 2). Equally, however, it was well known, according to Mr Byrne, that those views were not shared by certain of the more proactive Aboriginal Councils. Indeed, following Mabo No. 2, the Wik people in Wik Peoples v. State of Queensland (1996) 187 CLR 1 (Wik) applied for a declaration that they held Native Title rights over an area of land in Cape York and that those rights were not extinguished by the grant of Pastoral Leases under the Land Act 1962. That action was commenced in the Federal Court in 1993 before the enactment of the Native Title Act and before the relevant date for the assessment of compensation in the present matter. Three-and-a-half years passed before the High Court held that, putting the matter broadly, Pastoral Leases did not necessarily extinguish native title. The question of whether a grant of freehold title extinguished Native Title, although adverted to in the judgment of Brennan J in Mabo No. 2 was not finally resolved until the High Court decided that question squarely in Fejo v. Northern Territory (1998) 195 CLR 96 (Fejo) on 10 September 1998. 386. It was submitted on behalf of the respondent that having regard to the opinion of Dr Memmott and Mr Byrne, or similar opinions that might be expressed to a prudent purchaser as to the nature and extent of the traditional connection between the Hopevale community and the "Starcke" land; and the fact that the land is within the area of the CYLC, a body noted for its proactive stance in Native Title matters, the prudent purchaser would acknowledge these issues as issues of potential concern. 387. Whilst there was, as Dr Memmott put it, "a great deal of uncertainty about native title" at the relevant date, I accept the submission of the claimant that a prudent purchaser would reasonably believe that native title would have been extinguished over freehold land. 126 He would not, at that time, have the benefit of Fejo to shore up his belief, but would have the benefit of legal advice to that effect had he sought it. The difficulty which confronts me in this matter is that the evidence points to Aboriginal people in Cape York not subscribing to the then conventional view of the law. In addition, some demonstrate a willingness to challenge that conventional view and, given the outcome in Wik, with some justification. The issue for the prudent purchaser with respect to the "Starcke" freehold was one of making a judgment as to whether "Starcke" would become the test case for freehold title resulting in substantial delay and expense. Mr Byrne would advise an assumed purchaser that the question of the effect of freehold on Native Title was due to be tested. Mrs Campbell agreed that at March 1994 there was an increasing sense of assertiveness by indigenous groups. 388. The "Starcke" freehold land was the largest parcel of freehold in the Cape, where freehold was, and still is, an extremely scarce commodity. It adjoined a community with traditional ties to the land and who enjoyed a continuing association with it. Would an application to subdivide trigger a native title claim, as subsequently occurred in Fejo, a case involving a subdivision application? A prudent purchaser must, at the very least, assume that there was a possibility of a native title claim and of prolonged, expensive litigation. The prudent purchaser may, based on legal advice, be confident of success but any contest could be draining on the assumed profit from the venture. He would therefore be inclined to avoid the prospect of the interested Aboriginals pursuing the native title claim option. His best option would be to enter into bona fide negotiations with respect to the proposed subdivision and to make appropriate concessions. Some observers may characterise such a scenario as that described above as morally reprehensible. Be that as it may, the task that I confront is to apply the objective test of value supplied by the Spencer case. 389. A hypothetical prudent purchaser would, therefore, attempt to indirectly address the native title issue in the negotiations he had with the Aboriginal community, together with the other concerns raised earlier. He may discover that the people have no intention of pursuing a native title claim; or that the spectre of initiating such a claim is introduced as a negotiating tool; or that it is intended to lodge a claim. The evidence of Dr Memmott and Mr Byrne convinced me that an intending developer of the "Starcke" freehold would quickly be convinced that the people of Hopevale, supported by the CYLC, believe that "Starcke" is part of their land irrespective of the intervention of white man's law. 390. Mr Byrne gave evidence of Hopevale Aboriginals having agitated before the resumption of the "Starcke" aggregation for that land to be recognised as land in which 127 Aborigines had a legitimate interest, if only for the purpose of its environmental protection. They had sought the declaration of the then Starcke National Park as claimable land under the Aboriginal Land Act 1991 in order that it may be claimed under that Act. In addition they had commenced action towards the granting to them of the "Starcke" OLs. They had also, following the advertisement of the "Starcke" aggregation in the Wall Street Journal, sought legal advice as to how they might frustrate any sale to overseas interests. The CYLC was supportive of the Hopevale community in their actions. Mr Byrne was confident that, had an application for subdivision been lodged with CSC in 1994, those Aboriginals with interest in the "Starcke" freehold would have acted to protect and promote that interest. 391. He also expressed the view that CSC would not have been expected to approve subdivision as the proposal amounted to a "major development" and the Premier in 1994 had said that until the completion of the CYPLUS process no major developments would take place. Mr Byrne said that were CSC to have approved a subdivision application the CYPLUS process would have collapsed. Whilst I was not provided with documentary evidence as to the Premier's statement nor what was meant by the term "major development", I accept Mr Byrne's evidence that CYPLUS was both a complex and delicate process involving the goodwill and trust of a range of stakeholders. At the least, an approval of the suggested subdivision would have been a matter of concern to some CYPLUS participants. 392. Mr Byrne explained that the traditional Aboriginal owners of the "Starcke" freehold would, together with CYLC have pursued both extra-legal and political avenues in attempting to protect the land. Nevertheless, he acknowledged that if the subdivision proposal was to hypothetically proceed, the traditional landowners would attempt to negotiate for a VCA which, for example, preserved Aboriginal sites of significance and provided for access as appropriate for hunting and cultural purposes. As I understood him, such an outcome would follow the exhaustion of all legal and extra-legal options. 393. There was the additional prospect that environmental groups, such as the Wilderness Society or the Queensland Conservation Council, may join the Aboriginals in their endeavours. Mr Schneider's said as much. He said that the environmental movement would be concerned that a subdivision of the "Starcke" freehold would repeat the mistakes evident at "Daintree" and which resulted in the Daintree Planning Package. The prospect of rallies, protests and blockades was raised by Dr Memmott. I have recorded my view that a prudent purchaser would not see such activities as being of advantage to a subdivision project. A prudent developer would attempt to avoid such actions as the greater the 128 apparent conflict, the greater would be the effect on the respective parties' negotiating positions. I think that a prudent developer would, however, have been of the view that the recognition of cultural heritage sites and of a ceremonial right of access in a VCA could be considered a point of interest to possible purchasers. Council's likely Response to the Application and the EIS 394. A prudent intending developer would carefully scrutinise Mrs Campbell's view that the subdivision application would be "well received" by Council and, in effect, that any issues raised by the EIS could easily be addressed by the imposition of reasonable and relevant conditions and with no impact on the form and profitability of the subdivision project. The terms of reference of the EIS would be settled by the Chief Executive following consultation with interested State agencies. According to Mr Humphreys, the State Government would have been concerned about environmental issues, cultural issues and whether an economically sustainable pattern of development was proposed. He suggested that the State would have been likely to probe the issue of whether the proposed "Starcke" freehold subdivision was a sensible form of development, in terms of the long- term consequences for Cook Shire and its settlement pattern. In that regard he said the State would have regard to the findings of CYPLUS, though I was not taken to any particular finding of CYPLUS thought to be relevant. 395. I accept the evidence that the CSC was inclined to welcome development, however, given the size and nature of the proposed development here and the material that the EIS could reveal, it cannot be assumed that the Council would not ultimately act responsibly and reasonably. The nature of the application is one which would invite broader attention outside the confines of Cook Shire. It is a notable proposal and one outside the experience of the Shire, as well as of the Town Planner and the Shire engineer. Generally speaking, the advice of those officers as to the prospect of a subdivision being approved would be highly regarded by a prudent developer, however, a proposal such as this invites more detailed analysis and scrutiny. A prudent developer, advised of the CSC's historical disposition in favour of development, would quickly realise that the history of that local authority did not include a development of this nature and size, so would pursue the various questions that a properly advised local authority would need to consider. 396. I find the subdivision proposal to be an incongruous use of land in the context of the Planning Scheme, the qualities of the land and its location. Approval of the subdivision would be to "shoe-horn" into the scheme a proposal not obviously within its contemplation. 397. It will be clear from my reasons set out above that I entertain serious doubts that CSC could be expected to approve an application to subdivide the "Starcke" freehold in the 129 form and for the purpose proposed by the claimant. I am not prepared however, given the pro-development attitude of CSC, to hold that the hypothetical prudent purchaser would form the view that an application to subdivide in a form similar to that proposed would be refused. Such a purchaser would, however, recognise a significant risk in obtaining approval and would take that into account in estimating the price he would be willing to pay for the land. Mr Brett proceeded, however, on the basis that approval in the form proposed would be virtually a formality. 398. There are other matters which involve the local government and which are associated with the probable cost of undertaking the proposed development. I refer to the issue of the bitumen sealing of the spine road, the provision of bores and electricity and whether bridges or less expensive causeways would be needed at the Morgan and Starcke Rivers. I have already considered the matter of electricity and will take these other matters up later in these reasons. I will now turn to consider other elements of a "Starcke" freehold subdivision on the basis that subdivisional approval would be given. Lot Prices and Selling Rate 399. Valuers who employ either the DCF or hypothetical subdivision exercise methods of valuing land provide as an element of that exercise an estimate of the expected selling prices of the lots to be produced, the aggregation of all of the lots prices becoming what they call the "gross realisation". That estimate usually constitutes, in effect, a valuation of each of the assumed subdivided lots, with the sales of similar lots being used as bases in the valuation process. 400. Mr Brett did not employ that method in his DCF exercise. He formed the view that just as in the case of the "Daintree" project, the prices to be expected from the sale of lots could not be assessed by reference to local sales. The reasoning is that local sales, such as they are, did not result from a national and international marketing campaign, but resulted only from such interest as might have been generated locally. As a consequence, there is no evidence available locally of sales into the "environmental" market, according to the claimant. In these perceived circumstances the stock in trade tools of a valuer were unsuitable in estimating the prices that would be expected - as Counsel for the claimant put it, "valuers follow the market; they do not set it". The proposition is that the prices and the rate of sale of the "Starcke" lots would be established as a result of the marketing campaign. Mr Brett said, in effect, that no valuer could estimate the prices that might be achieved at "Starcke" in association with a marketing campaign. In these circumstances Mr Brett elected to take the advice of Mr Beattie as to the lot prices and sale rate to be expected for the "Starcke" freehold subdivision. Notwithstanding that decision, Mr Brett 130 did not abandon the valuer's perspective - he notes in his report that he was aware of land prices in the "Daintree" region and to the south of "Starcke" (the source of Mr Slater's sales). 401. Mr Slater acknowledged that the estimation of prices which might result from a marketing campaign as proposed by Mr Beattie is not the usual province of a valuer. As Mr Slater described it, the approach adopted by Mr Beattie, and therefore by Mr Brett, could be described as valuing the marketing campaign not the lots. Nevertheless, he did acknowledge that the marketing campaign at "Daintree" contributed to the volume of sales there and the level of prices. Mr Brett's view was that the gross realisation of the lots was dependent to some degree on the quality of the marketing campaign. He said that it was not therefore appropriate to place a price on the lots without taking the marketing campaign into account. 402. Mr Blomfield thought that marketing at "Daintree" there was relevant to the rate of sale, not the price. He said that he had reviewed prices at "Daintree" and at "Camelot" and concluded that prices between the two areas were not significantly different. Detailed evidence of his review was, however, not provided. He said, also, that it is not possible to determine from the sales evidence whether the marketing campaign at "Daintree" had an influence on price because of there being other influences in the marketplace and the unavailability of reliable marketplace evidence to indicate the source of influence as being the marketing campaign, as such. 403. As I appreciate the evidence, Mr Slater's concern about valuing the marketing campaign turns on his appreciation that there would be little local market for the "Starcke" lots - a point not disputed by the claimant - and that there would be "substantial difficulties" in attracting outside buyers. It followed, on that line of argument, that if success was assumed in attracting outside buyers, that success would have been dependent on the marketing campaign. Thus, an assumed set of sale prices and a selling rate assumed the success of the marketing campaign. 404. Now the "substantial difficulties" to which I have referred above were founded on Mr Slater's view that at Mr Beattie's suggested prices and the "Daintree" experience could not be expected to be repeated at "Starcke", given the differences between the properties. He mentioned differences in vegetation and location as being the matters of most significance. The claimant's view, however, was that the similarities between the "Daintree" and the "Starcke" are so great and the differences of such little moment that a repetition could be expected: that is, not a repetition of the sale of low priced 1 to 2 ha lots at the lower end of the market, but the sale of 100 ha lots at the higher priced end of the 131 market. I have already recorded my conclusions as to the similarities but important differences between "Daintree" and the proposed "Starcke" subdivision. 405. I think that it is valid for a prudent purchaser to direct his mind to the prospect of success of a marketing campaign and, for that matter, to design the campaign to achieve optimum effect for the amount to be spent. He will, where convinced of the benefit of marketing, assume a sale price of lots accordingly. In an environment where his subdivision competes with others or is a follow-on from others, he could not safely assume that his prices will be any higher than sales from those developments. Given a similar product and market, the developer could safely assume that a similar, though tailored marketing campaign, would beget similar success. Without marketing, however, he could not, with any confidence, expect to sell his lots at the same rate or the same price as identical lots previously sold. It follows that in placing a price on lots and in estimating the rate of sale, a marketing campaign must be seen as making a contribution to the success of the project. The question here becomes one of asking what success could be expected at "Starcke" in the form of prices and rate of sale. I would think that a pedestrian marketing campaign would have that limited effect in any subdivision project, but would be of greater significance in an estate such as "Starcke" where non-local buyers are essential to the project's success. Mr Beattie's suggested campaign, on the other hand, is something more than pedestrian. 406. One consequence of the need for a sophisticated marketing campaign is the level of expenditure. Mr Beattie has provided his estimate of this and these estimates were not seriously challenged. Another aspect is that the mere fact that such a campaign is needed is a pointer to the fact that the project is out of the ordinary. This, in turn, is a pointer to the risk of sales prices and sales rate not being achieved, a risk that needs to be factored in when considering the price one might pay for the land for subdivision purposes. 407. Mr Beattie's pricing approach and sale rate assumed that the developer would, as part of the marketing campaign, provide "attractive vendor finance" in a similar manner to that provided in the "Daintree" project. The parties agree that the availability of vendor finance at "Daintree"; that is, finance at below market rates, would have been an attractant to purchasers and would have impacted on both the rate of sale and sale prices. The respondent suggested that such finance would be more attractive to the lower end of the market and, therefore, would not have been as relevant at "Starcke" where Mr Beattie's prices were much higher than at "Daintree". Mr Beattie did not agree with that suggestion based on his experience at "Daintree". I will come back to that point. My main concern at this stage with the proposition of vendor finance, however, is one of principle. 132 408. Putting aside the particular geographic attributes of "Starcke", I need to consider the place of vendor finance as a factor in valuing land. No distinction should be made between two otherwise comparable in globo parcels of land in, say, the Beaudesert area near Brisbane on the basis that the purchaser and intending developer of one intends to offer vendor finance, whilst that of another does not. The point is, however, that in that area lenders are close at hand and the inspection and valuation of blocks is relatively easy. Potential purchasers will also often visit and revisit blocks under their own steam and will make a decision to buy at their own convenience. The "Starcke" selling experience would be quite different in that the potential lot purchaser is largely under the control of the vendor in terms of visiting the land and financiers are not readily available. Indeed, Mr Beattie said that financiers would not be greatly interested in the "Starcke" subdivision because, as he acknowledged, lending institutions "tend to approach the provision of finance in areas of this sort with a negative attitude". He said that purchasers would find difficulty in arranging finance from traditional sources for the purchase of lots such as those proposed at "Starcke". He attributed that reticence to such lenders feeling more confident "in lending where they can drive past and touch it themselves virtually" and went on to suggest that such lenders "have responsibilities to shareholders and things like that". The respondent submitted that Mr Beattie's explanation as to the attitude of such financiers indicated a view that such lenders had responsibility not to risk capital on projects of questionable security. In truth, I do not know what Mr Beattie meant by his reference to the responsibilities of such financiers, however, his view of the matter overall led him to a conclusion that to ensure sales of lots at the "Starcke" subdivision vendor finance would be desirable, if not essential. 409. Mr Beattie proposed vendor finance based on a 10% cash deposit by the purchaser and with finance being available at a 7% per annum interest rate over a 10-year term. The interest rate could be expressed in more precise terms, however, the general nature of the proposed vendor finance is clear. It is to be more attractive than would otherwise be available, commercially. Mr Beattie said that the availability of such vendor finance is critical to the marketing program as it enables the sales team to secure binding contracts "without interference from lending institutions". 410. It appears to me that I have the choice of either accepting what Mr Beattie said or in assuming that the prudent purchaser would choose to adopt the Beaudesert path I described above. I would think that the prudent purchaser would reason that the Beaudesert method would lead to a low level of sales at "Starcke" and would threaten the viability of the project. This hypothetical person would accept Mr Beattie's advice concerning the need for 133 vendor finance and, given that I have no evidence/submissions to the contrary, would adopt the terms suggested - at least at the outset. The rate would probably be adjusted with any movement in the finance market. The upside of that strategy would be an increase in sales and in a maintenance of sale prices, but there would also be a cost. First and most noticeable would be the actual cost of supplying the vendor finance. There are, however, other factors to be taken into account. The "Daintree" experience showed that even on the favourable terms available there, there were some defaulters. There is, therefore, the need to manage such outcomes and in an environment where the driving force of the marketing campaign may have concluded. The developer cannot easily disentangle himself from the project once the last sale has been made. The developer will also need substantial financial backing to be able to both fund the development and the vendor finance over a period extending beyond the standard life of such a project. The need for vendor finance would both reduce the pool of potential purchasers of the "Starcke" freehold in globo and attach to the project a higher risk profile than a development employing the financial facilities of traditional institutions. Mr Brett did not refer to this issue when he discussed the risk associated with the project. 411. I return now to the respondent's suggestion that vendor finance would be more attractive to the lower end of the target market. I accept Mr Beattie's evidence that attractive finance could be seen as beneficial by purchasers of either high or low economic means. I have, however, a strong suspicion that the Beattie marketing campaign is one that would have greater chance of success with less sophisticated prospects than with those with business acumen. The model employed by Mr Beattie is one that needs first to attract prospects and could be expected to generate response from a range of candidates. Once a prospect elects to visit the subdivision, he moves into the control of the marketer. The airfare will be "free" only if he buys. The inspection is compulsory. The inspection is under the control of the sales person. The finance is available to allow a closure of a sale following the visit. A sophisticated prospect will recognise that these circumstances are designed to place the prospect in the control of the seller and to extract a sale. 412. This may be a convenient point to mention that Mr Blomfield observed that Aboriginals in Cape York were a growing force in the marketplace. I refer later to two sales included in Mr Blomfield's valuation in which an Aboriginal legal entity was the purchaser. I would very much doubt that potential Aboriginal purchasers of "Starcke" lots would be influenced by the puffery of a marketing campaign. Certainly the two sales that I have mentioned indicate a propensity to drive a hard bargain. 134 413. Mr Brett said that he discussed at length with Mr Beattie his proposed allotment prices and sales rate in the same manner as would a prospective purchaser/developer. Although Mr Beattie is a qualified valuer, he did not employ a standard valuation methodology but drew on his skills and experience as a marketer in his pricing of the proposed "Starcke" lots and in estimating their rate of sale. The foundation of his method was based quite clearly on his experience at "Daintree" and on the assumption that the similarities between "Daintree" and "Starcke" are such that the pricing success at "Daintree" would herald success at "Starcke". 414. It is in this context that the similarities and differences between the two projects are significant. The sharp point in considering the significance of these differences lies in the assessment of expected price and rate of sale. It is with respect to those aspects that reliance on the "Daintree" precedent assumes the greatest importance, in my view. The hypothetical prudent purchaser will, I think, accept that a marketing campaign of the type proposed by Mr Beattie would probably be suited to marketing the "Starcke" lots, but it is the reasoning about selling prices and rate of sale that will be of much more importance. In this regard Mr Beattie would explain that he would repeat his "Daintree" method. That involves estimating selling prices based on extracting what the market would bear and estimating a rate of sale that assumes successful penetration of the market by the marketing campaign. 415. Whilst reference to past comparable transactions may be the usual method of estimation of gross realisation for the purposes of a DCF or hypothetical subdivision exercise, this does not mean, assuming the absence of such evidence, (as do Mr Brett and Mr Beattie) that the estimation of lot prices should be considered an impossibility. Mr Slater did not dispute that lots at "Starcke" would be saleable, so the question becomes one of finding an acceptable level of the expected sale price for such lots. 416. I acknowledge that the identification of a justifiable gross realisation figure is not by itself a valuation, but is part of the process of attempting to value the land by use of the DCF method. That does not mean, however, that the process should be any less rigorous than in the method of valuing a single lot by direct comparison with sales, but that any uncertainty or lack of confidence in the result should be catered for in some other part of the valuation process. I refer particularly to the allowance for risk which I discuss below. The point to be kept in mind, however, is that I am not concerned with the manner in which a valuer would approach the issue of gross realisation, but how the prudent purchaser would consider the various elements that are relevant to establishing the price that he 135 would pay for the land. Valuation methodology is an important part of that process, but is not the only part. 417. For that matter the expression of an opinion by an expert valuer in circumstances where there is not direct support in the marketplace has been accepted by the Courts on more than one occasion (Minister of Environment v. Petroccia (1982) 30 SASR 333 per Wells J at 336; and Commissioner of Highways v. Tynan (1982) 53 LGRA 1 per Wells J at 9). In Sri Raja the Privy Council referred at p.168 to the duty of the Court in circumstances where there is no market value evidence for guidance. In such a case the tribunal of fact must "as best he may from the materials before him" determine the value of the land. The relative weight, however, that might be accorded an opinion in these circumstances is an issue that was commented on by the Land Appeal Court in its decision in Standfield v. Commissioner of Main Roads (1969) 36 CLLR 76 (Standfield): "Such an opinion may be held by an experienced valuer in all honesty and sincerity but its evidentiary weight lessens if it cannot be substantiated or demonstrated by some tangible calculations reasonably based on available data" (at 80).

418. I think that, notwithstanding the views that I have expressed concerning the nature of a gross realisation, I should consider the evidence on lot prices and selling rate provided by Mr Beattie keeping in mind the opinion provided in Standfield. That will involve a deliberative process. 419. It was submitted by the claimant that "an extremely important question in this case is whether the Starcke Freehold Wilderness could be successfully marketed" and that given Mr Beattie was the only marketing expert called, I would accept his evidence on that question. I would, it was suggested, accept it particularly because the question is not one that can be answered by non-experts, including Land Court members. I have a number of difficulties with this proposition. 420. First, the role of a Land Court member is not that of a third party expert, but is judicial in nature. Any issue of substance between the parties is to be determined by the Court based on the evidence placed before it and the submissions made. Second, the manner in which the above submission is framed confuses two issues. One of those issues is to do with the manner by which a marketing campaign for the "Starcke" would be conducted. That is an issue for the expertise of marketers. The second issue is to do with the success of any marketing campaign undertaken and that issue is concerned with an analysis of the marketplace to ascertain whether there is evidence which leads one to a conclusion that the product at the suggested price will be purchased at an acceptable rate. Now I would not exclude a marketer from expressing a view about this second matter, 136 particularly in this jurisdiction, but it is not a topic which is the exclusive province of the marketer. Valuers are usually called upon to provide opinions on such matters. Now the opinions expressed, be they from a marketer or a valuer, need to be based on a foundation of fact put into evidence. The more sound the base and the more sound the validity of the reasoning, the more reliable will be the opinion expressed. My consideration of Mr Beattie's evidence as to the suggested success of the "Starcke" subdivision and marketing exercise will proceed in accordance with these principles. 421. Now in considering these matters, I will recognise and have regard to the conclusions that I have drawn on the evidence concerning the similarities and differences between the "Daintree" and "Starcke" projects and on the proposed marketing campaign. 422. Mr Beattie grouped the proposed "Starcke" lots, having regard to their primary features which I will set out shortly, then priced them "taking into account their likely individual features, location and (his) assessment of the prices purchasers would be willing to pay for them as a consequence of (his) proposed marketing program budget" (my emphasis). The principle was, therefore, one of affordability and assumed the success of the marketing campaign. Indeed, Mr Beattie was confident that the generated demand would be so great as to allow the developer to increase prices in a particular group as stock supply was reduced. In a similar vein Mr Quaid thought that Mr Beattie's prices could readily be increased to cover any escalation in costs or to cover any prolongation of the assumed selling period of two years. These suggested price escalations did not, however, feature in Mr Beattie's gross realisation of $45,570,000 or in Mr Brett's DCF exercise. 423. Mr Beattie has inspected the "Starcke" freehold by helicopter and landed in a number of spots. He has driven on the area just north of the Starcke River, but has not travelled over the land overall. He has not driven up the north/south road. Given the significance of the function that lot prices play in the DCF valuation method adopted by Mr Brett, I am concerned that Mr Beattie appears to have done less in his lot pricing, and without the benefit of market sales guidance, than a valuer might ordinarily do. 424. Mr Nevard provided examples which he said demonstrated that the "environmental" market paid a premium price for land greater than its agricultural use. That is not a point that I need to go into in the case of the freehold land because it is my understanding that both Mr Beattie and Mr Slater suggested prices for the proposed "Starcke" lots above their value as economic units. Indeed, except for the possible exception of the more fertile lands near Mt Webb, none of the proposed lots would have a demonstrable value for use as farms or as grazing properties. 137 425. I set out below in ascending order of pricing a summary of the prices applied by Mr Beattie to the proposed lots as described by him. Number Average Total of Lots

Near Dunefields 9 $95,000 $855,000 Near Dunefields/Rainforest 6 $100,000 $600,000 Red Soil Plains country/near Dunefields 1 $125,000 $125,000 Open Forest/Clearing/Dunefields 1 $125,000 $125,000 Red Soil/Rainforest 1 $125,000 $125,000 Rainforest 2 $125,000 $250,000 Open Forest/Clearing 61 $126,967 $7,745,000 Rocky Escarpment/Rainforest 9 $128,333 $1,155,000 Rocky Escarpment 15 $147,000 $2,205,000 Coastal Wetlands 11 $163,181 $1,795,000 Stunted Woodlands, Dunefields 18 $168,333 $3,030,000 Red Soil Plains country 2 $170,000 $340,000 Rocky Escarpment/Coastal Wetlands 14 $185,000 $2,590,000 Mt Webb Vine Forest 2 $215,000 $ 430,000 Mt Webb Fine Forest/Creek frontage 1 $215,000 $215,000 Mt Webb Vine Forest/Red Soil/Creek frontage 5 $221,000 $1,105,000 Inland River frontage 13 $226,538 $2,945,000 Coastal Wetlands/Dunefields 10 $230,000 $2,300,000 "The Oil Palms"/Opera House/Red Soil* 1 $245,000 $245,000 "Starcke Homestead"/Red Soil* 1 $245,000 $245,000 "South Starcke Airfield"/Red Soil* 1 $245,000 $245,000 "North Starcke Airfield"/Open Forest/Clearing* 1 $245,000 $245,000 Hillslopes 13 $266,538 $3,465,000 Estuarine River frontage 22 $267,727 $5,890,000 "White Sand Hill"/Coastal Wetlands* 1 $275,000 $275,000 Inland River frontage/Hillslopes 4 $300,000 $1,200,000 Beach frontage/Dunefields 14 $380,357 $5,325,000 "Round Hill"/Estuarine River frontage* 1 $500,000 $500,000 TOTAL $45,570,000

* These are described as the "special blocks" later in these reasons. 138 426. Perusal of the price list provides both an appreciation of the nature of the individual blocks proposed in the subdivision and the rank ordering of prices. I understand that the pricing reflects what Mr Beattie saw as the product, having these characteristics:  freehold title to 100 ha of wilderness which allows for privacy and pride of ownership;  located on the east coast of Cape York Peninsula parallel to the Great Barrier Reef Marine Park;  accessible from "historic Cooktown";  with the natural attractions of climate, history, fauna and flora (as dealt with in an impressive way in a mock sales brochure tendered in evidence); and appealing to:

 those with a pioneer spirit;  and a sense of responsibility for the environment;  and a yearning to escape periodically or permanently.

427. It seems that Mr Beattie has made distinctions between the relative price levels of his lot groups based on his perception of what the market would be seeking. Economic utility seems to be a relevant consideration in the pricing of lots with high fertility red soil and each of those which has an airfield. I make those observations notwithstanding Mr Quaid's understanding that the pricing disregarded economics productivity and was based solely on environmental features. The relativities in pricing seem to be reflective of the sort of aesthetic criteria that would be relevant to buyers seeking lifestyle residential lots. I refer to such matters as beach frontage, river frontage and elevation in particular. No mention is made of the important stands of livistona muelleri nor the rainforest on the dune country south of the Jeannie River mouth, though there does appear to be a coincidence between those expensive lots described as "beach frontage" and "estuarine river frontage" and that part of the freehold which was, in due course, included in the Cape Melville National Park The value of improvements and the unique attributes of the land seem to feature in his pricing of the "special" blocks. 428. These lots are special only in the sense that they are not part of the broader group. Those with improvements on them (the Opera House and the Homestead lots) should be priced having regard to the added value of the improvements for the target market. I assume that this was how Mr Beattie did this. Two lots include airfields and the prices for those appear to take this feature into account. The airfield block at "Daintree" sold for a higher price than otherwise similar blocks, as I understand the incomplete evidence on this, however, the extent to which the higher price reflected factors other than the presence of the airfield was not discussed in evidence. It seems that there was an assumption that there 139 will be purchasers who will see value in the airfield properties for use as such, given the probable benefit of air access to "Starcke". I have discussed that issue earlier. 429. One particular special block deserves mention and that is the Round Hill Estuarine river frontage at $500,000. This block, which is eponymously named, provides a well- elevated knoll which would afford a wide range of views from its top. Those views would include the ocean, the Starcke River, the escarpment and the flat areas of "Starcke". Its estimated price appears to reflect these characteristics. This a lot which, as I understand the evidence, is not of high environmental value. Another block, Lot 238, enjoys an expansive ocean aspect and is part of the environmentally significant dune-fields area just to the south of the mouth of the Jeannie River. It was also priced at $500,000 by Mr Beattie. No reasoning was advanced, however, it seems to me that the pricing does not reflect the difference in environmental values, but reflects their respective aesthetic values - views, aspect, ocean frontage. 430. The "Daintree" project offers examples of unique blocks which sold for substantial prices and I have mentioned them above at paras 149-150. These high "Daintree" prices are not offered as comparable sales, but as examples of the attractiveness in the marketplace of such blocks and the willingness of purchasers to pay substantial prices for such properties. I will not repeat the different circumstances which applied to "Daintree" in its period of marketing from that which would apply at "Starcke", but will say that notwithstanding those differences, I am led to the view that properties such as Round Hill or Lot 238, as particular examples, would be expected to fetch a price well above the "Starcke" average. 431. Mr Beattie explained in his written statement that his "Starcke" prices were arrived at following a similar method to that employed at "Daintree". At the "Daintree" no comparisons were drawn with other rainforest or agricultural lands, the prices being set at the highest levels that the developer and Mr Beattie thought the market would stand, for the product. He said that at the time he was striking prices for the "Daintree" lots there were no similar acreage lots of rainforest north of the Daintree River, "near beaches and creeks". In saying this he appeared to pay no regard to the Camelot sales and said that his pricing was not based on sales there. Mr Beattie said that the national marketing campaign proposed for "Starcke" would reach people who would consider the asking prices in the context of their own local conditions. Thus someone, for example, living in a house overlooking Sydney Harbour, which is very valuable, would consider the "Starcke" prices to be acceptable. In this context I should mention that Mr Brett said that overseas tourists find it relatively cheap to holiday at some of Australia's expensive island resorts. Similarly 140 he suggested that buyers from Sydney or Melbourne would find the "Starcke" prices to be on a lower plane than prices in those cities. He said that this did not provide a "huge foundation" for the prices suggested by Mr Beattie, but said this should not be dismissed. I will not invest much time and space in discussing that proposition. The reasoning is so fragile in my view that it could be employed to support almost any suggested price level. A prudent purchaser/developer would not be impressed by it. The prudent purchaser would seek some justification for the prices placed on proposed lots. One line of justification advanced by Mr Beattie is that the "Daintree" prices were based on affordability, therefore there is a precedent for pricing the proposed "Starcke" lots on the same basis. The flaw in that reasoning is that it proposes that one subjective view turned out well so all subjective views will turn out well. Having said that, I should now address what Mr Beattie raised in his report as what I understood to be objective evidence in support of his pricing approach at "Daintree" and again at "Starcke". 432. Mr Beattie said that in settling the "Daintree" asking prices notice was taken of certain levels of affordability and relativity and he gave the example of typical 1 ha titles which were mostly priced at $25,500, which was roughly the cost of a good level, centrally located homesite in Cairns "at the time". The "Daintree" was sold over an 18-year period and actively marketed over eight to nine years, which included the period described by Mr Blomfield as a buoyant period in the Cairns real estate market. The Cairns market was not, therefore, static. It follows that for pricing at "Daintree" to maintain the same relativity with the Cairns market as existed at the outset, the price would need to be increased. Mr Beattie said that the only price increase applied to the 8 ha lots of which there were few at "Daintree". I take this issue up again below. Creek frontage 1 ha titles at "Daintree" were priced 80% to 125% higher than the 1 ha titles at $45,500 and $57,500, whilst typical 8 ha titles were priced approximately three times the price of their 1 ha equivalents at $75,000 to $85,000. Creek frontage 8 ha titles were mostly priced 70% to 80% higher again at $125,000 to $150,000. Beach-frontage titles were priced at $85,000 to $237,500. Special sites at the "Daintree" subdivision were priced at the highest that it was thought might be paid. 433. Mr Beattie said that the developer's pricing policies in the "Daintree" were almost universally accepted by the market. He said that there may have been one or two that were negotiated to a lower than asking price level, but that 95% sold for the list prices. The respondent submitted that this is not factually correct, based on the sale prices of lands to the State under the Daintree Buy-back Scheme. Mr Quaid sold properties with a list price of $13,900,000 at a price of about $5,700,000. He gave his reasons for selling at this price 141 (para 84) . Whilst I accept the influence of these reasons on his willingness to sell these lands at a reduced price, the level of reduction was so great that I suspect that there was a degree of doubt that the list prices could be demonstrated to be appropriate. 434. Mr Beattie said in his written statement that by the 1990s Cairns prices for good, level, centrally located, traditional size homesites were in the $85,000 to $95,000 bracket. Beach frontage homesites in Cairns, if available, had risen to between $350,000 to $450,000 for 1,000 to 2,000 m² lots. Premium hilltop/hillslope homesites in Cairns were fetching $150,000 to $350,000. His pricing at "Starcke" has, he said, paid general regard to these Cairns levels of value, just as he had done when pricing the "Daintree" lots. During examination-in-chief, however, he made reference also to Port Douglas as a place where very high prices are paid for beachfront land. 435. Mr Beattie said in his statement that the "Starcke" lots have "obvious investment value" as less than 1% of the land mass in Cape York is freehold and the "Starcke" freehold comprises by far the largest example of that tenure. A similar claim with respect to investment potential was made concerning "Daintree" lots in the video used as part of the marketing campaign there. Mr Blomfield gave evidence that lots at "Daintree" that had sold for about $25,500 in the mid-1980's were selling for around $30,000 in 1994. At the same time Cairns prices had gone from around $25,000 to $85,000-$90,000 approximately. Mr Beattie attempted to meet that evidence by saying that he had been offered attractive prices for land he owned at "Daintree" and that there was plenty of evidence that resales had taken place at higher than the original purchase price. I think that the evidence points quite clearly, however, to the average purchase in "Daintree" not having kept pace with the Cairns market. Mr Brett suggested that the sales level at "Daintree" may have had parity with the Cairns market had the "Daintree" marketing taken place in 1994. That is a theoretical possibility, however I am wary of departing from the available market evidence and adopting what is nothing more than a thesis not concerning an historical event, but a possible event. Potential purchasers of lots at "Starcke" could be taken to be aware of the history at "Daintree" and to be concerned that there is no sound basis upon which they could confidently conclude that a purchase of a "Starcke" lot could be viewed as a sound investment. Scarcity of freehold title is a relevant consideration, but not a persuasive factor if there also is a scarcity of buyers and, in fact, the market for "Starcke" lots is quite untested at the price levels proposed. 436. The prudent purchaser would, I think, view the "Daintree" lot pricing experience with considerable concern in so far as it might be said to be usefully employed at "Starcke". On the topic of lot pricing, the hypothetical prudent purchaser would also, I think, be 142 concerned about the locational differences between "Daintree" and "Starcke" in one particular regard. Whilst the "Daintree" may be seen as having an association with Cairns because of its accessibility and the fact that out-of-towners fly in and out of Cairns in getting to and from the "Daintree", the "Starcke" does not have that similar relationship with Cairns. Mr Beattie said that Cooktown was the centre that "Starcke" would relate to. If that proposition is carried through to finality, then the obvious question is: why should not the lot prices at "Starcke" bear some relationship with the lot prices in Cooktown? Evidence of the Cooktown market was not provided, but Mr Slater did provide evidence from the rural market between Cooktown and "Starcke". That would be even better evidence. That evidence is, therefore, relevant if I adopt the main threads apparent in Mr Beattie's reasoning, but without using Cairns as the point of focus. That market would tell the hypothetical prudent purchaser that overall Mr Beattie's prices are too high and by a considerable margin even assuming a price increment attributable to a marketing campaign. As I understand the claimant's case, the main complaint to a conclusion drawn in this way would be that Mr Beattie's pricing is based on affordability and reference to local sales does not provide any guide to what his assumed market could afford to pay. To such a criticism I respond: what evidence is there that points to what the assumed market will both be able to pay and be willing to pay for the proposed "Starcke" product? Why is the Cairns market relevant? Why not adopt the Sydney, Melbourne, Adelaide, New York or London markets? 437. What was it about the Cairns market that prompted Mr Beattie to strike the "Daintree" prices at a level that was broadly referable to that market? Was it the case that the early purchasers at "Daintree" came from Cairns or its environs and would be expected to know the market there? Mr Blomfield certainly said at one point that some Cairns people purchased "Daintree" lots as weekenders. If that is the explanation, then a reference to Cairns in the "Starcke" pricing would be of very little, if any, assistance. I have perused the postcodes of purchasers provided in Exhibit 77. This evidence reveals that the bulk of sales at "Daintree" were to North Queensland purchasers during the first half of the marketing campaign, whilst the bulk of those gave Cairns as their address. Mr Beattie said that over the whole selling program most of the purchasers were not local. 438. Having worked through what I understood up until re-examination to have been an important part of Mr Beattie's reasoning, I then encountered his evidence that he "wouldn't make a big issue as to Cairns prices". It appears from what he said at this point that Cairns prices are not a point of reference in striking prices at "Starcke", but are relevant to raise only in a conversation between a salesman and a prospect when the prospect raises the 143 matter of price. Even then, as Mr Beattie puts it, a salesman would not mention Cairns prices to a person from Sydney to whom it would mean little. I gather that it would be something to save for Cairns people - not the main source of buyers at "Starcke" as I understood the claimant's case. 439. So if Cairns prices are relevant only in the process of selling - and then only to a few if any of the purchasers - why is a reference to that market relevant in striking prices at "Starcke"? Not very relevant at all, as I understand the final evidence of Mr Beattie. What then is the basis for Mr Beattie's opinion as to pricing at "Starcke"? The answer appears to be that there is no basis other than the fact that the prices flow from Mr Beattie who had the experience of "Daintree" and whose prices met the market on 95% of the sales according to him. The suggestion appears to be that if he got it right at "Daintree", he must be right at "Starcke". 440. Mr Slater suggested an average price for the "Starcke" lots of $75,000, though had included a price of $100,000 in a valuation in 1998. He wrote on that earlier occasion that he doubted that price could be achieved. He told me that no sales are available which could be regarded as providing a reliable basis for pricing the lots. He included four sales in his report; sales which he said provided an indication of the maximum prices that the "Starcke" lots could be expected to achieve. The details of those sales are: Sale 1 took place on 1 August 1993 and involved the sale of 32.5 ha for $175,000. The sale included orchard trees and was improved with a two bedroom mud brick dwelling The property had good frontage to the McIvor River with a good water supply, and comprised all volcanic red soil rainforest country, half of which was cleared and sown to pasture. The sale land was located 72 km from Cooktown. 441. Sale 2 took place in June 1994 and involved the sale of 262.3 ha for $200,000. There were no structural improvements on the property which had been largely cleared, but there was regrowth at the time of sale. This property also fronted the McIvor River to the south and was about 60 km by road from Cooktown. It was a mainly red soil block and was purchased to grow peanuts. That venture failed and the property was put back on the market. 442. Sale 3 adjoins Sale 2 and has similar country and no structural improvements. This sale took place in June 1995. The land area was 259 ha and the sale price $200,000. Notwithstanding that Sale 2 was purchased to grow peanuts, Mr Slater said that the Sales 1 and 2 properties were purchased "essentially" as sites. By this I understand him to mean that the price takes into account all factors, including the size of the lots, but that price was not paid on a unit area pro-rata basis. 144 443. Sale 4 sold in March 1998 for $570,000. The sale land comprised four lots totalling 1,630 ha. It was improved with a dwelling, machinery shed and outbuildings, fencing, five dams and a bore. There is about 350 ha of red soil on the sale property and a similar area of cultivation. This land also enjoyed frontage to the McIvor River on its north side. There was a suggestion made to Mr Blomfield from the claimant's side that Sale 4 may have taken place during a stressful time for the vendor. However, there was no cogent evidence in support of such a suggestion, apart from the fact that the vendor's father died just before the sale This aspect was not pursued with Mr Slater who had introduced the sale. The vendor was the Shire Mayor and would, presumably, be aware of the property's potential. 444. Each of Mr Slater's sales was zoned "Rural (General Farming)". He did not present an analysis of the sales to reveal a pure land value content - a deficiency which is of concern with respect to Sales 1 and 4. Mr Blomfield said that officers in his department had analysed Sale 4 to show an unimproved value of $101.77 per ha, however, the officer who prepared that analysis was not called, nor was his valuation exercise tendered in evidence. Mr Slater said that on an improved basis this sale does not show any potential for the sale of the individual lots. On that basis the sales analyses to an improved price of $350 per ha. On a mathematical basis this would mean that a 250 ha property would be worth $87,500, a figure much less than Sales 2 and 3. There is nothing in the evidence to indicate that the Sale 4 land is inferior to Sales 2 and 3 as those figures might otherwise indicate. The only conclusion I can draw is that either this sale shows that individual sale of the four lots does not form part of its potential or that the sale is a low sale. I think, in the circumstances, it is preferable to put the sale aside as possibly being a low sale. 445. Mr Blomfield gave evidence of a subdivision in about 1993 at Lakeland Downs to the west of "Starcke" where five to six lots were produced. Those lots greater than 100 ha sold for prices of $70,000 to $80,000. Unfortunately, no further detail was provided to allow any comparison with the proposed "Starcke" lots. He referred to another called "Lakeside Estates" in the Bloomfield/Rossville area, south of Cooktown, where about 20 x 20 ha lots were produced for sale. Asking prices were $85,000 to $130,000, though sales took place at $40,000 to $90,000. Again, no details were provided to allow me to draw guidance from these sales. 446. Mr Beattie was critical of Mr Slater's adoption of an average price of lots rather than applying prices to each of the lots. I think the criticism is well founded. Equally, I think that the respondent's criticism of Mr Beattie's suggested prices as being without any reliable foundation is valid. I am therefore left to my own devices as to what I can make out of the evidence. What I intend to do is, first of all, to adopt the price relativities 145 adopted by Mr Beattie. I am aware that he did not present a reasoned case as to why his price relativities were appropriate and I am also aware that Mr Slater said with respect to the beachfront lots, for example, that the prices that might apply to them was a matter of guesswork. The exercise that I am about to embark on is less concerned with valuing the "Starcke" freehold than with identifying the highest and best use. In saying this I foreshadow the outcome. In view of this I have decided to assume that the relativities in lot prices proposed by Mr Beattie is appropriate. I do this with a degree of discomfort and lack of confidence. I will employ Mr Slater's sales to strike a value of some comparable lots in the "Starcke" subdivision plan on the basis that there was no Beattie marketing campaign. The range of uses which might be contemplated at the "Starcke" lots would not differ markedly from the uses possible at other lots to the south of "Starcke" and en route to Cooktown. Access from the proposed "Starcke" lots and the existing lots to the environmental features of the area (Cape Melville, Starcke National Park, etc) would be comparable, though the "Starcke" lots would be closer to some features. The difference in accessibility to these sites would, though, not appear to be a major point of distinction. The major distinguishing feature between the proposed "Starcke" lots and Mr Slater's lot sales was not, however, related by the claimant to the physical characteristics usually of interest to a valuer, but to the proposition that the "Starcke" lots would be sold via the Beattie marketing campaign, whereas Mr Slater's sales were solely local sales. This is not presently a matter of concern for me, however, as I deal with the influences of the marketing campaign next in this process. 447. Mr Slater said that each of his sales is superior to the average notional "Starcke" lot in terms of land quality and potential, water supply and proximity to town. That conclusion gives one the initial impression that the comparison was made on the basis of each of the sales and notional lots having a highest and best use of farming. The claimant levelled that criticism at Mr Slater's approach. Nevertheless, in his valuation report Mr Slater said that, apart from the possible potential of the red soil lots in the south, the "Starcke" lots would have little productive capacity and "no prospect of independent viability". He also recorded a favourable view of the 14 lots adjacent to the Coral Sea and concluded that the highest and best use of the proposed lots would be as "rural sites". In effect that is the same use as was identified by the claimant's side, though with the qualification that it would be the "environmental market" that would be attracted to the lots by virtue of the marketing campaign. Mr Beattie criticised Mr Slater's use of the term "rural sites", yet Mrs Campbell often described the lots and the subdivision as being rural as, indeed, they would be. 146 448. Mr Slater's Sales 1 and 4 were not analysed to show a land value so are difficult to employ alone as indicators of value. Sales 2 and 3 might, however, be understood to indicate together with Sales 1 and 4 that the prices paid were influenced by the area available for production and the smaller the area, the higher the pro-rata value. Sales 1, 2 and 3 might also be viewed as properties that could be occupied as rural sites with a little farming as a sideline, so could be said to be attractive to the same market as might be expected to express interest in the red soil "Starcke" lots, though I appreciate that Sales 2 and 3 are more than double the area of the notional lots. Whilst each of these sales is marginally better located to Cooktown and south of the Morgan River, they enjoy the advantage of being located within the same region as the proposed "Starcke" lots. The sale lots would not, however, be subject to the possible protection of the VCA arrangement that the claimant proposes would apply at "Starcke". Nor would the sale level of Mr Slater's sales have resulted from other than the level of promotion that a local market would employ. Notwithstanding that, Mr Slater said that his average price of $75,000 assumed a marketing campaign beyond the local market. He priced that campaign at about $3,300 per lot - that is, at a lower level than Mr Beattie proposed. 449. Mr Slater said that his Sales 2 and 3 with frontage to the McIvor River have a common point of significance with the proposed "Starcke" lots which have frontage to the Morgan River. He said, however, that once lots away from the Morgan River are considered there was a loss of the significant river frontage point of comparison. I will, therefore, consider these sales in comparison with proposed "Starcke" Lots 159, 160 and 161. Each of these is priced by Mr Beattie at $215,000 and is described as "Mt Webb vine forest/red soil/creek frontage". Their areas are 100 ha, 104.2 ha and 105.5 ha respectively. I had the advantage of viewing the area of these lots from the air and partly from the ground. I travelled by road through the area of Sales 2 and 3 and past Sale 1. 450. Now whilst Mr Slater's Sales 1 and 2 were purchased essentially as sites in his view, I prefer not to simply make a value judgment as to what figure should be placed on a site less than half of their size, but to consider as part of the process of comparison what the unit area value is. In the case of Sale 2 the price paid was equivalent to $762 per ha and for Sale 3 it was $772 per ha. A direct translation of these prices would mean that an otherwise equivalent block of 100 ha would be worth about $77,000. On the basis, however, that the prices paid for the two sale properties included a substantial site value element in which the purchaser pays for the land as a site where size is important but is not the determining factor, the price of a 100 ha lot would be something more than $77,000. Each of the sale lots would possibly have some potential for further subdivision into two 147 lots though Mr Slater did not mention this in his comparison. The sales lots are better located than the three "Starcke" lots that I am focusing on, but the "Starcke" lots are more attractively vegetated, as I understand the evidence. I think that this point offsets the locational disadvantage to some extent. The best that I can do with this evidence is to say that the "Starcke" lots could be sold into the same market as attracted the Sales 2 and 3 and with a local marketing campaign at a price no greater than $110,000. This price assumes that the "Starcke" lots are not serviced by reticulated electricity, that the spine road is not bituminised, that the Starcke and Morgan Rivers are to be crossed by causeways, not bridges and that bores will not be supplied on lots to make water available to purchasers. Each of these assumptions is taken out of the design and costing evidence provided by Mr Dodds. 451. Mr Slater's suggested average price of $75,000 per lot calculates to a reduction of about 60% on Mr Beattie's prices. On that basis, and assuming Mr Beattie's price relativity to be accepted, the price of the three example lots I have selected would become $86,000. This is a price which might be said to be appropriate in that it takes into account the superior location of the sales and would appear to make an allowance for site value. That reasoning suggests that my adopted figure of $110,000 is too high particularly given that I have not yet assumed any increment due to a Beattie-style marketing campaign. I will, however maintain it as it was the product of transparent reasoning, whereas Mr Slater's approach in arriving at his average figure of $75,000 was not fully revealed. 452. To my $110,000 figure would need to be added an allowance for the "lift" in local price that the marketing campaign by Mr Beattie would be assumed to produce. Mr Slater acknowledged that the marketing campaign could produce "a margin over the real estate value" but nothing more. I ascertain this margin by a consideration of the "Daintree" evidence. The evidence of marketing margin there came from three sources. 453. First, there is the suggestion that the "Daintree" sales before and then after the start of the marketing campaign show a lift in price. This may be so, however, it is difficult to tell from the sales evidence supplied as no features of the lots other than their size is provided. It is not, therefore, possible to say whether the higher prices were paid for similar lots to those sold earlier. I am aware that some of the earlier sales were of cleared lots, but cannot take that comparison any further. Notwithstanding these difficulties, I can say that I gained a general impression that price levels increased following the implementation of the marketing campaign. 454. Second, there were the Camelot sales. The suggestion from the claimant is that the Camelot subdivision enjoyed a "halo effect" from the marketing of "Daintree". Before the 148 "Daintree" marketing campaign took place, the Camelot sales took place at a lower level than was experienced after the campaign started. Some of that movement may have been attributable to an improvement in the market, though the sales evidence is not conclusive. There are some sales and resales which, on face value, might be taken to indicate a rise in the market, however, I do not have evidence as to any improvement that may have added to the value of those lots. The Camelot evidence is inconclusive as to whether the "Daintree" marketing may have contributed to sales levels there. The evidence viewed broadly, however, points to there having been some influence. 455. Each of the above sources suffers in that the process involves an averaging of prices; it cannot properly recognise that there may have been a market change; and it does not involve a comparison of like with like. 456. The third source to which I have referred comprises "Daintree" properties which were purchased during the marketing campaign then, following default by the purchaser, were resold by the mortgagee, but without the benefit of the marketing campaign. A selection of those transactions as follows: Area Date of Price Comments Date of Resale Price Purchase

