Cox v Chief Executive, Department of Natural Resources [1998] QLC 141

LAND COURT, BRISBANE 17 November 1998 Re: Claims for Compensation - Resumption for Burdekin River Irrigation Project - Acquisition of Land Act 1967. Cecil Arthur Cox, Valarie Mary Cox and Lex Howard Cox v. Chief Executive, Department of Natural Resources (A96-25) Cecil Arthur Cox v. Chief Executive, Department of Natural Resources (A96-26) Lex Howard Cox v. Chief Executive, Department of Natural Resources (A96-27) Valarie Mary Cox v. Chief Executive, Department of Natural Resources (A96-29) James Cyril Cox v. Chief Executive, Department of Natural Resources (A96-28) (Hearing at Townsville) J U D G M E N T Introduction These matters involve claims for compensation in respect of five (5) parcels of land held by members of the Cox family and situated to the south of the Bruce Highway between Giru and Ayr, in the Burdekin District. The lands were resumed under the provisions of the Acquisition of Land Act 1967 for the purposes of the Burdekin River Irrigation Project (the Burdekin scheme). [1998] QLC 141 -- 1 of 78 -- 2 The first claim is for the taking of land owned by Mr Cecil Cox, his wife Mrs Valarie Cox and their son Mr Lex Cox, described as Lot 44 on Plan GS7, Parish of Jarvisfield (Lot 44), containing an area of 1817.577 hectares. It was resumed on 22 December 1990. The second claim is for the taking of land owned by Mr Cecil Cox, described as Lot 42 on Plan GS 148, Parish of Selkirk (Lot 42), containing an area of 1,328.178 hectares. It was resumed on 18 December 1992. The third claim is for the taking of land owned by Mrs Valarie Cox, described as Lot 43 on Plan GS148, Parish of Selkirk (Lot 43), containing an area of 1,328.178 hectares. It was also resumed on 18 December 1992. The fourth claim is for the taking of land owned by Mr Lex Cox, described as Lot 5 on Plan GS149, Parish of Barratta (Lot 5), containing an area of 1,781.831 hectares. It was resumed on 5 November 1993. The fifth claim is for the taking of part of land owned by Mr James Cox, the son of Mr Vivian Henry Cox and the nephew of Mr Cecil Cox, originally described as Lot 15 on Plan GS37, Parish of Jarvisfield, containing an area of 610.569 hectares. It was resurveyed as Lots 1 and 15 on Plan 814658 on 22 May 1991 and Lot 1, containing an area of 344.5 hectares was resumed on 7 September 1991. Lot 15, containing an area of 266.0695 hectares, was retained by Mr Cox. Plan 814658 was registered on 7 April 1992. However, despite the fact that Lot 15 is now the description of the retained land, throughout the hearing of these cases, the resumed land was referred to as “Lot 15”, no doubt as a shortened version of the more correct reference “the land resumed from the original Lot 15 on Plan GS37”. To avoid confusion, I will continue to refer to the resumed land as “Lot 15”. These matters were heard in Townsville in March and April 1998. The claimants were represented by Mr RM Needham and Mr RS Litster. The respondent was represented by Mr NM Cooke QC and Mr RS Jones. The Claims The original claims for compensation for Lots 44, 42, 43 and 5 were dated 17 March 1995, for the following amounts: Lot 44 $ 4,960,000 Lot 42 $ 3,349,000 Lot 43 $ 3,349,000 Lot 5 $ 4,324,000 The original claim for Lot 15 was dated 31 July 1992, for an amount of $742,000. On the first day of hearing, 16 March 1998, the claims were amended as follows: -- 2 of 78 -- 3 Lot 44 $ 2,595,334 Lot 42 and Lot 43 $ 4,202,855 Lot 5 $ 3,032,971 Lot 15 $ 721,348 The claim in respect of Lot 15 was again amended on 27 March 1998, to accord with the altered valuation of the claimants’ valuer, Mr Eales, to $699,400. The respondent contended for compensation in the following amounts: Lot 44 $ 1,450,100 Lot 42 $ 691,840 Lot 43 $ 744,180 Lot 5 $ 939,600 Lot 15 $ 372,750 The difference between the parties stems from the approach which they adopted to the highest and best use of the land and the extent to which each of the parcels had potential as irrigable arable land. Before proceeding to consider each of those different approaches, I will outline the background to these cases. Background The resumed land originally formed part of a cattle grazing property, which has been owned by members of the Cox family for four generations, since 1887. Towards the end of 1974, the then joint owners of the property, Cecil Arthur Cox and his brother, Vivian Henry Cox, commenced negotiations with a view to partitioning the land. In November 1977, the property was partitioned and certain parcels, including Lots 44, 42, 43 and 5, were transferred to Cecil Arthur Cox and members of his family. Mr Cecil Cox held Lot 44 jointly with his wife, Mrs Valarie Cox, and their son Mr Lex Howard Cox; Mr Cecil Cox held Lot 42 by himself; Lot 43 was held by Mrs Cox; while Lot 5 was held by Mr Lex Cox. The balance of the property was transferred to Mr Vivian Henry Cox and his family, including his sons Geoffrey, David and James, and was held by them in various ownerships, with the land from which Lot 15 was resumed being owned by James. Up until the time of the redistribution of ownership of the land, the property had been used for grazing cattle, but members of the family realised that the land had potential for growing sugar cane and set about developing parts of it for agriculture. However, the balance of the property continued to be used for