1.225 19-Jan-82 $40 000 M SOLD TO TREFFLEE & VIDOT 9-9-97 $29 000 1.02 19-Jan-82 $40 000 M SOLD TO CROWDER & VIDOT 4-1-99 $24 000 1.001 25-Oct-86 $25 500 SOLD TO POTYONDY 19-12-97 $29 000 8.18 17-Jul-89 $75 000 SOLD TO GAWRONSKI 16-6-97 $55 000 8.22 24-May-89 $75 000 SOLD TO STATE 8-1-98 $60 000 8.03 11-Apr-89 $75 000 SOLD TO STATE 8-1-98 $60 000 8.9 13-Jun-89 $150 000 M SOLD TO STATE 16-3-97 $65 000 8.69 13-Jun-89 $150 000 M SOLD TO STATE 4-2-98 $63 500 11.2 25-Jul-89 $125 000 SOLD TO STATE 24-6-97 $87 500 16.37 26-Mar-87 $75 000 SOLD TO STATE 13-6-97 $65 500 1 04-Apr-89 $45 500 SOLD TO WETHERILL 18-10-99 $30 000 1.694 16-Apr-87 $100 000 SOLD TO JANSSEN 8-3-99 $55 000 1.001 29-Jul-87 $65 000 SOLD TO MURPHY 25-9-99 $38 500 1.063 11-Feb-97 $45 500 SOLD TO JACKSON 23-3-98 $30 000 1.023 27-Mar-87 $40 000 SOLD TO PELLAGREEN 30-1-98 $30 000 1 28-Apr-87 $37 500 SOLD TO GRANEY & MANN 27-7-99 $26 000 1.01 12-Sep-89 $45 500 SOLD TO GREEN & HARRIS 28-10-99 $31 500 1.033 08-Apr-84 $25 500 SOLD TO HIGGINS & WHITE $29 500 1.013 31-Jul-85 $25 500 SOLD TO SELGE NOMINEES 3-9-97 $36 000 1.023 19-Aug-88 $30 500 SOLD TO MARSHALL 6-9-96 $29 200 1.013 20-Aug-87 $25 500 SOLD TO RADIVOJEVIC 4-11-96 $35 000 149 1.101 03-Apr-84 $25 500 SOLD TO HYNES 9-9-97 $30 000 9.94 11-Aug-88 $75 000 SOLD TO STATE 13-6-97 $65 500 1.024 25-Jul-89 $30 500 SOLD TO B & M LAWSON 25-9-99 $21 000 1.463 16-Aug-88 $57 500 SOLD TO STATE 9-1-97 $62 000 1.169 03-Apr-89 $37 500 SOLD TO STATE 9-1-97 $47 000 3.3 30-Oct-89 $57 500 SOLD TO SCHWAB 6-7-98 $43 000 0.995 16-Jun-89 $75 000 SOLD TO ANDERSON 5-9-97 $45 000

457. A perusal of this list shows some price increases but a greater representation of reductions. Again, I have no evidence concerning any improvements that may have added value to the lots, however, will proceed on the assumption that resales showing price reductions were probably not improved in any substantial way following their original purchase. I will remove price increases and marginal price reductions from my considerations. Another factor that I need to take into account is the state of the market. Evidence from both sides was to the effect that the buoyancy of the 1980's had receded by the early 1990's. I was not presented with clear evidence that values also receded, however, assume that this would have been the case. I think also that in a market not dominated by purchasers with a utilitarian need there would be less price support than in a mainstream market. Another influence on price in the case of the resales listed above may have been that sales were by a mortgagee. I would doubt, however, that the State would have been influenced by that fact. 458. The decline in price evidenced in purchases by the State averages about 21%, whilst private purchasers averaged about 33%. The overall rate is about 28%. Mr Blomfield said that lots that had sold for about $25,500 in the mid-1980's were selling for around $30,000 in 1994. That amounts to a market movement of about 17.5%. Mr Beattie suggested that the movement was greater but did not mention specific figures, so I will adopt Mr Blomfield's figures. I notice that many of the mortgagee sales took place in 1997-1999, however, do not understand the market to have been increasing from 1994. I notice also, however, that most of the original purchases took place in the latter half of the 1980's, therefore assume that price growth from then to the date of resale would not have been as great as would have been the case from sales made earlier. I will adopt a figure of 12% for market growth to take into account the later date of the initial sale of the land compared with the time period considered in Mr Blomfield's evidence. If I apply that 12% to the purchases by the State, the 21% would become 9% (21% - 12%). The private purchaser figure would become 21% (33% - 12%), whilst the overall rate of 28% would become 16% (28% - 12%). I am not inclined to disregard the private purchases even though I am 150 concerned at a possible mortgagee sale discount being present, so will adjust the overall rate down by 1% to cater for this. I conclude, therefore, that the absence of the marketing campaign would have contributed about 15% to the price reduction. Two factors might reduce that percentage further. First, there is the suggestion by Mr Beattie that goodwill, using that term in a positive broad sense, would have flowed to the "Starcke" from the concluded "Daintree" marketing campaign. Though I entertain serious doubts about that prospect, it does seem likely that "Daintree" resales would have been made against the profile created there by the marketing promotion. Second, there is the possibility that resales other than to the State were made under similar generous vendor finance as was provided initially. There is no conclusive evidence as to this, so I am not able to take it into account. A discount of 15% seems to be indicated. 459. A 15% price reduction, if expressed not as a discount but as a premium that would be added to the bare local market value, would convert to about 17.5%. In other words, a broad consideration of the sales evidence suggests that prices of the lots marketed at "Daintree" would have sold at prices about 17.5% greater than had there been marketing on a less sophisticated scale than was actually undertaken. This is a figure that does not sit uncomfortably with the other two methods discussed earlier, however I will lean in favour of the claimant and round it up to 20%. 460. I have already formed the view that the marketing at "Starcke" may be less effective than at "Daintree" because a comparatively more sophisticated market would be targeted and because the "Daintree" lots would have overall been more attractive than the proposed "Starcke" lots owing to their superior location and the attraction of the vegetation and topography there. Another factor to take into account is that the market in 1994 was less buoyant than that which prevailed during much of the "Daintree's" marketing period. Notwithstanding these observations, I will adopt the 20% premium figure for "Starcke". To attempt to adjust this figure further would be to add a subjective veneer to a process that is already dominated by a number of individual judgments. 461. My next step is to add this premium to the $110,000 figure that I have placed on the three sample lots at "Starcke". This would bring that price to $132,000 which I will round up to $135,000. Now this figure is to be compared with Mr Beattie's figure of $215,000 for these lots. The price reduction of $80,000 represents a reduction of approximately 37%. If I lean, again, in favour of the claimant and reduce that discount to 35%, Mr Beattie's gross realisation would become about $29,620,500, or an average of $123,500 per lot in round terms. If I assume that average price included the "lift" above the local market level brought about by the marketing campaign, then it is clear that the marketing and selling 151 costs of about $11,500 per lot has produced a net gain in selling price. There would also be an effect on the selling rate which I will come to shortly. 462. I will now consider this outcome against Mr Beattie's suggested sale prices. A useful benchmark may be the open forest/clearing lots which by far form the bulk of the 240 notional lots. Mr Beattie's price average is $126,967 for 61 such lots. This average would become about $82,500 for these lots. Such a price would be for land which can be used only as a rural lifestyle retreat. As such, the price does not sit uncomfortably in my view with Mr Slater's sales, though I acknowledge it differs from his opinion. Whilst I think his opinion was based on an ungenerous view of the prospects at "Starcke" , I do not fully reject it. His approach does bear some of the characteristics of acceptable valuation practice. The bulk of Mr Beattie's prices for beachfront lots was $375,000, which would on my analysis become $243,750. One such lot was priced at $500,000. This would become $325,000. Now there is no sales evidence that supports those figures, which on their face would appear to be difficult to achieve in the Cooktown area market. A similar comment can be made about the "round hill" notional lot and the estuarine river frontage lots. Mr Beattie's prices for those river frontage lots ranged from $275,000 to $400,000. These prices would become $178,750 and $260,000, respectively. 463. Such a "checking" process would not reveal to the prudent purchaser that the high priced "Starcke" lots had any support in the marketplace unless one was to have recourse to the Cairns market and the notion of affordability which I have criticised earlier. 464. The prudent purchaser would, therefore, in adopting the price structure I have deduced, be placing considerable faith in the marketing campaign and in Mr Beattie's opinions on prices - though an opinion subjected to critical analysis. The purchaser would acknowledge the risk in adopting such a price structure, including the inherent unreliability of the process involved in attempting to isolate the expected "lift" from the marketing campaign. He would, however, conclude that he has, at least, established a platform for pricing the notional lots - whereas there was none apparent in Mr Beattie's opinion, except a surfeit of self-belief. 465. The prudent purchaser may wish to check his conclusions on price level with a valuer such as Mr Slater. He would be advised that the prices estimated by the process I have devised does not value the land, but values the marketing campaign. He would also be advised that there is considerable risk in adopting such an approach as the only evidence to suggest that the marketing campaign would be successful is the "Daintree" experience - an experience of a quite different nature from "Starcke". The approach that I have adopted in attempting to establish the gross realisation that a prudent purchaser would estimate for 152 the "Starcke" subdivision is not one that would be adopted in a mainstream subdivision. It was adopted only because of the state of the evidence in this case. I now turn to consider the estimated rate of sale of the "Starcke" lots. 466. Mr Beattie's marketing campaign is based on a two-year selling period with phase in and out periods of three months each, that is a total of 2½ years. That calculates to a sale rate of 10 per month and Mr Beattie said that he based this rate on his experience in the "Daintree" subdivision. In saying this he did not attempt to provide an analysis of the selling rate at "Daintree", nor to provide any comparison between relevant aspects of the projects which led him to his estimated rate of sale. The evidential value of his estimate appears to be founded in his expertise with particular emphasis on the expertise gained at "Daintree". 467. When I discussed the issue of "Daintree" as a suggested precedent for "Starcke", I expressed the view that its value as a precedent turned on the material similarities between the two. I said there that similarities of product, market, time and price would be the pointed end of the technique which the prudent purchaser would use as a probe. A flight to generalities will not satisfy the inquiries of the prudent purchaser. 468. Mr Slater said that there were no subdivisions in the area of "Starcke" to provide guidance with regard to the rate of sale and expressed the view that a sale rate of two lots per month would be highly optimistic. He said that the local market would be limited and he thought that it would be extremely difficult to interest outside buyers in the blocks. He provided the following table showing transaction history of relevance in the Cook Shire overall: 20 TO 50 HA 50 TO 200 HA 200 TO 1000 HA >1000 HA TOTAL 1993 2 1 2 8 13 1994 6 2 4 11 23 1995 1 5 3 2 11 1996 5 6 2 5 18

469. This evidence supports Mr Slater's opinion as to the size of the local market and of the need to attract purchasers from outside the local area. In that respect the "Starcke" proposal differs from the "Daintree" project which showed in the sales evidence that there was a large market in the Cairns region for the lots produced there. Much greater reliance would therefore be placed on the marketing campaign at "Starcke" bringing purchasers in from outside the region. Mr Slater expressed doubts that this could easily be done describing the challenge as "extremely difficult". Mr Blomfield made inquiries of real 153 estate agents in an attempt to gain an appreciation of market demand for lots of the type the claimant proposes for "Starcke". His results were similar in effect to the views expressed by Mr Slater. He suggested a selling rate of one lot per month, or possibly two. 470. Mr Slater gave a number of reasons in support of his opinion. First, he noted the remoteness of the blocks and in identifying that particular feature he made reference to the distance from Cairns to "Starcke", not the claimant-preferred measure, that is the distance from Cooktown. He said that the potential buyers would be concerned about the "inhospitable climate", that is the high temperatures during the long summer and the wet season, which generally falls between December and April. He added that the wet season influence would make sale inspections difficult for a period. He said that the absence of services, in particular reticulated electricity, would impact upon buyer attitude as residents would need to generate their own power and would need to obtain fuel from Cooktown. He said also that apart from lots such as the red soil lots in the south and the beachfront lots, the product would not be very attractive in the marketplace. I think, however, that other lots such as round hill and those fronting a stream, for example, would also be attractive to some in the target market. 471. The claimant submitted that the fact that 75% of the vacant lots in Cooktown, according to Mrs Campbell, are owned by non-residents is evidence that, contrary to Mr Slater's view, there was a high interest by non-locals in land in the area. I would think for that reasoning to be supported, the historical background to that factual situation would need to be investigated. Such investigation could, for example, show that there had been a high level of interest which led to the purchase of the lands, but that on reflection buyers decided not to build and could not easily sell into a well-supplied market. I cannot say that this is the explanation, but the statistics alone cannot be relied upon to produce the conclusion suggested by the claimant. In any event, we are concerned with rural lots, not town lots. 472. I would think that the points raised by Mr Slater would be taken into account by a person considering the purchase of the "Starcke" freehold for subdivision purposes. That purchaser would be, as I am, quite uncertain as to the extent of the market into which he needed to sell and, therefore, would be equally uncertain as to the impact of those factors referred to by Mr Slater. Undoubtedly, there are people who are willing to live in Cape York and to take such matters as the high temperatures, the wet season and the absence of reticulated electricity in their stride. This does not mean, however, that such attitudes will readily be found in the target market. The prudent purchaser might reason that there will, however, be some purchasers in his target market who would accept that the types of 154 factors identified by Mr Slater form part of the cost of acquiring a parcel of land in proximity to the natural features in the area of the "Starcke"; that there will be some who would treat such disabilities as challenges to be met and that there will be some who will buy in ignorance. Nevertheless, there will be some who would reject the proposition of purchasing land at the "Starcke" for the type of reasons advanced by Mr Slater. The difficulty for the hypothetical prudent purchaser is: what proportion of his target market falls into this category and how will this impact on his rate of sale? 473. The rate of sale at the "Daintree" for the whole of the 18 years of the project and including the sale of 24 lots to the State averaged about seven lots per month. For the period 1982-83 to 1989-90, that is the period of the marketing campaign, the selling rate was just under 8½ lots per month. I have elected to disregard the selling rates after the 1989-90 year where, apart from the 24 sales to the State in 1996-97, sales levels were 5, 0, 5, 2, 0 and 1. In disregarding those years I have decided to focus on the period of the marketing campaign. In 1981-82 48 lots sold showing a sale rate of four lots per month. Whilst these sales were included in both Mr Beattie's and Mr Brett's figures showing 860 lots as having sold during the marketing period, I express a doubt that the campaign was in full swing during the 1981-82 period. The evidence on expenditure shows expenditure for commissions and bonuses only. I will, therefore, disregard this year's sale rate also. During the project, the years which reveal the best selling rates were 1982-83, (12 per month), 1984-85, (9.5 per month), 1985-86, (10 per month), 1986-87, (8 per month), 1987- 88, (8 per month) and 1988-89, (9.5 per month). The later years corresponded with the height of the market boom, according to Mr Brett's evidence. There was a suggestion from the respondent that those lots which came back into the vendor's hands owing to default by the purchasers should be taken into account in adjusting the rates of sale at "Daintree". There is merit in this suggestion. After all, if credit is to be given to the marketing campaign in influencing the number of purchases, then account needs also to be taken of initial purchases which fail in due course. The number of such failures at "Daintree" was 53 or about 6.5% of the sales which took place during the marketing period under consideration. If I apply that figure to the averages listed above, 12 becomes 11.2 per month, 9.5 becomes 8.9 per month, 10 becomes 9.35 per month, and 8 becomes 7.5 per month. 474. No explanation was forthcoming from Mr Beattie as to why the rate of sale at "Starcke" ought to be better than that at "Daintree" which, as I have said earlier, appeared to have more attractive selling conditions. He did say that there were occasions when product was not available for sale, however, the evidence shows no shortage of subdivided 155 lots during the main period of selling apart from in the 1980-81 year (Exhibit 157). The only difference that I can find which favours "Starcke" is where Mr Beattie indicated that whereas at "Daintree" there were practical and legal difficulties in selling to foreign buyers, the position had changed by 1994, thus expanding the pool of potential purchasers. 475. Mr Beattie said that potential buyers would have general knowledge of the area and supported that suggestion by reference to the "Daintree" experience. There he found that many people had been to Cairns or Port Douglas on holidays so knew the area. I was not presented with data showing visitation to the Cairns/Port Douglas area compared with the Cooktown area, but would think that the numbers would substantially favour Cairns/Port Douglas. Mr Beattie's point also tends to support the view that there is a ready association between Cairns and "Daintree". 476. Mr Nevard said in his report: "It is not unreasonable that George Quaid Holdings Pty Ltd could expect a market response to the sale of land at 'Starcke' of the order of that which it achieved at the 'Daintree'." That opinion seems to be based on there being people with an interest in buying land for its intrinsic environmental value and on sales at "Daintree" providing a benchmark for such purchases. How the market at "Daintree" was thus identified and why only one point of claimed comparison need be made between "Daintree" and "Starcke" are questions not addressed in Mr Nevard's evidence. 477. Both Mr Blomfield and Mr Slater said that the larger more expensive 8-ha lots at "Daintree" were the slowest to sell and comprised many of the lots unsold at the end of the marketing campaign. In saying this they were not referring to what I have called the "special" lots which Mr Quaid said he withheld from the market. A perusal of the list of sales provided by the claimant (Exhibit 77) is consistent with the respondent's view. There is also evidence (Exhibit 153) which clearly shows such lots having been available for sale much earlier in the marketing campaign. I conclude that higher priced lots at "Daintree" did sell at a much slower rate than did the 1-2 ha cheaper lots. Mr Beattie said that the marketing campaign did not target the higher priced market which tended to create its own momentum. Unfortunately, I was not told why this market was not also targeted. Whether a marketing campaign structured differently could have accelerated the rate of sale is really unknown. This evidence does, however, tend to indicate that the ability to sell lots will diminish as the price goes up and that, therefore, the rate of sale at the "Starcke" would, on this factor alone, be much lower than that experienced at the "Daintree". However, it should be noted that my view that the gross realisation ought to be reduced means that, correspondingly, the rate of sale would gain support. Nevertheless, the average sale price that I have settled on remains substantially higher than the average at "Daintree" having 156 regard to my adopted prices. As a general proposition, price would act as a discriminating factor - the higher the price, the smaller the market - the smaller the market, the lower the rate of sale. In addition, the buoyant market period for North Queensland has passed, thus presenting a less robust marketing environment than was enjoyed at the "Daintree" for an important period in its marketing. No amount of marketing genius can create buoyant market conditions. 478. Mr Slater also said that the rates of sale at the "Daintree" were achieved in circumstances in which vendor finance was provided at 12.5% .a. a more attractive rate than market rate. By comparison, Building Society rates ranged from 14.8% in December 1982, trending down to 13.25% in December 1984, then up to 17.25% by January 1990, though with some fluctuations in between. I have concluded earlier that it is appropriate to take into account the prospect that a prudent purchaser would see the benefit of providing vendor finance, therefore, Mr Slater's comment on the "Daintree" rate of sale being artificially induced by this feature is not a reason for assuming a lower rate of sale unless the vendor terms to be offered at "Starcke" are to be comparatively less favourable than those offered at "Daintree". 479. The prudent purchaser would take into account the impact that the wet season may have on the opportunity to inspect the lots. Mr Beattie gave evidence that, at least on one occasion, selling continued during cyclonic weather at "Daintree", however I think it would be a cavalier marketer who would assume that potential buyers should be taken on inspections at "Starcke" during such weather. Cyclones aside, the inspection of the land contained in most blocks would be all but impossible during the "wet season" given the nature of much of the "Starcke" freehold country. That is a reality that would impact on the rate of sale. 480. Mr Beattie said that the "goodwill" generated by the "Daintree" project would have flowed on to the "Starcke" marketing campaign. That proposition was not fully explained. The "Daintree" experience would, however, have provided a useful model for marketing remote rural retreats in North Queensland. Certainly Mr Beattie would be the greatest beneficiary of that experience, however, a prudent purchaser might consider as a live possibility the prospect of retaining Mr Beattie's organisation to carry out the "Starcke" marketing. Alternatively, an observer of the "Daintree" methods could probably be retained. 481. It is quite clear that the proposed subdivision would not be marketed to satisfy some unmet demand in the Cooktown region for rural residential or farming land. If any sales are to eventuate beyond the level indicated in the local market, it would need to be to 157 people outside the area. They would be attracted only if the lots provided a special feature such as environmental significance, a wilderness location or suchlike. The "Starcke" lots can justifiably be presented as having such features - if not on all of the individual lots, at least in the region of them. Nevertheless, it is my appreciation of the evidence overall that Mr Beattie's rate of sale is overly optimistic if I use the sale rate at "Daintree" as a basis. Indeed, there was no other basis provided in the evidence. A prudent purchaser would be mindful of the various differences between "Daintree" and "Starcke" referred to earlier in these reasons, including the differences in the marketplace. He would, I think, form the view that with a less ambitious pricing regime than that proposed by Mr Beattie, but with his suggested marketing campaign including vendor finance, he would nevertheless achieve a higher rate of sale than the two lots per month envisaged by Mr Slater and the one or two proposed by Mr Blomfield. 482. A prudent purchaser considering subdivision of the "Starcke" freehold as proposed by the claimant would not expect to better the rate of sale achieved at "Daintree" during its marketing campaign. The best it could achieve then is 8 lots per month average. For the various reasons discussed above, however, this rate would be discounted. The level of discount is a matter of judgment, however, I will lean in favour of the claimant and adopt a selling rate of five lots per month. In so doing I appreciate, again, that this imposes a large expectation on the marketing campaign and therefore involves substantial risk. 483. I should say that in drawing this conclusion, I have not totally disregarded the opinions expressed by Mr Slater and Mr Blomfield. Mr Blomfield has substantial experience in North Queensland including Cape York - his opinion should not be dismissed lightly. I think, however, that their suggested sale rates were influenced by the choice of a relatively inexpensive marketing campaign and without attractive vendor finance. Were I to approach the question of sales rate by using their opinions as my start point and by making allowances for the positive feature of the project not identified by these gentlemen, I would have arrived at a figure less than the one settled on. I have elected, however, to adopt a more favourable view of the project than that adopted by Mr Slater and Mr Blomfield. 484. A further point I should record is that, whilst I have drawn a conclusion unfavourable to the claimant in terms of the precedent value of the "Daintree", there is no other subdivision project mentioned in the evidence to which I could refer in striking a selling rate. In his original estimate of rate of sale, Mr Slater disregarded the "Daintree" example and based his estimate on his general knowledge of rural residential subdivisions. As the case proceeded, however, he focused more closely on the selling rates at "Daintree", 158 particularly for the more expensive 8 ha lots. His analysis convinced him that his suggested selling rate of two per month at "Starcke" was, indeed, optimistic. This analysis appears not to take into account that the main marketing strategy did not focus on this product - though I would think that purchasers would have been attracted by the publicity surrounding "Daintree" at the time. Time 485. An important part of the process of valuing land using the DCF method involves an estimation of the time that might be taken to receive subdivision approval, to carry out construction and to conduct selling of the lots. There was no dispute between the parties as to the construction time that would be involved were the claimant's development works to be assumed. Mr Dodds proposed a two-stage construction with the first taking five months and producing 93 lots starting in the south and the second taking six months and producing 147 lots. I have discussed selling rates earlier and have concluded that sales would take place over four years at five lots per month average. Mrs Campbell provided Mr Brett with the estimates of time involved in the subdivision application process, whilst Mr Slater relied upon the advice of Mr Humphreys in that regard. 486. There is a small difference between the parties as to the time that might be involved between the developer having made his initial inquiry with the CSC and lodging an application to be issued the terms of reference; however, I would elect to adopt the 10 days estimated by the claimant in preference to the 14 days included in Mr Slater's report. This would, however, make no difference to my final time estimate. Each of the parties allowed the statutory 20 days for the Department of Local Government to prepare the terms of reference for the EIS, however, Mr Slater added a period of 20 days to allow the local government to coordinate the terms of reference between the referral agencies. 487. Mrs Campbell provided for EIS preparation to commence in late April 1994 and to conclude eight weeks later. It appears that Mr Finney was involved in estimating this timeframe. Mrs Campbell said that she was aware of the EIS process taking longer in many cases, but said that in such instances the applicant was often poorly resourced or hesitant in going about the task. In her estimation of an eight-week timeframe she assumed a motivated developer and assumed also that Aboriginal community representation would be readily arranged. Her time estimate, she said, would be the minimum in such circumstances, though she acknowledged that involvement of Aboriginal groups in such processes had caused delays in many Cape York projects. Mr Slater's estimate for the same timeframe was 183 days and this was based on Mr Humphreys' advice which included some time for the preparation of the application for subdivision. As I understand Mrs 159 Campbell's evidence, she allowed that application to be prepared in tandem with the EIS. Whilst, undoubtedly, some of the application could be prepared in the manner she proposed, I would think that some time ought to be provided for the finalisation of the application following the conclusion of the EIS. Dr Memmott estimated a six-month timeframe for the completion of the Cultural Heritage and Social Impact Surveys, saying that that would be a minimum timeframe. The Cultural Heritage survey is to be conducted over a substantial area involving historical Aboriginal interest and an absence of previous work in the area. The State Government could be expected to have an interest in that work, though I think that interest would extend only to ensuring appropriate terms of reference, rather than in directly extending the time of the EIS. Mr Humphreys noted that if the VCA mechanism was to be employed, the EIS process would involve a quite detailed environmental survey across the land. That survey would also need to be directed to the engineering works and the need to ensure that roads and drainage works did not impact on sensitive or significant areas. He estimated a time of at least six months to prepare this EIS and a similar time frame to carry out negotiations with interested Aboriginals. Dr Memmott said that a Cultural Heritage survey of the "Starcke" freehold would be estimated to cost approximately $135,000 and a Social Impact assessment study would cost an additional $55,000 approximately. These costs did not include the cost of surveyors marking boundaries and roads. These costs have been provided for elsewhere. What would be needed though, would be a provision for time for such survey work during the EIS process. Dr Memmott's estimates of time and cost were based on his experience with other projects, however, they are projects which heralded a much greater level of impact than the proposed "Starcke" subdivision. I acknowledge that the exercise to be undertaken on the "Starcke" freehold could not be undertaken as a desktop study, given the absence of previous study on the site, however, I think that expenses somewhat less than those proposed by Dr Memmott would be incurred and that the time involved would be somewhat less. The Cultural Heritage survey described generally by Dr Memmott appeared to me to be of greater intensity than would be warranted by the subdivision project proposed. Intensive work would be needed in areas proposed for roads and on areas nearby if sites are encountered in road corridors as presently identified. The work would, I think, be less intensive on the proposed lots if I am correct in assuming that the bulk of them would be put to a lifestyle residential use. Survey of potential house sites would be warranted. 488. Mr Humphreys estimated a total of $100,000 for the above work, though I am uncertain whether this included the cost of an appropriate consultant to assist in the 160 negotiation process. Nevertheless I think that, on balance, Mr Humphreys' estimate is to be preferred. The matter that I think would be of real concern to the prudent purchaser would be the time factor. Even assuming that a lesser period than Dr Memmott's estimated six months is allowed for the field work, there is still the matter of negotiations which would, to my mind, be carried out in sequence following the bulk, if not all of the field work. The aggregated time allowed would therefore, on both his and Mr Humphreys' estimates, be greater than six months following receipt of the terms of reference for the EIS. I note that in the claimant's approach to the valuation of the freehold land such expense and time is not separately taken into account. In short, I see no reason to disturb the estimated 183 day period for preparation of the EIS unless it was to enlarge the time. 489. Mrs Campbell allowed four weeks for State agencies to assess the outcome of the EIS (s.8.2(9) and (10)). No similar timeframe appears in Mr Slater's time estimate. I assume that the total six-month period estimated by Mr Humphreys includes agency assessment. Mr Humphreys observed that the stage at which assessment is carried out by State agencies can be one that results in delays. I would think that there would be every prospect of such delays arising in the instant case as there would be a need for a consideration of the terms of the individual VCA's at some stage in the process and I would think for a meaningful local government condition to emerge from the application process that it would be probable that the VCA negotiations would be carried out at the conclusion of the EIS process. That would be in the interest of the applicant/developer as I understand the claimant's position. There is no statutory provision allowing for an extension beyond the four-week period referred to by Mrs Campbell and I would think that, apart from the VCA issue, CSC would not be tolerant of any extension. 490. Mrs Campbell proposed, given her timeframes as outlined above, that the application to Council would be made in June 1994 and would be considered at the August meeting of CSC. In the case of an application which involves the production of an EIS, the local government has 60 days in which to decide the application (s.8.2(11)), otherwise the application is deemed to have been refused, giving rise to applicant appeal rights. Mr Slater included an estimate of 60 days for local government to decide the application, however both sides acknowledged that CSC could have extended the decision-making period beyond the statutory 60 days, provided it notified the applicant (s.8.2(11A). Mrs Campbell's experience was that CSC usually dealt with applications during the statutory timeframe, however, it is important to recall that the proposal suggested for the "Starcke" freehold is of a type not previously considered by CSC. For his part, Mr Humphreys was not confident in the local government processing the application within the 60-day period. 161 There would be a need to receive comments from referral agencies and to consider these with there being a prospect that the local government may request further information on certain aspects. 491. If I leave unchanged the time period for 60 days for the local government to consider and decide the application, the total time taken, according to Mrs Campbell's estimate, would be about 22 weeks or about five months, whilst the estimate in Mr Slater's report adds up to a total of about 9.7 months. Neither of those time estimates include any allowance for an appeal against conditions or of "blocking" tactics being employed by an interested Aboriginal group. Taking such possible delays into account, Mr Humphreys suggested a time estimate of 24 months, however, thought that a prudent minimum time estimate would be 12 months, not the period of 9.7 months that results from a summation of the individual timeframes estimated. Mr Slater assumed that construction would not commence until after the conclusion of the wet season commencing in December 1994 or thereabouts, so adopted a May 1995 date for commencement of construction. If I adopt his estimated timeframe of 9.7 months between the date of contract of 11 March 1994 and the date of an assumed approval emerging from the local government, that timeframe would expire in January 1995 in the midst of the wet season. It follows that construction, on his estimate, could not commence until May 1995. 492. Mr Brett's DCF exercise appears to have allowed for construction of Stage 1 to commence in August 1994 proceeding up to December of that year, though he did mention the prospect of starting in May to July of that year. The estimate of an early commencement is based on an assumption that subdivisional approval would be forthcoming, that a prudent purchaser/developer would act on that assumption and would undertake certain fast-tracking steps. He would lodge an application for approval of engineering works which would allow the commencement of road construction and drainage works during the timeframe proposed by Mr Brett. At the time the claimant was given approval to freehold the land, a condition was imposed requiring the construction of a road through the freehold land. I was not provided with evidence showing the actual terms of that condition of freeholding approval, however, there was a requirement that construction be secured by the lodgment of a bond with the local government. Initially that bond was for the amount of $100,000, subsequently reduced to $10,000 on the application of the claimant. I take the quantum of the bond as an indication that the standard of the road construction would not be higher than that proposed by either side as part of the subdivisional works. The location of the proposed spine road is the same as the current dedicated road excepting for a large part of the proposed road construction in the freehold 162 tail where, in order that lots may be produced on both sides of the proposed spine road, the claimant's plan shows the new road following an alignment to the east of the existing dedicated road. No issue was raised by the respondent as to the location of the new spine road in its altered alignment. I should mention also that no point was taken by the respondent concerning the time that might be involved in closing that part of the old road which is not on the alignment of the new spine road, nor with respect to any amount that might be required as a purchase price for the land contained in the closed road. 493. Mrs Campbell said that CSC would have been amenable to work being carried out on roads external to the "Starcke" freehold and on gazetted roads internal to the site, as long as an application was made for such works to be carried out with the application including plans, the name of a reputable contractor retained to carry out the work and, I assume, some assurance that sufficient funding would be available to complete the works. I question, however, whether a properly advised Council would allow construction to proceed internal to the site before the Cultural Heritage survey was completed and all heritage sites identified. A prudent developer would also be concerned at inviting conflict with interested Aboriginals aware of the subdivision proposal. A particularly important question with respect to the assumed developer carrying out roadworks prior to the issue of subdivisional is whether a prudent developer would undertake these works in anticipation of the approval being provided. 494. The claimant approaches that question in two ways. First, it is the claimant's position that the roadworks are required in any event because of the obligation arising under the freeholding condition, so the construction of the new spine road would not constitute anything other than the performance of an existing obligation. The difficulty with that proposition is that the new spine road does not simply comprise an upgrading of the existing road, but comprises new works. Certainly I can conclude that the new works would probably be sufficient to meet the standard of that expected in the freeholding condition, however, it is not clear to me on the evidence that a prudent developer would see that work as comprising nothing more than the discharge of an existing obligation. It seems that the standard of the proposed spine road is substantially higher than that anticipated in the freeholding condition given the construction cost estimates provided by Mr Dodds. It follows, in my view, that a prudent owner of the freehold would construct the required road in satisfaction of the freeholding condition only if he was required to or if it was thought that the granting of suitable subdivision approval was a mere formality. 495. The second reason advanced by the claimant as to why a prudent developer would undertake construction of the spine road in advance of subdivisional approval is that the 163 advice he would have received from Mrs Campbell and Mr Bartsch would have been that subdivision approval was predictable. My consideration of the town planning evidence, however, leads me to conclude that a properly advised prudent developer would entertain a serious concern as to the likelihood of receiving subdivisional approval and the form any approval might take. I place that concern at a level that would lead the prudent purchaser/developer to conclude that it would be appropriate to defer construction until approval was forthcoming particularly given the Aboriginal interest I have referred to above. 496. It was also suggested by the claimant that the timeframe involved in the preparation of the EIS could be contracted by the developer commencing work prior to receiving the formal terms of reference. No doubt some preliminary work could be carried out, particularly with regard to the natural environment, however, I doubt that it would be prudent for an intending developer to embark upon the expensive and potentially difficult aspects of the preparation of the EIS - and I refer particularly to negotiation with the interested Aboriginal community. In the result I think that there would be some marginal time gain, only, in preparation of the EIS if some preliminary work was carried out. 497. Even assuming that a prudent purchaser/developer was to commence construction of the spine road prior to subdivisional approval emerging, I question that it would be wise to initiate a fully blown marketing campaign to start in, say, September 1994, assuming Mrs Campbell's timeframe for subdivisional approval; or in January/February 1995, assuming Mr Slater's timeframes. It would certainly be unwise for marketing to commence before subdivisional approval emerged and I would think that there would be real risks associated with attracting prospects to inspect the land during the wet season, then being precluded from carrying out inspections because of difficulties of access either onto the subdivision or onto individual lots. 498. Mr Brett said that he "built into" his DCF the prospect of a delay of a month or two "at the outside" to accommodate the prospect of legal action. I am not sure exactly where that timeframe is built into the DCF, however, assume that it is covered by the prospect of the developer employing the bonding processes provided for in s.6.4 of the P & E Act. Mrs Campbell said that CSC would probably have acceded to a request to bond uncompleted works where it was satisfied that works were substantially completed and/or that no-one would have been disadvantaged by the early release of registered title prior to all engineering works having been completed. Mr Beattie said that marketing and selling of the proposed subdivisional lots could take place before construction was completed. He 164 even saw it as an advantage for construction to be under way whilst he was involved in showing prospects over the land. I accept this evidence. 499. Another fast-tracking suggestion from the claimant's side was that the prudent purchaser/developer would arrange VCA's or at least agreements similar in form and content prior to the involvement of the State. I think that some preliminary work could be done, but that some time would need to be built into the process to allow for consideration of the EIS by the Minister's officers and for final approval by the Minister to emerge. No statutory timeframes are provided for this work. I note that there is no provision in the time estimates provided by either Mrs Campbell or Mr Slater for VCA negotiations to be carried out. I think that much of that work could be carried out in parallel with some of the activities required before the subdivisional application is formally considered by the local government, however, some VCA work, I think, would have the effect of extending the EIS period. 500. Throughout his valuation and his discussion of the matter in evidence, Mr Brett proceeded on the basis of a sale of the "Starcke" freehold to the claimant "or a similarly experienced developer". He approached the issue of time required to gain approval and commence development on the basis that Mr Quaid was a proactive person and not one who would make allowances for the prospect of a failure or for delay in any of the steps involved in the process. I do not doubt that Mr Quaid may act promptly, even peremptorily, in developing the land. The construction of the Southedge Road shows him to be a man of action. Indeed, others may be found who would act similarly. Implicit in Mr Brett's approach is the proposition, however, that such action men are the equivalent of the hypothetical prudent purchaser found in the Spencer case. I do not accept that proposition. Any purchaser considering the "Starcke" project would be of entrepreneurial bent but I place a limit on the level of risk that such a person would be willing to undertake. Part of Mr Brett's reasoning was based, I assume, on his acceptance of Mrs Campbell's advice that subdivisional approval would be all but a certainty and on an assumption that found its way into the claimant's case that subdivisional approval would not contain any conditions unacceptable to the developer nor would there be any loss of yield. Importantly, it was assumed that there would be no time delays beyond the very strict timeframe proposed by Mrs Campbell and in particular, given the conclusion concerning only benign conditions being part of the subdivisional approval, that no provision would need to be made for any time delays including any prospect of there being any need to conduct negotiations with the Council or even to pursue an appeal. I am of the view that there is a tension between the suggestion of certainty of approval and of that approval not being 165 subject to unacceptable conditions on the one hand, together with a suggested willingness by the developer to fast track activities at substantial expense; and on the other hand the suggestion by Mr Brett of a profit and risk allowance of 75% discussed later in these reasons. 501. Mr Slater's time estimate of 9.7 months and a construction commencement in May 1995 appears to assume that the prudent developer would carry out site investigation, geotechnical survey, land survey, design and estimation and calling of tenders all during the wet season. Equipment would be moved onto the site immediately following the conclusion of the wet season - assuming that can easily be identified. I have assumed that would take place in April. Mr Slater's estimate also assumes the prospect of some EIS work being carried out at the commencement of the wet season - both an expensive and difficult activity, according to Dr Memmott. In such circumstances Mr Slater saw his 9.7- month time estimate as being a minimum, but thought that there was the prospect of delay both in the risk of legal action by Aboriginals or in the need for the proponent to appeal to the Planning and Environment Court. He was inclined to the view that a prudent purchaser would take a pessimistic view of the expected time line and would negotiate a price reflecting the maximum, not the minimum time estimate. The maximum, according to Mr Humphreys' estimate was 24 months, however, Mr Slater did not adjust his construction commencement date from May 1995. I think that his approach is an appropriate one, for the prospect of legal action either in the form of an appeal to the Planning and Environment Court or actions by third parties should not be treated as a reality, but should be assessed as a risk associated with the project. Accordingly, some allowance needs to be made in the estimation of the appropriate profit and risk allowance that should apply to the project. 502. In the result, I think that the time line of 9.7 months with construction commencing in May 1995 as proposed by Mr Slater is eminently reasonable, even leaning in favour of the claimant. On the other hand, I think that the time estimate proposed by Mrs Campbell and Mr Brett is, notwithstanding the possible fast-tracking steps that might be taken, a very ambitious view of timeframes and not one that would be acceptable to a prudent purchaser. 503. Mr Brett put forward the proposition that if the timeframe to obtain subdivisional approval was correct at 9.7 months as estimated by Mr Slater, this would not have been relevant to his DCF as the claimant need not outlay the purchase price of $15,000,000 suggested by him as the value of the land. He could simply hold the land and wait until the time for development came. (If that were the case, then I must wonder at the suggested use of fast-tracking techniques.) I think, however, that this is a proposition that is wrong in principle. All that a DCF is designed to do is to identify the market value of a parcel of 166 land. In the event that comparable sales evidence was available, those sales would be relied upon in settling on that value. No further allowance would be made for the fact of ownership of the land by way of adjustment of the price to cater for the approval period. A sale is assumed and that sale is taken to reveal the market value. It follows that in the absence of comparable sales, that is when a DCF is employed, there can be no justification for any adjustment of that exercise on the basis that the land was at the relevant date owned by the claimant. Development Works and Costs 504. The claimant's estimates of the cost of development works were made by Mr Dodds who provided the design and specification of the works, assisted by Mr Williams who provided the cost estimates. Their estimate of the total development costs was $6,329,267. The State's estimate was provided by Mr Potter, the engineer who designed the works, and Mr Grigg who provided the cost estimate. The relevant State estimate was $21,800,000, however, it should be noted that $1,420,954 of that amount was allowed for "other costs", which includes many items not included in the Dodds/Williams estimate. They were provided by others and were included in Mr Brett's DCF exercise. These are discussed at paras 639 and following. 505. Before I become enveloped in the issues which balkanised the parties with respect to the costs of development, there are some preliminary comments I should make. First, I am not, in my consideration of costs estimates, concerned with the type of precision that might be needed in a construction contract being entered into for the purpose of the construction of the required works, but with the level of inquiry that might be expected from a prudent purchaser when considering the purchase of the land for the purpose of subdivision and resale in the manner proposed by the claimant. (Hall and Hedge v. Chief Executive, Department of Transport (1997) 18 QLCR 284). Second, the differential between the two estimates can partly be explained by the inclusion of different design items in each, for example, bitumen versus gravel road paving, bridges versus concrete inverts, however, the extent of the remaining differences is a matter of concern to me. 506. This is not a subdivision with sewerage and reticulated water and such like, but is essentially a road construction project involving the construction of the "spine road" in a north-south direction up what is virtually the middle of the freehold, together with some internal roads. It may be convenient to record here that there will be about 95.4 km of road in the subdivision. The roads will be to a 80 kph standard and will be crossed by numerous streams or flood paths including the Starcke and Morgan Rivers. Mr Williams described the construction task as "one of the simplest types of earthworks road formation(s)" that he 167 had encountered. That the issue of the costs of such an undertaking should absorb so much trial time and so much evidence reflects poorly on the parties' effort at finding at least a partial resolution. It also points to the inadequacies of the Rules of Court which applied prior to 1 July 2000. 507. Whilst the respondent relied mainly on the Potter/Grigg evidence in support of the $21,800,000 figure, there was evidence of an earlier (June 1997) estimate made by SKM in the amount of $11,497,134. Mr Potter did not contribute to that report, but was asked to comment on it in his capacity as a consultant, not then employed by SKM. Following consideration of his comments, a further estimate was made and a November 1997 report includes a total estimate of $11,719,493. The only difference between the November 1997 estimate and the one made in June of that year related to stormwater (increased from $3,333,285 to $3,526,635) and contingencies (from $1,170,891 to $1,199,900) to take into account the increased stormwater costs. 508. There was a great deal of evidence provided in the form of SKM files. The material that was of interest to the claimant included various documents that referred to items relevant to the costing of a 238 lot "Starcke" freehold subdivision. With limited exception, the quantities and costs recorded in file documents as being under consideration were generally lower than those in Mr Potter's report. When Mr Potter took on responsibility for the project he introduced additional items (eg hydromulching, soil testing), larger quantities (eg earthworks) and higher costs (eg bridges). He attempted to justify each element of his report and generally referred to the earlier work by SKM as being what I would summarise as "work in progress". He also said that for its earlier costings work SKM did not have independent expert input such as that provided to him by Mr Grigg. 509. Perusal of the earlier SKM reports and comparison between them and Mr Potter's report reveals, with respect to many items of cost, substantial variation in either the dimension and volumes of the work or the cost of an item of work. Further perusal of the SKM files relevant to the project shows a collection of figures of dimensions/volumes and costs whose variation over time invites use of the word "erratic". There was copious reference to documents in these files by the claimant, the implication being that the contents of Mr Potter's report must be considered suspect. After all, his report is an adaptation or refinement of this earlier work. The further point is that Mr Potter's overall cost is greater than the earlier SKM reports. I think that the earlier work of SKM is best looked at not in the form of the various file notes but in the form of the June and November 1997 reports. Each of those was the culmination of the internal work, though each was 168 deficient in certain respects. Mr Potter's work started with these reports, not with the various file notes. 510. An increase in cost estimates from the earlier SKM reports to Mr Potter's report can, it is said by the respondent, be justified on three bases:  Mr Potter has introduced additional items (eg bitumen) raised by him in his comments on the June 1997 report, but not costed in the November report.

 Mr Grigg has now supplied costings which are, I accept, from a more expert source than those made by SKM internally.

 Mr Potter has provided the final report and appeared to be cross-examined on it. By comparison, the earlier reports were more of a preliminary nature in his view.

 Mr Russell, the author of the 1997 reports, acknowledged in the November report that further work would need to be done to provide a complete product.

511. There is merit in each of these points. Equally, I think, there is merit in the claimant's point concerning the reliability of Mr Potter's report. After all, it presumes to suggest particular figures when, in truth, the detail of the project is not known. There is no ground survey, no geotechnical investigation and no final design. For these reasons and others, both Mr Potter's report and that provided by Mr Dodds, contain figures and propositions that rely on a range of assumptions and a high level of professional judgment. That is the nature of the task. 512. The author of the earlier reports was not called to give evidence because of illness. The result is that I prefer, except in particular instances that I will cite, to concentrate on Mr Potter's report and will judge it on its merits. 513. Differences between the parties arose out of both the standards of the development works to be carried out and the appropriateness of the cost estimates for certain items. I will deal with the issue of development standards, which included: 1. The sealing of the main internal or "spine" subdivision road at a cost of $1,446,260 according to Mr Potter.

2. The upgrading to a gravel standard of 36 km of external road from the intersection with the Hopevale Road, then to the Morgan River, at a cost estimated by Mr Potter at $3,600,000 compared with an upgrading of 7 km of external road proposed by Mr Dodds and estimated at $306,630.

3. The allowance by Mr Potter for three low-level concrete bridges at a cost of $1,490,000 opposed to concrete inverts or causeways included in Mr Dodds' material.

169 4. The number and size of crossroad drainage culverts which ought to be constructed within the development area (discussed below under the heading "Stormwater).

5. The question of the desirability of providing reticulated electricity (discussed at paras 280 and following).

6. The provision of bores at a cost of $4,000 per lot as included in Mr Potter's assessment. No similar allowance was made by Mr Dodds.

514. In my discussion on the matters of lot prices and selling rate, I proceeded on the basis that the development works for the suggested subdivision would be as proposed by Mr Dodds. Given also the impact on the value of the "Starcke" freehold of my conclusions on lot value, selling rate and time to gain subdivision approval, there is little requirement for me to consider development costs before carrying out adjustments to Mr Brett's DCF exercise. I will, however, discuss certain aspects of the development costs issue so that I can have a full appreciation of the risks associated with the projects. I will also express my opinion on certain issues where I conclude that Mr Dodds' costs ought to be adjusted; however, will adopt a best case scenario in my adjustments to Mr Brett's DCF. That is, I will employ Mr Dodds' costings without adjustment, not because I conclude that his costs are all to be preferred, but because I see no need to proceed to a conclusion on each item of cost. 515. The claimant submitted that Mr Dodds was concerned with the costing of a "wilderness development", whereas Mr Potter focused on a rural residential subdivision in which he had regard to the traditional wants, needs and desires of such a development. Both of the 1997 SKM reports bore the description of being reviews of "proposed rural residential subdivision on 'Starcke' property" and Mr Potter, in his report provided in evidence, provided material which was simply a further development of both the content and format of those earlier SKM reports. The claimant's suggestion is that he, therefore, was concerned only with a "rural residential" subdivision not with a "wilderness development". 516. I find some support in the evidence for the suggestion that Mr Dodds had in mind a "wilderness subdivision". He was, however, guided by the advice of Mr Bartsch in choosing causeways against bridges, gravel sheeting against bitumen sealing and upgrading of the 7 km, not 36 km, of external roads. That advice was given as part of a site inspection carried out by Mr Dodds and Mr Bartsch before Mr Dodds completed his report. His choice of drainage culvert design and specifications was, I think, more a matter of an engineering decision, though the difference between Mr Dodds and Mr Potter was really 170 concerned with the assumed water flows to be managed. Perhaps the only concession to the proposal being a "wilderness subdivision", in Mr Dodds' evidence, was that he did not include bores. As I appreciated the evidence of Mr Dodds and Mr Bartsch, they were concerned with the construction of roads with associated stream crossings and culverts - the construction leading to the subdivision of land and the eventual settlement, on that land, of a number of new buyers/owners. Whether that work might be described as a rural residential subdivision or a wilderness subdivision would, I think, have meant little to these gentlemen. Mr Dodds, for example, adopted a road construction technique which included the digging of borrow pits on land near the road construction, whilst Mr Williams assumed a road stripping and clearing method which produced windrows of cleared vegetation alongside the road. Such techniques are common in the construction of roads but do not appear to me to provide any concession to a suggestion that the task at hand is associated with "conservation" or "wilderness" allotments even though Mr Bartsch said that borrow pits would need to be located in a "programmed", not a haphazard way. 517. I think that Mr Dodds was largely motivated in his design and in the construction of the works by finding the least cost to his assumed client, the developer. That is a worthy attitude to adopt. Mr Potter, on the other hand, appeared to me to place himself in the position more of the Shire Engineer that he had been, but one attempting to both protect the Shire and get the best out of the project in terms of roads and services. 518. Mr Beattie said that, as it was proposed that the "Starcke" lots be sold into the "environmental" market, the level of development proposed by Mr Dodds would meet the needs of the purchasers. They would expect nothing more in his view. I think, however, that the matter is to be approached not from the perspective of the marketer or the developer, but from that of the properly informed local government. 519. Chapter 24 (CSC Planning Scheme - Subdivision of land) was supported by a Policy on Engineering Requirements which were adopted in 1985. The policy was "provided for general guidance" of those involved in subdivision of land and provided that "specific conditions may be set in addition to the General Conditions if considered necessary by Council. Council may consider relaxation of this policy in exceptional circumstances." The policy applied to the "Starcke" freehold, but did not apply to land outside a 100 km radius of Cooktown. 520. The policy said that the primary function of the "Rural (General Farming)" zone was "to be used primarily for grazing and extensive farming" and I would understand the policy to be formulated on that basis. Mr Potter was the author of the policy and said that it was not prepared on the basis that it would apply to large-scale subdivisions of the type 171 proposed by the claimant for the "Starcke" freehold, which was leasehold land under the Land Act 1962 at the time the policy was adopted by CSC. 521. The policy provided for new roads and for upgraded existing roads to be gravel paved. Other specifications were provided, including requirements for drainage. There were also requirements for water supply. Bitumen Sealing of Spine Road 522. Mr Potter said in his report that "there is a real possibility that Council would ask for a sealed bitumen road along the main road from the Morgan River to the Jeannie River mouth". As the main road actually leaves "Starcke" at a point below the Jeannie River mouth, I assume that Mr Potter's estimate of cost is to that point. Based on his assessment of the likelihood of a sealed bitumen road being required, Mr Potter included an estimated price of $1,446,260 (final trim and bitumen seal) in his report to cover the cost of sealing. Mr Russell had mentioned the "real possibility" of Council requiring bitumen sealing, but did not include any costing in his November SKM report. 523. Mr Potter's opinion concerning the possible requirement for sealing was based on his appreciation of the vehicular usage that the spine road would experience. As discussed earlier, he assumed that the subdivision would support between 500 and 1,000 persons and estimated the usage based on each lot being occupied. He said that there was little basis in the available research material for estimating the traffic generation from a subdivision of the type proposed, so approached his task from first principle. He estimated traffic volumes of between one return trip per lot (that is two vehicles per day or "VPD") to three return trips per lot for home-based trips (that is six VPD). He said the Department of Main Roads uses figures of six to eight VPD's from urban subdivisions with destinations being in close proximity to houses. He assumed that, over time, community facilities such as a general store, hardware, school and medical facilities, would be developed locally, thus avoiding the need for multiple trips to Cooktown. The prospect of that assumption becoming a reality is problematic. He reasoned that the number of trips per lot would probably approach his higher number of six VPD. He considered that it would be unlikely for daily trips to traverse the entire distance of the spine road, so calculated daily trips being on the basis of an average of 10 km for each lot. As a result, he was able to estimate the usage of identified sections of road, those estimates including a minimum of 48 VPD for one section and a maximum of 276 VPD for another section. He did not adjust these figures up to take into account external service traffic, nor tourist and visitor traffic which he thought would be likely to become significant as the subdivision developed. 172 524. Neither Mr Dodds, Mr Garden nor Mr Bartsch provided an estimate of the expected usage of the spine road as a basis for Mr Bartsch's conclusion that bitumen sealing of that road would not be requested by the Council. Nevertheless, Mr Bartsch formed a view that the usage of the spine road would not be as great as the usage, for example, of the main north/south Development road, which services Cape York to its northernmost point. That road is not bitumen sealed and has not crossed the threshold of usage which would categorise it as requiring sealing. In making that comparison, Mr Bartsch appears to have paid little regard to the prospect of increased tourist usage of the spine road. I also have a concern as to whether the comparison he made is a valid one. The traffic data for the Development road was collected at sites outside towns, therefore was probably more concerned with through traffic than with the servicing of a subdivision with rural residential characteristics. Mr Potter could see no reason why the Development road indicated a ceiling on his expected usage for the spine road at "Starcke". Mr Bartsch said that the Cooktown to Hopevale road was in need of sealing, but he did not say what the relevant usage was. Mr Potter said that this road had an Average Annual Daily Traffic flow (AADT) of 267 in 1998. 525. Mr Bartsch's unrefined reasoning process would not apply to more closely settled situations, such as Coen and Lakefield, where town roads are bitumen sealed. The 100 ha lots proposed for "Starcke" with 500-metre frontages would be much less closely settled than these other centres, so the intensity of usage close to residential accommodation and other improvements would be much less, I would think. I would suggest that people in a "Starcke" subdivision would more carefully plan their trips than would those in a residential centre where, for example, making a second, short trip to pick up something forgotten on the first trip would be more likely. Mr Bartsch thought that the nature of the proposed subdivision as supplying "retreats" would be a limiting factor on usage. Mr Potter, on the other hand, paid broad regard to road usage connected with a rural residential area. 526. Whilst Mr Potter attempted to provide a measurable basis for his opinion as to the possible need for sealing of the spine road, the accuracy of that basis cannot easily be determined. Not only is the population number at "Starcke" a matter of guesswork, so would be the probable road usage patterns. I would think though that the resident population number would probably be lower than the maximum assumed by Mr Potter. Mr Bartsch suggested that Mr Potter's figures should be modified based on 80% occupancy of lots and assuming two trips per day would reduce maximum usage to 74 VPD compared with Mr Potter's figure of 276 VPD. 173 527. The claimant's position is that as Mr Bartsch was the Shire Engineer at the relevant date and had been for four years, his advice would be accepted by the hypothetical prudent purchaser. Mr Potter also had been the Shire Engineer and though he did not carry out a specific inspection of "Starcke" before he provided his report, he exhibited a good knowledge of the land and the Cape generally. His advice would not be dismissed as irrelevant. He clearly made a greater intellectual investment in forming his view of the matter than did Mr Bartsch, who had not discussed the matter with the town planner and who said that if there had been an actual subdivision application, he "would have spent a lot more time on the application". Mr Potter could claim a high level of expertise in such matters of traffic volumes given his 1992 study "Peninsula Development Road - Infrastructure Study" which is concerned, amongst other things, with that subject. Mr Potter also made reference to his broad experience in traffic analysis particularly in remote areas of the Cape. Nevertheless, he was bedevilled also with the salient fact that there is no Cape York experience that points to the traffic volumes that a project such as a "Starcke" subdivision would be expected to generate. 528. Mr Bartsch appeared to be strongly influenced by his perception that he ought not to impose conditions that the local authority might not find acceptable. Whilst, no doubt, his experience with the Council tutored him in this regard, an important consideration in the present case is the unique and grand nature of the proposed "Starcke" project compared with the historically small subdivisions in the Cook Shire area. Nevertheless, I think that a prudent purchaser would be inclined to the view that the opinion expressed by Mr Bartsch may well be the opinion finally settled upon by Council. His approach appears to be consistent with the road standards in the area and the Potter argument in favour of a higher usage lacks a firm statistical basis. The prudent purchaser would be aware, though, that the Council may be concerned that the proposed allotments could well be sold to urban buyers who will, in due course, expect a higher grade of road surface; or that usage could approach the sort of figures suggested by Mr Potter and thus necessitate road sealing. It would be an unwise purchaser who would not keep in mind such matters when he is attempting to determine a purchase price. Mr Humphreys drew my attention to "Daintree" where public pressure resulted in the main through road being sealed partly at local government expense and where there is agitation for internal roads also to be sealed. Of course, "Daintree" is more closely settled than what is proposed at "Starcke" and has a much larger number of lots. Mrs Campbell said that she would expect that roads in a rural residential subdivision would be sealed, but she did not describe the "Starcke" proposal as that.

174 External Road Upgrading 529. Both Mr Quaid and Mr Dodds said that the developer would have been prepared to offer to upgrade the external road for a distance of 7 km from the southern boundary of the "Starcke" freehold back to the intersection of the McIvor Valley and the Isabella-McIvor Roads. Mr Bartsch indicated that he would have thought that that part of the road would have been required to be upgraded as the road is "a low volume road now and would be substantially changed with the development". 530. Mrs Campbell gave an insight to the influences on Council officers, such as herself and Mr Bartsch, when she said "… the conditions that Council will typically slash, and I use that word slash, from recommendations are those which involve the proponent having to carry out works or expend money on roads and particularly roads external to the site, is something that is very rarely imposed as a condition". I note also that no express mention was included in the Engineering Policy concerning external roads, though neither Mr Bartsch not Mr Potter appeared inhibited by that. 531. Mr Potter's detailed and considered approach to this matter can again be contrasted with that of Mr Bartsch. He considered the unique nature of the subdivision and the assumed impact of the traffic generated by the subdivision on the main access route to Cooktown. He said that whilst the traffic projection for the road south to Cooktown would be difficult to estimate without an understanding of the availability of community facilities on the subdivision, he expected traffic to the services and facilities at Cooktown to be substantial. He said that the AADT volume between Hopevale and Cooktown (43 km) in 1994 was 200 VPD, yet Hopevale is a community with substantial facilities of its own. He also made reference to the AADT from the Bloomfield area with a population of 600 at 120 VPD to Cooktown. Hopevale and Bloomfield figures during the wet season reduced to 150 VPD and 70 VPD respectively. 532. On the basis of those figures, Mr Potter estimated that the subdivision at "Starcke", with his assumed population between 500 and 1,000, could generate between 70 and 150 VPD, at a maximum. He estimated that dry season volumes could reach 300 VPD, assuming an influx of tourist traffic during that time of year. On the basis of this reasoning, he concluded that even on the lowest level of usage the road link to Cooktown from "Starcke" would need to be upgraded to a minimum two-way gravel standard with acceptable cross-drainage. A total of 36 km of road upgrading is involved. Without such upgrading, Mr Potter said that the volume of traffic anticipated would cause significant problems for the Shire, in terms of the degrading of the road necessitating costly maintenance. There would be safety issues and at low stream crossings there would be 175 delays. I travelled along this road by four-wheel drive vehicle as part of an inspection of the route and country between the southern part of "Starcke" and the Cooktown Airport. The road would not have been trafficable after rain. It was barely trafficable by four-wheel drive vehicle during my inspection. 533. If traffic levels were at the upper limit of Mr Potter's projection then a higher standard of upgrading may be sought by Council, in his view. He said that 500 VPD is generally considered the maximum AADT for an unsealed road and he referred to the publication "Unsealed Roads Manual" Austroads 1993, which suggests that depending on function and importance of the road, sealing would be advisable at lower volumes of traffic. 534. Mr Potter said that a development of the size proposed on the "Starcke" freehold would produce one of the busiest road sections in the Cook Shire if the subdivision was fully inhabited. The external road standard would need to reflect that usage, in his opinion. He said also that expectations of the provision of a flood-free route would increase over time and suggested that flood-free access would be required within a 20-year time frame, though he provided no factual basis for that conclusion other than reference to his experience. 535. I doubt that one would expect the CSC would ask for any external road to be bitumen sealed. I do think, however, that Mr Potter has advanced a very sound case for the upgrading of 36 km of external road notwithstanding the uncertainties associated with his statistics. I note that Mr Russell had suggested upgrading of 60 km of external road in the November 1997 report, but I do not see this as very influential for the same reasons that I prefer to pay most attention to Mr Potter's evidence rather than the earlier SKM reports. The local government would reasonably anticipate public pressure for the external access road to "Starcke" to be upgraded if this was not carried out as part of the development. The Council, properly advised, would be concerned at the cost to it if such an upgrading were to be carried out some years after the developer had moved on and would be concerned in the interim with the maintenance it would have to shoulder. In addition, the assumed purchasers of the "Starcke" lots would probably expect access to Cooktown via a two-way gravel road of a suitable standard. 536. In Mr Potter's view, it would be likely that the CSC would adopt the position that most, if not all of the cost of the external road upgrading, should be borne by the developer of the subdivision. I would think that a prudent purchaser would be concerned that he may be required to foot the bill for part, if not the major part of the upgrading of the external road (on the authority of Cardwell Shire Council v. King Ranch Australia Pty Ltd (1984) 176 54 LGRA 110). He would be aware of the past attitude of the Council, as explained by Mrs Campbell, and as evinced in Mr Bartsch's opinions, but would equally be aware that his proposed development would be seriously investigated to ensure that Council did not inherit the liability of substantial downstream costs. Bridges or Inverts/Causeways 537. A number of streams and flow paths are crossed by roads in the subdivision plan. There are three significant crossings (Morgan River, Starcke River and Hummock Creek) over which Mr Potter provided for single-lane bridges costed at $1,490,000. Mr Potter said that the Main Roads standard would have required a two-lane bridge for road crossing - a more expensive proposition. Mr Schneiders said a bridge would be needed at the Morgan River - an experienced, but unqualified view. Mr Dodds provided for concrete causeways (also called "inverts") to be constructed over these streams. These provide a concrete surface with pipes underneath which carry the normal flow, but would be overtopped regularly each year. Higher level volumes during rain periods would flow over the top of the structure, but vehicles could be driven over the causeway except where the water levels reached a point where a crossing might become dangerous. Vehicles could be swept off the causeway surface and topple downstream. Depth indicators would be required to assist travellers in deciding whether crossing would be safe. 538. Mr Dodds agreed that a decision to construct low-level bridges instead of concrete causeways would be a matter for the civil engineer responsible for the project, however, he relied upon the advice of Mr Bartsch who said in evidence that either a bridge or a piped concrete causeway would be satisfactory in his view. The CSC is moving more to the use of causeways rather than bridges largely because of cost. That may have influenced Mr Bartsch's opinion. Indeed, he did not appear to approach the matter with the same level of analysis employed by Mr Potter. 539. The crossings at the proposed bridge locations carry significant volumes of water in the wet season and the level of the streams rises quite quickly. Bridges, as proposed by Mr Potter, would ensure a Q1 flood immunity at the three crossings and would generally be considered safer than the causeway solution. The term Q1 refers to the level of flow that might be expected each year, whilst Q10, for example, refers to an event expected at 10- year average intervals. The less frequent the event, the greater would be the volume of the flow. Mr Potter's design would mean that bridges would probably become impassable each second year on average. Other road drainage culverts were designed by both sides at up to a Q5 standard but some were to a Q1 only. The claimant's side put the view that there would be limited advantage in having a bridge over certain streams, which traffic could 177 safely utilise in times of high water flow, only to be held up at other inundated drainage paths with lower levels of flood immunity on the Isabella-McIvor road. That was a point raised by Mr Bartsch, though he said it was not a decisive consideration. Indeed, the argument is a strange one as it may be thought to argue in favour of a reduction of the standard of all road drainage. 540. The causeways proposed by Mr Dodds provide for little flood immunity, being designed to cater for safe crossing at low or normal stream flows only, so when overtopped during times of flood various sections of the "Starcke" subdivision would be isolated. There is a stream gauge facility on the Starcke River. Data from that gauge indicates that traffic to the north where 136 of the proposed lots would be located would be cut off frequently. Data shows that a depth of 0.5 metre occurred for an average of 63 days between the years 1971-1987, whilst a depth of 1.0 metre was recorded over 29 days. There is no depth gauge at the Morgan River which has a smaller catchment than the Starcke River, but is a more confined stream resulting in deep, high velocity flows occurring following a briefer rainfall event than it would take to generate a similar flow at the Starcke, according to Mr Potter. 541. A prudent purchaser would again be confronted with no clear choice as to which option would be required by the local government, however, I think that he would be reasonably hopeful that the solution proposed by Mr Dodds and supported by Mr Bartsch would be considered acceptable to the Council. Such causeways would provide safe access at most times and would be unsafe only at times when they would probably be exposed to limited traffic. People would be wary of travelling this road during the wet season - occasional residents would probably stay away altogether at such times. The Council may be concerned that there will be demand in the future for an upgrade to bridges, however, I think the apparent attitude of the Council in favour of development and the fact that the Cape residents appear to accept road stoppages by streams as part of the lottery of tropical life, would lead the prudent purchaser to a view that the risk of the Council requiring bridges would not be a high one. Bores 542. Mr Potter included an amount of $960,000 for the provision of individual bore water supplies to the proposed allotments (that is 240 lots by $4,000 each). He said that no conclusion could be drawn on any potential problems of aquifer depletion or saltwater intrusion if the proposed 240 bores were installed and utilised by an occupant population, however, said it was proposed that the bore water be used for domestic, not commercial or agricultural use. He said that CSC required bores on other "rural residential" subdivisions 178 as a matter of course. Mr Dodds made no allowance for water supply to the subdivided lots, proceeding on the assumption that purchasers would supply their own by way of tanks. He said also that the developer would have difficulty in knowing where to locate bores as he would not know the location of the house site that might be selected by the end purchaser. Mr Dodds suggested that water would be available from streams. He admitted, however, that he had not undertaken an investigation of the water supply issue and agreed that in the dry season water supply would be a problem. At that time of the year, streams other than the major ones would probably not be flowing. Mr Potter said that 50,000- gallon house tanks may be adequate to supply potable water, but suggested that some supplementation would be necessary for other domestic uses and to ensure that tank water supplies were not depleted during the dry season. Borrow pits created during the construction of roads, according to Mr Dodds' road construction technique, might supply water storage to stock, however, the water quality, their location and the prospect of them running dry during the dry season, would limit their utility for domestic purposes. 543. In his report Mr Potter justified the requirement for bores by stating that the final paragraph of s.2.1.4 of the CSC Policy on Engineering Requirements for Subdivisions suggests that the use of a water tank is a "supplementary" supply of water, not a principal supply of water. That final paragraph and the preceding paragraph provide: "Where the source of water is proposed as a creek, bore, earth or other dam, evidence of the flow rates and water quality shall be presented to the Council. In the case of supply from a creek or bore the approval of the Water Resources Commission shall be obtained to the proposed usage and flow rates.

The water quality must be acceptable for washing, bathing and septic use. In the event that the water is not potable, then a supplementary rainwater tank will be acceptable at the time of construction of a residence for the supply of drinking water."

544. I do not understand this to say that a rainwater tank will necessarily be considered to be a supplementary source of water supply and that, therefore, there must be some other principal source of supply such as a bore. Read as a whole, however, the Council policy makes it clear that the CSC is concerned to ensure that for a subdivision in a "Rural (General Farming)" zone there will be a suitable supply of water for the intended use. The council requires information to that effect from the developer, but does not require that the developer install the supply. 545. The supply of water to the individual lots would, I think, be a matter of first order consideration for intending purchasers of the "Starcke" lots, notwithstanding Mr Beattie's robust assertion that it would be irrelevant, particularly if people are not going to make use 179 of the property. A response by a salesperson that tank water may be sufficient or that a bore could be sunk for such domestic uses as watering gardens or the washing of clothes, would not, I think, be well regarded by an intending purchaser, particularly if the developer had not carried out investigative drilling. An expenditure of $4,000 per lot would, I think, be an investment in the saleability of the blocks, not a luxury superfluous to the characterisation of the subdivision as one comprising "conservation lots". The bore could be provided after the purchaser has selected a house site. I have not taken this conclusion into account in my consideration of lot prices and rate of sales discussed earlier in these reasons, but have decided that groundwater investigations, at least, would be taken into account by a prudent developer as part of geo-technical investigations associated with the project. Costings Issues 546. There is no need for me to descend into the actual costs of required items in order that I may adjust Mr Brett's DCF exercise. It may be of benefit to the parties, however, if I provide my views on certain matters of costs on which the parties joined issue. I should mention that the various costs figures from Mr Potter's report were provided at current 2000 rates. Adjustment would be needed to yield a 1994 figure in the manner proposed by Mr Potter. Matters of Credit 547. Many of the individual cost items also give rise to differences in design or construction method; differences of an engineering nature. In respect to these engineering issues, the parties saw it appropriate to contrast either the qualifications, experience or the perceived attitude of the relevant witness. It was submitted that the case for the claimant on design and construction issues is considerably weakened by the fact that Mr Dodds has no formal engineering qualifications, whereas Mr Potter is both a qualified and experienced civil engineer and is the former Shire Engineer of CSC. It was further submitted that the fact that the various engineering drawings prepared by Mr Dodds were inspected and reviewed by a Mr Garden, an engineer who resides in Atherton, adds little or no weight to the case for the claimant as Mr Garden did not give evidence. Mr Garden had not inspected the "Starcke" freehold land. It was submitted that in the circumstances of this case where such a potentially vital witness is not called, the Court is entitled to draw an inference adverse to the claimant to the extent that I might infer that, if called, Mr Garden's evidence would be potentially harmful to the claimant's case. In making that submission, reliance was placed on Jones v. Dunkel (1959) 101 CLR 298, I assume on the words of Kitto J at 308: 180 "The jury should at least have been told that it would be proper for them to conclude that if Hegedus had gone into the witness-box his evidence would not have assisted the defendants by throwing doubt on the correctness of the inference which, as I have explained, I consider was open on the plaintiff's evidence."