grazing cattle. At that time, most of the cane in the Burdekin district was grown on light levee soils in the Burdekin delta area, as the heavy cracking clays, or Barratta clays, of which the Cox lands largely consisted, were not regarded as suitable for cane growing. However, at the time -- 3 of 78 -- 4 of transfer of the lands to the various family members, it was intended to progressively develop those lands for agriculture. In addition to the subject lands, Mr Cecil Cox and Mr Vivian Cox also owned a cane farm of approximately 100 hectares in the Kalamia area, known as “Millview”. In June 1973 that property was transferred to Mr Cecil Cox, Mrs Valarie Cox, and Mr Lex Cox. It continued to be leased to various tenants until 1978, when Mr Lex Cox took over its management and operated it in partnership with his parents. It became apparent to Mr Lex Cox that the subject lands were superior to “Millview” for the growing of sugar cane. The land in the Kalamia area was broken in nature and of poorer soil quality, the light sandy soils required more water and were, therefore, less economic to farm than the Barratta clays. At the time of the redistribution of the Cox lands to the various family members, Lot 574, Parish of Jarvisfield (Lot 574), of 64.75 hectares, which adjoined Lot 44 to the east, and situated within the North Burdekin Water Board area, was transferred to Mrs Valarie Cox. At that time it was leased to a rice grower. The owners of “Millview” intended to transfer their cane farming operations to Lot 574 and then onto Lot 44. However, they faced a number of difficulties. The cane land on “Millview” was assigned to the Kalamia Mill, while Lot 574 and the subject lands, although having no assignments, were in the Pioneer Mill area and the Invicta Mill area. At that time, peaks and assignments attached to the lands to which they were granted and could not be substituted and transferred as of right. Furthermore, the Regulation of Sugar Cane Prices Act prevented transfers between mill areas, except in extreme circumstances. In 1986 the regulation of peaks and assignments was freed-up to some extent, so that peak and assignment could be purchased independently of land. By the end of 1987, they had purchased 2,000 tonnes of peak and approximately 20.4 hectares of assignment and relocated it to Lot 574. However, their 1989 application to substitute part of the “Millview” assignment to Lot 44 was not approved, but in that same year the sugar industry was further deregulated to allow roaming between mill areas. This enabled them to plant part of the “Millview” assignment on Lot 44 in September 1989. By the time of the resumption of Lot 44 in December 1990, approximately 20 hectares of it were planted up to sugar cane. In March 1988, the owners applied to the Water Resources Commission (WRC), the predecessor of the Department of Natural Resources (DNR), for an irrigation bore licence to grow cane on Lot 44. That application was granted in accordance with the WRC groundwater allocation policy for 0.25 megalitres per hectare, with an entitlement of 454 megalitres. Their intention had been to use Lot 44 for the peak and assignment which they had purchased, -- 4 of 78 -- 5 but which circumstances had made it more appropriate to locate on Lot 574. In addition, part of Lot 574 had been leased to a neighbour for cane growing. During this period, the family of Mr Vivian Cox had also been active in the development of their land for cane farming and in planning the means by which irrigation water could be obtained. It was clear that the progress of the development of all of the Cox land for sugar cane growing was dependent upon the availability of irrigation water. All this development took place under the threat of resumption. From the time of publication of an Order in Council on 12 April 1980, the subject lands had been included within the Burdekin River Irrigation Area (BRIA) and therefore likely to be resumed. The lands owned by Mr Vivian Cox and his family were similarly affected and on 5 May 1990 and subsequently, over 3,700 hectares of land owned by Mr Vivian Cox was resumed. Claims for compensation for approximately $10.4 million were heard by the Land Court and on 17 July 1995, judgment was delivered in the matter of VH Cox v. Water Resources Commission (not yet reported), determining compensation at $4,960,400. Both parties appealed to the Land Appeal Court and on 21 August 1997, that Court delivered a judgment in the matter of Water Resources Commission v. VH Cox (not yet reported), determining compensation at $4,300,400. The judgments of the Land Court and Land Appeal Court will be referred to as “the Davco decision”. “Davco” is derived from the name given to a private irrigation project called the Davco Irrigation Project (the Davco project), devised by Mr David Cox (the son of Vivian Henry Cox), for the development of the Cox family lands as irrigated cane land. The Burdekin scheme prevented the Davco project from proceeding as planned. The whole matter was discussed in detail in the Davco decision and that degree of detail need not be repeated here. However, because of the importance of the Davco case to the present cases, it is necessary to briefly outline the main features of the Davco project. The Davco Project Essentially the Davco project was a private irrigation scheme devised by Mr David Cox for