548. No explanation was provided from the claimant's side as to why Mr Garden was not called, even though engineering matters were clearly in issue from the time that the claimant became aware of the costs of development proposed by the respondent. Expert reports were exchanged before trial. It was submitted by the respondent that, as it was clear at an early stage during the trial that Mr Dodds' lack of formal qualifications as well as the accuracy of his engineering drawings were an issue, Mr Garden ought to have been presented for cross-examination. Whilst the fact of Mr Garden not having been called would not by itself lead to a conclusion in favour of the respondent on engineering matters, it is a matter that I think can be taken into account in my consideration of these issues. The way in which I intend to do that is to assume that Mr Garden could not have advanced the claimant's case on any issue. 549. The claimant made reference to the Southedge Road as a construction demonstrating the capacity of the companies associated with Mr Quaid to carry out the sort of development envisaged on the "Starcke" freehold and, in particular, to demonstrate the expertise of Mr Dodds and his firm, Higham & Dodds. I see no need in the present case to consider whether this project indicates that the claimant had the technical capacity to develop the "Starcke" freehold in the manner proposed. No issue was raised between the parties as to any particular engineering challenges which might be encountered in the carrying out of the subdivision of "Starcke", nor does the claimant suggest that it is uniquely placed to carry out the engineering works and that such capacity is reflected in land value. In these circumstances the correct approach, in my view, is for me to proceed on the assumption that the hypothetical prudent purchaser would have, or could acquire, the capacity to carry out the engineering works needed. 550. Mr Dodds was involved in the construction of the Southedge Road in that he assisted his partner in locating the road, surveyed the road and supervised its design including drainage. He also had some involvement with actual construction. The claimant put forward that experience as evidence of his capacity to design the roadworks needed on the "Starcke" freehold to an appropriate standard which can then be costed. The evidence is therefore said to be relevant with respect to the issue of the determination of the cost of development that a hypothetical prudent purchaser might take into account in considering 181 the purchase of the "Starcke" freehold land for the purpose of subdividing it into 240 lots of about 100 ha each. 551. The Southedge road is bituminised and travels through part of the Great Divide rising to about 300 metres above sea level in about its first six kilometres. It travels through a number of different tenures including freehold, leasehold and State land. Mr Bryars was asked by the State Main Roads Department to prepare a report on the condition and design of the road with respect to it possibly becoming a public road. That report was completed in February 1998 and included a desktop consideration of design material, together with a site inspection. In his evidence before me Mr Bryars relied on that report and on a subsequent inspection. He presented that earlier report in a digested form. 552. Mr Bryars relied on the design standards which applied in 1989 for rural road design - that is the year of completion of the road. Those standards were adopted by the Main Roads Department and are a particular application of the Austroads Guidelines. Mr Bryars found that the Southedge Road exhibited a number of departures from the published standards which could be categorised as departures of a safety type (tight curves, steep slopes, steep crests, etc) a maintenance type (pavement thickness, catch drains, batter slope and material etc) or an environmental type (lack of fauna crossings, propagation of non- native vegetation, etc.). He acknowledged that some of these departures could be addressed, at least in part, by appropriate signage, but expressed the view that most could have been avoided by appropriate design. He observed at the time of his first inspection in November 1997 that no major collapse of the road had occurred, but that there was some fretting away of batter slopes and some slumping of material. 553. A section of the Southedge Road washed away in 1999 following a rainfall event. Mr Dodds advanced an explanation for the mechanism of the failure of that section of road, which I need not detail here, however, Mr Bryars provided an explanation which I found to be much more plausible. In short, the wash away resulted from a design deficiency. Mr Bryars' attention was drawn to the fact that the Southedge Road had failed once only after 11 years and that other roads had also closed as a result of wet season difficulties. Mr Bryars acknowledged this, but said that this simply illustrated that problems inherent in some of the aspects of the Southedge Road that he had identified (cut and fill batters) took some time to develop. Mr Dodds initially said that this road, which I had the opportunity to inspect, was build to the Department of Main Roads standards and NAASRA standards, however, I accept the evidence of Mr Bryars that Mr Dodds is in error in this claim. Mr Bryars gave evidence that the plans of the Southedge Road do not meet the Austroads' 182 Guidelines, which were preceded by the NAASRA standards, but expressed in substantially the same language. 554. Mr Bryars said that the cost of upgrading the road to a commercial usage standard would in 1998 have been between $6,500,000 and $12,800,000. The cost of upgrading to heavy vehicle use would be between $13,000,000 and $26,000,000. That evidence provides some dimension to Mr Dodds' suggestion of the standard of the road. It tells me that this error in Mr Dodds' evidence is a matter of significance in so far as his engineering competence, recollection or reliability is concerned. The issue under consideration is one of competence, so I will confine my conclusions to that point. 555. It was suggested to Mr Bryars in cross-examination that, given that the Southedge Road is a private road, it could, irrespective of the various published standards, be seen as a construction demonstrating "a certain degree of serious professional competence" - not one demonstrating "palpable incompetence". On this issue Mr Bryars offered three points:  the design of a road needs to be congruent with its purpose - its intended use. If it is not so designed its suitability is more a matter of chance than good judgment;  it is open to a client to accept minimal standards and to accept the attendant risks;  nevertheless there are some "unusual aspects of this road", whatever the road's classification - and he referred to the steepness of the batter slopes, given the material used, the pavement and drainage issues. 556. I do not understand the evidence concerning the Southedge Road to constitute an endorsement of Mr Dodds' engineering competence, such that he can be considered the equivalent of a qualified engineer. Mr Bryars did say, however, that he would expect the problems to be encountered at "Starcke" would be somewhat less than involved in the Southedge Road construction, but that similar principles of safety and maintainability would apply. I now turn to other matters of credit. 557. Before completing his report Mr Dodds had carried out an inspection of the "Starcke" freehold over two days and was accompanied by Mr Bartsch for part of that period. During his inspection Mr Dodds took samples of some gravel in order that it could be tested to establish its Californian Bearing Ratio (CBR); that is, to ascertain the quality of the material for road-building purposes. Mr Potter, on the other hand, relied on his general knowledge of the land from his time as the Cook Shire Engineer, as well as the work done by the authors of the 1997 SKM reports, and did not carry out a site inspection until after his report was finalised. Mr Potter did, however, direct his mind to the sort of development conditions that he considered ought to be appropriate for the type of development proposed and paid regard to the responsibility of the local authority as he saw it, whereas Mr Dodds 183 made no similar investigations, but simply relied upon the advice of Mr Bartsch, the then Cook Shire Engineer. Mr Bartsch, as I have outlined earlier in these reasons, tended to approach his task in more of a broad-brush than in a detailed manner and not at the level of detail that he would have brought to bear had there been an actual application. 558. The respondent suggested that there would be a question mark over Mr Bartsch's independence and objectivity, particularly given that as the Shire Engineer he accompanied Mr Dodds on a site inspection when it was known that the land was not going to be developed. Mr Bartsch's response was that he was acting under instructions from the council and said that the inspection provided him with an opportunity to inspect the road at the same time: a duty of the Shire Engineer. My attention was also drawn to the fact that Mr Bartsch was not appearing under subpoena or otherwise as the ex-Shire Engineer, but was being paid for his services in the trial, just as Mr Potter was. There was also evidence that Mr Bartsch had expressed a willingness to provide advice to the respondent on the same basis as to fees. I think it appropriate that I consider Mr Bartsch's evidence as being the evidence of an engineer who had been the Shire Engineer at the relevant date in 1994. I do not place his evidence higher than that. Similarly, Mr Potter had been the Shire Engineer. 559. Mr Potter said that he had not been involved in any subdivision work for a private developer since 1980. That was seized upon by the claimant as a pointer to his lack of relevant experience for the purpose of costing a development such as the "Starcke" freehold subdivision. In fact, neither Mr Dodds, Mr Williams nor Mr Grigg had experience of a subdivision of this kind in the Cape York area, however, the character of the project, as I have said earlier, was more a matter of road construction and drainage than a subdivision with other services. Mr Potter's curriculum vitae reveals that of this group of witnesses he had the greatest level of experience in road and drainage design and construction in the Cape York area. He also has an overall understanding of road standards and requirements 560. Mr Potter's report was an adaptation, a borrowing and a fine tuning of the original June and November 1997 SKM reports, however, the bulk of SKM's experience in subdivisions, according to Mr Potter, was in residential, urban residential or fringe rural residential work. At the time of preparation of those reports, Mr Potter was not an employee of SKM. A Mr Russell, an engineer employed by SKM, was the author of those reports and it was Mr Russell who approached Mr Potter for his advice on the contents of the June Report. In the November 1997 Report some of the matters raised by Mr Potter were mentioned, though were not acted upon or costed. Subsequently, Mr Potter joined SKM. Mr Russell became ill with the result that Mr Potter was required to prepare the 184 report provided in evidence. To the extent that Mr Potter explained the conclusions drawn in the report, it seems to me that he has brought into play his own qualifications and experience and he ought to be judged on that and on the veracity and cogency of his evidence overall. I might add that Mr Grigg, who provided costs estimates before me of the works contained in Mr Potter's report, was not involved in either of the SKM 1997 reports in any detailed way, thought two notations on an SKM file indicated that he may have been consulted in an informal way for some costings information. He said that such ad hoc contacts with a range of engineering firms were not uncommon. I conclude that, on the evidence, Mr Grigg could not be said to have been responsible for the costing in the two draft reports. The first record of formal contact between SKM and Mr Grigg's firm regarding this project was by letter dated 14 March 2000, though it is apparent that there was some verbal contact shortly before that date. 561. Mr Potter said that the 1997 reports were preliminary in nature, designed to identify what the minimum costs might be and did not include items and costings associated with the conditions the Council might be expected to impose if subdivision approval was forthcoming. He provided a document which identified the major differences between the November 1997 report and his report. This document, together with Mr Potter's oral evidence, reveals the lower level of investigation and input, as well as engineering standards and solutions adopted in the 1997 reports in comparison to his report. 562. There are, therefore, explanations for differences that were identified between the 1997 reports and Mr Potter's report. At the broadest level, I understand those explanations, however, will consider each of the relevant items as I discuss elements of the engineering costs. 563. It is unquestionably the case that Mr Potter possesses qualifications and a breadth of experience which are greater than Mr Dodds. In instances where the source of the opinion on a particular matter comprises the only material difference between the parties, I would, therefore, prefer Mr Potter's opinion to that of Mr Dodds. Otherwise I will consider the evidence overall on each issue including the comparative qualifications of these two gentlemen, just as I think a prudent purchaser would do. A prudent purchaser would also have regard to the fact that Mr Potter had not specifically inspected the land before preparing his report but, given Mr Potter's experience in the area, that factor would not lead to any substantial qualification being applied to Mr Potter's opinions, in my view. I am concerned with an estimate for the purpose of land purchase, not with a construction contract. 185 564. Mr Grigg was criticised as an estimator whose company had not at the relevant date won a contract that it had tendered for on Cape York, the implications being, as I understand it, that he lacked experience in the Cape and that his estimates were not sufficiently competitive to be successful. It was also suggested, based on a proposition put to Mr Williams in cross-examination, that Mr Grigg's estimates erred on the conservative or high side. Mr Williams said that his own estimates were based on the proposition that he was trying to win a tender. Mr Williams' company had more experience in the Cape, but he did agree that Mr Grigg's company was capable of undertaking the project proposed for the "Starcke" freehold and he added that, once on site, the job would be no more difficult to do in the Cape than anywhere else, putting aside the effect of the wet season. 565. One example cited by the claimant, which it was said pointed to both Mr Grigg's inexperience in the type of job involved at "Starcke" and to his conservatively high approach to estimation, is that of the estimates for guideposts. Mr Grigg estimated $75 per post, whereas Mr Williams' estimate was $30. Mr Grigg conceded that his estimate would have been too high, based as it was on his experience in smaller projects where only a handful of guideposts would be installed at a time and for which he estimated workmen placing guideposts at the rate of one per hour. It is clearly the case that Mr Grigg's estimate for guideposts is too high. Similarly, his inclusion of a cost for flying staff in and out of the job site on a regular basis would not have been standard practice in 1994, even if it was his company's policy. Notwithstanding these examples, and I will come to other matters of difference between him and Mr Williams later, I must say that Mr Grigg generally impressed me as a candid witness who was doing an honest job of estimation. In contrast, Mr Williams gave me the distinct impression that he was in Court to argue a case for the claimant. Early in his evidence he took an opportunity to be critical of Mr Grigg in a general sense. In addition, he provided individual exercises, which I will come to in due course, which were intended to support the estimates that he had orally given to Mr Dodds, whereas these exercises were not completely consistent with practical examples of works Mr Williams had actually been involved in. Nevertheless, I found Mr Williams' greater experience in the Cape to be a telling factor in the instance of the estimation of camp establishment costs. 566. The process whereby Mr Williams provided his advice on estimates to Mr Dodds was one where they met and had discussions based on a schedule of volumes and cost estimates that Mr Dodds had prepared. Mr Williams provided Mr Dodds with costing rates that he had at his fingertips, which he later described as a "rule of thumb approach" based on his experience. In most instances these costs were higher than those estimated by Mr 186 Dodds, according to Mr Williams. None of the documented exercises provided in evidence by Mr Williams to support the estimates given to Mr Dodds during these discussions formed the basis of the estimates provided to Mr Dodds initially. In contrast to this approach, Mr Potter provided Mr Grigg with a schedule of items and quantities and Mr Grigg independently provided his estimates based on that schedule. Generally speaking, therefore, the Potter/Grigg relationship was an arm's length one, though not totally so, as the evidence revealed that there were discussions between Mr Grigg and Mr Potter concerning earthworks - a topic I discuss in some detail below. In addition, Mr Grigg had been supplied with a copy of either the June or November 1997 SKM reports, probably before he carried out his estimating work. Those reports contained the estimates carried out by SKM "in house". Mr Grigg said, however, that he employed the report to aid his understanding of how SKM had approached the project not to focus on the SKM estimates. He said he was not influenced by those estimates. 567. Some collaboration between the designer/engineer and the estimator would probably be required, however, the extent of collaboration between Mr Dodds and Mr Williams raises a doubt as to the objectivity associated with the cost estimates provided. Mr Williams had clearly paid regard to Mr Dodds' estimate in contradistinction to Mr Grigg who said he was more concerned with the project description. The doubt raised is not, however, a substantial one. 568. Mr Williams appears to have been the first choice by Mr Potter to provide cost estimates, however, Mr Williams had already been retained by Mr Dodds and thought it inappropriate to accept an appointment by Mr Potter. I assume that Mr Williams' superior experience in Cape York compared with Mr Grigg might have been the motivator in his initial choice. 569. I have set out reasonably fully the evidence going to credit with respect to these witnesses because both sides elected to pursue such matters at length. I am not led by this evidence to exclude the opinions of any of these witnesses, however, must say that Mr Potter and Mr Grigg survive this part of the contest better than did their opposing witnesses. This does not mean in my view that matters of credit become the primary point of influence throughout consideration of the topic. I think it is preferable to consider the substantive evidence first, then pay regard to matters of credit only if the substantive evidence is insufficient to dispose of the issue. Photogrammetry 570. In order that the quantity of earthworks needed in road construction can be estimated and the required cross-drainage of roads may be ascertained, there is a need for 187 the engineer to have data available showing the contour of the land. That contour information will show him, for example, how deep a particular cutting will need to be based on his adopted road design and, consequently, how much material is produced to provide fill for lower areas. I will mention at this point that I understand such a process of utilising such material to be called "cut to fill". This becomes relevant later in these reasons. 571. Contour information will also provide a picture of the size of the catchment area that a particular crossroad drainage culvert/invert will need to accommodate. The expected rainfall and the acceptable frequency of flooding of the culvert as well as matters of cost are the other parameters that influence the culvert/invert design. 572. In estimating the earthworks and drainage requirements, Mr Potter relied on a plan of subdivision which had contours marked on it at 5 metre intervals, together with a 1:100,000 topographic map. Mr Dodds had that same information, but also utilised data produced by a process called "photogrammetry". This is a technique which employs aerial photography. The photogrammetry gave Mr Dodds data over a strip 800 metres wide following the spine road and he employed this in calculating his earthworks figures. Given the need to also determine catchment areas which fell outside the 800 metre wide strip, Mr Dodds supplemented the photogrammetry data with information from the same sources relied on by Mr Potter. 573. Mr Watts, a qualified surveyor, described photogrammetry as a process of making precise measurements from photographs and other information sources to determine the relative locations of surface and detail points of land. The process enables the finding of distances, areas, volumes and elevations. Most commonly, photogrammetry is used in the preparation of planimetric and topographic maps from photographs, employing a person using a stereoscopic viewing instrument. 574. He said that spot height accuracy, using photography at a scale of 1:25,000, was plus or minus 0.6 metres, whilst 1:80,000 scale photography resulted in a spot height accuracy of plus or minus 1.1 metres. Spot height accuracies would be of a lower order where published 1:100,000 topographic maps together with standard aerial triangulation are employed. Resultant accuracies are plus or minus 50 metres in horizontal position and plus or minus 10 metres in elevation. The level of mapping accuracy would deteriorate where visual observation is obscured by vegetation. 575. Mr Watts made reference to the photogrammetric mapping data relied upon by Mr Dodds, having been captured from 1:80,000 and 1:25,000 scale photography controlled from published 1:100,000 scale topographic maps. He said that the smaller scale work 188 could involve inaccuracies of about 1.2 metres, whilst the larger scale work might be inaccurate up to 2.2 metres. 576. Mr Watts said that the material supplied to Mr Dodds would, based on his firm's experience with the Department of Main Roads, be suitable for planning work but not design work. In contrast, Mr Dodds said at one stage that the photogrammetry data was accurate to such a standard that he would be prepared to go to tender on the basis of that information. He said his understanding was that the data would be accurate to 0.1 to 0.15 of a metre. He subsequently conceded that more detailed ground survey work would be required for a suitable tender to be prepared. 577. The level of reliability of the photogrammetric data relied upon by Mr Dodds cannot precisely be compared with the contour information relied upon by Mr Potter. There was no evidence as to the source or accuracy of the contour lines on the plan used by Mr Potter. He assumed that the surveyors who had prepared the subdivision plan had provided the contour information, though he did not say what his assumption was as to the source of the data from which the contour lines were prepared. I note that in some areas of the relevant plan there are no contour lines marked. 578. Mr Watts was asked to compare the methods used by Mr Dodds and Mr Potter and to comment on their relative accuracy. He expressed the view that "as a starting base" the Dodds' method would be more reliable. I understand his qualifying words paid regard to his view that neither method was suitable for design purposes. I also understand that his opinion was not influenced by the fact that there was no information as to the accuracy of the contour lines on the map relied upon. 579. I accept that Mr Dodds' method would be preferred by a prudent purchaser and I also express the view that the fact that this method would be insufficient for design purposes would not be a matter of concern. Now I do not have evidence as to what in the marketplace would have been considered an acceptable standard - indeed, I expect that in the circumstances of this case that evidence would not be available. I am prepared to accept that a prudent purchaser would not in considering a purchase of the subject land go to the trouble and expense of proceeding to design standard and that a vendor would not be easily convinced to allow that level of investigation unless there was an unconditional contract. Clearly, however, there is a level of inaccuracy in the estimates arrived at by Mr Dodds and this needs to be catered for by the inclusion of an appropriate allowance. I should also make it clear that the acceptance of the base methodology of Mr Dodds does not automatically lead to an acceptance of his cost estimate for earthworks and drainage. 189 Design and costing considerations also impinge on that exercise. This brings me to the individual items which make up the differences between the two cost estimates. Miscellaneous Items 580. There were various items included in Mr Dodds' cost estimates that differed insubstantially from Mr Potter's figures. With respect to Road Pavement, which comprises the load bearing or "road base" part of the road structure, Mr Dodds included a figure of $1,113,750, whilst the Potter figure was $1,091,438. The respondent submitted that, given that the difference between the estimates is only $22,312, a figure of $1,100,000 would be appropriate. There was no complementary submission on this matter from the claimant. Given that the respondent's submission has the effect of reducing the claimant's estimate and that, in the absence of some compelling reason, a prudent purchaser would probably adopt a figure between the two close estimates, I accept the submission. 581. Mr Dodds had included an amount of $54,600 in his estimate for guideposts, whilst Mr Potter's figure was $130,350. Mr Grigg had supplied the estimate for the respondent and the difference in pricing ($30 per post for Mr Williams and $75 per post for Mr Grigg) was a matter, relatively small though it was, that commanded the attention of the parties for some time. In submissions, the respondent did not dispute the claimant's figure which I accept. 582. Mr Dodds' figure was $2,000 for Street Signs, whereas Mr Potter's figure was $4,400. The respondent submitted that a figure of $3,500 is reasonable. I accept that submission. 583. There is a difference of only $200 between the parties with respect to the cost of Access to Lots. I adopt the lower of the two figures, that is Mr Dodds' figure of $238,000. 584. Another item, Road Signs, was included in Mr Potter's report, but not in Mr Dodds'. These are signs warning of road crests, approaching culverts, intersection, etc., therefore, fall into a different category from street signs considered above. Mr Dodds conceded that there would be a need for some such signs, though suggested that not all of those proposed by Mr Potter would be needed. Mr Dodds said that he did not include any amount in his estimate because of the small cost involved. I accept Mr Potter's estimate of $44,360 for this item, not only because he is a qualified engineer, but also because he has directed his mind to this issue in a detailed and considered way. 585. Mr Dodds included an estimate of $122,000 for mobilisation and demobilisation; that is, the cost of moving equipment onto and off the construction site. Mr Potter's allowance was $50,000, however, Mr Grigg said that this assumed that equipment would be moved in and out once only. Mr Williams, whose figure Mr Dodds adopted, allowed for 190 equipment to be moved in and out twice to cater for construction to be carried out in two stages. It was generally acknowledged that the project would be constructed in stages and that construction would prudently be halted during the wet season. Accordingly, though Mr Dodds' figure is the higher of the two, it would be more appropriately adopted. Mr Williams noted the landing reserve on the Starcke River that could have allowed for equipment to be transported by barge which, he said, would be less expensive than road transport. There is, therefore, the prospect of a saving on this item. 586. Both sides saw the need for the provision of a telephone service to the subdivision, however no costs were included in the relevant reports. There was a suggestion from the respondent that there would be a cost in the order of $1,500 per lot for this item, however this was not supported with cogent evidence. I understand that in a suburban situation there would be no costs for the provision of a telephone service, though would suspect that there would be some cost to a developer of a "Starcke" subdivision. Clearing, Stripping and Formation 587. Both sides allowed for clearing of vegetation along the road corridor to a width of 15 metres, though there was a difference with regard to the approach to "stripping". "Stripping" is the process where soil to a certain depth is removed from that part of the surface of the road area where the design requires it. Vegetable matter would also be removed as part of this process. In Mr Potter's design and construction method the disturbance width was greater than provided by Mr Dodds because of the inclusion of table drains in the Potter design, but not generally in the design employed by Mr Dodds. 588. Mr Dodds said that he allowed for stripping to a depth of 50 millimetres across the "footprint" of the road formation. The road "footprint" is that part of the roadway which, for example, in a relatively flat area of land would contain the carriageway, the shoulders and the batters down to the toe of the batters. In the case of Mr Dodds' design, the distance between the top of the batters at each side of the road was 7.5 metres, therefore, the footprint would be wider than that, the width depending upon the overall dimensions of the batter which again turns upon the topography being encountered. That footprint would be different where there was a cutting or where fill was needed to build up the level of the road. 589. Mr Dodds' rationale for stripping to the width of the footprint was that stripping outside that area could subsequently cause problems if the stripped areas are left bare. He said that wider stripping than the road footprint would necessitate topsoil needing to be replaced over the area of stripping outside the road footprint area in order that revegetation might be supported. He said also that there are some, though not many, areas of dispersive 191 clays, which he said would be detrimental to the subdivision, though did not explain this point further. 590. As to the depth of stripping at 50 millimetres: that depth had been adopted in the 1997 SKM reports, however Mr Potter said that these reports were based on minimal costs. Mr Williams gave evidence that he was confident, following his visit to the site, that stripping at 50 millimetres would be adequate. Mr Dodds said that he had stripped to 50 millimetres only in similar country near Mt Molloy when constructing the Southedge Road. 591. Mr Potter's design involved stripping to a depth of 100 millimetres and to the full width of 15 metres of the road corridor. His design employed the use of table drains throughout the road length, thus necessitating stripping to the 15-metre width, whilst Mr Dodds allowed for such drains on a very limited basis, leaving drainage of water from the road surface to be disposed of by the natural topography. Mr Potter was concerned to ensure that such water was disposed of and did not lie near the road formation saturating it and potentially weakening it. 592. These differences in road design were also reflected in the different construction methods proposed by Mr Dodds, on the one hand, and Mr Potter, on the other. In simplistic terms, Mr Dodds' construction method involved the movement of required fill from cuttings and supplementing that, as needed, from borrow pits. His design method effectively involved the construction of the road on top of the natural surface after stripping had been completed, thus lifting the road surface to a level which, except in cuttings, would eliminate the need for table drains. Mr Potter's method relied on the digging out of table drains on each side of the roadway and using that material as the fill for the formation of the road with extra fill as required coming from cuttings. That is, he did not use borrow pits. Mr Potter's method therefore appears to be more efficient than Mr Dodds in that respect. In addition, the number of borrow pits needed would constitute an unattractive feature for the development. The point needs to be made that Mr Potter's method assumes that suitable road formation material will be found throughout the project. If it is not found there, his cost would increase because of the need to transport material. 593. Each of these gentlemen assumed a typical road profile based on their respective construction methods and allowed for variations from that typical profile in cuttings and heavily filled areas in arriving at the estimate of works required. Mr Potter's calculation method was to allow a 15-metre stripping throughout the full length of the assumed road, reasoning that whilst in filled areas full-width stripping would not be required, there would be a need for extra work on the construction of catch drains at the top of cuttings to divert water from flowing down the batters. Thus his estimate of volumes included compensating 192 assumptions. Mr Dodds, on the other hand, specifically allowed for table drains in his cuttings and for all required works by way of the computer program that he utilised. 594. Their respective methods of construction varied further in that, whereas Mr Potter intended to stockpile the materials stripped and then spread it over the batters before placing hydromulch (discussed below) in Mr Dodds' approach there is no such double handling, so the efficiency pendulum would swing in favour of Mr Dodds. Mr Dodds took advice from Mr Bartsch that batter protection should be provided by lowering the slope of batters so that erosion on them is avoided. This issue is discussed further below under the heading "Hydromulching". The different method of construction adopted by Mr Dodds means that there are very few table drains and, therefore, less requirement for revegetation. Mr Dodds did say, however, that he would include further table drains in addition to those that he provided for in cuttings if difficult areas were encountered requiring such treatment. As I mentioned above Mr Potter said that it was desirable to remove water from the vicinity of the road formation to ensure that lying water did not weaken the road. For this reason he thought that the construction of table drains was an important part of the design. It follows that his construction method would be adopted if his design was preferred. As I understand Mr Bartsch's evidence, he sees both methods of design and construction as being acceptable from an engineering perspective, the difference largely being matters of philosophy. He did, however, suggest a flat batter construction (I come to that later), therefore had an interest in the security of the road formation. It seems to me that Mr Potter's design would, in terms of the longevity/security of the road formation be the more effective design, but that Mr Dodds' construction technique would be the more efficient. I think that Mr Bartsch may have been influenced in his design philosophy to support the less expensive design, whereas a properly informed Council would, I think, prefer Mr Potter's design. Even if Mr Dodds' design was accepted, there would probably be a requirement for further table drains. 595. The depth of stripping needed is not, however, simply a matter of design philosophy, but involves the disposing of unsuitable material, according to Mr Potter. His experience in similar country is that the taller grass "balls up" underneath the graders and usually gets discarded. He said that, as a result, stripping to 50 millimetres is never enough, though he conceded that at the design concept stage of a project, as in the present case, it was really a matter of judgment as to the depth of stripping that would finally be required. In making his judgment Mr Potter observed that some of the proposed spine road was located in a flatter and more grassed area than the existing road. Mr Dodds, on the other hand, said that the loss of topsoil by historical erosion in some parts of the road 193 corridor meant that there were places where virtually no stripping was required. Interestingly, the evidence of Mr Potter and Mr Grigg leant the other way: once work actually commences on the ground, the scope of works typically increases rather than decreases, according to them. Mr Grigg also supported Mr Potter's adoption of a 100 millimetre depth stripping, though said that the depth was really a matter for the engineer. 596. The respondent urged on me that given that there was only limited information about the actual ground conditions and that as Mr Potter was the only engineer called, his evidence ought to be preferred on the matter of stripping. I accept that once the assumed development works proceeded, engineering decisions would need to be taken as required to meet the circumstances actually met on the ground. I think, also, that Mr Dodds' adoption of a 50-millimetre stripping depth comprises too ambitious a standard. Additionally, I accept that the fact that there was limited information about actual ground conditions and that some expansion of the scope of works should be provided for. This would lead to an increase in the identified allowance for stripping. I adopt the 100 mm depth. 597. Mr Grigg allowed $3,100 per ha for clearing, whilst Mr Williams provided a combined estimate of $2,500 for clearing and stripping. He provided an analysis which was produced subsequent to his provision of his estimate to Mr Dodds and that analysis concluded in a figure of $830 per ha for clearing and $1,600 per ha for stripping, that is a total of $2,430 per ha. 598. Mr Grigg's figure for stripping was based on a cubic measurement basis, that is $6.55 per cubic metre. That converts to a per ha rate of $6,550, however it cannot readily be compared with Mr Williams' rate of $1,600 per ha for two reasons. First, whilst Mr Grigg's rate is based on stripping to 100 millimetres depth, Mr Williams has worked on 50 millimetres. Second, Mr Potter's construction technique differs substantially from that suggested by the claimant. The respondent would discard the grass and other surface vegetation and stockpile the remaining topsoil. In due course, that topsoil would be placed on batters to assist in revegetation. Mr Williams suggested that such a process could be carried out for the equivalent of between $3,000 to $3,500 per ha instead of $6,550. the claimant proposed a technique where the topsoil would be rilled out by a grader to a position outside the road footprint from where it could be graded back onto the constructed batters. 599. Although I am unable to compare the stripping costs directly, it follows from my conclusion on the extent of stripping that would need to be carried out that Mr Dodds' costs would be expected to rise overall. 194 600. Mr Williams' clearing estimate of $830 per ha placed reliance on a job he had undertaken at Old Marpoon. He said that his records there showed that a D6 bulldozer achieved a clearing and stacking rate of 20,000 m² (or 2 ha) per day in country that might be compared with that at "Starcke", though his actual tender rate for that job was higher than $830 per ha. Mr Grigg doubted that such a production rate could be achieved. His costing is based on a D7 machine with an assumed clearing rate of 7,000 m² per day. 601. At para 639 below I mention that Mr Dodds has included a figure of $285,000 for "engineering, surveying and dozing" to be carried out as part of the design phase of the project. The "dozing" element of that does not appear to be contained in the respondent's costings. Mr Grigg said that such dozing would have the effect of reducing the amount of clearing needed later in the project. That may provide some support to Mr Williams' gross figure for clearing; however, the evidence indicates that his rate of $830 per ha is too low. I also note that part of the road corridor would not require clearing, though Mr Williams' estimate is for the complete road system. Hydromulch 602. Material termed "hydromulch" may be applied to the road batters and table drains to assist in the revegetation of these, therefore contributing to their stability against water erosion. The applied material acts as a mulch providing physical protection to the soil from rain which might fall before the batters and drains naturally stabilise. Mr Potter said that this is very important in the Cape York dry season so he included a cost for hydromulch in his report, whereas Mr Dodds did not. The hydromulch material also provides fertiliser and a wetting agent and seeds of an annual grass (usually Japanese millet), which can provide initial stability until native species can establish. There would also be an emulsion to tie the various components together. 603. Mr Dodds said that the slope of batters would have to be in the order of 1:2 to avoid the need to be artificially revegetated or perhaps 1:3, whilst his drawings showed a road batter slope of only 1:1.5. When this was drawn to his attention during cross-examination, Mr Dodds said that he would simply flatten the batters out. He explained that his road design was produced before Mr Bartsch had advised him about his preference on batter slopes. 604. Mr Potter's evidence was that rehabilitation of batters and table drains by the use of hydromulching was not only available for engineering purposes, but was consistent with CSC subdivision by-laws. I was not provided with a copy of the relevant by-law. In his opinion, batters of 1:2 or 1:1.5 would not be stable without some form of revegetation. He said that depending on the material in the batters, he would expect that one would need 195 batters of 1:4 or 1:6 to avoid the need for revegetation, but he thought that even then some form of assisted revegetation would be needed. Mr Dodds said that batters on the Southedge Road had not been revegetated and that there is little evidence of erosion problems there. Mr Grigg observed that the country through which the spine road is to travel is subject to scouring, indicating the importance of batter stabilisation. 605. Mr Williams gave evidence that he would not have considered hydromulching as he thought that most native grasses would be better suited. He appears, however, not to consider the agronomic process involved in the application of hydromulch discussed above, which is directly concerned with the establishment of native grasses. He said also that he could not recall any construction job that he had carried out in the Peninsula over the previous 10 years that had required hydromulching or grassing of batters. 606. The claimant submitted that there was an internal tension in the respondent's case in that on the one hand there was the suggested requirement for hydromulching, whilst on the other there was cross-examination of Mr Finney about the environmental dangers of fertiliser application that might occur if any of the developed blocks on the cleared red soil area at the southern part of the "Starcke" freehold were used for agricultural or horticultural purposes. He was also asked about the prospect of introduction of weeds. I would suggest that a one-off use of hydromulch would have a negligible effect on the environment and that the additional chemicals involved would quickly dissipate. The hydromulching process cannot, I think, be compared with frequent soil disturbance and the application of fertilisers and chemicals on an ongoing basis. 607. Mr Potter said that the suggested use of hydromulch came from Mr Grigg's firm following a discussion about what might be the appropriate treatment to ensure the grassing of batters and table drains. Mr Williams had given evidence that the use of hydromulching had only become prominent in the past two or three years; that is, 1998-2000. It had been used before that, though usually in built-up areas and on steep batters. The suggestion from the claimant's side is that Mr Grigg may have relied on his experience in built-up area construction work when he gave the advice to Mr Potter. That suggestion, though possibly correct, cannot dispose of the matter as the need for the revegetation of batters was identified by Mr Potter, not by Mr Grigg, and the extent of scouring suggests that some form of erosion control would be needed. Other techniques such as seed drilling were available in 1994 and could have been employed. They would, I understand, be less expensive than hydromulching. 608. I am concerned that even with the flatter batter design preferred by Mr Bartsch and accepted by Mr Dodds, some initial erosion protection would be needed on the type of 196 country in "Starcke" through which much of the roads pass. The onslaught of the wet season can be punishing on bare, unstabilised areas. I think the answer partly lies in adopting a flat batter design. I think that, in addition, the local authority would require an alternative to hydromulching of the flatter batters or that it would be prudent for the developer to employ such a technique so as to limit the need for possible repair work and maintenance on the road structure. 609. Mr Dodds allowed $89,568 for the rehabilitation of the existing track. Mr Potter allowed nothing for this, but this appears to have been an oversight. Mr Potter, on the other hand, allowed $868,140 for hydromulching, whereas Mr Dodds allowed nothing for this, though he did allow protection in the form of concrete drains coming into culverts. These drains are dealt with elsewhere. The hydromulch cost rate employed by Mr Potter was $1.40 per m² over an area of 620,100 m². I think it would be prudent to allow, say, 25% of Mr Potter's figure of $868,140 (that is $217,035) to cover the cost of a process of revegetation by a less expensive process than hydromulching. Soil Testing 610. Mr Potter explained the need for soil testing to provide the engineer with data concerning the paving material being used so that he can decide, for example, how many passes with a roller is needed to achieve the required compaction. He said, also, that the extent of testing depended on the quality of materials found on the site. If material of a uniform quality was found there would be less need for testing. 611. Mr Williams allowed $108,000 for this item based on the assumption that the tester would supply his own vehicle and would carry out soil testing on site at an hourly rate of $35. He suggested that it would probably be the case that the soil tester would not be needed on a full-time basis, however, he preferred to adopt a conservative allowance so had proceeded on the assumption that the tester would be there during the whole of the construction phase of the project. 612. Mr Grigg, who had at one stage of his career been a soil tester, was of the view that Mr Williams' figure did not allow sufficient for the establishment of a laboratory and for the off-site CBR testing that would be needed. Mr Grigg's estimate of $271,572 was calculated on a per soil test basis and he said that it was probably conservatively high given the lack of geotechnical information and suggested that a lower figure could probably be negotiated. 613. I think that a purchaser would reason, on this evidence, that the Williams' figure is too low, but that a figure lower than the Grigg's figure was probably achievable particularly if he adopted the Williams' approach of paying on a per day or per week basis rather than a 197 per test basis as might apply, for example, in a suburban subdivision. I think a figure of $175,000 would be reasonable as an estimate. Preliminaries 614. Mr Potter allowed a figure of $1,682,500 under this item in his report, however, some items included in this figure are dealt with below under other headings so as to allow comparison with Mr Dodds' figures. I will therefore confine this discussion to: 1. Provision of "as constructed" information (provisional allowance) $30,000 2. Construction industry levy and fees (a) notifiable project fee $17,500 (b) portable long service fee. WPH & S fee (0.2%) $35,000 $82,500 615. Allowances for these items were not included in Mr Dodds' report. I understand from Mr Potter that item 1 above is generally required by the local authority and that item 2 includes statutory requirements. I accept that inclusion of such estimates would be appropriate. Mr Griggs said that Item 2(b) above may have been calculated at 0.5% in 1994, not 0.2% I will not adjust the figure on his uncertain view, but will allow it to be taken up in a contingencies allowance. Earthworks 616. The term "earthworks" is intended to cover the mechanical removal of soil by cutting and its movement to places needing fill and the provision of additional fill as required. Both Mr Dodds' and Mr Potters' evidence indicated that greater fill was needed than could be supplied by the cutting process. I have described the different construction techniques earlier. 617. Under this heading the claimant has a figure of $776,596, whilst the respondent's figure is $1,774,440. These differences arise out of both the volume of earthworks involved in each estimate and the estimated costing. I will deal first of all with the question of volume. 618. As discussed earlier, Mr Dodds' assessment of earthworks is a computer-generated figure which relied upon the contours as provided in the photogrammetry from which road plans were prepared indicating the level of cutting and filling needed. He broke the earthworks' figure down into "cut to fill", on the one hand, and "imported fill from borrow pits", on the other, and arrived at a figure averaging about 2 cubic metres per lineal metre of road. The total figures were: 105,202 cubic metres of cut to fill and 88,947 cubic metres of fill required from borrow pits. The gross figure is calculated at 194,149 cubic 198 metres. Given that I have expressed a preference for Mr Potter's construction method and design, I will consider his earthworks in detail. 619. Mr Potter's method was to rely on a drawing of the design of a typical road profile cross-section, which appeared in the SKM 1997 reports. In those reports the volume of earthworks, estimated as being required, was 136,000 cubic metres. That figure was apparently calculated having regard only to the volume of fill required on the typical profile (1.22 cubic metres per lineal metre - Exhibit 48C(ii) p.27) together with an additional allowance for the greater volume of earthworks needed at culvert sections. The figure does not, however, include any allowance for cutting in ridge areas, this being allowed for under the heading "gravel works" and costed on the basis of a total of 59,625 cubic metres being cut. These "gravel works" also appear to cover the item of "pavement", which appears in Mr Potter's report and I have no way of separating that out. All that I can conclude is that for the 1997 SKM report earthworks would have been greater than 136,000 cubic metres but not greater than 195,625 cubic metres (that is 136,000 plus 59,625) a figure which is remarkably, though perhaps coincidentally, close to Mr Dodds' total figure. 620. The figure included in Mr Potter's report for "earthworks excavation on leads to fill" was 286,200 cubic metres. He arrived at that figure by first drawing the conclusion that based on the typical road profile 2 cubic metres per lineal metre was needed. That would total about 190,800 cubic metres. The figure originally provided to Mr Grigg was, however, 114,480 cubic metres or about 1.2 cubic metres per lineal metre. That figure is clearly too low. In any event, the original figure was discussed between Mr Potter and Mr Grigg and I can only assume that Mr Grigg was made aware of how it was calculated, that is by reference to the typical road profile. Whether he was aware of the actual figures and the method of calculations, I do not know. However, it seems he was not. He said in cross-examination that he was supplied with the quantities and did not calculate them himself. The letter that accompanied his costs estimates confirms this. In any event, both Mr Potter and Mr Grigg said in examination-in-chief that Mr Grigg had advised Mr Potter to increase the figure from 2 cubic metres per lineal metre to cater for extra work, for example, in the form of cuttings and culverts. Mr Potter said he adopted 3 cubic metres having regard to this advice, hence his total final earthworks figure of 286,200 cubic metres. A suggestion by the claimant that Mr Grigg's involvement in advising Mr Potter smacked of recent invention disregards the consistency of the evidence-in-chief of both Mr Potter and Mr Grigg on this topic. 621. Mr Potter used the term "leads to fill" in his report. It was suggested to him, and it is a suggestion that I thought to be perfectly reasonable at the time, that this meant "cut to 199 fill". It followed that total earthworks employing the typical road profile approach would comprise cut, which produced fill, and to that would be added any additional fill needed. Mr Potter's typical road profile showed fill of 1.22 cubic metres per lineal metre needed and showed cuts of 1.09 cubic metres per lineal metre on one side of the profile and 0.05 cubic metres per lineal metre on the other. The total cut, therefore, would yield 1.14 cubic metres (1.09 + 0.05), therefore extra fill needed would be 0.08 cubic metres per lineal metre (1.22 - 1.14). In other words, based on the suggestion that he was calculating cut to fill together with additional fill in the manner I have just done it, would meant that total earthworks would be 1.22 cubic metres per lineal metre or 116,388 cubic metres. 622. Now not only is that figure only about 60% of the Dodds' figure, but Mr Potter said that that is not the correct method of calculation, close though the result may be to his original figure of 114,480 cubic metres. He said that the way to calculate earthworks is to add the cut and the fill, that is 1.09 cubic metres and 0.05 cubic metres, as well as 1.22 cubic metres to produce a result of 2.36 cubic metres per lineal metre and that as this figure did not allow for the increased works at cuttings and culverts, etc, this figure ought to be then increased, on his estimate, to 3 cubic metres per lineal metre. The figure of 2.36 cubic metres would generate a total requirement of 225,144 cubic metres of earthworks on my calculation. I do not find this figure in either Mr Potter's or Mr Grigg's material. 623. Mr Potter said that the method of calculation of earthworks described by him was the standard method used in construction contracts. It would appear though, if I refer to the Dodds/Williams' method that it is not the only one. The question I next ask is whether Mr Grigg's estimate of costs was based on the Potter method or some other method? Unfortunately, that question was not put squarely to Mr Grigg, though he gave evidence after Mr Potter. I am led to the perception, however, that having regard to the criticism that Mr Grigg made of the Williams' method of calculating his earthworks rate discussed below at para 625 (in the Exhibit 42 exercise provided by Mr Williams in support of his original estimate) that Mr Grigg could well have assumed that the figure of 3 cubic metres per lineal metre was based on the sum of cut to fill plus fill. All other things being equal though, I would have thought that the Potter method of calculation would lead to a lower cost per cubic metre, yet Mr Grigg's cost was $5.50 per cubic metre in 1994 costs, whilst Mr Williams suggested $4 per cubic metre both for cut to fill and for winning fill from borrow pits. By comparison SKM, in 1997, relied upon a figure of $5.27 per cubic metre for earthworks, but $22.64 per cubic metre for the additional "gravel works". This points to Mr Grigg not being aware of the Potter calculation method, given my suggestion that Mr Potter's method would have produced a lower costing rate. Whilst each side provided 200 different road design and construction techniques, earthworks needed are able to be compared given the similarities in road standard. I will therefore consider Mr Dodds' earthworks estimates. 624. Some adjustments would be needed to the road plans provided by Mr Dodds to cater, for example, for the NAASRA requirements for line of sight at crests and for curve adjustments at the base of hills, according to Mr Potter and other changes suggested by me above. Mr Potter said that the provision of a safe road alignment depended on the application of engineering skills to the design that might be produced from NAASRA or Austroads' guidance. Mr Dodds said that any need for further cutting would simply generate greater fill and, given that Mr Williams had costed both cut to fill and winning fill from borrow pits at $4 per cubic metre, there would be no cost change. That suggestion assumes, however, that the fill quality would be suitable and that the original quantities were correct based on the photogrammetry data. There is also evidence from Mr Potter that on his analysis of Mr Dodds' plans, the line of sight and curve adjustments would result in additional earthworks to those estimated by Mr Dodds. Given the state of the evidence, I will put aside Mr Potter's estimate of quantities of earthworks and consequently the estimate provided by Mr Grigg. I would employ Mr Dodds' figure of 194,149 cubic metres as a base figure, but would adjust that up by, say, 20% to cater for the obvious need for the design to be adjusted. The design as it stands is deficient. Prudently, earthworks in the volume of about 230,000 cubic metres should be allowed for. 625. I will use Mr Williams' costing of $4 per cubic metre as my start point for the consideration of costing. He provided a document (Exhibit 42) which contained an exercise that he relied on to support the $4 figure he had given to Mr Dodds based on his experience. He said that a rate of $4 was common in a number of construction projects that he had undertaken, but did not refer to a particular project. I note also that he said that each job was different and involved different considerations and that costing of earthworks involved an element of risk. His exercise was supported by his reference to two projects he had undertaken at Aurukun. The exercise that he provided, which assumes certain rates of production from machinery, calculated a rate of $3.58 per cubic metre for earthworks. The exercise, however, revealed certain mathematical errors and once these were corrected, the result would be adjusted to $4.78 per cubic metre. That figure assumes a three-minute cycle for a scraper from load to dump, whereas Mr Grigg said that a prudent allowance could be as high as five minutes, though he had carried out his costings on a daily production rate which catered for the various inefficiencies that might impact on a hypothetical production rate. He said that the real rate would depend on the final design, 201 but that a four-minute cycle might be a realistic one. If a four-minute cycle was adopted, Mr Williams' cost would become about $5.70 per cubic metre. Mr Grigg observed that the earthworks concerned were generally quite shallow, therefore the production rates would be low compared with a bulk earthworks project. Having regard to this evidence and to what I said earlier concerning my reservations about the reliability of Mr Williams' evidence, I think that a cost of the order of something greater than $4.78 per cubic metre but less than $5.70 is indicated by the evidence. That is a wide range with a midpoint of $5.24 per cubic metre. I boldly assume that a prudent purchaser would adopt such a midpoint figure, but would round it up to $5.25. At such a rate the earthworks total cost would become $1,223,250. Given the uncertainty about earthworks' assessment, I think that a prudent purchaser would ensure that a contingency allowance took into account the prospect of a higher earthworks costs than I have decided to adopt. At a cost, for example, of only 45 cents per cubic for the volume of earthworks involved the risk amount involved would not be a small figure. Stormwater Drainage 626. The June 1997 SKM figure for this item was $3,333,285, which was increased to $3,526,635 in the November 1997 report, whilst Mr Potter's estimate was $4,089,405. The increase was attributed by Mr Potter to higher costs being supplied by Mr Grigg, compared with the earlier estimates prepared internally by SKM. 627. Mr Dodds provided a figure of $2,049,413, however, the two estimates may not be directly compared without some further break-up. That break-up is: Item Mr Dodds Mr Potter Culverts $1,358,433 $2,873,655 Minor inverts $460,980 $426,059 Major inverts $225,000 Nil Anchoring $5,000 Nil

628. Both Mr Dodds and Mr Potter paid regard to the CSC policy that roads should be constructed to a Q5 standard. Nevertheless, each considered the cost that would be associated with the larger cross-road drainage structures and adopted a lesser standard for these. In his report Mr Potter offered two optional proposals. The cost implications of adopting one standard against another can be understood when it is noted that Mr Dodds has 268 total crossings. Most of these are culverts which is the least expensive, smaller type of structure, whilst 26 are minor inverts and five are major inverts. The type of structure selected depended in the rainfall run-off expected from the relevant catchment 202 area. Whilst Mr Bartsch was not asked to comment on matters of detail concerning these different designs, he did express the view that any of the three proposals would have been acceptable to CSC. 629. Mr Potter allowed bridges at three of the five locations. Mr Dodds had identified, as requiring major inverts (causeways). The cost for bridges is not included in his break-up of estimates above. The anchoring estimate included in Mr Dodds' break-up is associated with causeways, so there is no comparable estimate in Mr Potter's figures. At the other two locations where Mr Dodds adopted major inverts, Mr Potter opted for a Q1 culvert design with a stabilised invert. 630. I will maintain my approach of working from Mr Dodds' design (where I accept it) and costings and identifying any risks associated with the adoption of those. There were some variations in the sizes of the catchment areas identified, respectively, by Mr Dodds and Mr Potter, with Mr Potter's areas tending to be the larger. That probably arises from the difference in methodology discussed earlier. This is particularly the case in the larger catchments where either culverts or major inverts are concerned. The first point I need to record is the conclusion that I have made under the heading "Photogrammetry" that of the two methods employed in the calculation of catchment areas Mr Dodds would be preferred. It is, however, inherently unreliable as a basis for arriving at a final design and costing, given the accuracy level of the photogrammetry, its limited coverage and the fact that there is limited data concerning large parts of the catchment areas. 631. Mr Potter's costings were based upon an assessment of the cost of developing the roads as shown on the subdivision concept plan tendered by the claimant. Mr Potter did not make any alterations to the road layout, whereas Mr Dodds had realigned a road identified as Road E to avoid the necessity for five creek crossings in a short distance. Mr Potter accepted that such a realignment would be appropriate, however, said that his instructions were to test the feasibility of the subdivision as proposed. Mr Dodds' approach would therefore be preferred. 632. There are other concerns I have with Mr Dodds' material. The design and size of cross-road drainage structures is not just a product of data concerning the relevant catchment area, but is also concerned with expected rainfall and run-off. The evidence reveals that Mr Dodds employed less reliable data concerning rainfall and design frequency than did Mr Potter. The effect of the application of the preferred data would be to increase the size and therefore the cost of many of Mr Dodds' drainage structures. Mr Potter said that the volume of run-off for each catchment would increase by between 18% and 40% meaning that there would be a need to increase the size and number of culverts/inverts to 203 maintain the Q5 standard. Assuming a 20% increase in run-off, eight of Mr Dodds' catchments would increase to such an extent that the less expensive culverts included in his design would need to be replaced by inverts. 633. The respondent cross-examined Mr Dodds for some time as to whether he had allowed sufficient cost for the construction of culvert headwalls on some of his culverts. I think that in all probability his costs in this respect are a little low, however, the evidence does not lead me to classify this prospect as being any higher than a low risk. There would however be a need to increase the costs to cater for the flatter batters recommended by Mr Bartsch, but not included by Mr Dodds in his design or costings. Clearly, the flatter the batter, the longer the under-road drainage structure would need to be. 634. Mr Potter included an allowance for scour protection associated with road culverts and inverts. This is required, according to Mr Potter, to ensure that scouring both upstream and downstream of culverts does not occur when there are high velocity flows. The actual construction comprises cement-grouted stone pitching. Mr Potter allowed $1,215,750 for this work. Mr Dodds' estimate makes no separate allowance for this item as his design allowed flows greater than the Q5 design flow to be taken away from the culvert and to cross the road away from the line of the culvert. I can understand how flow velocities may be reduced by such a technique, however would think that some scour protection would be needed at culverts or that additional costs should be allowed for the Dodds' design. That is the opinion of Mr Potter, a qualified engineer. External Road 635. Mr Dodds' estimated $43,800 per km ($306,630÷7 km) for this item. This was based largely on his cost estimates for the internal roads, therefore even if his design for the internal road was adopted in preference to Mr Potter's, his estimate for the external road would need to be increased, having regard to my comments on the various road components. Camp Establishment 636. There is a need to establish living quarters to house those working on the development works. In addition, ablution and kitchen facilities need to be supplied and meals provided for the workers. Mr Williams estimated $186,000 for this item, whilst Mr Grigg supplied an estimate of $970,000. In submission the respondent conceded that this could be reduced to $750,000. 637. The large difference between these two figures is partly attributable to:  The greater scope of works involved in Mr Potter's proposal (bituminising of spine road, scour protection, different form of road construction etc - but not bridge construction or external road) consequently the longer period for construction. 204  The larger workforce to be employed by Mr Grigg, therefore consequential increases in accommodation and sustenance costs.

 Mr Grigg's inclusion of the cost of flying workers out for recreation breaks - though he later conceded this was not current practice in 1994.

 Mr Williams' assumption that "bunkhouses", kitchens and ablution facilities could be purchased new, then resold locally after construction is completed. Mr Grigg opted for the notionally more expensive leasing model.

 The inclusion by Mr Grigg of an administrator on site.

638. Mr Williams is the more experienced of the two estimators with respect to the establishment of a camp at a remote location and impressed me as the better witness with respect to the associated costs. Mr Grigg obtained costs by assembling subcontractors' figures and leasing charges as a substantial part of his exercise, however, Mr Williams carried out more of a hands-on exercise. Mr Williams' costs would need, however, to be increased to accommodate any increase in the scope of works. I think also that there is a risk associated with his proposal to sell off the bunkhouses, kitchen and ablutions structures after completion of the project. Some allowance would need to be made for this in the present context, though in a real world situation that risk would be borne by the contractor. I was impressed by Mr Grigg's argument concerning the need for an administrator and would think that Mr Williams' figures ought to be increased to cater for this requirement. Design, Supervision and Project Management 639. Mr Dodds included the following items in his estimates: 1. Engineering, survey and dozing $285,000 2. Design and certification of plans $125,000 3. Supervision by CSC $80,000 4. Project management $130,000 $620,000 640. Mr Brett included certain relevant figures in his report that could appropriately be considered here: 1. EIS $51,000 2. Cadastral survey $351,000 3. Title registration fees $30,500 4. Initial design, liaison with Council $24,000 5. Planning investigations $7,000 6. Council application fees $9,500 $473,000 641. Mr Potter included under the heading "Other Costs" a figure of $1,420,954, which was calculated as 10% of the costs of clearing and earthworks; roadworks, drainage and 205 bridges; site access and bores. The items this "rule of thumb" estimate purports to cover include: EIS Engineering Design and Documentation Survey for Design Real Property Survey Fees to Council for application, checking plans, inspections, plan registration Fees for Title Registration 642. Mr Potter's rule of thumb approach to the matter makes it difficult to compare with the estimates provided by Mr Dodds and Mr Brett. Fortunately, Mr Humphreys also supplied figures so I will consider those. 643. I understand that Mr Dodds' Item 1 was estimated by Mr Humphreys as $380,000. As I understand the evidence the difference would lie in the greater amount of work that Mr Humphreys suggests is needed to ensure that the hydrological character of the area is not compromised by the extensive stream-crossing work needed. On this basis I would think that Mr Dodds' estimate of $285,000 would need to be increased. In saying that I am taking into account that Mr Humphreys said that he has not attempted to provide accurate costs, but has provided broad estimates only for all of his figures. Mr Grigg provided Mr Potter with an estimate of $50,000 for "construction survey and dozing", however that appears to be a more limited operation than Mr Dodds and Mr Humphreys were concerned with even though it includes "dozing". I doubt that this element was in Mr Humphreys' figure, however will not suggest that such a fine adjustment needs to be made. I have no reason to adjust Mr Dodds' estimates for his Items 2 to 4 inclusive. 644. I now come to Mr Brett's Item 1. I think that given my discussion on the process that would be anticipated for an EIS, the claimant's estimate of $51,000 would need to be increased substantially. Mr Potter expressed surprise at what he saw as the lowness of that figure. I have at para 488 adopted a figure of $100,000 for the Cultural Heritage and Social Impact work proposed by Dr Memmott and would add to that an estimate for the balance of the EIS. Mr Humphreys estimated a figure of $70,000 for fauna and flora work, but suggested that this might be a little low. I think it would need to be increased to take into account the prospect of those investigations needing to be extended to incorporate any required VCA work. Accordingly, I am of the view that Mr Brett's estimate for EIS would need to be increased substantially. 645. I would not adjust Mr Brett's estimates for his Items 2, 3 and 4. Item 5 "planning and investigations" requires some discussion. Mr Humphreys has supplied an estimate of 206 $80,000 for "planning and co-ordination" - a similar topic as I understand it. Given Mr Brett's understanding that subdivision approval is virtually a fait accompli, I would understand his lower estimate to reflect that viewpoint and for Mr Humphreys to reflect a quite different view. On the basis of my conclusions as to the matter of planning, I would increase Mr Brett's estimate for this item. 646. Where Mr Brett included $9,500 for Council application fees (Item 6), Mr Humphreys has allowed $100,000 in his Exhibit 94. This higher estimate seems to assume a need for rezoning so I would not adjust Mr Brett's figure. 647. Mr Humphreys has included allowances of $50,000 for Social Impact work and $60,000 for geotechnical investigations. He described the first of these as being concerned with socio-economic considerations (quite different from that discussed by Dr Memmott) associated with the community services that the proposed subdivision could require. An allowance for such work would be needed, in my view. The second item is commonly found in projects of the nature proposed here and should be allowed for. I would expect such investigations to include groundwater work -an initiative that I have found earlier to be desirable (See para 545). Contingencies 648. This item was included in both the reports of Mr Dodds and Mr Potter to cover the prospect of encountering unforseen events in the process of construction, with the allowance also paying regard to the quality of the data and construction plans in existence at the time the estimates were made. Mr Potter also included other items under this heading, some of which I thought would have been better included under other headings such as his "Other Costs". I refer, for example, to project management for which Mr Dodds allowed $130,000. 649. Mr Dodds suggested that contingencies ought to be 5% of costs only because of the advanced status of his road plans based on photogrammetry. Certainly I have accepted that his use of this data was superior to Mr Potter's method, but given what I have said earlier concerning the level of accuracy of this material, I do not accept Mr Dodds' expressed view on the quality of his plans. Mr Dodds' 5% calculation, which produced a figure of $301,394, was calculated on the total of his other construction cost estimates. I infer that it was designed to cater for unforseen events with respect to all of those items. 650. Mr Potter's figure of $1,470,954 was calculated at 10%, but based only on the same cost estimates as he employed to calculate his "Other Costs" item. He said, however, that the contingencies sum was designed to cater for broader eventualities than that list of items. In the June 1997 report SKM included a 15% allowance based on "all internal works to 207 cover changes, fees, charges, etc." These are further described in the text of that report as including "all professional fees, Council charges, Government charges and incidentals". Mr Potter described that report as being preliminary in comparison to his report tendered in evidence, so one would have expected a higher contingencies calculation in 1997, however, I understand it to include costs that Mr Potter had included under his topic "Other Costs". 651. I must say that I think an allowance of 5% to be a low allowance in the circumstances as presented. I would have thought that an allowance of about 10% would be appropriate, but it appears that Mr Potter's 10% includes one item already included elsewhere by me, namely project management. An allowance of 10% less $130,000 for contingencies should therefore be allowed based on the final construction costs estimate. There is no geotechnical information available, nor has any survey been completed. Swampy ground could be encountered, gravel pits could be difficult to locate increasing haul times and catchment areas and runoff could be found to be greater than presently estimated. There are possible costs associated with conditions to be imposed with respect to road construction and with the location and geometry of borrow pits, amongst other things. A 5% allowance seems to me to be quite inadequate. Mr Potter said that even at tender stage a 5% allowance should be made for variations. The quality of information presently available would not be sufficient to invite tenders to construct the "Starcke" subdivision works. Other Costs: 652. Before I come directly to a consideration of Mr Brett's DCF exercise, I should mention some other items of costs. Marketing: 653. Mr Slater's opinion as to the difficulty in attracting purchasers to the "Starcke" lots was reflected in his criticism of the marketing budget proposed by Mr Beattie. That budget was $2,750,000 overall or about $11,500 per lot. Mr Brett calculated average commission per lot at about $3,750, leaving about $7,708 per lot for marketing, as such. Mr Slater said that in the case of "Starcke" the salesmen would be canvassing a lot more prospects than at "Daintree" to achieve a sale and that the marketing budget would need to reflect this. 654. The overall "Daintree" budget was $5,823,444 or about $6,771 per lot assuming sale of 860 lots for the years 1980-81 to 1989-90; or about $7,171 per lot if the year 1980- 81 is excluded. Putting aside any differences flowing from inflation, the cost of the overall "Starcke" program is proposed to be less than half of that spent at "Daintree", notwithstanding that the cost per lot would be greater. One might expect from such a 208 comparison that "Starcke" would suffer the prospect of achieving a lower profile than "Daintree" enjoyed. 655. In his valuation report Mr Slater allowed a total cost of marketing at 7.5% of the selling prices which he averaged at $75,000. This allowance of $5,625 includes agent's commission on sales, leaving about $4,125 per lot for promotion, assuming commission was negotiated at 2% ($1,500 per lot) which was the rate supplied by Mr Brett. Mr Slater said that his marketing figure was based on a "mainstream type subdivision". His per lot expenditure of around $4,125 would be substantially less than Mr Beattie's figure of $7,708. Mr Beattie criticised Mr Slater's suggested budget as inadequate to achieve sales. Mr Slater, on the other hand, expressed the view that much of Mr Beattie's proposed expenditure would be wasted as not producing an adequate rate of sale. 656. I will adopt Mr Beattie's suggested budget for three reasons. First, it was the product of a detailed marketing proposal, whereas Mr Slater's figure was simply a broad estimate. Second, it is the type of campaign which both sides acknowledge was productive in the "Daintree" project. Third, in my consideration of lot prices and selling rate, I have assumed the presence of a marketing campaign of the type proposed by Mr Beattie. Having said this, I should record Mr Slater's opinion that the "lift" in price above the value shown in the local market brought about at "Daintree" is not as great as the "lift" Mr Beattie appears to expect at "Starcke". I have dealt with this earlier under the topic "Lot Prices and Selling Rate". 657. Whilst I adopt Mr Beattie's overall marketing budget I will, in my adjusted DCF exercise, change the monthly rate of expenditure to reflect the longer selling period involved in my adopted rate of sale. 658. Mr Brett carried out an alternative DCF exercise to that provided in his expert report to take into account possible downsides to his original DCF exercise. I will return to this second exercise later, but will deal with one aspect of it now. That exercise adjusted sale prices downwards by 10%, reduced the rate of sale to 6.6 lots per month and adjusted marketing costs. Mr Brett spoke to Mr Beattie about the first two adjustments. According to Mr Brett, Mr Beattie said that "if you are 18 months into this two year sales program, spending the money where budgeted, you will have by then certainly focused on your target market", so you would reduce your marketing cost from then on. Mr Brett said he did this by reducing marketing costs by one-third following the 18-month point. Perusal of Exhibit 80, however, shows that marketing costs have increased. This was conceded in address. 209 659. A concern that I have had is that with the extended sales period that I have adopted, the monthly marketing expenditure would be inadequate if I simply spread Mr Beattie's overall budget over a longer period. The increase in marketing costs in Mr Brett's alternative DCF exercise reinforces my concern. In the overall circumstances under which I have adjusted Mr Brett's DCF, I have elected to adopt Mr Beattie's budget, including his strategy of having a lead-in and lead-out period. My adjusted figures appear below. Interest Rate: 660. Mr Brett included an interest rate of 6.75% as part of his DCF calculations. This is not a commercial rate of interest, but was adopted to reflect the "opportunity cost" of the funds applied to the purchase and development of the land. Mr Slater said that a commercial rate ought to be employed, but that in any event the rate adopted by Mr Brett was low. He said that the rate should be a minimum of 7%. That rate is lower than the bond rates provided in evidence, however, I will adopt it. Average Selling Prices: 661. Mr Brett's average selling prices were based on the total of the prices in each stage of the project. That is, he assumed for the purpose of calculations in his DCF that the Stage 1 lots would all sell at the average price of that stage, then the Stage 2 lots would all sell at their average price. Mr Slater was critical of this approach on the basis that it would be the lower priced lots that would first become available as the subdivision work progressed and therefore would sell first. On that basis, income would be received at a lower rate than is proposed by Mr Brett. 662. Mr Brett said that his selling program assumes that all of the lots in each stage would be placed on the market at the same time. Mrs Campbell said that CSC would be amenable to bonding of the uncompleted works (s.6.4 P & E Act) which would in turn allow the sealing of subdivision plans and the registration of the new subdivided titles. Although no bonding costs are included in Mr Brett's DCF, I accept that approach. Thus, in the DCF exercise, sales are assumed to commence prior to the completion of construction with revenue starting to flow during the last three months of the construction of Stage 1. Selling Commission: 663. I have undisputed evidence that selling commission should be calculated on the basis of 2% of the gross realisation. Mr Brett had included commission at a rate of $3,750 per lot in his DCF exercise. My adopted figure per lot is $2,468 based on the following calculation: ($29,620,500 x 2 ÷ 100) ÷ 240.

210 Settlement Date: 664. In his DCF exercise Mr Brett assumed that the purchase of the land took place at the relevant date, but that settlement did not take place until two months later. He did this in reliance in what he said was commercial practice. I accept this as being so. The respondent expressed concern, however, that the deferral of settlement may unduly complicate the award of interest on unpaid compensation moneys. In the circumstances of my final conclusion on the matter of compensation, I have decided not to adjust Mr Brett's approach to this matter, but to proceed in accordance with commercial practice. Internal Rate of Return: 665. In his DCF exercise Mr Brett employed an internal rate of return (IRR) after interest of 69.4%. The IRR represents the per annum return on the project and may be contrasted in one respect with the profit and risk allowance employed in what is often called the hypothetical subdivision exercise. In that form of residual valuation exercise the profit and risk allowance is relevant to the overall project and is not an expression of annual return. Putting aside this difference between the IRR and the profit and risk factor, the important similarity between the two is that they comprise a measure of the level of profit that would be required in a project by a prudent developer for him to commit to the project, having regard to the degree of risk involved. 666. The claimant submitted that in the assessment of a profit and risk allowance or an IRR it is appropriate to take into account not just the risk that things might go wrong but also that things might go better than anticipated. This, it was submitted, is standard practice in looking at the assessment of damages for lost earnings in the civil courts, where in assessing whether any deductions should be made "for contingencies" the upside has to be considered as well as the downside. As was stated by Windeyer J in Bresatz v. Przibilla (1962) 108 CLR 541 (Bresatz v. Przibilla) at 544 - "Moreover, the generalisation, that there must be a 'scaling down' for contingencies, seems mistaken. All 'contingencies' are not adverse: all 'vicissitudes' are not harmful. A particular plaintiff might have had prospects or chances of advancement and increasingly remunerative employment. Why count the possible buffets and ignore the rewards of fortune? Each case depends upon its own facts. In some it may seem that the chance of good fortune might have balanced or even outweighed the risk of bad."

These sentiments, it was submitted, were echoed in the context of assessment of the figure for profit and risk allowance in a hypothetical subdivision exercise by Dixon CJ in Turner v. Minister of Public Instruction (1956) 95 CLR 245 (Turner) at 264, where the Chief Justice said: 211 This is perhaps a convenient point to make an observation about the basis of the deduction of a percentage for 'risk of realisation'. To no small extent the 'risk' is of the estimate of the nett proceeds of subdivisional sale proving too low. The reason may be found in the estimate of the prices for blocks being too high, the sale of the blocks being too slow, the estimated costs attending subdivision and sale proving too low or in any or all of such causes. It is therefore evident that the degree of faith held in the estimates, whether by the court or the hypothetical purchaser, must bear upon the fixing or allowance of the percentage. In coming to a reliable determination there is no reason why it should not be done by fixing provisional figures and then reducing them, but it would seem that there is equally no reason why it should not be done by making definitive estimates in the first place. It must be borne in mind, of course, that while the estimate of the expenditure may prove too high and the estimate of the return may prove too low, the contrary is equally possible. At some point fixed reliance must be placed on the figures produced by the use of the hypotheses which the use of the formula requires. After all the purpose is to ascertain the full return which may reasonably be expected from the sale of the land, not the most conservative value. The ultimate purpose of the inquiry is to find a figure which represents adequate compensation to the land owner for the loss of his land. Compensation should be the full monetary equivalent of the value to him of the land. All else is subsidiary to this end."

667. There are two comments that I make concerning this submission. First, I do not understand the Chief Justice to have said that there will always be the prospect that contingencies will be equally positive and negative. The view taken of risk will be dependant on the evidence overall touching on the matter and the perceived reliability in the figure finally adopted. There is, I think, a difference between the principle expressed in Turner and that in Bresatz v. Przibilla, a difference identified by the High Court in Boland. In that case (p.245) Hayne J expressly distinguished matters of valuation "about which reasonable minds may well differ widely" and the assessment of damages. I do not understand his Honour to mean that there is an unnavigable chasm. Between the two but that transfer of principle or methodology one to the other is not openly available. 668. A significant difference between the two areas of law was identified by the Gleeson CJ where he said: "… the basis of compensation was the value of the land taken and not, apart from the specific kinds of damage referred to in s 124*, the general or particular financial harm otherwise suffered by Yates as a consequence of the resumption." (Boland p.212)

(* Public Works Act 1912 (NSW)).

669. That is, contrary to a submission by the claimant, the approach to compensation is not one of assessing the "total financial impact of the resumption on the dispossessed owner" but of assessing compensation based on the loss of the land. 212 670. Evidence as to what a prudent developer would require as an IRR is best obtained from the marketplace - not from completed projects, but from sales of similar in globo lands. That evidence was not available in the present case. In such circumstances I have the opinions of Mr Brett and Mr Slater, only, on this matter. Expressed as a profit and risk allowance, Mr Brett would allow 75%, whilst Mr Slater said that a minimum of 100% would be required. In an earlier preliminary report Mr Slater had included an allowance of 60% which he described as "highly optimistic". A 100% profit and risk allowance is the equivalent of an IRR of 97.4% based on Mr Brett's DCF exercise and would reveal a land value of about $12,200,000, assuming no other adjustments were made. I should make it clear, however, that Mr Slater's suggested 100% minimum profit and risk allowance was provided in the context of his original expert report - average selling price of $75,000 and a rate of sale at two lots per month. He said with respect to Mr Brett's DCF that "a margin well in excess of 74.7% would be expected". 671. Mr Brett's estimated IRR was based on his broad experience and on two factors:  the unusual nature of the "Starcke" project; and  the historically high prices expected.

In his experience "developers investing in more speculative subdivisions relying on intrastate and interstate sales programs talk of a desire to "double their money", but will buy at much lower returns and will treat each case on its merits". 672. In his DCF exercise he calculated a profit level of $19,000,000 in round terms. He said that this was an "enormous" profit and that it could accommodate the vicissitudes of a subdivision of the type proposed. His second DCF exercise, which I mentioned earlier, was designed to demonstrate this. That exercise showed a profit of around $13,000,000, but an IRR of 30.9%. I understand Mr Brett's point to be that even if such downsides eventuate, there is still a substantial profit. Such a proposition raises a number of points for discussion. 673. First, I do not understand that this second DCF exercise is an alternative to the first; that is, it is not intended to show that with the three adjustments made by Mr Brett he considers that the IRR ought to be 30.9%. In this second exercise he maintained his land value at $15,000,000. I understand that if the inputs to this second exercise were in fact the inputs into his first or primary exercise, he would have adjusted the land value downwards in order to maintain a suitable IRR. 674. Second, I do not accept that a focus on the calculated profit in money terms; that is $19,000,000, for example; can be considered independently of the funds invested. Thus, a developer wanting to "double his money" still has a multiplier factor in mind. A 213 $19,000,000 return would be miniscule if the invested money amounted to billions of dollars. It follows that returns expressed as percentages are relevant, though no particular percentage return has universal validity. 675. Third, the level of risk that individuals are willing to take in the hope or expectation of a profit will vary greatly, sometimes even with a particular person over time. Thus, an older person may be less inclined to adopt risks that he would have undertaken earlier in life. A timid investor will keep his money in the bank. However, I have to assume a hypothetical prudent person, (Spencer), not one with a personal baggage of the type described above. This hypothetical person will exist in the marketplace at the relevant date and will consider the proposed subdivision project in the context of the market opportunities available at that time. Thus, if he expects to get a certain return on funds invested in say, Brisbane, he will not be convinced to seek a similar return in a higher risk project near Beaudesert. 676. I selected these two centres for good reason. Mr Brett said that, in Brisbane, returns would have been in the range of 20% to 25%. Mr Slater said, however, that 25% would have been a minimum for a 240-lot subdivision there on the assumption of an unconditional contract. He would have expected a figure closer to 30%. In cross- examination Mr Slater was taken to Beaudesert and he said that in a rural residential subdivision there a minimum rate of 45% would be expected. Against this background the estimates of both valuers with respect to a "Starcke" freehold subdivision are not compromised, however, I still have a difficulty in ascertaining which opinion or adjustment of either is to be preferred. 677. I think that the best approach to adopt in the circumstances is to use Mr Brett's opinion as the start point and to consider any adjustments to that. He said that "knowledge of the market sector and experience in the locality has a considerable bearing on each developer's attitude". Such a comment brings into play my earlier conclusion as to the uncertainties with respect to the target market and the limited degree to which the "Daintree" experience can be treated as valid for "Starcke". Mr Brett assumed a greater comparability between "Daintree" and "Starcke" than I accept and I assume that his IRR would reflect his perception of their similarity. 678. Whilst Mr Brett treated the prospect of obtaining subdivisional approval for this project as proposed as all but a given, Mr Slater expressed the view that the DCF should reflect a high risk in the obtaining of such approvals. On my conclusions the risk level in that respect would be greater than was assumed by Mr Brett, but not to the level described by Mr Slater. A prudent purchaser would, I think, also be concerned at the prospect of 214 extended delay in gaining approval and in the possibility that approval would not be in the form proposed owing to the influence of cultural and possibly environmental factors. There was also the prospect of the approval being subject to conditions not anticipated by Mr Brett and the prospect that arranging for VCA's may be more difficult than Mr Finney assumed. 679. There are also possible cost escalation factors that would need to be taken into account and I refer particularly to: electricity, bridges, sealing of spine road, and the extent of external road upgrading. My assessment of risk needs to take into account the prospect of cost increases given that it was Mr Dodds' evidence that he had incorrectly proceeded in the basis that his road design and costs were equivalent to the stage of tender for a contract. I recognise that I have already made an allowance for contingencies, however observe that even if construction costs were included in a contract, a risk would remain that cost increases could outstrip the contingencies allowance - though not substantially, I would think. 680. All of the above factors have the effect of increasing risk. Risk reduction items were few: use of landing reserve to transport equipment; possible need for less stripping depth in some areas and the prospect that required clearing will be less than that estimated. I need also to consider whether the adjustments that I have made to lot prices and the selling rate would have the effect of reducing risk. In considering this, I start again with Mr Brett's evidence. He expressed confidence in the achievement of Mr Beattie's suggested lot prices, though did say that one of the factors which he took into account in adopting his IRR was the "historically high prices expected". He was also confident of achieving Mr Beattie's suggested selling rate seemed a little less fulsome in this regard. 681. In a market such as Brisbane where there is usually competition for similar product, the adoption of selling prices and rate of sale will be the product of a refined comparison process. All other things being equal, the lower each of these items is, the lower will be the risk. In the present case, however, I do not understand Mr Brett's perception of risk with respect to these two elements to be any greater than what I have perceived. All that I have done is to draw a different conclusion on the expected prices and rate of sale. I have not attempted to adopt levels which are below market. 682. Mr Slater carried out a series of DCF exercises in which he considered a variety of input changes (construction costs, selling prices, etc), yet in each he maintained an IRR of 69.4% - that is the same as in Mr Brett's original DCF. That may be taken to indicate that in his view the IRR did not warrant adjustment in spite of any adjustments or range of adjustments, though there was no complete debate on that point. 215 683. Nevertheless, I would think that a prudent developer presented on the one hand with Mr Brett's selling prices and rate of sale and with mine on the other, would perceive a somewhat lower risk profile in adopting my figures. My pricing and selling rate are less ambitious than those suggested by Mr Brett in reliance on Mr Beattie. I would expect that a prudent developer would consider this to be of particular importance. 684. Apart from that single item of downward pressure on risk, each of the other matters to which I have referred would have the effect of increasing risk. The assessment of risk is not, however, a matter of mathematics with each item being of equal value, but a matter of judgment. The difficulty I have here is that the only evidential guidance that I have is in the form of opinions - opinions not directly supported by market evidence. I also have the disadvantage of neither side having had an opportunity to comment on the adjustments I have made to sale prices and rate of sale nor to my conclusion on construction items/costs. My judgment is that the net result would probably lead to an increase to the IRR adopted by Mr Brett. I prefer, however, in the absence of expert advice on the matter to assume a reduction in the IRR - and thus to lean, probably err, in favour of the claimant. 685. In the circumstances I propose to adopt an IRR of 60%. On the basis of my adjusted DCF exercise, which I detail shortly, this converts to a profit and risk allowance of about 133.9%. Its increase from the original 74.7% is a product largely resulting from my adjustment of Mr Brett's selling prices and rate of sale and of the static nature of a hypothetical subdivision method. 686. Before I list the adjustments that I have made to Mr Brett's DCF exercise I will deal with the matter of construction timing. Mr Dodds, in his report, provided for construction of Stage 1 to commence at the beginning of the month of July (1994). This involved the construction of the external road. He said, also, that a claim for progress payments for that work would be made that month: presumably at or towards the end of the month. In his DCF exercise Mr Brett proceeded on the basis that payment for the external roadworks would take place in July. I have no evidence as to whether he assumed that payment would take place at the beginning or the end of the month so have decided to not make any adjustment to what may be an incorrect coincidence between the timing of construction and of payment - though it should be noted that my assumed commencement date is May 1995, not July 1994. If the evidence had shown that payments would not be made until the month following construction work then sales would also be deferred a month, resulting in a reduction in the flow of income. I think that the claimant has not been disadvantaged by my election to proceed in the manner I have.

216 Mr Brett's DCF Adjustment 687. I have adjusted the DCF provided by Mr Brett in the following respects: 1. Opportunity cost interest has been adjusted to 7%. Mr Brett conceded that this would be an acceptable rate.

2. Average selling prices in Stage 1 have been changed to $110,640, whilst for Stage 2 it has become $131,504. These prices represent a 35% reduction of the prices for each stage included in Mr Brett's DCF exercise.

3. Rate of sale has been adjusted to five lots per month.

4. Selling commission has been changed to an average of $2,468 per lot to cater for the reduced prices.

5. Marketing costs estimated by Mr Beattie at $7,708 per lot have not been changed, however I have spread the cost over the extended selling period. I have maintained the three months pre-selling costs totalling $112,000 (that is $23,000, $44,000 and $45,000) and the post-selling costs of $307,000 ($45,000, $35,000 and $227,000). I have added $24 to the last month as a balancing figure. Monthly expenditure for the balance of the marketing campaign becomes $29,812.

6. Construction of the external road has been timed to commence in May 1995 with all other items of construction being adjusted in relationship to that start date. I have maintained a similar distribution of construction costs to that included in Mr Brett's DCF. Thus, for example, the first expenditure on internal roads is $578,731 and this expenditure takes place in June 1995.

7. Selling in each stage has been included to produce settlements two months following the commencement of construction of internal roads. This assumes a bonding of uncompleted works which are anticipated to complete within three months. There would be a cost to arranging bonding, however, I have not included a cost. None was provided in evidence.

8. Stage 2 construction has been adjusted to commence in order that construction may be completed by December of that year (1996). Mr Brett has provided for construction in Stage 1 to be completed in December on the assumption that I have made that costs are brought to account at the end of the relevant month of construction. Although I think that this runs a risk of construction encountering the wet season, I have allowed a December completion for Stage 2 construction. Stage 1 construction is carried out from May 1995 to September of that year.

9. I have included rates at $4,000 payable each three months, then reduced to $3,000 and $2,000 towards the end of the selling period in the same manner as Mr Brett did. Land tax payable each October of the project has been included at $15,000 per annum.

10. I have adjusted the land cost such that it reveals an internal rate of return of 60%.

11. I have not attempted to cost the provision of vendor finance. 217 688. The result of my adjusted DCF exercise shows a raw land value for the "Starcke" freehold of $2,825,000. It will be observed that in (para 852) below I have concluded that treated as grazing land with potential for use also for eco-tourism purposes and limited subdivision, the value of the freehold plus improvements is $4,556,700. It therefore follows that the highest and best use of the land is not for subdivision into 240x100 ha lots, as was proposed by the claimant. 689. What I have attempted to do in considering Mr Brett's DCF exercise and the debate between the parties as to its various components, is to deal with each item and the overall exercise on the basis of the evidence given on each point. In so doing, I have adopted the view, as I see it, that an intending prudent purchaser would take. The residential value methods of valuation whilst being recognised, in effect, as modern valuation tools (Callinan J in Boland pp.267-269) have, in their application been the subject of critical comment (see eg Merivale Motel Investments Pty Ltd v. Brisbane Exposition and Southbank Redevelopment Authority (1985) 10 QLCR 268 (Merivale)). Mr Brett carried out two DCF exercises in the present case - one his primary exercise and the other a "check". Mr Blomfield gave evidence that he had carried out a number of such exercises when he was attempting to ascertain the highest and best use of the "Starcke" freehold but none revealed that subdivision into 200 or more lots was a viable use. A computer disk of those exercises was provided to the claimant but did not become evidence. Mr Slater carried out at least two DCF exercises before trial; the first being of a preliminary nature and the second as the foundation of his expert report. During the trial he prepared a further six exercises designed to demonstrate the impact on the result of a number of individual items debated in evidence. 690. Each of the DCF exercises produced in evidence before me was supported, as to its elements, by evidence and opinion. None could be described as lacking in principle or the product of gratuitous tactics. Now I have carried out an additional DCF exercise following my consideration of the evidence. And I say that my DCF reveals the best supportable case for the claimant with respect to the prospects of a 240 x 100 ha lot subdivision. 691. My understanding of the formulation of principle, with respect to the concept of value, in Spencer (particularly Griffith CJ at 432 and Isaacs J at 441) is that it proposes a normative formulation that expresses a principle and which describes a view of the marketplace. It acknowledges that in the marketplace informed parties to a transaction make judgments on a range of issues material to the value of a parcel of land and the final value. Some such judgments will adopt a position in a range of possible judgments with 218 respect to a particular aspect, whilst other judgments will comprise the assessment of one such aspect against another. I would call this second type a "balancing judgment". 692. In a DCF exercise all judgments are reduced to a precise figure with the only place for balancing judgments being in the reservoir of the IRR. The hypothetical prudent purchaser, in my view, would not accept that the uncertainties of unproven prices in an unproven market over an unproven sales period could be accommodated in the expression of a selected IRR or a profit and risk factor. 693. Having arrived at this point in my discussion, my mind is drawn to two propositions. The first is to do with the risk of placing excessive reliance on mathematical calculation. 694. In Moreton Club v. Commonwealth (1948) 77 CLR 253 at 259 Dixon J said: "A merely mechanical adherence to calculations is impossible in the present case, unwise as it is in all cases. In my opinion it is necessary to arrive at an assessment of compensation by taking into consideration all the facts and considerations I have mentioned in this judgment and by endeavouring to fix a sum which will fairly represent in money the value to the owner which the asset clearly possessed."

In Dixon v. City of Glenorchy (1968) 15 LGRA 407 at 417 Chambers J expressed the same proposition in this way: "… value … is to be decided, not by a strict adherence to precise arithmetical calculations, but by a commonsense endeavour, after consideration of all the material before the court, to fix a sum satisfactory to the mind of the court as representing the value of the land at the relevant date."

695. I also place reliance on what Dixon CJ said in Turner at p.264 where the Chief Justice stated: "It must be borne in mind, of course that while the estimate of the expenditure may prove too high and the estimate of the return may prove too low, the contrary is equally possible." (emphasis added)

In other words, one should not approach this case simply on the basis of all the negatives that may occur as positives are also possible. I think that, in the present case, it is quite possible that some of the freehold land may be able to be profitably subdivided. 696. There are three items of evidence that I pay regard to in saying this:  In his discussion of the matter of risk Mr Slater said "it is difficult to accept that a prudent person would seriously consider pursuing" the subdivision as proposed by the claimant. He saw the risk as simply being too great. Bear in mind, however, that he thought that two lots per month could be sold at an average price of $75,000. 219  Mr Humphreys said that whilst he saw difficulties in the Council approving a 240 x 100 ha lot subdivision, this did not mean that some other subdivision proposal would not be considered acceptable.

 The region south of the Morgan River has over the years been subdivided and become more closely settled than land to the north. That may be considered to be the result of both superior access to those lands to the south and the fact that the "Starcke" freehold has been held by an owner who was patient in awaiting opportunities that might emerge. Nevertheless, that "Starcke" land is a substantial freehold property whose attractive geographical features I have described earlier in these reasons. It is not a parcel of land that can be easily categorised into having a grazing use with an eco-tourism use as an adjunct - and nothing more.

697. Now the prudent purchaser would be aware that subdivision into 240 x 100 ha lots would not be viable. My adjusted DCF exercise would show that. This purchaser would recognise that the various elements of the DCF adopt a very favourable view from the claimant's perspective. I think also this abstract person would agree that there is merit in Mr Slater's observation that consideration of the risk level alone would be sufficient to dissuade a prudent purchaser from pursuing such a project. Each valuer adopted rates that are abnormally high. Now I understand that the assessment of a profit and risk factor or an IRR in the marketplace is done as a measure of the risk associated with the elements of the project and the profit needed to accommodate those risks - though a composite figure would be employed. A point may be reached in such a process where the required profit is so high as to call into question the sense of undertaking the project. That would particularly be the case where the measure of important project components is of such uncertainty that the assessment of the required profit is fraught with difficulty. It is not in my view appropriate to assume that an abnormally high risk figure will accommodate important components arrived at as a result of an unusually high measure of judgment or even guesswork. 698. Mr Brett expressed the view that the level of risk involved, whether on his view or Mr Slater's, was not such that the prospect of subdivision should be dismissed. As he put it, "the facts of the matter were that Mr Quaid was pursuing the project". Now there was evidence that Mr Quaid expressed an intention to pursue the project, but not evidence that he was in fact pursuing it. More importantly, however, the proposition advanced by Mr Brett is wrong in principle. I again rely on Boland: "… that kind if individualised prediction is outside the scope of the exercise involved in estimating market value." (per Gleeson CJ at 228)

His Honour said that the test involved is one which is of an abstract nature involving a hypothetical purchaser - and I would add, a hypothetical vendor. 220 699. In short, I think that the hypothetical prudent purchaser, having completed a DCF as I have, would conclude that the subdivision as proposed by the claimant would not succeed. He would conclude, however, that the land could still have some limited potential for subdivision. I do not think that the use of the word "prudent" means that the hypothetical purchaser envisaged by Isaacs J in Spencer could not have some entrepreneurial flair. Such a prudent purchaser would, I think, consider the value of the "Starcke" freehold on the basis of it having a potential for grazing and an associated eco- tourism use, then would judge that above that it has some potential for subdivision, though not to the extent proposed by the claimant. I will leave this point here, but will return to it when I consider the sales evidence provided by Mr Blomfield. PDH Value 700. Mr Gould inspected the "Starcke" property initially in October 1995, however, not with a view to assessing compensation. His inspection for that purpose took place on 9 December 1999, however, the wet season had commenced and a detailed ground inspection was not possible. He therefore inspected the land by helicopter, landing in approximately six locations. One landing was at Bathurst Bay. He did know the country, however, and had the benefit of a more detailed recent inspection of "Kalpowar", which adjoins "Starcke" to the west. He is experienced in aerial inspections, though would have also liked to have had more time on a ground inspection. Mr Blomfield inspected the "Starcke" lands on a number of occasions before completing his valuation. 701. At the time of Mr Gould's inspection the improvements had suffered the ravages of bushfires and souvenir hunters with the result that he was at a disadvantage in estimating the value of structures. He inspected improvements at "Wakooka" outstation on the PDH, which included two sheds, bronco yards, a pound and race, together with a plunge dip with a drainage pen and sump. He also noted a cleared airstrip site. Mr Gould, whilst acknowledging the difficulty of making an assessment of the added value of the structures at the date of resumption, expressed the opinion that the added value of these improvements would not have exceeded $25,000. He noted two dams in the vicinity of "Wakooka" outstation, both of which were in a poor state of repair, but he was not able to identify other man-made water facilities because of the abundance of water lying on the ground from the recent rains. He also noted timber treatment, some to the south-east of "Wakooka" outstation showing heavy regrowth, whilst another area in the south-east of the PDH showed only light regrowth, in his opinion. 702. Mr Gould provided a valuation of the PDH, only, on the basis that the freehold was disposed of separately. He valued the land interest at $1,250,000 and improvements at 221 $25,000. In considering the highest and best use of the PDH Mr Gould noted not only the obvious grazing potential of the land, but that the property is on the tourist trail from Cooktown to Cape Melville and to Lakefield National Park to the west. He therefore concluded that there was an element of tourism potential which would add value to the pure grazing value of the property. Mr Blomfield's valuation of the PDH was made on the basis that this holding would be used together with the freehold. He attributed a grazing value only to the PDH, but valued the freehold on the basis that, in addition to grazing value, it had potential for an eco-tourism use. As his valuation is presented, however, it is possible to arrive at a value of the PDH alone, though on the basis that it is used with the freehold. I will deal with his freehold valuation later in these reasons. I will, however, record now that I will proceed on the basis of a single sale of the "Starcke" aggregation, but will consider the value of the PDH and freehold as notionally separate entities only for the purpose of arriving at value. 703. I should note that, given the irregular and uneven shape of the freehold located as it largely within the PDH, an assumed sale of the PDH independently of the freehold would mean the sale of a property with a poor shape, in the south, and a severed area of about 16,000 ha. Mr Blomfield's approach does not need to take into account this issue of shape, whereas Mr Gould's does. Given that I proceed on the basis of the PDH being used in conjunction with the freehold, separate treatment of this 16,000 ha is not required. It will be convenient if I introduce some background material now that will be useful when I consider the valuations - Mr Gould's in particular. 704. At the date of resumption there was only a handful of privately held properties along the east coast of Cape York Peninsula, all of which were located in an area identified by the State Government as being part of the Cape York Conservation Zone. I infer from the descriptive title of the zone that conservation of the relevant lands' natural environment would have been a significant goal of the designation, however, I was not provided with any detail as to the full implications of a property being included within the zone nor as to its precise boundaries. 705. Before the Conservation Zone became official policy, the Government, in May 1994, commenced negotiations to acquire the "Silver Plains" aggregation, a coastal property east of Coen and at the northern end of Princess Charlotte Bay. The acquisition was concluded in November of that year. Mr Gould relied upon this transaction together with another, "Kalpowar", in valuing the "Starcke" PDH. Mr Blomfield also referred to "Silver Plains", however, treated it as supporting evidence, only, for his valuation of the whole of the "Starcke" aggregation. 222 706. The "Silver Plains" property comprises a Pastoral Holding of 175,000 ha, a Special Lease covering 3,300 ha over part of a timber reserve and a Special Lease of 23,970 ha exclusive of road. Each of these leases was granted under the Land Act 1962. The Special Lease over the timber reserve was not the subject of any debate between the parties, so I will not discuss it further, however, will refer to the other Special Lease which was granted over two lots, each separated by a substantial tract of the Pastoral Holding. This Special Lease had approximately 30 km of coastal frontage and was subject to a condition that allowed its conversion to freehold, subject to the satisfaction of certain development conditions and following the approval of the Governor-in-Council. The freeholding conditions provided, inter alia, for a purchase price of the freehold at a figure set at $250,000 at the commencement of the lease, then increased in accordance with the Consumer Price Index compounded quarterly from the commencement of the term of the lease. 707. The lessee satisfied the requirements of freeholding, such that all that was required was the approval of the Governor-in-Council and the payment of the freehold purchase price. The lessee was actively pursuing freeholding, according to Mr Blomfield, and survey plans had been prepared to enable a Deed of Grant to issue. The Department of Environment and Heritage, however, expressed interest in acquiring parts of the leased land and that interest led to protracted negotiations. As a result, the freeholding of the Special Lease was not placed before the Governor-in-Council for consideration and the State proceeded to negotiate for the acquisition of the whole of the "Silver Plains" aggregation including the Special Lease. According to Mr Blomfield, the State paid a price for the Special Lease as if it were freehold. I will return to discuss this aspect in some detail. 708. Mr Gould gave evidence that in July 1994 the ANZ Bank, as mortgagee of the "Kalpowar" aggregation, began pressuring the lessee to take steps to sell the property. "Kalpowar" is a large property which adjoins the "Starcke" aggregation to its west and to the west of "Kalpowar" is the Lakefield National Park. "Kalpowar" has coastal frontage to Bathurst Bay and to a small section of Princess Charlotte Bay, but might otherwise be described as a hinterland property. 709. The bank appointed a sales agent in June 1995, then on the 28th of that month the Premier announced the State's intention to acquire all of the remaining privately held land on the eastern seaboard of Cape York in the Conservation Zone. As a result, the process of private sale was discontinued and, according to Mr Gould, the ANZ Bank effectively took control of negotiations with the State, resulting in an agreement for the State to acquire the "Kalpowar" aggregation on 20 December 1995. 223 710. It was Mr Gould's understanding that the purchase of both "Silver Plains" and "Kalpowar" by the State were made without the threat of resumption, however, he said that both vendors were aware that "they were dealing against a player with a strong hand". That, I think, understates the position with regard to "Silver Plains". The final agreement between the parties to the transaction, which I will come to shortly, makes it clear that the "sale" was involuntary. The owner of "Silver Plains" was also in the position of not having yet received freehold title to the Special Lease, so his best hope of receiving full value for that lay with the State, not in a competitive market. I will return to discuss both "Silver Plains" and "Kalpowar" in due course. It may be useful, however, if I now provide an overall summary of Mr Blomfield's value of the "Starcke" aggregation. "Starcke Pastoral Development Holding - $ $

166,000 ha @ $5.00/ha 830 000

Freehold lands - 24464 ha ($100/ha) Site Value 2 500 000 3 330 000

Add: Structures on PDH and freehold 203 800 Yards 47 700 Timber treatment 550 400 801 900

4 131 900

Add: Plant and Equipment 4 800

4 136 700

ADOPT $4 150 000 "

711. In valuing the PDH Mr Blomfield referred to six sales. It will be convenient if I discuss his valuation of the PDH first, then return to Mr Gould's. Mr Blomfield's Sales (for PDH) Sale 1A - "Strathmay" Station (Minka Pastoral Holding) - date of sale 31 August 1992 - area 120,434.5 ha - carrying capacity 1:35 ha (3,440 head) - total sale price $700,000 - analysed sale price per ha fenced and watered $185,945 ($1.54 per ha) - beast area value $54.05.

Sale 2A - "Inkerman" Station (Alma, Galbraith, Kuparee and Wynola Pastoral Holdings) - date of sale 9 August 1993 - area 267,079.8 ha - carrying capacity 1:23 ha (11,612 head) - sale price $5,000,000 - analysed sale price per ha fenced and watered $2,338,281 ($8.75 per ha) - beast area value $201.38.

Sale 3A - "Strathburn" Station - date of sale 12 October 1993 - area 246,048.9 ha - carrying capacity 1:31 ha (7,937 head) - sale price $750,000 - 224 analysed sale price per ha fenced and watered $312,905 ($1.27 per ha) - beast area value $39.42.

Sale 4A - "Glen Garland" Station (Ancilia Pastoral Holding) - date of sale 15 October 1993 - area 90,132 ha - carrying capacity 1:54 ha (1,669 head) - sale price $650,000 - analysed sale price per ha fenced and watered $424,134 ($4.71 per ha) - beast area value $254.12.

Sale 5A - "Koolburra Station" - date of sale 16 February 1994 - area 160,000 ha - carrying capacity 1:28 ha (5,714 head) - sale price $950,000 - analysed sale price per ha fenced and watered $313,025 ($1.95 per ha) - beast area value $54.78.

Sale 6A - "Strathhaven" Station (Ingleby Pastoral Holding) - date of sale 21 January 1994 - area 64,700 ha - carrying capacity 1:50 ha (1,295 head) - sale price $495,000 - analysed sale price per ha fenced and watered $284,979 ($4.40 per ha) - beast area value $220.06.

712. Mr Blomfield said that he did not rely on each of his six sales as properties which might individually be directly compared with the "Starcke" PDH, but considered them overall. He said that the variations in values reflected by the sales suggests some "market uncertainty in Cape York", however, he considered that the volume of sales served as useful evidence of value. He did, however, make some broad comparisons between the sales, saying that the better comparisons between the "Starcke" PDH are to be made with Sales 1A, 3A, 4A, 5A and 6A, paying particular regard to the carrying capacity as assessed by him. He said that access is a problem common to all of these properties. In comparison, the subject PDH, which has internal access difficulties given its elongated shape, has access to the southern boundary which is superior to each of the sales, in his opinion. 713. There were a number of issues raised by the claimant with respect to these sales, however, the main point of criticism was that, apart from Sale 2A, none was a coastal sale. Sale 2A itself is on the west not the east coast, therefore in the claimant's view is substantially inferior in location. The claimant's position was that the east coast location lends to properties there a higher tourism potential than properties in the west or those located in the central part of Cape York would have. Mr Gould said that the sales used by Mr Blomfield were strictly grazing properties, usually purchased by those who wanted a quiet rural life, whereas purchasers in the east included "name" buyers. For example, the "Starcke" aggregation had, before purchase by the claimant, been owned by companies associated with Sir Peter Abeles and "Kalpowar" was owned by a company that had involvement with Mr Izzy Hertzog, a well-known developer from Melbourne. He referred to Mr Minuzzo, also a developer who at one stage was involved in the ownership of "Kalpowar". "Silver Plains" was at the time of acquisition by the State owned by an 225 American family who had plans of developing substantial facilities there as part of a tourist venture. Mr Gould said that a different type of buyer would be attracted to such east coast properties: buyers who were looking at more than pure grazing. My attention was also drawn to the announcement of the Premier in June 1995 when he made public the State's intention to acquire all of the remaining privately held land on the eastern seaboard of Cape York for the Conservation Zone: such evidence said to indicate a significant difference between the quality of land in that zone and that located elsewhere in the Cape. I note also that when the Premier announced to Parliament in September 1993 the intention to acquire the "Starcke" aggregation and to introduce the Starcke Bill, if required, he made reference to "this important piece of coastal land". I note that the Premier's reference was not a reference exclusively to the PDH, but included the freehold. 714. I accept that the east coastal location of the PDH and its proximity to Cooktown, as well as its association with nearby natural features, lends to that property an aspect that the market would value. In that respect the PDH, I find, is superior to each of Mr Blomfield's sales. I will return to this issue later in these reasons. 715. Another difference between the "Starcke" PDH and those properties referred to by Mr Blomfield, in particular Sales 1A, 3A, 4A and 6A, is that the rainfall near the coast and therefore near "Starcke" is significantly higher than it is for those properties. Whilst this is a relevant consideration, such a feature ought to be reflected in the quality of country and carrying capacity, which I deal with below. There is no need, therefore, for me to detail the evidence on rainfall differences. 716. The claimant's criticisms of Mr Blomfield's sales as being less well-located grazing properties was drawn into question by the respondent, who referred to Mr Gould's two valuations of "Kalpowar" for the mortgagee ANZ Bank in August 1994 and December 1995. In these valuations he had included schedules of sales which listed many of the sales relied upon by Mr Blomfield, as well as others which might be criticised by the claimant in the same respects as those made against Mr Blomfield's six sales. The implication is that the criticisms lack consistency and merit. Mr Gould's answer was to say that, first, the schedule of sales was a "living document" in the sense that it collected together sales as they occurred, even though information on each was incomplete, though was being added to as it became available. That clearly seems to be the case. He said also that the sales were included partly to "pad" the valuation report which was prepared not for litigation purposes, but as an advice to a mortgagee. Each of Mr Gould's valuation reports said that the sales were "not easily compared to the subject which differs substantially in size, quality of country and tourism potential" and went on to say that some sales took place for 226 purposes other than grazing. Nevertheless, in the 1994 "Kalpowar" valuation the estimated value was expressly based on the sales, though not compared on a direct one-to-one basis. It appears to me that Mr Gould used the sales in a similar manner to the way Mr Blomfield did in the present case though with a measure of reluctance. 717. In his 1995 valuation of "Kalpowar" the "Silver Plains" transaction was included and was directly relied upon as the best evidence, according to Mr Gould. Mr Gould's understanding of the Government's apportionment of the overall "Silver Plains" purchase price into leasehold and "freehold" was adopted by Mr Gould in valuing "Kalpowar" at $3,250,000. He had been told by a State Government officer that the full price was $4,500,000 and that this price took into account the freeholding price of the Special Lease. He therefore assumed that the provision of a Deed of Grant over the Special Lease area was all but a formality. He understood that the State paid $3,500,000 net for the Special Lease and $1,000,000 for the Pastoral Holding. His comparison was with the Pastoral Holding component only of "Silver Plains" as "Kalpowar" did not include freehold or any Special Lease which was capable of being freeholded. His 1994 valuation, based generally on the sales evidence available apart from "Silver Plains", had produced a value of $2,550,000 for the "Kalpowar" lease. This tends to indicate that the value of "Kalpowar" when estimated on the basis of an east coast sale, "Silver Plains", more readily reflects its east coast location. 718. It is clear to me that Mr Gould had proceeded in his 1994 and 1995 valuations of "Kalpowar" on the basis that the general Cape York sales evidence could be employed, but that a "sale" on the east coast was preferable in valuing properties enjoying a similar location. That understanding leads me to conclude that on the evidence, Mr Blomfield's sales cannot, on the basis of their location, be rejected as being unsuitable for comparison with the "Starcke" PDH. The question remains, however, as to whether the two transactions relied upon by Mr Gould provide the better basis for valuation purposes, particularly a valuation for the assessment of compensation. This now brings me to some specific criticisms of individual sales relied upon by Mr Blomfield. 719. The marketing material made available to interested persons prior to the presentation of "Inkerman" (Sale 2A) at auction, included a letter from the Department of Environment and Heritage to the intending vendor indicating the interest of the Department in acquiring a portion of that property, apparently by resumption if necessary. The effect of the loss of that particular part of the property was described by a real estate agent involved in the transaction as a loss that "kicked the guts" out of "Inkerman". This is because the land which attracted the interest of the Department was a superior part of the property for 227 grazing purposes and included improvements and water facilities. The State's view of that matter before me was that any prospective purchaser would anticipate that he would receive reasonable compensation for the loss of that valuable part of "Inkerman", however, Mr Gould, I think, put the matter into a practical perspective. He said that there can be a number of aspects which would discourage a purchaser from buying a property which he knew was going to be resumed and that there probably would be a consequential impact on the purchase price. 720. Mr Blomfield said that he was aware of the departmental interest in "Inkerman" and said that that issue comprised one of the reasons why he treated the sale as "supporting evidence" only. The respondent submitted that the circumstances outlined should lead to a conclusion that the sale price would have been lower than might otherwise be expected, therefore the sale ought not to be referred to as supporting evidence, but treated as a low sale. It was also submitted that whilst the "Inkerman" property has better grazing land than the "Starcke" PDH, it is much more remote, has difficult access and an inferior location away from the eastern seaboard. In addition, it was suggested that "Inkerman" did not have the environmental significance of the "Starcke" PDH, however, given the Department of Environment and Heritage's view that the "Inkerman" land has "significant conservation values", I cannot accept that suggestion, though would agree that the visual attractions of the "Starcke" region would be superior. 721. Given the circumstances of Sale 2A, the transaction should be treated with caution. I do not agree that an assumption should be made that its value would be greater than the analysed figure of $8.75 per ha. That would treat the sale as, apart from this aspect, being consistent with a stable, mature market - a proposition that the sales evidence does not support. I think that the best way to treat the sale is to rank it as the least important of Mr Blomfield's sales. 722. Sale 5A, "Koolburra" Station, was a transaction in which part of the purchase price involved an exchange of a unit at Hamilton Island, an element of the transaction not disclosed by Mr Blomfield in his valuation report. It ought to have been mentioned. As well he should have included a statement as to the manner in which he had dealt with that particular circumstance. The evidence concerning the exchange was provided orally and Mr Blomfield detailed how he had made inquiry through a firm of valuers involved in valuation of the units at Hamilton Island. He was satisfied that the price of the unit was appropriately accounted for in the sale transaction. Mr Gould had not made similar inquiries. 228 723. There was, subsequent to the sale of "Koolburra" referred to by Mr Blomfield, a further sale and this involved as part of the sale price an exchange of a commercial property at Nambour. Mr Blomfield did not fully investigate that transaction, saying that at the time of this later sale "Koolburra" had, he understood, been substantially improved, thus contributing to a higher sale price. I see no need to consider this subsequent transaction further. 724. The vendor in Sale 5A was apparently financially distressed before the sale. There was evidence of a written request to the then Land Administration Commission for a remission of annual rent in which the vendor revealed that his debts with respect to the property were greater than the sale price subsequently received. Such a circumstance is a relevant consideration, but becomes a matter of significance only when the sale price appears to be low when considered in the context of the sales evidence generally available. A comparison between Sales 5A and 6A indicates that Sale 5A is low. Sale 6A has a carrying capacity of 1:50 ha, according to Mr Blomfield, whilst Sale 5A carries 1:28 ha, yet the analysed sale price per ha (fenced and watered) was calculated by Mr Blomfield at $1.95 for Sale 5A and $4.40 for Sale 6A. Part of that differential may be attributable to the smaller area of Sale 6A (64,700 ha versus 160,000 ha for Sale 5A), however does not provide a complete explanation in my view. Mr Gould expressed the view that Sale 6A is significantly inferior to the "Starcke" PDH. Whilst I acknowledge the lack of sophistication in the market in Cape York, the evidence does point to Sale 5A being a low sale. Direct comparison with it should not be made. I now turn to another concern raised by the claimant with respect to Mr Blomfield's sales under discussion. 725. As will be apparent from the information supplied above, Mr Blomfield provided an analysis of the purchase price of each of his sales by deducting an estimated value for improvements apart from fencing and water. If the final analysed land value is expressed as a percentage of the total sale price, the following percentages are revealed: Sale 1A 26.5% Sale 2A 46.75% Sale 3A 41.75% Sale 4A 65.25% Sale 5A 33% Sale 6A 57.5% 726. In such circumstances where the added value of the improvements forms a high proportion of the sale price, the reliability of the analysed rate per ha is dependent very largely on the correctness of the analysis. That comment equally applies, of course, to the 229 two transactions relied upon by Mr Gould, however the valuers must take the market as they find it - they cannot manufacture market evidence. 727. One of the items of assessment in each of Mr Blomfield's sales is the value of livestock. In four of the sales there were no guarantees in the relevant contract as to the number of stock to be found on the property. In the case of Sale 1A there was a guarantee as to stock numbers, whilst in Sale 6A the allowance made by Mr Blomfield was based on the number of stock assessed by the purchaser. In Sale 2A, a sum of $287,600 was allowed in the analysis for calves, in circumstances where the evidence from the respondent was that a purchaser would normally make no allowance or a minimal allowance only. In the other sales, Mr Blomfield adopted the number of stock suggested in the contract as being on the property and placed a value on these of $200 per head. In Mr Gould's opinion an allowance should be made reducing the value allowed for stock in these sales for the risk that would be applied by a prudent purchaser that the stock numbers would not, in fact, turn out to be as stated in the contract. Mr Blomfield's evidence was, however, that he had fully investigated each sale by interviewing both the vendor and the purchaser and that stock figures in each contract were intended to represent an estimate made on a mixed herd basis but without the benefit and the cost of a muster. Given the largely open-range style of stock management in the Cape, estimates would always be unreliable and either the purchaser would gain a few head or fall a few short, according to Mr Blomfield. In comparison with these sales, "Starcke" PDH presents for valuation on a destocked basis and with very few improvements. 728. Accordingly, the value attributable to livestock is an important consideration. Nevertheless, Mr Blomfield's approach to this issue appears (with the possible exception of Sale 2A) to have been appropriate and thorough in the circumstances. This does not mean that his figures must be treated as accurate, but that they are acceptable, given the difficulties involved in such an analysis. In the process of comparison with the "Starcke" PDH it would be appropriate however, in my view, not to treat Mr Blomfield's analysis of his sales (including his treatment of livestock) as being accurate without qualification, but to ensure that reasonable doubts as to their accuracy are resolved in favour of the dispossessed owner. 729. One point of difference between Mr Gould and Mr Blomfield was the method of comparison each said they had employed. In analysing his sales Mr Blomfield placed a value on the improvements including such clearing as there was, but excluding fencing and water. His comparison was, therefore, on a fenced and watered basis, according to his evidence. Mr Gould's method was to include the value of fencing in his value of structures 230 and to compare properties as watered and cleared. He employed this method, he said, first because management practices varied widely with regard to fencing in Cape York and, second, because direct comparison on per ha or beast area basis is easier when treating the properties as cleared and watered. I understand this would be because the comparative carrying capacities would be more easily estimated and compared. In the end, I think there is little real difference between the two valuers on what they said was their preferred method, as in Mr Blomfield's six sales the allowances for clearing are not very high and are generally confined to areas associated with structures or in holding paddocks near property, housing and accommodation. That is, they do not contribute to increased carrying capacity in any meaningful way. That position changes when I come to "Kalpowar", and I will consider that, specifically. I note that Mr Blomfield employed a technique in assessing carrying capacity where he viewed each property under consideration on the basis that clearing that existed had actually been carried out. That is, he attempted to assess actual carrying capacity as if the cattle had access to the water and cleared land that was there, with fencing such as it might be. 730. The beast area value (BAV) method of valuation or of comparison between properties may, as I understand the evidence before me, be described as a process where the value of a property is converted into a figure which is the product of its carrying capacity and its sale price or value. I was not presented with a dissertation on nor a full description of the method and its uses and implications. The following discussion is therefore an attempt to distil from the evidence the essentials of the method and its application. A 100,000 ha property which sold at $1,000,000 (ex all structures including fencing) and a present carrying capacity of 1 beast to 20 ha (that is 5,000 head) has a BAV of $200. That is, each beast occupies and uses $200 worth of land which includes the water that the beast will drink and any clearing or pasture improvement that contributes to the carrying capacity. If the land is capable of further improvement, for example, by additional clearing, this can be treated as a quality in the property in the form of potential to carry an extra, say, 1,000 head at some cost or it can be reduced to a mathematical representation of that potential. Employing the first method involves the use of judgment, such that the BAV of $200 in the example above may be described as a BAV for such a property with potential with additional clearing. Some indication of the extent of potential would usually be included. Elements of access, location and such features come into play in a similar manner. In his valuation process Mr Blomfield said that he employed a method such as this. 231 731. Alternative to the judgment method, the estimated cost of the extra clearing could be taken into account in a mathematical way. Say, for example, the additional clearing was to cost $150,000 on estimate, the overall price of the property would be $1,150,000 (that is $1,000,000 purchase price plus $150,000 clearing) with the anticipation that the carrying capacity would increase to 6,000 head. On that calculation the BAV on a developed basis would be $191. 732. Consider another property which carried 5,000 head, but which had the potential for a further 1,000 head, but with an expenditure of $250,000. All other things being equal, that property would, prior to further development, be less valuable than the first example. Say it would have cost $800,000 to buy or $160 present BAV. Add to that price the cost of development of $250,000. Thus, to carry 6,000 head the fully developed cost would be $1,050,000 or $175 BAV fully improved. 733. Now in comparing the first property example with the second, it will be clear that (all other things being equal) the first with a fully developed BAV of $191 will be more valuable than the second with a fully developed BAV of $175. As other sales properties are analysed they may show a range of fully developed BAV's and it may become possible to identify some sales as "high" and some as "low". 734. A practical use of BAV's is that it can point to whether further development work is economic. For example, the development work would not be economic if, for example, 1,000 extra head could be carried on other land that could be purchased at $200 BAV or a total of $200,000, whereas it may cost $250,000 to develop the present property. 735. Mr Gould employed both present and potential carrying capacity in his valuation, but in the calculation of the BAV for his potential carrying capacity did not consider the cost of achieving it. This may have been because, in his view, the supply of relatively inexpensive water facilities was thought to be adequate to substantially increase carrying capacities on each of the properties under consideration ("Silver Plains", "Kalpowar" and "Starcke" PDH). However, as I understand the methodology, that cost, whatever it might be, ought to be included in order that the true potential or developed BAV may be revealed. As I have no costs and as both Mr Blomfield and Mr Gould provided me with present carrying capacities, I think it appropriate for me to proceed on the basis of considering present carrying capacity, keeping in mind a viewpoint by Mr Gould, though not shared by Mr Blomfield, that properties, including the "Starcke" PDH in particular, have potential to increase carrying capacity. 736. One aspect of the BAV method which is important is that it indicates the appropriateness of price or value. Thus a very high BAV compared to others shown in the 232 marketplace will show a price to be too high, assuming that the additional money in the BAV is not catered for by a substantial opportunity to achieve potential at relatively low cost. 737. It will be clear that the application of the BAV method is highly dependent on carrying capacity. An error there will make the figures go awry. I will discuss carrying capacity shortly, but will foreshadow at this point that that discussion shows the carrying capacities in Cape York are less an expression of land classification than in more closely settled and long utilised areas in other parts of the State. An uncertain market, according to Mr Blomfield and, I would think, a narrower range of purchasers, together with an opportunistic style of management means that BAVs are even less certain than in other parts of the State and ought not to be used as a primary method, but as a check method only. 738. In valuing grazing properties a critical factor for comparison purposes is the carrying capacity of both the subject land and the sales. Other factors such as location, aspect, shape and such like are not able to be expressed numerically, so tend to become second order for consideration. This is a suitable point to carry out a discussion of the subject of carrying capacities. 739. In Mr Gould's valuation of the "Starcke" PDH he treated the disconnected/severed 16,000 ha separately, therefore leaving him with 150,000 ha in the main body of the property. Mr Blomfield treated the whole of the PDH as equally available for grazing, therefore, his absolute number of cattle would be higher than he would have estimated had he employed Mr Gould's approach. I take this into account in my discussion of the carrying capacity issue. 740. A further point of difference of approach between the valuers is that whereas Mr Blomfield took into account present carrying capacity in his valuation, Mr Gould also took into account the carrying capacity potential of the subject land and his two basic transactions. I return to this below, but will focus on present or actual carrying capacity. I will have regard to the opinions expressed concerning potential to increase carrying capacity, not so much as an actual figure to be employed mathematically, but as an expression of opinion concerning the quality of the country, which may support more stock - with added water, in Mr Gould's view. I do this for four reasons. First, there is sufficient controversy concerning present carrying capacity without introducing another complicating factor. Second, whilst I have these opinions on three properties ("Silver Plains", "Kalpowar", and "Starcke" PDH), I do not have such opinions for all of the properties under consideration. Third, there is some uncertainty in my mind as to whether 233 purchasers will pay a price for land based on potential that may be difficult to fully achieve. Fourth, no disadvantage flows to the claimant in the approach I intend to adopt. 741. Mr Gould expressed the view that the 150,000 ha of the PDH, apart from the separate 16,000 ha, was capable of carrying one beast to 27.5 ha on average, giving a total carrying capacity of 5,455 head. He suggested a potential carrying capacity of one beast to 22.5 ha, that is 6,667 head, with the addition of extra water facilities in the area westerly from "Wakooka" outstation. In his written report Mr Gould said that his potential carrying capacity figure, if spread over the entire PDH, would equate to 1:25 ha, however, I understand that this assumes a nil carrying capacity on the severed 16,000-ha area. 742. In comparison, Mr Blomfield estimated a present carrying capacity for the PDH of 1:49 ha (3,320 head), which is a recalculation provided by him in his evidence-in-chief. The original carrying capacity in his report was 1:50 ha. Of interest, only, for present purposes is Mr Blomfield's carrying capacity estimate for the "Starcke" freehold of 1:16 ha. Mr Blomfield's carrying capacity of the PDH was arrived at by employing a combination of on-the-ground inspection and the use of CYPLUS land classification maps and data. This material (CYPLUS Natural Resources Program Vegetation Mapping Project) provides a classification of land type on Cape York and indicates a range of carrying capacities considered appropriate for each class, according to work undertaken by Mr Blomfield's department. Those carrying capacities are broad and require individual assessment rather than automatic application. Mr Blomfield's reliance on that material was criticised on the basis, first, that it was not data available for sale to the public at large and was not generally relied upon by purchasers at the relevant date; second, that the land classification produced from this method was unduly refined and not a classification of the type purchasers would usually have regard to; and, third, the CYPLUS data provided country description break-up but did not offer any precision with regard to carrying capacity, providing a broad range of capacity only for each country type. I will deal with these issues now. 743. Whilst the CYPLUS data was apparently not available for sale to the general public in March 1994, Mr Blomfield said that people could access it and get advice with respect to it at the Department of Lands' office in Cairns at that time. Maps were not in the coloured form presently available, but were black and white representations of the same information. Mr Blomfield acknowledged that the data was an aid, only, in the estimation of carrying capacity in that it provided a reliable description of country. He said that on-the-ground inspections were often unreliable as roads used for such inspections were usually constructed on the harder ridge country, therefore leaving the valuer to seek out the better country, much of which may lie undiscovered. The CYPLUS data was an invaluable aid in 234 that regard, he said, and generally improved the quality of the information available to the valuer. Unfortunately, I do not have the benefit of Mr Gould's views on the use of CYPLUS data as he was not cross-examined on it nor was he recalled for that purpose. In contrast to Mr Blomfield's method, he worked from topographic maps and broad country classifications - a method that probably more clearly reflected a market approach. 744. Mr Blomfield's description of the "Starcke" PDH, which resulted in part from his use of the CYPLUS information, included: range country of 32,560 ha (17%) generally along the western boundary falling through steep to undulating stringy bark, bloodwood and ironwood forest of about 42,500 ha (22%) and about 5,200 ha (3%) of ironbark, bloodwood and mixed eucalyptus on rugged plateau edges. There are better areas of undulating box country of about 17,470 ha (9%) and about 21,330 (11%) of drainage lines and rolling downs of molloy box, poplar gum and broadleaf carbeen. There is about 30,340 ha (16%) of mixed tea tree associations and about 4,800 (3%) of ti tree soaks, depressions, swamps and lagoons and about 4,100 ha (2%) of poorer quality ti tree forest. There is about 1,400 ha (1%) of stringy bark, carbine and swamp mahogany moist lowland areas. He said about 12,420 ha (6%) comprises tidal mangroves and salt flats and about 8,950 ha (5%) comprises heath country and wind-swept headlands. There is also about 4,040 ha (2%) of rainforest and mixed scrub and about 1,870 ha (1%) of undulating carbine, bloodwood and poplar gum forest on red clay loam soils generally to the south and around the main homestead. The balance area of about 3,484 ha (2%) comprises gallery forest along numerous intersecting creeks and rivers. 745. That is certainly a more fine-grained description of country than the broader "prose" description used by Mr Gould and would, I think, be more precise than would generally be employed in the marketplace. Mr Gould said that 108,000 ha comprised average forest, better grazing was 7,000 ha, whilst unavailable country covered 35,000 ha. 746. The range of carrying capacities included in the CYPLUS material relied upon by Mr Blomfield were arrived at following consultation with industry, according to his evidence. The range of carrying capacities suggested for each country type was so broad as to leave to the valuer a responsibility to form his own view as to the capacity of each class of country. In these circumstances it seems that the main suggested benefit of the CYPLUS material was in the designation and break-up of country types. 747. Mr Blomfield used the CYPLUS material, together with physical inspection, of both the subject PDH and his sales in the assessment of the carrying capacity of each property. Whilst Mr Gould had some knowledge of certain sale properties relied upon by Mr Blomfield, he had not inspected them for the purpose of this case and was not in a 235 position to express a considered opinion as to their respective carrying capacities. He did, however, provide some useful comment with respect to some of these sales and I will come to those shortly. 748. Although I have some reservations as to the level of use that the CYPLUS material might have enjoyed in the marketplace at the relevant date and at the time of the various sales employed by Mr Blomfield, his evidence of carrying capacity in respect of these sales is clearly the best evidence on that matter, therefore, should be considered by me. Apart from that, the various carrying capacity assessments carried out by Mr Blomfield should have gained a degree of reliability by being estimated by a single expert employing a standard methodology. A greater level of consistency ought to result. Mr Gould was of the view that consistency between carrying capacities of various properties would be best maintained by having the same person carry out the assessment on each property and by having those assessments carried out at the same time of the year, therefore, subject to the same seasonal influences. These are matters that Mr Blomfield appeared to be aware of. 749. Evidence was tendered by the claimant drawn from DNR records, which showed that apart from Sale 2A, each of Mr Blomfield's carrying capacities for his sale properties were generally better or "tighter" than the carrying capacities said to have been "historically" applied by that Department. This table summarises this evidence: Sale Property Historical Carrying Mr Blomfield's Carrying Capacity Capacity

1A 1:80 ha 1:35 ha 2A 1:23 ha 1:23 ha 3A 1:50 ha 1:31 ha 4A 1:80 ha 1:54 ha 5A 1:50 ha 1:28 ha 6A 1:80 ha 1:50 ha

750. In the case of the "Starcke" PDH the 1971 "opening" carrying capacity of 1:65 ha was assessed for both the present PDH, areas of subsequently surrendered land and the present freehold combined. Mr Blomfield assessed the PDH at 1:49 ha as at the relevant date. The suggestion by the claimant is that in striking his carrying capacity for the "Starcke" PDH, Mr Blomfield has not maintained the relativity between the "Starcke" property and the various sale properties, according to the historical carrying capacities mentioned above. In other words, if he was applying a consistent relativity template to each of these sales and to the "Starcke" PDH, a better carrying capacity for the "Starcke" PHD would result. The evidence is that the opening figure would have been light and that even with the freehold removed, the present figure for the PDH would have been better 236 than 1:49 ha. Mr Gould pointed out that since the initial opening of the "Starcke" holding lands which have been surrendered for National Parks were generally of a rough, poor type of country. It follows, he suggests, that the carrying capacity of the balance would have improved on a pro-rata basis. 751. The historical DNR carrying capacities have in recent times been substantially reviewed by the Department using CYPLUS material, and Mr Blomfield explained that many carrying capacities have been tightened, with some being "let out", yet others maintained at the same level as in the historical records. Numerous Crown reports and records of these historical carrying capacities were tendered, however, it appears that many were recorded without inspection. In one case (Sale 1A) the historical carrying capacity was recorded in Exhibit 61 as 1:80 ha (compared with Mr Blomfield's 1:35 ha), then a further exhibit in the form of a property sketch with attached notes taken from a DNR file was tendered showing the carrying capacity at 1:35 ha. If that figure was included in the historical carrying capacity of that property, Mr Blomfield's present carrying capacity would be seen to be the same as the historical carrying capacity in Sale 1A, but tightened in the case of the remaining sales, apart from Sale 2A. 752. The claimant drew my attention to Exhibit 61 where the handwritten classification showed that the worst part of that property (Sale 1A), namely the "SB sand and gravel ridges" had been assessed at a capacity of 1:50 ha. It was suggested, and probably correctly, that that classification referred to the area described on the sketch plan as "poor, low, sandy bloodwood, messmate, wattle, quinine, ironwood, tea tree and grassed tree ridges". The submission arising out of that evidence was that Mr Blomfield's carrying capacity on the "Starcke" PDH at 1:49 ha indicates that his carrying capacity for the "Starcke" must be too light as the "Starcke" PDH country is of better quality overall than the description of country in Exhibit 61 to which the author of that document applied a carrying capacity of 1:50 ha. That submission has merit. I note that Mr Gould described Sale 1A as being "hungry country", yet Mr Blomfield has applied a better carrying capacity to that than he did to the subject. 753. I note that Mr Blomfield's report includes a country description of Sale 1A, which appears to largely agree with the description included in Exhibit 61. I observe also that Mr Blomfield's carrying capacity of 1:49 ha for the subject PDH takes into account a combination of country types which includes, on Mr Blomfield's description, which I have set out above, greater than 50% of the PDH land area described as poor quality, low carrying capacity land. On my reading of it, however, it is better than the Sale 1A country described above and assessed at 1:50 ha. 237 754. I have formed a view on the evidence thus far discussed that I cannot conclude that Mr Blomfield has unduly tightened the carrying capacities of the sales, which he included in his valuation report. Having said that, I note that his carrying capacity for the "Starcke" PDH showed little variation from its historical levels of 1:65 ha and will now focus on that. 755. Mr Blomfield's estimated carrying capacity of the "Starcke" PDH was said to be too harsh compared with the opinions of Mr Gould and an opinion expressed by Mr Scott Aitcheson, a DNR valuer who prepared a valuation of "Starcke" dated 21 October 1993. The claim of harshness, it was said, was supported by consideration also of the various carrying capacities applied to "Silver Plains" and "Kalpowar":- Silver Plains Kalpowar Starcke

Gould 1:30 1:32 1:30 Cotter 1:30 1:32 - Aitcheson - - 1:40 Blomfield 1:32 1:35 1:49

756. In order that this table might be understood, I should provide some explanatory comments:  All of Mr Gould's carrying capacities are actual, not potential.

 Mr Gould's carrying capacity for "Starcke" is assessed over the whole of the PDH including the severed 16,000 ha.

 "Cotter" is a Mr Gary Cotter, a valuer in the employ of DNR who prepared a valuation report for "Silver Plains" without inspection in 1994.

 The carrying capacity for "Kalpowar" attributed to Mr Blomfield was not, according to him, assessed by him as he had not inspected "Kalpowar" for this purpose. Apparently the figure comes from a departmental file. Mr Blomfield said that Mr Cotter agreed with him that this carrying capacity would be 1:35 ha, though he had initially thought it to be 1:32 ha.

 Mr Blomfield's carrying capacity for "Silver Plains" was assessed by him by use of on-the-ground inspection and CYPLUS.

757. The suggestion from the claimant's side is that there is a high degree of consistency between the opinions concerning the carrying capacities of "Silver Plains" and "Kalpowar", but that Mr Blomfield's assessment of carrying capacity for the "Starcke" PDH is demonstrably inconsistent with the opinions of the other valuers, namely, Mr Gould and Mr Aitcheson. In fact, Mr Blomfield's and Mr Aitcheson's opinions on the "Starcke" PDH carrying capacity are marginally closer together than the Aitcheson/Gould opinions. Mr Aitcheson's report indicates that he inspected "Starcke" on 28, 29 and 30 September 1993. His method of assessing carrying capacity is not revealed by his report, however. In the 238 case of the "Starcke" freehold, he assessed the carrying capacity at 1:15 ha, which compares with Mr Blomfield's assessment of 1:16 ha. It is only in the assessment of carrying capacity for the leasehold land that Mr Aitcheson and Mr Blomfield part company. I would suspect that any intending purchaser of the "Starcke" PDH would have (as did Mr Blomfield and a former DNR valuer Mr Scott Aitcheson) seen "Starcke" in an under-managed state. Mr Quaid described to me that the property had not been actively managed for some years. Its comparison with other properties would need to take this into account. 758. I am not able to identify a conclusion on this matter by any forensic technique, but must be guided by the weight of the evidence. In that respect Mr Blomfield's opinion is either out of step - or is the only one in step. He has not convinced me that it is the latter. I am concerned, having considered the evidence overall, that Mr Blomfield may have placed too great a reliance on the use of the CYPLUS material and the mathematical application of the carrying capacities he applied to each class of country. Cape York properties are grazed very much on an opportunity basis having regard to the location and quality of pasture generated by the wet season. The carrying capacity of poorer blocks would be very much influenced by the cattle population that will be supported during the dry season. There appears to me to be more than the usual scope for variations in opinion as to carrying capacity in Cape York properties compared with other parts of the State where carrying capacities are more settled. Management techniques in the Cape are relatively unsophisticated and certainly not intensive, so the carrying capacity of a particular property would vary, depending on the nature of the enterprise and the level of management. 759. "Starcke" has the advantage of better quality country in the freehold, especially to the south. Whilst Mr Blomfield had notionally separated the freehold and the PDH in his valuation, his highest and best use is one which should have taken account of the balance of country overall. I accept that his inspection of "Starcke" was marginally superior to that carried out by Mr Gould, but I do not dismiss Mr Gould's opinions because of that, nor because he carried out his inspection during a time of pasture flush. Mr Gould is a highly experienced valuer who would be aware of the need to take seasonal variations in the Cape into account. Nevertheless, I think that his present carrying capacity for the PDH is much too ambitious for the class of country available. Mr Aitcheson's written opinion is of relevance, but its influence on my conclusion on this issue must be limited by the fact that he was not called and that his methodology is not known to me. 760. These factors lead me to conclude that for the purpose of comparison the carrying capacity applied to the "Starcke" PDH ought to be somewhat tighter than the 1:49 ha 239 settled upon by Mr Blomfield. Having regard also to his description of country on his sale properties, I cannot conclude that his carrying capacity for the "Starcke" PDH ought to be expressed as being any better than 1:40 ha. That is the level I will adopt in considering his sales evidence. I acknowledge that it is the same as Mr Aitcheson's figure but it is not that, but the evidence as a whole that has influenced me. A carrying capacity of 1:40 ha over 166,000 ha equates to 4,150 head. 761. Mr Gould suggested that additional water westerly from "Wakooka" outstation would improve the carrying capacity by 1,212 head. He openly acknowledged that this area was subject to lying water during his inspection, but said that some inexpensive water facilities would help cattle work this country into the dry season. Mr Blomfield did not agree with this, his main point, as I understand it, being that if Mr Gould was correct, it would have been done before. Mr Aitcheson did not include any potential carrying capacity in his 1993 report. I accept that Mr Gould has expressed an honestly held opinion - one that may have been assisted by his client Mr Quaid, though there was no evidence to that effect. I intend recognising that there is further grazing potential on the "Starcke" PDH, but will not accept the precision of Mr Gould's figure. 762. Mr Blomfield's sales, as I have said, were criticised by the claimant for not having been east coast properties, therefore, not having the same tourism prospects as the "Starcke" PDH. Mr Blomfield did recognise tourism potential in valuing the "Starcke" freehold, but initially said that he valued the PDH purely on a grazing basis. Any tourism use of the PDH would be subject to ministerial consent, given the provisions of the Land Act 1962 (s.61C). Nevertheless, Mr Cotter saw no difficulty in his indicative valuation of "Silver Plains" in recognising the Pastoral Holding tourist potential, notwithstanding the need for ministerial consent. I agree that the potential of freehold land would be greater because of there being no need for ministerial consent. Freehold land would also have a greater potential for subdivision (Planning Scheme, permitting) for the benefit of achieving the best tourism potential, however, I see no need to limit the tourism potential to the freehold. Indeed, Mr Blomfield's reasoning suggests that he has not done this. Mr Blomfield's evidence was that holders of land not located on the coast, that is inside properties, frequently exploited the tourism potential of their properties. That potential, he said, was not reliant on a coastal location. Indeed, even good fishing can be experienced in inland waterways and water bodies. Hunting is also available, as well as a range of both physical and intellectual adventures. Accordingly, Mr Blomfield's valuation of the PDH, it was suggested, reflects an element of tourism potential. I accept that. I think, however, that greater allowance is needed in the case of the "Starcke" PDH both because of its more 240 advantageous location and because of the prospect of its use being associated with any eco- tourism use on the freehold portion. I have already noted the east coast location as being a superior location to the inland properties, inviting a class of purchaser likely to capitalise on the locational aspects for tourism purposes. Now I should point out that Mr Blomfield also argued that his reliance on the "Silver Plains" transaction, which is an east coast property, also introduces into his valuation approach tourism potential of a property in a comparable location. I leave that point for discussion below. 763. In his valuation Mr Gould did not make a specific allowance for the tourist potential on the "Starcke" PDH, but simply took account of that aspect in his comparison with the transactions on which he relied. I will now turn to consider those transactions, first dealing with "Silver Plains". The property known by this name comprises the three adjoining leases described earlier. "Silver Plains" 764. The freeholding Special Lease comprised two lots with the smaller (Lot 12) having an area of 5,170 ha being located towards the north and near the coast and the larger (Lot 14) having an area of 18,800 ha and being located towards the south, and also near the coast. The State, through the Department of Environment and Heritage, had an interest in acquiring the Special Lease, particularly Lot 12, for environmental purposes, though the whole of the freeholding Special Lease was on the cusp of being converted to freehold at the time. 765. Mr Blomfield's evidence was that the State approached the question of the amount to be paid for the aggregation on the basis that the lessee was entitled to the issue of a Deed of Grant over the freeholding Special Lease area, even though Governor in Council permission had not yet emerged. The indicative valuation prepared by Mr Cotter for the purpose of negotiating compensation was prepared on this basis and the final page of his valuation report is summarised thus: "Silver Plains Pastoral Holding 14/5530 SL14/50135 and SL14/50141 180460 ha @ $5/ha adopt $900,000

SL14/50136 - 23970 ha $2,500,000

$3,400,000

Add: Structures $387,000 Yards $33,000 $420,000

Timber Treatment $830000

241 $4,650,000

Less, Freeholding payout $312253 *

$4,337,747

Adopt $4.3 MILLION "

* It appears that Mr Cotter proceeded on the assumption that for the landholder to obtain freehold this amount would have had to be paid as at the date of valuation.

766. Following negotiations, the parties to the "Silver Plains" transaction settled on a figure of $4,500,000 subject, however, to a condition of continued occupancy (Permit to Occupy) for a five-year period, which I will come to in some detail shortly, but which in the written acquisition agreement settled by the parties was associated with a figure of $300,000. During the continued occupation, the outgoing lessee was to be allowed to continue a low-key tourist use and the grazing of cattle - both subject to terms. Compensation payable on settlement was $4,500,000 with the balance of $300,000 being associated with the Permit to Occupy. I employ the term "compensation" as that was the term employed by the parties to the acquisition which was, by written agreement, to be acquired by a Proclamation made pursuant to s.306 of the Land Act 1962. The agreement acknowledges that the "resumption … is for public purposes" and that "it is involuntary on the part of the registered lessees". In his reliance on this transaction Mr Gould acknowledged that the State had treated the Special Lease differently from the balance of the property. His interest was confined to valuing the "Starcke" PDH only, therefore it was the final price of the "Silver Plains" aggregation, exclusive of the value attributed to the Special Lease, which was relevant to him. Mr Blomfield, on the other hand, saw benefit in employing the total "Silver Plains" transaction as supporting evidence for the combined value he placed on the "Starcke" PDH and freehold. 767. He put aside the matter of the continued occupancy and for the purpose of comparison between the "Silver Plains" aggregation and the "Starcke" overall on a fenced and water basis, analysed the net agreed figure thus: " $ $ Negotiated Purchase Price 4 500 000 Add Freehold Payout Cost (as at 4/1/194) 314 705 * 4 814 705 Less: Structures 387 000 Yards 33 000 Timber treatment 830 000 1 250 000 242

Value of land fenced and watered $3 564 705

ADOPT $3,560 000 "

* I gather that Mr Blomfield has added this amount on the basis that, following the acquisition, there would be no requirement for the landholder to make such payment for freeholding. I cannot find any mention of a freeholding payment in the agreement connected with the acquisition. It seems to me that an obligation to make such a payment would arise ordinarily only if freeholding was to proceed and a Deed of Grant issue. Unless that process were to have taken place there would be no debt due to the State, therefore no debt to be forgiven. I can only assume that the parties to the "Silver Plains" acquisition took into account the assumed need for a freeholding payment to be made with that assumption depending on the assumption that the Special Lease land was to be considered as freehold.

768. The figures for structures, yards and timber treatment were adopted from Mr Cotter's indicative valuation. Mr Blomfield split the figure of $3,560,000 as produced by the above analysis into figures he thought to be applicable: to the Special Lease as if it were freehold; and the balance to the Pastoral Holding and Special Lease over the timber reserve as follows: " $ Silver Plains Pastoral Holding 14/5530 and SL 14/50135 (over Timber Reserve) 1 158 950

Special Lease No. 14/50136 (converted to freehold) 23970 ha @ $100.00/ha 2 397 000 $3 555 950

ADOPT $3 560 000 "

769. This distribution of compensation was not presented by Mr Blomfield on the basis that it comprised an actual reflection of what was agreed between the parties to the transaction, but was an hypothetical analysis, only. I note that the freeholding payout figure included in Mr Blomfield's above analysis is $2,452 greater than the figure included in Mr Cotter's indicative valuation, the difference being attributable to the different dates applicable to each exercise. That is, the escalation of the purchase price for the freehold is to be calculated as at the date of settlement in accordance with the terms of the lease. I note also that whereas Mr Cotter's valuation is less than the negotiated final net figure, Mr Blomfield has chosen to place a lesser value on the freeholding Special Lease than did Mr Cotter and has applied to the other interests the balance of the increase between Mr Cotter's figure and the settled price. That appears to be because Mr Blomfield uses the "Silver 243 Plains" transaction as support evidence only, whilst his valuation for the "Starcke" freehold can, in his view, be analysed to a figure of $100 per ha based on some sales evidence yet to be discussed. 770. I do not intend descending further into a detailed consideration of Mr Blomfield's above analysis at this stage, but present it largely to contrast it with Mr Gould's approach. Mr Gould characterised the agreed figure as having been at $4,800,000, but reduced to $4,500,000 in consideration of the continued occupation of "Silver Plains" by the landholder. Mr Gould's reasoning was, in effect, that the landholder was willing to accept compensation of $4,800,000 for vacant possession at the date of resumption, but was willing also to accept $4,500,000 at that date on the basis that he would forego $300,000 by being allowed to continue in occupation under certain restrictive terms for a period of five years. Part of the agreed compensation is therefore paid in cash and part in "kind". I will put the continued occupation issue aside for later consideration. Mr Gould reasoned that the $4,800,000 figure should be grossed up to provide for the freeholding price of the Special Lease, which was initially $250,000 but was subject to CPI adjustment. Implicit in that reasoning is a proposition that compensation was agreed to on the basis that the value of the Special Lease was assumed to be freehold or subject to a debt to the Crown. There is, of course no debt or any obligation for the lessee to pay that amount (or any variation of it) to the State unless there was an election to proceed with freeholding or unless the transaction was treated by the parties to it as if that had been the case. In such circumstances the lessee would be treated as having been forgiven the debt and its value ought to be added to whatever else was to be paid to him. This is consistent with Mr Blomfield's approach. 771. Mr Gould calculated that freeholding figure at $312,253, the same as that included in Mr Cotter's valuation. On this basis his gross price for the aggregation on a vacant possession basis would be $5,112,253. Actually Mr Gould should have calculated the freeholding figure at the date of agreement between the State and the landholder as Mr Cotter's calculation was prepared in advance of the date of that agreement. A small upwards adjustment of $2,452 should be made, based on Mr Blomfield's calculation. The figure becomes $5,114,705. 772. Mr Gould then apportioned that gross figure in the same ratios as applied to the figures included in Mr Cotter's indicative valuation which had been provided to the State for negotiation purposes. That is, 19.36% of the gross figure was applied to the Pastoral Holding and timber reserve Special Lease. This may be represented thus:

244 1. Mr Cotter's $900,000 is 19.36% of $4,650,000.

2. Therefore Mr Gould's figure (on his reasoning) should be 19.36% of $5,114,705.

773. The mathematics of Mr Gould's method, using his figures, attributes a figure of $989,732 to the lease area, which he then compared with the "Starcke" PDH. In calculating these figures Mr Gould relied on the value of improvements placed on the property in Mr Cotter's valuation. The bulk of the improvements were on the freeholding Special Lease. I therefore understand Mr Gould to have attempted to arrive at a figure for the "Silver Plains" land exclusive of the "freehold" and that this figure would not include any specific amount for the added value of any improvements, including fencing. Thus he has attempted to generate a figure which represents the pastoral lease and timber reserve areas as grassed and watered for grazing purposes. For reasons I will give shortly, I would deduct his figure of $300,000 for the Permit to Occupy. In short, this means that I would start with Mr Blomfield's calculation totalling $4,814,705, but will broadly employ Mr Gould's method of apportioning this figure. 774. There is another adjustment that needs to be made. The improvements valued at $1,250,000 are, apart from $14,000 for fencing, all found on the freeholding Special Lease. The figure for the Pastoral Lease is therefore better considered as a proportion of the value of the land component plus $14,000, that is 26.36% of $3,564,705 plus $14,000. (I have calculated the rate of 26.36% by taking Mr Cotter's $900,000 as a percentage of his land value of 43,400,000 plus $14,000.) This calculates to $943,346 (say $945,000) or about $5.24 per ha. It may be useful if at this point I calculate the amount that would apply to the Special Lease based on my conclusions: Total compensation $4,814,705 Less PH value $943,346

$3,871,359

Less value of improvements on the S.L. ($1,250,000 - $14,000) $1,236,000

Fenced and watered figure $2,635,359

775. This calculates to $109.95 per ha, say $110. If the apportionment using the "ex structures" approach is employed, then the value of clearing at $830,000 would be added back in, giving a result of $3,465,359 or $144.53 per ha. I will, however, utilise the $110 figure as I intend to add the value of improvements to the "Starcke" freehold value once the comparison process is complete. 245 776. It will be noted that the value which Mr Blomfield attributed to the "Silver Plains" Pastoral Holding is higher than that settled upon by Mr Gould or by me ($1,158,950 versus $989,732). Mr Blomfield drew attention to that, however, argued that by a process of compensating errors Mr Gould's result was acceptable. Mr Blomfield thought it inappropriate to add the figure of $300,000 to cater for the Permit to Occupy. He also thought the mathematical distribution of the overall settlement figure to be a wrong method because it assumes that the distribution of the increase in the settlement figure over Mr Cotter's indicative valuation was in the same proportions (Pastoral Holding to Special Lease) as in that valuation. Mr Blomfield's figures are not, however, a simple presentation of what was agreed between the parties, but a representation of his analysis of the figure finally agreed upon. He employed Mr Cotter's figures for improvements and analysed the net figure on a fenced and watered basis, having regard to his own sales and the value he placed on the "Starcke" freehold. It is not as if there are two different methods which arrive at a similar result. There are different assumptions as to how the transaction ought to be analysed. Mr Blomfield's method has the effect of increasing the pastoral lease value and reducing the "freehold" value. 777. Before I turn to consider the various criticisms made by the State with respect to Mr Gould's approach to the "Silver Plains" transaction, I will provide some details of the "Kalpowar" transaction which was the other property upon which Mr Gould relied. The "Kalpowar" aggregation purchased by the State comprised four pastoral holdings: "Birthday Plains" 63,200 ha "Kalpowar" 80,031 ha "Jack Lakes" 82,621 ha "Lythe" 172,752 ha

Total Area 398,604 ha

778. Mr Gould's valuation report says that the lessee of the "Kalpowar" aggregation spent a considerable sum on the relocation of a number of demountable buildings to a beachfront location near Bathurst Head. He refurbished the buildings with the intention of establishing a "fishing village". These works were undertaken without the benefit of prior Council approval, however, it is Mr Gould's understanding that the Shire Council subsequently approved the buildings as an outstation. The then Department of Lands had issued a written warning to the lessee that the use of these improvements to accommodate any person not directly associated with the operation of the pastoral lease would constitute a breach of the Land Act 1962 (s.61C). These matters are of interest as they relate to the manner in which these improvements should be treated in any analysis of the transaction. 246 Mr Gould applied a figure of $200,000 to those improvements, whilst Mr Cotter's valuation of the property included a figure of $524,000 on the basis that they should be valued at full replacement value, less depreciation because, in effect, that would be the value to the State as a purchaser. I do not accept the State's approach to be a correct market value approach but one influenced, perhaps, by a desire to fully compensate the lessee or by recognition that the State would be relatively uninhibited in taking advantage of the full value of these improvements. Mr Gould's approach is to be preferred. 779. Mr Gould, who researched the DNR file of the acquisition of "Kalpowar", said that that file revealed that agreement was reached for the State to purchase the four pastoral holdings on 20 December 1995. Both the ANZ Bank and the lessee company were represented at the conference. In Mr Gould's view the level of indebtedness to the bank meant that, in practical terms, bank interest was in the land and improvements, leaving the lessee to be concerned only with livestock, plant and equipment and disturbance issues. The State's offer of $4,500,000 under all heads was supported in file documents in the following way: "Unimproved Land (about) $2,092,000

Improvements $1,848,000 $3,940,000

Mustering Costs 180,000 Stock Transport Costs 121,500 Removal of Plant/Equip 32,500 Alternative Property Acq'n 203,000 Legal & Valuation Fees 23,000 $560,000

TOTAL UNDER ALL HEADS $4,500,000 "

780. Mr Gould understood that the settlement proceeds were distributed according to an agreement between the ANZ Bank and the lessee company, however, he was not aware of the basis for that distribution which resulted in the bank receiving $4,050,000 and the lessee receiving $450,000. In the circumstances he decided to adopt the figure of $3,940,000 for land and improvements, being the figure contained in the DNR file records. I note that this figure is net of the disturbance items amounting to $560,000. The acquisition agreement for "Kalpowar" provided, amongst other things, for the lessee to be allowed to remain in occupation for a period of two years from the date of acquisition and to depasture up to 4,500 head of cattle under the terms of a Permit to Occupy to be granted under the Land Act 1962. No Permit to Occupy document was provided in evidence. There was no evidence of any monetary equivalent having been attached by the parties to the value of retaining possession. Mr Gould reasoned, however, that based on the "Silver 247 Plains" transaction as a guide in which an allowance of $300,000 was included in the acquisition agreement, the value to be placed on the right to continued occupation at "Kalpowar" ought to attract a figure of $200,000. It was less than the "Silver Plains" figure because it was for a shorter period and did not provide for any tourism usage. His calculations were based on figures he had found on the State file dealing with the "Silver Plains" $300,000 figure. 781. Mr Gould's reliance on both "Silver Plains" and "Kalpowar" was criticised by the respondent. It was said that these were purchases by the State in circumstances where, if landholders had not reached an agreement on price, there was a possibility of the compulsory acquisition powers of the State being employed. The respondent's submission is that the circumstances of these transactions therefore introduce the difficulty in trying to identify and attribute a value to items which would not ordinarily be taken into account in a normal market transaction. The suggestion is that Mr Blomfield's reliance on "Silver Plains" can, however, be justified as it was used as a "support" transaction only, not a "basic sale", to use the parlance of valuers. Whilst "Kalpowar" was an acquisition by the State and bears many of the characteristics of having a compulsory element to it, it is more akin to being a market transaction than was "Silver Plains". There was an intention by the mortgagee to dispose of "Kalpowar" - the identity of the acquirer being a matter of irrelevance. The lessee was, perhaps, an unwilling party but would have been the case had the State come into the scene or not. 782. In Merivale the Full Court considered an appeal from a decision of the Land Appeal Court in which the central issue related to the use of so-called "settlements". Matthews J, with whom Ryan J agreed, considered a number of authorities dealing with the admissibility of settlements, then at p.239 said: " It seems to me that the question is not one of admissibility but one of weight to be given to such transactions or the use which a valuation Court decides to make of them and if the Court has available to it other evidence which it considers satisfactory for its purposes, it will not act irrationally if it concludes that it will not derive assistance from the evidence of settlements."

783. His Honour then noted, with apparent approval, that in its reasons the Land Appeal Court had referred to two matters as being relevant to the Court on that occasion in excluding reliance on certain settlements. These two matters included policy considerations of government which might intrude into a settlement or settlements, for example, in a large well-publicised resumption scheme; and that the settlements referred to in the case involved lump-sum payments with no apportionment of such elements as disturbance. In that regard the Members of the Land Appeal Court said they did not have 248 sufficient evidence as to the course of negotiations to adopt with confidence an analysis of the main settlement suggested by the claimants as being a suitable valuation benchmark. 784. There was no evidence before me of any policy considerations which may have arguably impacted on the level of settlement, though both "Silver Plains" and "Kalpowar" were, as I understand, located in the Conservation Zone. In the case of "Kalpowar", I have some evidence of the course of negotiations from the State's perspective, though none of relevance from the landholders' side, apart from the interests of the ANZ Bank as mortgagee and the lessee. I have no break-up of the final settlement figure supported by both sides to each transaction, though in the case of "Kalpowar" I have evidence of the State's view that disturbance totalled $560,000, whilst compensation for "Silver Plains" is expressed in the written agreement between the parties as being "under all heads". There is no mention in the figures provided by Mr Gould and Mr Blomfield in the case of "Silver Plains" of any disturbance items such as legal and valuation fees, cost of muster and sale of cattle, matters which would have, on the facts provided, been relevant matters for consideration in the assessment of compensation. Mr Ian Anders, who was the Government officer who negotiated the acquisition of the "Silver Plains" property, would have been aware of such matters as well as other pertinent matters surrounding the "Silver Plains" transaction. Mr Anders is now in private practice. He was in Court for a large part of the hearing, being there, as I understand it, on the invitation and perhaps on the retainer of the claimant, yet was not called by either party to clarify the nature and circumstances of the "Silver Plains" transaction. It was suggested from the respondent's side that the claimant could have called Mr Anders in order that these issues might be settled, however, there is no property in a potential witness and I was not made aware of any contract which would have restrained Mr Anders from giving evidence for one party or the other, nor was I informed of any other inhibition on Mr Anders providing evidence. Both parties simply left aspects of the "Silver Plains" transaction unexplained, yet each attempted to rely on it for their own purposes. 785. In so far as the continued occupancy of "Silver Plains" was concerned, Mr Blomfield suggested that this simply allowed the landholder an opportunity to dispose of cattle in an orderly way. The suggestion is that some of the disturbance items would have been catered for in the grant of the Permit to Occupy, though Mr Blomfield did not claim direct knowledge that this was the case. The submission for the claimant, however, is that the continued occupancy is much more than this and that that can clearly be seen if one analyses the agreement between the parties. That agreement between the lessee and the Minister for Lands provides that compensation comprises a total amount of $4,800,000 of 249 which $4,500,000 will be payable on 25 November 1994 with the "balance of $300,000", as I will call it, being payable at $5,000 per month commencing 4 November 1994 subject to a contingency:- the agreement provides for the Minister to grant a Permit to Occupy to the lessee over the bulk of "Silver Plains" (excluding Lot 12 only) and it further provided that if the Minister terminated the Permit to Occupy prior to the conclusion of a 60-month term, the Minister must pay the equivalent of $5,000 per month for any remaining months or, as I understand it, part months. If the Permit to Occupy was not terminated prior to the expiry of the 60-month period, then none of the "balance of $300,000" is payable. 786. I note that the permit provides for the Crown to use the permit area , together with the permittee, and that there is a number of conditions in the permit designed to provide for the management of the land in a way that would conserve it. 787. Some other parts of the Permit to Occupy are worthy of note -  The permit provides for the permittee to use the permit area for grazing purposes and for the purpose of a low-key tourist operation.

 The permit provides for the depasturing of a maximum of 2,000 head of grown stock on the land at any one time - a herd of much smaller size than would ordinarily have been grazed on a similar area of land on "Silver Plains".

 The permit provided that no additional structures or facilities could be placed on the permit area without the consent of the Minister.

 The tourist operation was limited to hosting a maximum of 10 persons at the one time and a maximum of 200 for any year during the currency of the permit.

 Tourist activities were to be limited to camping and fishing or other uses that in the opinion of the Minister could co-exist with the Crown purposes intended for the area;

 The Crown was by the permit said to be entitled to use the permit area for national park or conservation park as well as Aboriginal purposes, even though no formal reservation had been effected.

 A rent of $1,600 per annum was payable by the permittee for the permit. I was not provided with evidence as to whether $1,600 would be a standard level of rent for the permit in question.

 The planning and preparation for destocking of the permit area was to commence after four years of the permit with cattle needing to be removed from the permit area within six months from the date of termination of the permit.

250 788. The Permit to Occupy was to be issued pursuant to s.371A of the Land Act 1962, which relevantly provides: " 371A. Permissive occupancies. The Minister may grant permission to occupy any Crown land or any such land comprised in a reserve or road for such purpose and upon such terms and conditions as the Minister deems fit.

Any such permission shall be terminable at will by the Minister."

789. In the context of the statute which deals, amongst other things, with leases to be granted from the Crown for terms certain or in perpetuity, the type of interest to be created under this provision is, I think, properly characterised as a licence (Radaich v. Smith (1959)101 CLR 209). Given that the statute provides that such licence "shall be terminable at will", the Minister could not by agreement or unilaterally grant a Permit to Occupy under this provision for a term certain. A further point of relevance is that there is no provision in the Land Act 1962 for compensation in the event of a Permit to Occupy being terminated nor may it be transferred. In such circumstances, it may be that the "Silver Plains" lessee sought to protect the benefit of the Permit to Occupy by the inclusion of a condition subsequent characterised as compensation of $300,000. This could be taken as an indication that the parties, or at least the landholder, saw the Permit to Occupy to be worth $300,000 to him or that it was sufficient penalty to ensure against early termination of the Permit. Mr Gould said that he had seen calculations on the relevant Government file which supported the figure of $300,000 as being the "value to the vendor" of the Permit to Occupy. He said that the calculation was based on the ability of the permittee to carry livestock for, in effect, a 4.5 year period and to maintain the tourist operation for five years. Those figures were not produced. Whilst I accept this evidence, a value of $300,000 for a five-year permit seems to me to be out of relativity with, for example, Mr Gould's assumed value of the "Silver Plains" Pastoral Holding at $990,000. If the Minister had no intention of terminating the Permit to Occupy before the conclusion of 60 months and was confident that circumstances would not arise requiring that termination, then the amount of $300,000 may be characterised as being largely irrelevant to the Minister as it was not a price which he was or would be paying for a particular interest in land or head of compensation. That is a point that appeared to influence Mr Blomfield's thinking on the matter. What needs also to be taken into account, however, is that in providing the use of State land the Minister is providing something of value. 790. Having regard to the above summarised conditions of the permit, I cannot accept the respondent's view, put through Mr Blomfield, that the Permit to Occupy simply catered for the orderly disposal of cattle. A term much shorter than five years would be needed for 251 this. In addition, the permit would not be concerned about a tourist usage. On the evidence before me, I conclude that the grant of the Permit to Occupy and its value to the landholder formed part of the compensation for the acquisition by the State of the "Silver Plains" aggregation. That is, compensation "under all heads" to use the terms of the agreement, comprised monetary compensation totalling a figure of $4,500,000 together with the Permit to Occupy. I do not accept that this Permit to Occupy had a value of $300,000 to the outgoing owner. Such a value is not consistent with other evidence of value. I will not place a numerical value on the Permit, but will simply treat it as an added value of the property. To some extent this value is offset by my assumption concerning disturbance/vacant possession discussed in the following paragraph, but I would estimate (using "Kalpowar" disturbance as a guide) that the quantum of disturbance would be greater than the added value of the Permit to Occupy. Naturally I would prefer to place a figure on the value of the Permit, however it is not appropriate that I adopt a figure which my analysis shows is wrong nor to guess at a figure. I proceed on the basis that the Permit is of value and that value is something less than $300,000. In deciding that it has a value I assume that the rent payable is below market. 791. I have no evidence in the case of "Silver Plains" as to the payment of any of the various items of disturbance reported by Mr Gould as representing the Department of Lands' view of the make-up of the "Kalpowar" settlement figure (that is mustering costs, stock transport costs, removal of plant and equipment, alternative property acquisition and legal and valuation fees). These disturbance items total $560,000 for "Kalpowar", albeit for a larger more valuable property than "Silver Plains" and one with more cattle. The Permit to Occupy granted in the case of "Silver Plains" imposes on the permittee the obligation to remove stock and makes no provision for payment by the Minister. Given that the agreement between the parties is presented as an agreement with respect to compensation for an intended acquisition pursuant to s.306 of the Land Act 1962, it is probable that compensation settled upon provided for some disturbance items. I think it more than likely that disturbance compensation is contained in the "all heads" figure. I note that the lessee retained a firm of solicitors, and a valuer therefore could be assumed to have been in receipt of appropriate advice. Mr Cotter's indicative valuation at $4,300,000 did not make any reference to disturbance. I think it is probable that part of the explanation for the difference between that figure and the amount finally settled upon is attributable to disturbance, though Mr Gould preferred to say there was none and that it was a commercial transaction. It was clearly not. Certainly it was Mr Blomfield's understanding that disturbance comprised an element of the final agreement between the parties to the 252 transaction, though not expressly referred to in the written agreement for reasons best known to those parties. Even if the transaction is treated as a commercial transaction then it still remains the case that the price would be assumed to include an element for the costs associated with the provision of a vacant property. 792. In the case of "Starcke" the State acquired the cattle from the claimant under a separate agreement. In such circumstances there would be no disturbance items associated with the mustering and disposal of cattle and none was claimed. In the instant case all items of disturbance are dealt with separately from land value. I need to take care that there is no doubling-up of compensation by making a comparison between the subject PDH and a transaction that includes other items, namely, disturbance or its commercial equivalent. I am concerned, therefore, in the employment of the "Silver Plains" transaction as part of the process of finding a value for "Starcke" that any comparison is made on a "like with like basis". I have no ready means of extracting from the "Silver Plains" transaction a particular figure to cater for disturbance. I am loathe however to reject a transaction relied upon by both Mr Gould and Mr Blomfield, particularly given the location of "Silver Plains" in the east coast of Cape York. In addition I am concerned as to certain aspects of some of Mr Blomfield's other sales evidence, both those discussed thus far; and those yet to be discussed, which provided his basis for his freehold valuation of "Starcke". Given my comments thus far concerning "Silver Plains", I will treat it cautiously. 793. For the purpose of comparison between the "Silver Plains" transaction and the "Starcke" PDH I will adopt the figure of $945,000 as representing that part of the gross figure attributable to the Pastoral Holding and the smaller Special Lease. Mr Gould estimated the present carrying capacity of "Silver Plains" at 1:30 ha as did Mr Cotter, whilst Mr Blomfield's estimate was 1:32 ha. Mr Gould estimated that the "Silver Plains" holding had a potential with the provision of more water to carry 1:25 ha. In Mr Cotter's indicative valuation of "Silver Plains", he estimated potential of the Pastoral Holding at 1:10 ha, therefore strongly supporting Mr Gould's opinion as to the potential of the property. I accept Mr Gould's assessment of the present carrying capacity. There is really little between the parties on this point. On Mr Gould's potential carrying capacity the "Silver Plains" has a beast area value of $139, whilst the beast area value based on present carrying capacity, assuming I adopt Mr Gould's figure, would be $166.60. 794. The land value in Mr Gould's valuation, as adjusted by me, calculates to a figure of $5.24 per ha. It is this value per ha which I intend to make my main point of focus in considering the "sales" evidence. Such a figure more closely represents the price paid for the land in the case of sales generally as it does not involve the mathematical imposition of 253 an opinion as to carrying capacity - an opinion that may not have been held by the purchaser. Variation in figures in the beast area approach can become exaggerated, whereas the analysed land price is not so subject to variation. It takes into account land quality as well as other material considerations. I will, as I have said earlier, consider beast area values as a supplementary check only - the higher the beast area value, the higher the potential. 795. Mr Gould described the "Silver Plains" property as having a quite irregular shape in comparison with the "Starcke" PDH, however, it was Mr Blomfield's view that the "Silver Plains" property has a more regular shape. I think Mr Blomfield's view is the better of the two, particularly given the elongated shape of the "Starcke" PDH which compares with the squarer shape of "Silver Plains". 796. "Silver Plains" is located quite a distance north of "Starcke". By road, access to Mareeba, which would be the main rural service centre servicing both properties, would be about 8-9 hours from the "Silver Plains" homestead and about 4½ hours from "Starcke" homestead. Access to Coen from the "Silver Plains" homestead would be 59 km by the shortest route, but 87 km by the route that is better maintained, whilst the distance from the "Starcke" homestead would be just over 90 km to Cooktown. Cooktown is a more attractive service centre than is Coen, both because of the facilities that are available there and the location of Cooktown right on the coast. Mr Gould said that the "Starcke" PDH would provide a better lifestyle choice than "Silver Plains". In addition, he said that "Starcke" is on a recognised tourist route providing an opportunity for the tourists to travel a loop through "Starcke" and then out again to the west, whilst those visiting "Silver Plains" would need to retrace their steps once the property is visited. He also said that the "Starcke" property provides a more varied landscape and a more prominent mountainous backdrop than is available at "Silver Plains", though he acknowledged that "Silver Plains" has a botanical variety that may be of interest to the more scientifically inclined visitor. I accept his opinions on these matters. I conclude on the evidence that the "Starcke" PDH would be superior to "Silver Plains" as a tourist venue because of its present visitation, its geography and its accessibility. 797. In his comparison Mr Blomfield placed "Silver Plains" at $6.50 per ha and the subject PDH at $5 per ha. In my consideration of the evidence I think that he has understated the comparative value of the "Starcke" PDH. Certainly I have accepted that its present carrying capacity is less than "Silver Plains", however, it is superior with respect to its location as a grazing property and with greater tourism potential. Whilst I am considering the value of the PDH as notionally separate from the freehold, that is not the 254 factual basis on which my conclusion of value is formed. Thus the PDH needs to be seen for its value as part of the aggregation, not as a separate entity to the north, as Mr Gould saw it. Bearing that in mind, I cannot agree with the relativity adopted by Mr Blomfield. I conclude that the PDH value per ha is greater than the value of the "Silver Plains" Pastoral Lease which it should be noted I analysed to a figure of $5.24 per ha. 798. This brings me to consider the application of "Kalpowar", Mr Gould's other basis, the details of which I have included above. Before I come to the comparison, there are some issues that first need to be addressed. 799. This transaction also comprised an acquisition by the State from a private individual, however is of somewhat easier application than is the "Silver Plains" transaction, as in the case of "Kalpowar" I have details of disturbance items paid by the State to the dispossessed owner. 800. I have limited details, however, of continued occupation of "Kalpowar" by the outgoing owner. There is no evidence of the parties attaching a particular sum of money to the arrangement for continued occupancy, so Mr Gould, consistent with his approach to the "Silver Plains" matter, concluded by comparison that the "Kalpowar" Permit to Occupy added an amount of $200,000 to the aggregate value of compensation. All of that value is, in his view, in the hands of the lessee, not the previous mortgagee who would have retained no interest in the matter of ongoing occupation. I will remain consistent with the view I took of the continued occupation in "Silver Plains" and not accept the application of a monetary value to that aspect of the transaction, but will acknowledge in comparing "Kalpowar" to the "Starcke" PDH this aspect of superiority. 801. Mr Gould inspected "Kalpowar" on a number of occasions and can be taken to have a greatly superior understanding of that property and its elements than would Mr Blomfield who did not carry out an inspection, but in the evidence that he provided relied upon the work of others held in the files of his employing department. In particular he relied on a valuation prepared by Mr Cotter. 802. Mr Gould's analysis of the "Kalpowar" transaction involved the addition of the $200,000 figure that I have mentioned above, then the deduction of "structures" which he valued at a total of $725,000. The result is that the analysed sale price became $3,415,000 or $8.55 per ha. In the case of his use of the "Silver Plains" transaction he did not arrive at an independent view of the value of structures and other improvements. He adopted the figure provided by Mr Cotter in his indicative valuation of the property - the valuation that formed the basis of the State's position in negotiating the acquisition compensation. He was criticised for that by the respondent, however the merit in that criticism is not clear to 255 me. By accepting Mr Cotter's figure Mr Gould has made them his own, even if he would be unable to justify them in the unlikely event of an attack by the respondent. 803. In the case at "Kalpowar" he provided his own valuation of improvements and in the resultant "ex structures" figure does include the value of clearing in the sense that there is no deduction made by him for that particular aspect. Compare this with "Silver Plains" where there was no clearing value in the pastoral lease area. "Kalpowar" was, however, a highly improved property and had a large value in its clearing according to Mr Blomfield and not disputed by Mr Gould. As part of the valuation of structures, Mr Gould arrived at a value for fencing of $155,000 which he deducted to allow a comparison between "Kalpowar" and the "Starcke" PDH. 804. Mr Blomfield said that departmental records revealed a value for timber treatment of $262,000 at "Kalpowar", however, that figure was not put to Mr Gould, neither was it supported by the valuer who produced the figure in the first place. Mr Blomfield's suggestion was that Mr Gould ought to have deducted the value of clearing from the "Kalpowar" figure to ensure that none of this value was, by the comparison process, transferred to the "Starcke" PDH which did not have any valued clearing on it, in his view. This criticism may have some validity if one was attempting to ascertain unimproved value for some statutory purpose but is not, I think, relevant in this case. Mr Gould is considering the value of the subject PDH in the marketplace, but for the purpose of comparison, has removed all structures including fencing from consideration. He is therefore looking at the land in the case of each property and attempting to ascertain what it will fetch if viewed by an intending purchaser. That purchaser will consider what cattle each can carry notwithstanding that in one case the carrying capacity resulted, in part, from clearing whilst the other did not. That is an appropriate approach, to my understanding, as long as any value of clearing is then not added to the resultant value. Mr Gould has not done this. Indeed it may even be said that Mr Gould has disadvantaged his client as he has made no allowance for the prospect of the clearing on "Kalpowar" having to be maintained. 805. For the purpose of maintaining a constant method of comparison (or as constant as is possible on the evidence), I take Mr Gould's analysed price "ex structures" of $3,415,000 and deduct from that the $200,000 which he had added to cater for the Permit to Occupy; the figure arrived at should have been produced on a similar basis to that employed by Mr Gould in the case of the "Silver Plains" property. That final figure is $3,215,000, which calculates to $8.07 per ha. 806. Mr Blomfield provided an analysis of the "Kalpowar" transaction by deducting structures, yards and clearing to arrive at a figure of $2,698,000 or $6.77 per ha fenced and 256 watered. Now whilst this Court is able to admit hearsay evidence, the question of the weight that ought to apply to such evidence is quite another matter. In comparison to Mr Blomfield's association with "Kalpowar", Mr Gould must be treated as the better witness, so I will proceed to consider the comparison between "Kalpowar" and the subject PDH on the basis of his analysis of the "Kalpowar" transaction as adjusted by me. 807. Mr Gould said that "Kalpowar" is superior in shape and country type to the "Starcke" PDH, but they are similar in terms of tourist potential given the similarity in location and attributes. That is a view which I must say surprises me, given the extended coastal frontage the "Starcke" PDH enjoys and its proximity to Cape Melville. Mr Gould notes that the subject PDH is substantially smaller than "Kalpowar", which covers 398,604 ha and on that basis says that the subject PDH would be attractive to a wider market and, therefore, would have a higher value on a pro-rata basis. In comparison with his analysed figure of $8.55 he concluded that the "Starcke" PDH would have a value of $8 per ha. Mr Blomfield said that he accepted the points of comparison between "Kalpowar" and the "Starcke" PDH as provided by Mr Gould. If I employed somewhat similar relativities to those provided by Mr Gould, the value that would be placed on the "Starcke" PDH would, on the basis of the above two sales alone, amount to $7.70 per ha, a figure which, importantly, includes the tourist potential of that property. That figure is, however, too high in my view when beast area values are compared. The subject PDH at a carrying capacity of 1:40 ha and 4,150 cattle with, in Mr Gould's view, less potential than "Kalpowar", should have a lower value. I will settle on a figure of $6.80 per ha taking into account the comparison with the "Silver Plains" lease area. This calculates to a figure of $1,128,800 which I will round up to $1,130,000. I recognise that this calculates to a BAV outside the range suggested by Mr Blomfield for present carrying capacity BAV's ($200 to $250), however I do not wish to disadvantage the dispossessed owner because of the uncertainties as to value levels in Cape York. I will not include the value of improvements at this stage as it would be convenient to add those to the aggregate value of the "Starcke" freehold and PDH. I will now return to Mr Blomfield's sales evidence to see if I should adjust the conclusion of value made thus far. 808. Sale 5A is to be deleted in accordance with my earlier conclusion on the evidence, whilst Sale 2A is to be treated with caution. Mr Blomfield treated his sales as a basket of evidence and did not provide direct comparisons between each of the properties and the subject PDH as a valuation process. He employed Sale 2A as a support transaction. Interestingly, whilst Sale 2A is to be treated with caution, the analysed value of that, according to Mr Blomfield is $8.75 per ha, a price achieved in an environment where one 257 would have thought that the price would be depressed, given the interest of the Department of Environment and Heritage in acquiring part of the property. Each of the other sales shows an analysed price lower than the $5 per ha which Mr Blomfield concluded should be the value of the subject PDH. Sale 4A at $4.71 per ha comes the closest, but the difficulty is in considering this basket of sales in arriving at a point for the "Starcke" PDH above the analysed prices indicated. In Mr Gould's valuation he provided transactions which "bracketed" his conclusion on value, whereas Mr Blomfield has not, excepting for the inclusion of Sale 2A, provided a "ceiling" transaction. 809. Another difficulty that I have with the approach supplied by Mr Blomfield is that whereas he has adopted a particular intellectual process in drawing his conclusions, that process was not presented in a manner which allowed it to be fully understood. Adjustments cannot be made, criticisms levelled and particular points understood. All that I can do is to apply my own intellectual process which would also be difficult to articulate and then to see whether my result differs from that arrived at by Mr Blomfield. In saying this I do not suggest that I disregard his opinion, however, it is the evaluation of that opinion which presents me with the difficulty. 810. What I can make explicit is that I take from the evidence a view that the "Starcke" PDH is in a superior location to each of the sale properties referred to by Mr Blomfield and that if the property is to be viewed not simply as a place where cattle may graze, then the subject PDH must be worth more on a pro-rata basis than each of the other properties, if I exclude Sale 2A from consideration. Given that Mr Blomfield did not expressly include a tourism premium in his PDH for its preferred east coast location, that would be another reason to increase his assessed value. My conclusion is then that the value of the "Starcke" PDH has not shown to be less than $6.80 per ha, therefore that is the figure which I will adopt and to which I will add the value of improvements once I have considered the value of the "Starcke" freehold on the basis of the highest and best use proposed by Mr Blomfield. I should make it clear that the value that I will apply to the PDH is not on the basis of there being a disconnected /severed 16,000 ha as Mr Gould's approach requires, but on the basis of there being 166,000 ha at a value of $6.80 per ha. This calculates to $1,128,800 which I will round up to $1,130,000. 811. The claimant suggested that the PDH had a premium in value arising out of its environmental values. I accept that the environmental values of the PDH were greater than the freehold. I do not have evidence, however, that such would increase the price of the land in the marketplace. Neither Mr Gould nor Mr Brett said they were able to measure such a premium. The prospect of such a premium being paid appears to be based on Mr 258 Nevard's evidence in which he concludes that "a suitable purchaser or purchasers prepared to pay an 'ecological premium' for the land at 'Starcke' could therefore have reasonably been expected to come forward". This conclusion appears to have been based on there being a level of activity in the marketplace where interested private organisations have purchased land of high conservation value and on the recognition of Cape York as an area of interest. I am not convinced, however, that a price premium would need to be paid. Mr Blomfield made inquiries to the effect that interested organisations would buy at prices consistent with the broader market, that is, based on highest and best use as perceived in the general market. He developed the clear view, consistent with good business sense, that such organisations would not act competitively to create their own market. Not all of these bodies purchased land to hold. The Trust for Nature (Victoria), for example, had a practice of buying land then reselling it after registering some form of restrictive covenant on the title. Given this and also that the only evidence of such a premium actually existing is the opinion of Mr Nevard whose evidence came from a range of sources quite disparate from a market in Cape York I, too, cannot conclude any premium on account of such an aspect. Having said that, however, I should mention that the added value of the tourist potential of the PDH takes into account the attributes of that land including its environmental values. 812. Mr Blomfield's estimate of the value of the improvements on the PDH totals $4,500. The evidence points to these improvements being in a degraded condition at the relevant date. This included the airstrip at "Wakooka". Though this airstrip was capable of rehabilitation, it is its value at the relevant date which is relevant here. Mr Blomfield noted that clearing had taken place on the PDH, but had all but fully reverted at the relevant date. As such it had no added value, in his opinion - an issue that did not arise on Mr Gould's approach. In the approach that I have adopted, I include the value of all of the PDH improvements in the overall "Starcke" aggregation value. Mr Blomfield's Freehold Valuation 813. Mr Blomfield said that he had, on a number of occasions in considering his valuation task, considered subdivision and sale of the freehold, but rejected that as representing the highest and best use of the land. He formed the view that the "Starcke" freehold had a value as grazing land, but that the tenure of the land gave it an enhanced potential and marketability over the PDH area. That potential he saw as probably being one "based on an eco-tourism related theme capitalising on the property's coastal frontage, its scenic resources and diversity of land forms". He recognised that a rezoning would be required to release such potential, however, following discussion with Mr McColl (town planner, CSC) saw no difficulties in achieving that. His view was that the rigors of the wet 259 season in the Cape, together with the hot and muggy conditions that accompany it, as well as the impact of rain on accessibility, would have a substantial effect on any eco-tourism usage during the wet season. He concluded, therefore, that there would very likely be continued reliance on a grazing operation on the property as a source of income throughout the year. 814. Although I accept Mr Blomfield's opinion that grazing would feature as a use on that land in the future, it is clear that its potential for that use was not of primary consideration in his mind. His value of $100 per ha, compared with his PDH grazing value of $5 per ha indicates this. I will therefore focus on the attributes of the freehold of which its carrying capacity is but one feature. Mr Blomfield put that at 1:16 ha. Given the ongoing use of this land as grazing land, Mr Blomfield added the full value of improvements pertinent to that grazing use. This is appropriate. 815. Whilst the obligation to upgrade the road through the "Starcke" freehold was suggested by the claimant as a positive element in valuing the land for a 240 x 100 ha lot subdivision, its presence seems to have been forgotten in valuing the "Starcke" land for the uses that I have settled on. In placing a value on the freehold it seems to me that the obligation to carry out the road upgrade would be a negative factor. Its completion may, however, provide some enhancement to the PDH. I have no expert evidence on this matter. I mention this simply to make it clear that this is an aspect that does not feature in my assessment of compensation. 816. In carrying out his valuation of the "Starcke" freehold Mr Blomfield relied on four sales, only one of which enjoyed freehold tenure. He had considered other sale properties in Queensland and the Northern Territory. Generally, the use of comparable sales is the accepted method of determining the market value of land: Redeam Pty Ltd v. South Australian Land Commission (1977) 40 LGRA 151 at 156; River Bank Pty Ltd v. Commonwealth (1974) 48 ALJR 483 at 484 (Stephen J);Cienda Pty Ltd v. South Australian Urban Land Trust (1988) 66 LGRA 360; 34th Philgram Pty Ltd v. The Crown 14 QLCR 13 at 26. Comparable sales must, however, be subjected to critical appraisal before being put to direct use in the process of valuation: Minister for Environment v. Petroccia (1982) 30 SASR 323 at 343 (Wells J). 817. Mr Blomfield's Sale 1B took place on 30 October 1989 and involves the sale of a Grazing Homestead Perpetual Lease named "Yarramulla Station". The sale land had an area of 17,000 ha and sold for $1,050,000, which Mr Blomfield analysed down to a figure of $841,089 after the deduction of plant, structures and yards. I assume his values were based on a grazing, not a tourism use. On a fenced and watered basis that sale shows a 260 figure of $49.48 per ha in Mr Blomfield's valuation. I observe that this is much higher than any of his Sales 1A to 6A discussed earlier. Sale 1B is situated on the Gulf Development Road about 75 km south-west of Mt Garnet. The purchaser is an established grazier and tourist operator who has developed the "Undarra Experience" Resort on an adjoining Special Lease. He purchased "Yarramulla" to secure the lava tubes found on that land and to run cattle to generate income until the resort became established. The lava tubes were described by Mr Blomfield as constituting "spectacular geological features" offering visitors a completely different experience from "Starcke". He said that direct comparison between the "Yarramulla" property and the "Starcke" freehold was therefore difficult. He acknowledged that the tenure of the sale property is inferior to freehold, but thought the sale to be of some benefit in that it involved the purchase of a large area, specifically to secure its tourism potential. Mr Gould described the grazing quality of the land as being that of a "starvation block", but acknowledged that its main value would have been its proximity to the lava tubes. As such it would be a combined grazing/tourism property. Mr Gould's main criticism of this transaction as a basis for valuing the "Starcke" freehold was its tenure - it is not freehold in a region where freehold is in short supply. How one accounts for that is a matter of difficulty. Mr Blomfield said that in 1994 there was not a great deal of marketplace distinction between GHPL and freehold values in the area of this sale. He did not, however, produce market evidence in support of this, nor did he refer to the volume of transactions that might have guided his opinion on this. My concern is that there may have been insufficient evidence to demonstrate a difference - but that a difference may have existed. Mr Gould certainly thought so. 818. Notwithstanding Mr Blomfield's views on the matter of freehold values, there was evidence that the lessee had sought to freehold this property but had been refused permission. That lessee clearly saw advantage in converting to freehold and paying a price for that benefit. On the basis of this transaction the "Starcke" freehold would be worth substantially more, particularly given that I am prepared to add value for the prospect of some subdivision potential at "Starcke", though I will put this aside for separate consideration later. If I view the "Starcke" freehold as a site, its value ex-improvements must be higher than the figure of $841,089. It is a superior tenure, enjoys a coastal location and provides for a range of visitor experiences. 819. Sale 2B in Mr Blomfield's valuation took place on 30 October 1998. Mr Aitcheson referred to this sale in his valuation of "Starcke", but I see no benefit in considering his evidence in detail which contains apparent errors of fact. The property concerned is "Kirrama Station" a Pastoral Holding with an area of 42,500 ha, which sold for $4,800,000; 261 that is $4,638,061 after the deduction of structures, yards and clearing at values estimated by Mr Blomfield. The analysed figure shows $197.79 per ha fenced and watered based on the areas of the new leases discussed below. The sale property is to be found on the edge of the Kirrama and Cardwell Ranges about 125 km southerly of Mt Garnet. Access can also be obtained from Kennedy, which is about 56 km to the east. The transaction was effected by way of a share transfer and involved three separate contracts, one dealing with the Pastoral Holding, one with the stock and one comprising a mustering agreement. It was by reference to these three contracts that Mr Blomfield was able to conclude a selling price for the property ex stock at the $4,800,000 figure mentioned above. The transaction resulted in the purchaser acquiring an apparent tax benefit according to Mr Blomfield. He was, however, advised that the price was not affected by that aspect. This is difficult to accept; however, as it would have the effect of reducing the purchase price in a net sense and as I have no precise figure for this benefit, I will simply characterise it as an aspect of the transaction that sullies the certainty of its application as being in accord with the principles expressed in Spencer. The sale was conditional upon the purchaser obtaining all necessary approvals to permit the development of a golf course, tourist accommodation and associated improvements. The process of gaining the necessary approvals involved the surrender of the Pastoral Holding and the grant of a Special Lease over an area of about 2,450 ha, which was so conditioned as to facilitate the intended tourism development. Of the original Pastoral Holding 21,000 ha was retained by the lessee. The purchaser was required as part of this process to surrender a larger area of the Pastoral Holding than was originally intended in the purchase. This resulted in the reduction of the purchase price from $5,000,000 to the final $4,800,000. The Special Lease provided for the State to share in any windfall gain which might arise if sale took place before development. The Special Lease could not be sold separately from the balance of the Pastoral Holding. Such conditions may be of limited impact to a committed and funded developer but would, I think, impact on other purchasers. It seems that the purchaser here was not well funded or committed. The terms of the Special Lease provided that it could not be converted to freehold. It had the benefit, however, of being a lease for 75 years - an abnormally long term according to Mr Blomfield. 820. The tourism attraction of Sale 2B was associated with the "spectacular Blenco Falls", to use Mr Blomfield's description. Mr Blomfield said that the original "Kirrama" property had been marketed extensively overseas as a development concept and that the end purchase price was substantially generated by the intended tourism use. In the end the tourism development proposal was down-scaled to a more low key eco-tourism resort, 262 however, this does not detract from what was in the mind of the purchaser at the time of the original purchase, according to Mr Blomfield. I accept this reasoning and, in so doing, observe that the potential apparently perceived by the purchaser is greater than I think would be the tourism potential of the "Starcke" freehold. Mr Gould knew the "Kirrama" property and thought it had some good cattle country, but some quite steep country. The topography is impressive it seems and the vegetation includes substantial rainforest. He said that the Blenco Falls were not easily accessed or viewed from the property, however, the evidence as a whole leads me to conclude that he was in error in this regard. 821. Clearly, there is, as Mr Gould said, a vast difference between such a set of circumstances and that applying to the "Starcke" freehold. Nevertheless, the highly attractive features of the property and its region, as well as its accessibility from both Cairns and Townsville, give the property a value which is difficult to apply to the "Starcke" freehold. The new lease areas are similar in total area to the "Starcke" freehold but contain a large area of Pastoral Holding. I conclude that overall the subject freehold would be worth less on a per ha basis than this sale because of the differences in the features of the properties and also because the larger area of the "Starcke" freehold, whilst of a better tenure than Pastoral Holding, is largely limited in usage to grazing. Its tourist potential is not as great as the sale and certainly less than was apparently in the mind of the purchaser at the time of purchase. 822. Mr Blomfield's Sale 3B took place on 3 June 1992 and involved the sale of a Non- competitive Lease of 215.8 ha, plus a Special Lease of 1,180 ha, which together make up a property known as "Cape York Wilderness Lodge" (or "Pajinka Lodge") located at the tip of Cape York Peninsula with frontage to both the Coral Sea on the east coast and the Arafura Sea on the west. The sale property comprises a tourist resort which, according to Mr Blomfield, had a poor trading performance at the time of sale but this has subsequently improved to a break-even position. The location of this property at the tip of Cape York makes it one sought out by tourists who undertake the pilgrimage to the "tip". The property was sold for a price of $2,250,000 to the Injinoo Aboriginal Corporation. Mr Blomfield deducted plant and equipment at $425,000 and structures at $1,378,200 to reveal an analysed figure of $446,800 or $320.10 per ha. The value of improvements deducted by Mr Blomfield were similar to the values Mr Cotter had placed on them when he valued the property as improved at $3,155,000 in a valuation dated 19 December 1990. Mr Blomfield was explicit with regard to his reliance on that earlier valuation. Mr Blomfield said that for this reason he employed the sale as support evidence only. The circumstances of the transaction, which I will come to shortly, are also relevant to it not being used as a 263 first order basis for valuation. The earlier valuation had been prepared by Mr Cotter on instructions to assist the final purchasers in the process of their negotiations with the vendor. The valuation figure supplied by Mr Cotter is a little less than $1,000,000 higher than the price finally paid. Two issues arise out of this. One, was the transaction an open market transaction? Two, should the value of the improvements have been less in 1992 reflecting the reduced price and therefore value of the enterprise at that time? 823. I think the answer to the second question is "yes" and that it follows that Mr Blomfield's net land value would be analysed to a higher figure - just how much is not in evidence, but a proportionate reduction in the value of the improvements of 28.75% (which represents the reduction from Mr Cotter's figure to the eventual sales price) results in improvements having a value of $1,284,780. That compares with the figure adopted by Mr Blomfield of $1,803,200. The fresh improvements calculation would show a land value of $691 per ha or a site value of $965,220 compared with Mr Blomfield's figure of $446,800. If it was the case that a comparison was made between that property and the "Starcke" freehold on a direct basis then, all other things being equal, the value of the "Starcke" freehold would be higher than that estimated by Mr Blomfield. The sale's highly improved nature would, however, make it difficult to compare on an "ex structures" basis to the subject freehold. Its much smaller size would appear to be reflected in its high price if considered on a per ha basis. I will, however, bear in mind the site value of this property. I stress, however, that Mr Blomfield referred to this transaction as a support only, particularly given the circumstances of the sale. 824. I will come to those circumstances now and the question as to whether the sale was an open market transaction. There were press clippings provided in evidence showing that the final purchasers had a clear interest in acquiring the property. Mr Byrne said that the acquisition of this property by the Injinoo people comprised CYLC's first success. When the Injinoo expressed their interest in the property, they demonstrated that interest first by raising a flag at the "tip" and providing a letter to the management of the property to pass on to the owners, Australian Resorts. Any other intending purchaser would have been well aware of the interest of the Injinoo. It was Mr Gould's opinion that a purchaser other than the final purchaser would have had a concern as to the relationship with neighbours. 825. There was some evidence that the Minister for Land Management at the time, whose responsibility it was to provide or refuse consent to the transfer of leasehold interests, was approached and requested not to consent to a transfer of the relevant leases except to the Injinoo Aboriginal Corporation. I am not aware of the impact of such an approach, nor whether there was any need by the purchaser to place reliance on it. It does, 264 however, as a piece of evidence, reflect the extent of interest that the purchaser had in acquiring the property. 826. In Mr Blomfield's opinion the sale property is superior to the "Starcke" freehold in terms of location and beach frontage, however, has an inferior tenure - the non-competitive lease would be subject to conditions and, amongst other things, requires the lessee to pay rent. The Special Lease in the case of this sale property is subject to a condition of resumption, given six months' notice in writing with compensation being confined to improvements only. I accept Mr Blomfield's comparison. Care needs to be taken, however, that in any comparison with the "Starcke" freehold regard is paid to the circumstances of the sale and the adjustment that I have made to the analysis. 827. Mr Blomfield's Sale 4B took place on 9 November 1993. The property concerned was "Line Hill", a freehold property of 3,009 ha. The sale was from the receivers and managers to the Lockhart River Aboriginal Council at a price of $750,000. Mr Blomfield deducted a value for structures and yards to produce an analysed figure of $721,300 or $239.71 per ha for the 3,009 ha. The property is considerably smaller than the "Starcke" freehold - a feature which generally leads to a higher pro-rata value, assuming that to be the correct method of analysis. 828. Mr Blomfield said that his Sale 4B is the most comparable with the "Starcke" freehold of all of his sales. Although said to be the most comparable, he did not isolate it for direct comparison with the "Starcke" freehold, but considered it as part of his basket of sales evidence. The sale property is located on the eastern side of Cape York and has frontage of approximately 8 km to Lloyd Bay. To the south it adjoins the Lockhart River Aboriginal Reserve and although it is more isolated than the "Starcke" freehold by road, the sale property adjoins the Iron Range all-weather bitumen airport. 829. The sale property comprises coastal dunes and swales along the coast, which rise to undulating ridges along the western boundary. The property is intersected by several creeks, which are fringed with tidal mangroves where these creeks flow into Lloyd Bay. Upstream, the creeks and their tributary streams are fringed by areas of rainforest and tall closed scrub. A prominent feature of the site is a line of narrow sharp crested rocky ridges in the central section of the property and Line Hill comprises one of these features. The property has quite a history having been the subject of a proposed international resort with a "600 bed marina" at one stage. There was an EIS prepared with respect to that development proposal. 830. Mr Blomfield said that there are six commercial flights per week into Iron Range and access from the airport to the sale land is good. Mr Gould thought the sale land did not 265 have dedicated access, however, the evidence leads me to conclude that it has, though of an indirect nature. Whilst flying time Cairns/Iron Range would be longer than Cairns/Cooktown, road access from the airport to Line Hill would be superior to that available to "Starcke" from Cooktown. There is, however, the prospect of utilising an airstrip on "Starcke" for visitation. Access by road from such airstrips to any particular part of "Starcke" would be inferior to Line Hill, particularly in the wet season. Access by road to Line Hill from Cairns is much more difficult than access from Cairns to "Starcke". The distance between Cairns and Line Hill is about 765 km by road, of which 425 km is formed gravel or grade and 100 km is of a lesser standard road. The nearest town to Line Hill is Weipa, which is 260 km away on the other side of Cape York. 831. The receiver and manager of the Sale 4B property had initiated a tendering process as a means of selling the property. The sale to the Aboriginal Council purchaser was, however, negotiated prior to the completion of the tendering process and in Mr Blomfield's view that occurrence casts some doubt on the circumstances of the sale. Mr Blomfield understands that the contract of sale contained a profit-sharing clause which provided that should the property be on-sold within 10 years, then 50% of all profit generated by that sale would be payable to Lloyds International Limited. The assessment of profit in such circumstances would take into account cost of purchase and sale and reasonable holding costs. The contract, however, is framed on the understanding that the purchaser intended to hold the land for the benefit of the Aboriginal Council without the thought of resale. Whilst that profit-sharing term would be considered a restriction to any purchaser who may, in due course, wish to sell the property, there was no evidence to suggest that such a clause would have applied to any purchaser other than the eventual purchasers. For the eventual purchasers to accept such a clause, there would probably be a quid pro quo. Whether that was the abandonment of the tendering process, or a reduction in the sale price, or a combination of both, is not at all clear, however evidence from Mr Gould was to the effect that the vendor was inclined to accept the offer from the eventual purchaser rather than adopt what it saw to be risks associated with seeking a higher offer. The property had, however, been marketed nationally and internationally by Richard Ellis, real estate agents. That marketing attracted three "qualified inspections" according to Mr Blomfield but, apparently, no offers. He understood also that no interest was expressed in subdivision of the land by those who inspected it. 832. Mr Gould said that the selling agent involved in the Sale 4B transaction had told him that the nearby Aboriginal community could "make it difficult" for any other intending purchaser. That evidence was given in the context of a discussion concerning access, 266 however, Mr Gould said that the agent did not specifically refer to any access difficulties. It is not clear to me precisely what "difficulties" a purchaser might experience, though I infer that it would have to do with the adjacency of the neighbours and the prospect of cross-cultural tension. 833. In Mr Blomfield's view there are similarities between the sale property and the "Starcke" freehold in terms of development potential, length of beach frontage and adjacency to lands reserved for the Aboriginal inhabitants of the State. The most significant difference that he identified between Line Hill and the "Starcke" freehold is the sale's smaller area. Mr Blomfield was unconvinced with the proposition put to him in cross-examination that size may have favoured the subject freehold, given its physical scope for development. I suspect, that together with that suggestion, lay the proposition that the larger the property the greater its capacity to support a national and international marketing campaign of the standard proposed by Mr Beattie. Mr Blomfield suggested that the element of site value in the Line Hill transaction overrode any suggestion that there was anything approaching a pro-rata value in the larger size of the "Starcke" freehold or any premium on account of the larger size factor. This reasoning made good sense to me. 834. If I assumed for the moment that the "Starcke" freehold comprised a similar area to the either Line Hill or the Sale 3B property, but in its present location and with all of its geographical attributes, then such a "site" would, I think, be worth a figure higher than to $750,000 but less than $965,220, assuming these figures represent market value. The main difference between the subject and Sale 4B would be that of accessibility which I think would favour Line Hill, though it is not as well located as this notional "Starcke" site would be. I am not confident, however, that the price of $750,000 properly reflects the value of the Line Hill property. Some allowance would need to be made for that factor. In comparison with Sale 3B the "Starcke" land affords better land access but must be considered a lesser site than one located at the "tip" of Cape York. In addition to those considerations, there is the balance of the freehold which would have a value greater than the grazing value for the PDH because of its tenure and its more direct association with the supplementary eco-tourism use assumed to take place on the "site" that I have notionally created. It is also a little better located than the PDH. 835. Whilst Mr Blomfield analysed the above sales to reveal a price per unit area, he applied a site value to the "Starcke" freehold as I understand his reasoning, then calculated that value to represent a rate of $100 per ha. By comparison, I note that Mr Aitcheson had previously applied what I understand to be a pro-rata value of $130 per ha to the "Starcke" freehold to produce a value of $3,172,000 ex structures, but including clearing. Mr 267 Blomfield's value for clearing is $550,400, so if that is added to his value of $2,500,000, the resultant $3,050,400 is marginally less than Mr Aitcheson's figure. 836. Having established his value for the "Starcke" freehold in his mind, Mr Blomfield became aware of the "Silver Plains" transaction then referred to that in support of his value. My understanding of his approach is that he applied the figure of $100 per ha to the apportioned value that I have identified earlier in these reasons, to produce what he saw to be an acceptable analysis of that transaction. In that manner the "Silver Plains" transaction is said to support his figure. It is my understanding that when valuers refer to support evidence rather than basic evidence, that evidence is of less significance - see, for example, Mr Blomfield's earlier reference to Sale 2A when he was valuing the "Starcke" PDH. Nevertheless, the "Silver Plains" transaction which had been referred to by Mr Gould for other purposes, attracted a substantial amount of the parties' attention and gave rise to a large volume of evidence, some of which I need to refer to here. In considering that evidence, there are two questions only that fall for consideration, in my view: 1. Was the "Silver Plains" Special Lease acquired/sold as freehold? 2. Was it sold at a price of $100 per ha?

837. In considering the first question I point out that some aspects have been discussed earlier in these reasons but some repetition is warranted. The lessee had been undertaking protracted discussions and negotiations with the State to be granted a Deed of Grant, however, the State resisted those entreaties and sought to acquire at least part of the "Silver Plains" land. Negotiations were undertaken after the State announcement of the "Conservation" zone had been publicised; after the Starcke Bill had been ventilated in Parliament (a Bill dealing with the subject property where freeholding approval had only emerged after a total period of 14 years) and after potential purchasers of "Silver Plains" had been turned away because of the uncertainty surrounding the property. One possible purchaser suggested a price to officers within the then Department of lands which was similar to the figure settled upon in Mr Cotter's valuation. I do not see that as a matter of any moment. A chronology of events that showed the rigours of the whole process was tendered (Exhibit 111). That process led the lessee to express a willingness to surrender Lot 12, part of the freeholding lease, in order that freeholding might proceed. Mr Brett, who surveyed the State file on the matter, said that he formed the view that the lessee had his "back to the wall", not only because of the freeholding process, but because of his own financial pressure and the fact that he was negotiating from a position of weakness. The lessee did not have a freehold Deed of Grant to bolster his position, but was in fact seeking this grant from the same party who was wishing to take the land from him. Mr Quaid gave 268 an insight into what the lessee's state of mind may have been. In 1989, prior to the Deed of Grant issuing over what is now the "Starcke" freehold, he felt that he held nothing more than a lease. It was not until he had the Deed of Grant in his hand that he was able to consider the property as being anything other than Crown leasehold property. 838. The Special Lease at "Silver Plains" was granted in July 1988 with the freeholding conditions having been complied with by December 1991. The sale to the Government took place in November 1994. During the period 1991-1994 the position of the lessee appeared, on the evidence, to be weakening rather than strengthening, whilst from the State's perspective there was a perception that once freehold was granted, the State bargaining power would be diminished. The lessee, in a letter dated 4 June 1992 to the State, expressed a different view of that matter. That letter said in part: "However, if the Governor-in-Council fails to grant freeholding, and if our land is resumed by the Crown, then we will be entitled, in any case, to the same compensation as if the freeholding had proceeded normally, in accordance with the principle set out in Housing Commission (NSW) v. San Sebastian Pty Ltd (1978) 140 CLR 196. This principle is that, where restrictions are placed on the land as a prior step to its acquisition, the effect of such restrictions on the value of the land is not to be taken into account."

839. Whether that is a correct view of the law is something that I need not address. Even if the point was included in the letter for strategic purposes, I must say that it at least represents an arguable position. The inclusion of this proposition in the letter to the State does tell me, however, that the lessee had legal advice that was both serious and focused and that negotiations from both sides would be on the basis that this land interest was something more than a mere lease. I remain in some doubt, however, as to whether negotiations resulted in compensation for the Special Lease that represented freehold value, from the viewpoint of both parties. This brings me to the second question. 840. The transaction which finally took place was based from the State side on an indicative valuation prepared by Mr Cotter. Mr Cotter's indicative valuation was tendered in evidence. It reveals that whilst he was familiar with the property, he did not inspect it for the purpose of preparing the valuation which included no schedule of sales. Sales would usually be included in a "speaking" valuation. I am therefore left in a state of doubt as to the manner by which Mr Cotter formed his view of the value of the Special Lease on the assumption that it was freehold. The valuation was undated and the value of improvements included in it was taken from a "development report" that appeared on the relevant departmental file. The value of those improvements, it might be noted, was adopted by Mr Cotter, Mr Gould and Mr Blomfield. 269 841. Mr Cotter's indicative valuation contained language which was, on the evidence, adopted without change from previous valuations prepared by Mr Blomfield - though not valuations of "Silver Plains". A similar comment can be made with respect to Mr Cotter's "Kalpowar" valuation. I understand it to be a fairly common practice that valuers will place some reliance on market evidence originally obtained by other valuers, however, the extraction of large amounts of prose from prior valuations is not a practice that I would endorse. Mr Cotter was not, however, presented to explain the circumstances that may have given rise to his adoption of this questionable practice, so I will not be critical of him; however, will indicate that I entertain a serious question as to the level of individual professional judgment brought to bear in the conduct of the indicative valuation. Mr Cotter wrote that he assumed two freehold titles would issue and said that he based his valuation on that. I am concerned, however, as to how he could have arrived at his suggestion of the value of the freeholding Special Lease and, on the other hand, whether that viewpoint was shared by the lessee. 842. In all of the circumstances I have formed the view that whilst I would not reject the "Silver Plains" transaction, in particular that element dealing with the leasehold value, I would treat the transaction as providing questionable support to Mr Blomfield's conclusion as to the value that ought to be placed on the "Starcke" freehold. 843. Even if I put aside those concerns for the moment, I note that the "Silver Plains" freehold is located in a much more remote area than "Starcke" and is some distance from Coen, an inland town, less attractive and with fewer facilities than are available in the historic Cooktown, which would serve the "Starcke" property. The land in Lot 14 of the Special Lease is flat, rather featureless with distant views of the McIllwraith Range which cannot readily be compared in terms of impact to the escarpment which is in the view of all of the "Starcke" freehold land. Lot 12 to the north is somewhat closer to the Range, however again is uninteresting in its topography except for the Nesbit River and the vegetation in that vicinity. There are saltpans of large dimension inside the coastal fringe which flood during the wet, providing an abundance of wildlife, but are unattractive during the dry season. The coastline itself is rather featureless and does not provide the dunal contrast available at "Starcke". Overall the land is less diverse than "Starcke". 844. Given these features I think that fewer people would be convinced to go to "Silver Plains" as tourists that would elect to visit "Starcke" if developed for that purpose. "Silver Plains" use would seem to me to be confined to cattle grazing with a small homestead-stay enterprise in association with that, as was conducted before acquisition by the State. Mr Brett is of the view that in valuing the "Starcke" freehold the "Silver Plains" Special Lease 270 is totally irrelevant and, whilst I would not go that far, I see comparison with it as being an exercise of tenuous value. Notwithstanding that view, I cannot understand that the application of the analysed "Silver Plains" Special Lease figure taken from the acquisition at $110 per ha should yield a value of the "Starcke" freehold at anything less. The comparison that I have extracted from the evidence tells me that it ought to be something more. I note that the "Silver Plains" Special Lease is the only other property in Cape York of "similar tenure" to the "Starcke" freehold and of a size which is very much the same. It is located on the east coast and is a wilderness property and so for these reasons ought not to be rejected. It is the questionable aspects of the transaction which render it a difficult property to employ, however, the comparison process that I have adopted I think is useful in supporting a higher value than that proposed by Mr Blomfield. 845. None of the transaction evidence referred to by Mr Blomfield stands out as being a basic property which a valuer would be happy to discover and to apply. They do comprise, however, the available material and must be utilised. On the basis of the above evidence and what I have said with respect to each sale and its comparison with the "Starcke" freehold I conclude that this subject land would have a value of $3,500,000. In arriving at this figure I have proceeded on the basis that the property has a value as a site and as a grazing property but I have not yet directed my mind to the value of the subdivision potential that I see as being an element of the value of the property. 846. Whilst Mr Blomfield said that he thought the Line Hill property had the same subdivision potential as the "Starcke" freehold with a maximum of 30 blocks possible - or 29 as submitted by the claimant - he could not say whether a project of this size would support a marketing program of the size proposed for "Starcke". The subdivided blocks at "Line Hill" would, however, have frontage to a sandy beach and the ocean. The comparison between "Line Hill" and the "Starcke" freehold as lands with potential for subdivision and sale was not put to Mr Beattie. Mr Brett had insufficient knowledge of the property to usefully comment. Both Mr Brett and Mr Slater had formed the view that there were no suitable sales available to value the "Starcke" freehold as an in globo site. Certainly, there are no subdivisions of land sold for that purpose to point to a value for such a use. Mr Blomfield's point is, I think, a negative one however. That is; here is land available for subdivision; CSC is pro-development; and value for subdivision is therefore in this land and a comparison with the "Starcke" freehold will therefore take that potential into account. 271 847. The respondent seized on a list of features included in Mr Brett's expert report which identified what he saw to be important subdivisional aspects which apply to the "Starcke" freehold:  freehold tenure;  location within a wilderness area on Cape York which features areas of environmental significance and National Parks;  the only property on Cape York of sufficient size to warrant a national sales campaign;  coastal lowlands including ocean frontage;  within a reasonable driving time of a sizeable town;  absence of possible competition.

848. Mr Blomfield said that each of these features applies to "Silver Plains" and, apart from the size of "Line Hill", would also apply there. I think that the application of these aspects is largely a matter of degree, though this does not mean that a prudent purchaser would not reach the point where the degree of difference becomes such that prospective use for subdivision disappears. I will not recite again the details of comparison made earlier with respect to establishing a freehold value for the "Starcke" freehold on the basis of the highest and best use identified by Mr Blomfield, however will simply say that the "Starcke" freehold has, in my view, a greater opportunity to be a property which may attract limited subdivision than either of these other properties. 849. I therefore intend to add an amount to reflect this potential on the "Starcke" freehold. How I do this is a matter of judgment, however I will set out the mental process I employed. I have assumed that 10-20 lots could be produced from the "Starcke" freehold over the foreseeable future. Rate of sale would be low as such a subdivision could not be financed by a Beattie-style marketing program. Values would average about $100,000. The cost of crossing the Morgan River would be absorbed by a small number of lots. Having regard to these figures as a guide, I would estimate that a purchaser may be prepared to pay an additional $250,000 for the benefit of this potential. Whilst I have concluded that the freehold land has some potential for subdivision, I have not directly taken into account the value that might be inherent in the individual sale of the four freehold lots that make up the freehold. I have insufficient evidence to pursue that option but proceed on the basis that a lower premium than $250,000 would result. The value of the "Starcke" freehold is therefore $3,750,000 to which figure I need to add the value of improvements. "Starcke" Improvements 850. Mr Blomfield analysed the improvements on the "Starcke" aggregation at: Structures $203,800 272 Yards $47,700 Plant and equipment $4,800 Clearing $550,400

TOTAL $806,700

851. In his report Mr Finney said that in total about 30% of the freehold area had been cleared. That calculates to an area in excess of 7,000 ha, whereas Mr Blomfield valued 2,360 ha only of clearing. Mr Stanton estimated clearing would have been carried out on 10% to 15% of the freeholding property - an estimate that roughly accords with Mr Blomfield's figure, though produced from Mr Stanton's memory, not by any recent measurement. Mr Finney's figure was also an estimate. I am of the view that Mr Blomfield's evidence should be preferred to Mr Finney's on the basis that he was concerned with effective clearing to which he applied a value depreciated for a level of regrowth and the incursion of weeds. I will not adjust Mr Blomfield's figure. 852. Though Mr Gould had not had the opportunity to carry out a detailed inspection of "Starcke", including the improvements, at or near the relevant date, he formed a view that values placed on some of the improvements by Mr Blomfield were low. I have considered this evidence, including tendered photographs, and conclude that Mr Blomfield's evidence is clearly to be preferred. I therefore adopt his estimation of values of the improvements. The addition of this figure to the land value that I have found gives a total value of $4,556,700 for the freehold. Environmental Value 853. Mr Nevard described a different "environmental" market from that discussed by Mr Beattie, in the form of purchases by private organisations of land thought to merit conservation. He referred to examples in Australia as well as overseas and said that Cape York would, as a region, have been of interest to such organisations, nationally and internationally. In that regard he thought that the "Starcke" aggregation would have been of interest, though he acknowledged that the freehold was not as environmentally significant as the PDH. Nevertheless, he suggested that there would have been interest in purchasing the freehold as an in globo site, even if it was intended to be subdivided as is suggested by the claimant. 854. Mr Nevard said that such a purchase would be possible if the intrinsic environmental values were to be protected by a management plan following subdivision. He gave no example, however, of a purchase by the class of organisation he described, of land for subdivision purposes. The closest examples in his evidence involved the uses of:  Eco-tourism (the Conservation Corporation in Africa) 273  The Pensthorpe Waterfowl Park in the UK (a purpose built nature reserve and breeding facility which is also a tourist attraction, but is controlled by a charitable trust)

 Wilderness lands in Scotland where the "sporting" values of such lands have traditionally been a key sales issue.

 Barn Elms housing estate in central London where house prices overlooking the reserve of the Wildfowl and Wetland Trust are said to be "significantly in excess of adjoining comparable Thames-fronting properties, a reversal of what might normally have been expected.

855. Notwithstanding this apparent shortfall in his evidence, I do not see his view on this aspect as being at odds with the claimant's case. The claimant asserts that the "Starcke" freehold could be sold to a prudent purchaser who would pay a price consistent with its highest and best use for subdivision into 240 lots. It matters not that the purchaser be assumed to be an organisation with conservation aims and credentials. They would not be buying in a separate market from that based on its highest and best economic use. I have therefore impliedly considered this aspect of the claimant's case in my treatment of the subdivision proposal. This brings me to another aspect of the suggested environmental value. 856. The claimant made reference to Sri Raja and took me to p.312 where Lord Romer said: "It is perhaps desirable in this connection to say something about this expression 'the market price'. There is not in general any market for land in the sense in which one speaks of a market for shares or a market for sugar or any like commodity. The value of any such article at any particular time can readily be ascertained by the prices being obtained for similar articles in the market. In the case of land, its value in general can also be measured by a consideration of the prices that have been obtained in the past for land of similar quality and in similar positions, and this is what must be meant in general by 'the market value' in s.23. But sometimes it happens that the land to be valued possesses some unusual, and it may be, unique features, as regards its position or its potentialities. In such a case the Arbitrator in determining its value will have no market value to guide him, and he will have to ascertain a best he may from the materials before him, what a willing vendor might reasonably expect to obtain from a willing purchaser, for the land in that particular position and with those particular potentialities. For it has been established by numerous authorities that the land is not to be valued merely by reference to the use to which it is being put at the time at which its value has to be determined … but also by reference to the uses to which it is reasonable capable of being put in the future. No authority indeed is required for this proposition. It is a self-evident one. No-one can suppose in the case of land which is certain, or even likely, to be used in the immediate or reasonably near future for building purposes, but which at the valuation date is a wasteland or is being used for agricultural purposes, that the owner, however willing a vendor, will be content to sell the land for its value as waste or agricultural land as the 274 case may be. It is plain that, in ascertaining its value, the possibility of its being used for building purposes would have to be taken into account. It is equally plain, however, that the land must not be valued as though it had already been built upon, a proposition which is embodied in s.24, sub-s. 5, of the Act and is sometimes expressed by saying that it is the possibilities of the land and not its realised possibilities that must be taken into consideration."

857. The underlining was supplied by the claimant who submitted that the value that I had to find is not the value of a grazing or "pastoral property", but the value of a "one-off property in the Cape with particular conservation values …" 858. The primary question to which I have directed my mind is: "what is the highest and best value of the resumed land?" In that respect I have dealt with the PDH and the freehold separately. I do not, however, understand that the evidence relied upon by the claimant provides me with the choice of either finding a grazing value of the freehold or a value of a property with particular conservation values. 859. The claimant did not present the "Starcke" freehold simply as a property with particular conservation values, but as a property which was ripe for subdivision into 240 lots, which were saleable into an "environmental" market. The distinction that I have drawn is not simply a play on words for even if I was to assume the sale of the property in globo into the conservation market described by Mr Nevard, the price, according to the claimant's evidence, is to be assessed on the basis of its subdivision value and without any added premium. Unless I was to find that subdivision approval would not be given by CSC, I need to consider the value of the land for the purpose of subdivision. If the figure I found for that was higher than any other prospective use then the highest and best use of the land is for subdivision. This would not mean that the purchaser must subdivide it, but does mean that a purchaser who does not wish to subdivide it needs to compete in that market in purchasing the land. The claimant's case, discussed thus far, is not therefore one which says with respect to the freehold that the value of the land assumes that the conservation market would add a premium to its market value. There was, however, another aspect of "environmental value" raised by the claimant. 860. Reference was made to the various statements in Parliament by the Premier who emphasised the environmental values of the "Starcke" aggregation. I discuss these elsewhere in these reasons (para 301). The claimant submitted that, "if Caesar passes special legislation, Caesar has to pay the purpose of that special legislation as reflecting value". An aspect of this rather elusive argument appears to be: if the purpose included stopping the sale of the land to overseas interests for its ultimate development to a higher 275 use than a mere grazing use, then it was wrong to value the "Starcke" freehold as a grazing property. 861. In answering the highest and best use question, I do not find the views expressed by the Premier or the reasoning and motives attributed to him, as a matter of logic, to be at all persuasive. He may have been concerned at the prospect of a sale to a person who could have developed the land as a "frontier tourist development" or a "game park" or who would have extensively cleared it for grazing purposes. He may even have had in mind a value of the "Starcke" lands of the order of that proposed by Messrs Brett and Gould, based on the respective highest and best uses suggested by them. Even if he did and if he was called to say that, I would still need to consider the evidence which supported that opinion, not the mere existence of his opinion - notwithstanding his high office. I note that in a Ministerial Statement to Parliament on 11 November 1993 (Hansard p.5588) the Minister for Lands, Mr GN Smith, spoke of the government stopping overseas sale of the "Starcke" to "protect it from being turned into a game theme park and/or some other inappropriate use." 862. There is, however, in addition to the factual matter discussed thus far, a legal aspect that I should address. The central principle for which the Sri Raja case stands is that a potentiality in the acquired land, which can be taken to fruition only by the acquiring authority, is to be considered in valuing that land for the purpose of assessing compensation. Thus, if there is, for example, an attribute of the land or a structure or part of a structure on it which would be of value to the acquiring authority only, then the value of that attribute, structure or part of a structure must form part of the market value. In Collins v. Livingstone Shire Council (1972) 127 CLR 477 a local authority had constructed a reservoir partly on privately owned land which it then acquired. That part of the reservoir on the acquired land was held to form part of the resumed land asset to be valued, even though only the local authority could realise its potential to hold water. In Sri Raja the feature for consideration was a spring which produced water which had the potential to benefit the acquiring authority who could profitably use the water in connection with its harbour project. 863. This central principle of the Sri Raja case needs to be distinguished from the principle that the value to the acquiring authority is not the proper measure of value (Re Lucas and Chesterfield Gas and Water Board (1909) 1 KB 16): a proposition made clear in Sri Raja itself. Rather, this central principle, as I have called it, is to do with some economic value in the land. Thus, for example, an acquisition of land by the State to add to a poorly shaped parcel of land it owned and to therefore improve its shape so that it could be sold for shopping centre purposes would lead to compensation based on the potential of 276 the acquired land to become part of that larger shopping centre site - not its value based on its previous use as a house; that is unless that previous use yields a higher value. 864. An acquisition by the State for sewerage farm purposes, to cite another example, would not fall into this category as this would be a service/utility use, not a commercial or economic use. I confess some concern at the issues that might arise in borderline cases - cases produced by the privatisation of what have traditionally been State or public services or by the movement of entrepreneurs into previous State monopolies; however, such cases can, I think, be addressed and do not fall for consideration here. 865. The question that arises, given the submissions of the claimant, is whether the State, having acquired the claimant's land for environmental purposes, should pay compensation based on that particular aspect. The first part of my answer is: to the extent that the claimant could have put the land to a use based on its environmental values the answer must be "yes". That is, of course, part of the enquiry which I have undertaken with respect to the highest and best use of the land. 866. To the extent, however, that the environmental values of the land are of value to the State because of the public value of such attributes the answer must be "no". In such a case it is Re Lucas and Chesterfield Gas and Water Board that provides the answer. Claim for Compensation - Mr Quaid's Approach 867. Mr Quaid said that he intended to dispose of the "Starcke" property by way of a two-phase program. Phase one was to involve an attempt to market the property overseas. The advertisements in the "Wall Street Journal" were part of this phase. He said that he had 40 or 50 responses to those advertisements but had about 140 prospects, overall. Phase two would comprise a subdivision and sale of the freehold if phase one had not resulted in success after a period of one year. Following the completion of the subdivision project, the PDH and OLs would be sold. There was no evidence of any initiative having been taken with respect to phase two before the resumption took place. Mr Quaid's asking price for the "Starcke" aggregation as a parcel was based on his appreciation of its value as subdivision land, not its value based on the uses which appeared in the "Wall Street Journal" advertisements. He had no evidence of the value of such uses so, as I understand it, considered subdivision value as a surrogate. He assessed the subdivision value at $US300 per acre for 60,000 acres (about 24,300 ha). That calculates to $US18,000,000, though he provided no market basis for these figures. He also said that he placed some value on the PDH, OLs and livestock, however, this is difficult to reconcile with his view that 24,300 ha (almost the area of the freehold alone) was worth $US18,000,000, his asking price for the whole aggregation. 277 868. He also provided me with what he described as a "commercial assessment" of the "Starcke" capital realisation program that is, in effect, phase two of the marketing program that he said he had in mind. The exercise presented by Mr Quaid accepts the correctness of the gross realisation from the sale of the 240 subdivided lots, as estimated by Mr Beattie ($45,570,000) and assumes a development and selling period of 2½ years. It assumes that the PDH area would appreciate in value during that period of development and sale owing to the improved access and other facilities provided by the subdivision of the freehold and would reach a value of $3,000,000. No basis is provided for that figure which is substantially higher than the value Mr Gould placed on the PDH. Apart from this, there is a question as to whether the value of the PDH would in fact be enhanced by the assumed subdivision of the freehold area into 240 x 100 ha lots. 869. Mr Quaid then deducted the cost of development and marketing, as estimated by the various experts called by the claimant, and his estimate of land value at $25,000,000 (which he says was the $A equivalent of $US18,000,000), to reveal a surplus of $14,000,000. He thought that surplus adequately represented the "use of funds", (which I take to be the equivalent of interest); and allowances to cover the delay in the receipt of sale proceeds, as well as to cover the risk of realisation. I was presented with no details of the amount of interest that would apply to his calculation, nor does the exercise as presented include the costs of purchase of the land. This is an edited version of Mr Quaid's exercise:- Gross realisation of freehold $45,570,000 Leasehold value after freehold developed and sold $3,000,000 $48,570,000 Less development and selling costs $9,570,000 $39,000,000 Less in globo value $25,000,000 Surplus $14,000,000 870. It was submitted by Mr Gallagher QC that whereas the values struck by Mr Brett and Mr Gould should be described as "market" values, it is only Mr Quaid's figure of $25,000,000 which satisfies the notion of "reasonable compensation" provided for in s.5(1) of the Starcke Act. 871. It will usually be the case that the value of resumed land and therefore compensation for its loss will be assessed in accordance with the market value test supplied by Spencer (see the judgments of Griffith CJ at 432 and Isaacs J at 441 in particular). Circumstances will sometimes arise where a value struck by reliance on the market value 278 test will be less than the value of the land to the owner, thus something additional to market value will be assessed to reflect this so-called "special value" (discussed most recently in Boland). No evidence was led nor submissions made to support a conclusion that the figure of $25,000,000 included a component of special value. It seems then that the claimant bases its claim for loss of land on the proposition that the term "reasonable compensation" found in the Starcke Act (but not defined there) is something different from "compensation" as provided for in s.20 of the Acquisition of Land Act and, on the facts of this case, equate with the dollar equivalent of what the claimant's asking price for the land was in 1993. Such a view suffers from an absence of logic and authority, in my view, and disregards the requirement that compensation be decided in accordance with s.20 of the Acquisition of Land Act. Senior Counsel for the claimant commended to me the judgment of Barton J in Spencer. I take him to have had in mind what His Honour said at p.436-437: "And I should say, in view of the many authorities cited and upon the sense of the matter, that a claimant is entitled to have for his land what it is worth to a man of ordinary prudence and foresight, not holding his land for merely speculative purposes, nor, on the other hand, anxious to sell for any compelling or private reason, but willing to sell as a business man would be to another such person, both of them alike uninfluenced by any consideration of sentiment or need."

I do not think that those words provide any support to the proposition put to me by the claimant. His Honour was clearly discussing an objective test. In Commonwealth v. Reeve (1949) 78 CLR 410 at p.418 Latham CJ said: "… the value of land to the owner is what he can get for it. He can never get for it more than other people will give for it. But what other people will give for it is not unaffected by what the owner is prepared to take for it …" (my emphasis)

That might be understood as suggesting a subjective test, however, read as a whole his Honour's reasoning clearly proposes an objective test. 872. Description of compensation as "reasonable" does not in my view introduce a new category or test of value to the owner nor does it erect a statutory test which displaces s.20 of the Acquisition of Land Act. If it did, there would be no need for s.5(2) of the Starcke Act. 873. Furthermore, Mr Quaid's figure of $25,000,000 was based, as I understand it, solely on the original asking price of $US18,000,000. It is said by the claimant that because of this the figure is "reasonable" in terms of the Starcke Act. Now it may well be reasonable, subjectively, to Mr Quaid, but it is not a figure arrived at by acceptable valuation methodology. The asking price gains no cogency as a land value simply because it was 279 said to be, or indeed was, a genuine attempt to sell at that price. It follows, also, from my conclusion with respect to the expected time of commencement of construction of the "Starcke" freehold subdivision, the expected selling prices, the rate of sale and the risks attendant on the project that I do not accept the foundation of individual figures included in Mr Quaid's exercise. Acquisition Costs and Tax Advantage 874. The claimant included an amount of $600,000 for disturbance, described as "acquisition costs of new property" in the document said to provide "details of our claim". It also included an amount of $6,840,000 described as "tax advantage of land". A number of difficulties arise in my consideration of these items. First and foremost is that in the final amendment of its claim, the claimant did not include either of these two items. Nevertheless, there was evidence led with respect to each item and submissions for the claimant were made with respect to the matter of "acquisition costs", but not the matter of "tax advantage". The claimant's view was that compensation for loss of land ought to be determined in the amount of $25,000,000 as estimated by Mr Quaid and that on this basis the items of "tax advantage" and "acquisition costs" would merge with this sum. Given the following discussion, I can understand why "acquisition costs" would theoretically merge, however, fail to appreciate how the so-called "tax advantage" changes character. However, I need not embark on a discussion of that dilemma. I note in passing that in Exhibit 22A both of these items of claim are placed under the heading of "disturbance" not "special value", however this is not a fatal defect as my task is to determine compensation, not to maintain conceptual purity. 875. The claimant's view is that, should I not determine compensation with reference to Mr Quaid's figure of $25,000,000 but in accord with the Brett and Gould figures, the items of "tax advantage" and "acquisition costs" should be added in as items of compensation. Now whilst I have serious doubts that the claim as described in Exhibit 22A survived as an alternative claim, even if that is legally possible under the applicable statutory regime, the matters raised do merit a diversion. I will first consider the matter of the "acquisition costs of new property" which, it will soon will be found, was not an item concerned with a new property at all. 876. This item arises in this way: in his DCF exercise Mr Brett allowed, as part of the expenditure on the development, the acquisition costs at 4% of land value, which on a value of $15,000,000 as estimated by him, would amount to $600,000. In my adjusted DCF exercise that figure becomes $113,000. The claimant submits that it is appropriate for a developer looking at purchasing land such as the "Starcke" freehold for the purpose of 280 subdivision, to make an allowance in his valuation exercise for the cost of purchasing the land. I accept this. Similarly, it is suggested an owner of in globo land, being a person not in a position to carry out the subdivision or development of that land would, in ascertaining the appropriate sale price, make allowance for the acquisition costs to the purchaser. The claimant's position was contrasted with this second scenario. 877. The claimant's argument is that Mr Quaid and his team of experts was in a position to carry out the development of the "Starcke" freehold and, therefore, would not allow for the acquisition costs in deciding the asking price for the land. It would make no difference, according to this submission, whether the claimant intended to carry out the development or to sell the land in globo. The reasoning is that if the claimant were to carry out the development himself, he would not have to incur acquisition costs. It was submitted that this feature is a characteristic of the land; namely, the land is in the ownership of the claimant rather than in the ownership of some other person from whom he would have to purchase it. Therefore, the argument is that the claimant has a "special value" in the land. Reference was made to a number of authorities including Pastoral Finance Limited v. The Minister [1914] AC 1083 (Pastoral Finance) at 1087-1088 which, put briefly, authorises a value in excess of market value where the claimant is in a position to economically take advantage of a feature in the land, though the general market could not so do. Such a "special value" in the "Starcke" freehold would not exist, according to this argument, in a person who did not have the ability to develop the land. 878. "Special value" gives a "value to the owner over and above its market value" - per Callinan J (Boland at 269). Having said this, His Honour then quoted, with approval, from the Australian Law Reform Commission Report No. 14 (1980) para. 239, which defined special value as "that additional economic advantage which the owner obtains, by reason of his ownership … and which is not reflected in market value". The claimant's argument appears to be that the claimant has a special value in the "Starcke" freehold land "by reason of its ownership" together with the fact that the claimant is capable of developing the land by subdivision in the manner proposed. Now whilst I have not found a value for the freehold land based upon it having a clear highest and best use for immediate subdivision, nevertheless the question raised by the claimant remains, given that I have recognised the prospect of some such potential emerging. I will now deal with each of the elements upon which I understand the claimant to rely. 879. The claimant's submission is that the claimant would pay more for the land because of the advantages of ownership, that is a saving of the cost of purchase. That view is both novel and untenable for a number of reasons. First, even in a special value case a sale must 281 be assumed: that is the nature of the test of special value enunciated by Lord Moulton in the Pastoral Finance case at 1088: "… that which a prudent man in their position would have been willing to give for the land sooner than fail to obtain it."

880. This test is similar to Spencer in that there is an assumed transaction. In Gollan v. Randwick Municipal Council (1960) 6 LGRA 275 at 278, it was made perfectly clear to my understanding that in determining value a sale must be assumed. If a sale were not to be assumed then all that a claimant could receive would be the equivalent of the land's historical cost to him. Exploration of such a proposition would be an arid undertaking, however, as there is no authority in support of it. 881. I do not think that the Law Reform Commission or Callinan J intended to convey that the fact of ownership comprised an element of special value. Certainly ownership, or having an interest in land, is a prerequisite to having a right to claim compensation (s.12(5) Acquisition of Land Act) but it cannot, in my view, sensibly be an element of value. All claimants have an interest in land; most are owners. The argument of the claimant must, therefore, rely more directly on the capacity of the claimant to develop the land in the manner proposed. 882 The qualifications of the claimant as a competent developer of land are not confined to the "Starcke" freehold. These are qualities that are transportable without loss and are therefore not qualities in the land, but qualities that are personal to the owner. The resumption has not destroyed those qualities, but has simply denied the claimant the opportunity to apply them to this land. Such qualities must, of course, be assumed to be present or available to any hypothetical prudent purchaser purchasing the land for its highest and best use or to any vendor of the land. Mr Brett said as much. Thus, a farm has full value as a farm, whether the present owner is able to operate the farm profitably or not. Spencer assumes a capacity to apply the land to its highest and best use and does not penalise the actual owner because of his lack of competence as a farmer. Land with a highest and best use for subdivision has a value based on that use, notwithstanding the qualities or capabilities of the owner, whatever they may be. If the fact of ownership together with the capacity of the owner to apply the land to its highest and best use combined to produce a special value in the land, then every residential parcel of land and most other types of land would have a special value, yet as Callinan J said (p.269), "There will in practice be few cases in which a property does have a special value for a particular owner". I would add that the present case is not one of those rare examples. 282 883. At this point, useful reference might be made to the words of Kitto J in Turner at 291-292: "I must reiterate, however, that this is not a case where there is a difference between the value of the land in general and its value to the expropriated owner in particular. The suitability of the land for subdivision was one of its inherent characteristics; it was available to be exploited by the owner whoever he might be; the land had no special value for the appellants. But I cannot forbear to add that if the test of value which has been approved for cases where there is special value to the owner be applied here, the question must be asked in the familiar words of Lord Moulton in Pastoral Finance Association Ltd. v. The Minister: what would a prudent man in the position of the appellants have been willing to give for the land sooner than fail to obtain it? And the answer must be: precisely what any other prudent purchaser would have been willing to give for it."

This reasoning applies with equal force to the facts before me. 884. I will now turn to the matter of tax advantage, but will be brief if only because the claimant did not include in its final submissions any mention of this item of claim. The amount of $6,840,000 included in the "claim details" in Exhibit 22A was said to equate to the income tax that a developer company would pay on Mr Brett's assumed profit and risk allowance of $19,000,000. Interestingly, Mr Quaid's taxation advantage figure assumes a margin of $14,000,000 based on his own calculations. The argument is that the claimant was in a position to subdivide and sell the "Starcke" freehold land and sell the PDH without a requirement to pay any income tax for the same reasons that he was not required to pay tax on the proceeds of the subdivision of "Daintree". Mr Quaid understands that the Taxation Commissioner would treat a "Starcke" subdivision similarly, but he claims no expertise in taxation matters. Since the resumption denies the claimant the opportunity to subdivide and sell the land, it is said that the tax advantage of $6,840,000 interest in the land is lost to the claimant. Senior Counsel for the claimant acknowledged that the full loss would not be compensable given the test of special value and that a discounted figure based on the $6,840,000 would be provided to the Court. None was provided. 885. This item of claim must fail for a number of reasons:  no expert evidence was provided to show that the claimant:  Would not be required to pay income tax were it to have subdivided and sold the land, and

 Would be required to pay income tax in the amount of $6,840,000 (or any other amount) as a consequence of the resumption.

283  No cogent reason was advanced as to why the measure of loss should be referable to an assumed development of the land rather than by reference to an assumed sale of the land in globo

This item of claim is therefore disallowed. Compensation Determined 886. I have concluded that the value of the resumed land and improvements is as follows: Value of PDH $1,130,000 Value of freehold $3,750,000 Value of improvements $806,700 TOTAL $5,686,700 887. Compensation for the resumption of the "Starcke" aggregation from the claimant is, therefore, determined in the amount of Five Million Six Hundred and Eighty-six Thousand Seven Hundred Dollars ($5,686,700). Orders (i) I ORDER that the respondent pay the claimant compensation in the amount of $5,686,700. (ii) In the exercise of the discretion granted under s.28 of the Acquisition of Land Act 1967 I ORDER that interest be paid by the respondent to the claimant on the amount of $5,686,700 from 11 March 1994 up to 5 December 1994; then on the amount of $1,536,700 up to 25 May 1999; then on the amount of $1,260,413 up to and including the day immediately preceding the date of payment; interest in each case being paid at the rate of 7.00 per centum per annum.

RP SCOTT MEMBER OF THE LAND COURT