the growing of sugar cane on his own land, that of his family and the land of neighbouring farmers. The project commenced in 1977 and was modified over the years with changes in circumstances. It involved the conjunctive use of water resources, a series of drains which exploited the natural drainage of the land in such a way as to utilise run-off water and tail water from irrigation, together with water pumped from the Burdekin River to recharge underground water supplies. -- 5 of 78 -- 6 It was described by David Cox in the Davco case as “... a carefully planned privately funded self-sufficient integrated system of water harvesting, storage and distribution with infrastructure to legally harness, store and reticulate water from the Burdekin River, the underground aquifer, natural rainfall and topographical runoff for use on lands owned by the Cox family and others. The project comprises a system of conduits, channels, drains, pipes, culverts, pumps and storage cells to distribute the water to and over the lands. The project was designed by me with sufficient capacity to supply peak irrigation requirements to the whole of the land for the growing of sugar cane on that land.” Support and financial assistance for the project were provided by members of the Cox family, but it was largely financed by developing, subdividing and selling part of their land. During 1978 and 1979, development work proceeded on the Davco main channel, preliminary work on the pump stations and pipe systems were carried out, consents obtained and a licence to pump 1,200 megalitres per annum from the Burdekin River was granted. However, with the announcement of the Burdekin scheme in April 1980, the Cox family was prevented from proceeding with the development of their land by financing that development by the subdivision and sale of part of it. However, development continued on the Davco main channel, because David Cox was not convinced that the Burdekin scheme would proceed. As explained in the Davco decision, he spent a considerable amount of time and effort trying to limit the impact of the Burdekin scheme on his farm and his project. The Davco project plan was continually modified as circumstances changed. With the announcement of the Burdekin scheme and the inclusion of his land, that of his family, and that of all potential beneficiaries of the Davco project in the BRIA, subdivision of any of those lands would be allowed only with the approval of the WRC. Such approval would be unlikely, as the land was required for the Burdekin scheme. In addition, from the time of that announcement, the lands of all potential users of water from the Davco project, including the subject lands, were under threat of resumption. Development of the Davco project in a modified form continued from 1984 to 1986, but it was realised that the construction of the Burdekin Dam and the supply of channel water to the BRIA, was going to profoundly affect the project. At least part of the subject land, Lot 44 and Lot 15, were to be included in the Davco project. Mr Lex Cox explained that his cousin, David Cox, had approached his father and himself in 1977, suggesting that he (David) would be financing the project by selling property as he went and that Cecil and Lex Cox should pay him in land, rather than money. He said that David believed there was sufficient water for the Davco project to extend right through to the Bruce Highway. However, they all realised that the benefit would not accrue to the -- 6 of 78 -- 7 subject land for some time, so David opted to take a loan of funds to offset his development costs. Loans were made by Cecil Cox to David Cox from 1977 and have all been repaid. The Resumed Lands At the various dates of resumption, the whole of the resumed land, with the exception of part of Lot 44 and Lot 15, was being used for the grazing of cattle by the Kalamia Plains Pastoral Company, a partnership comprising Vivian Henry Cox and his son, Geoffrey Cox, which ran cattle over an aggregation of family lands, a large proportion of which was resumed for the purposes of the Burdekin scheme. Mr Geoffrey Cox explained that they used Lot 44 for breeding, whilst Lots 42 and 43 were used for growing steers and Lot 5 was used for fattening bullocks. He regarded Lot 44, which comprised heavy Barratta clays, as being very similar to the lands of Vivian Henry Cox, which were the subject of the Davco case. Lots 42 and 43 comprised soils ranging from heavy clays suitable for agriculture, through to river silts and creek overflows, which were better drained. Lot 5 comprised areas of heavy clay soils, but the balance of it was what Mr Cox described as “broken sandier and siltier creek banks, well drained and suitable for fattening bullocks”. Para grass was successfully introduced into the reliable swamps on Lots 42, 43 and 5, but was not successful on Lot 44. Three stockwater dams were constructed on Lot 5, but only one was really successful. There was little dispute between the valuers for the parties about the description of the resumed lands. Where there were significant differences, I have so indicated in the following discussion of each of the lots. There was also very little difference between the soils experts as to the areas of land on each lot suitable for development for furrow irrigation of sugar cane. Where they have differed, I have adopted the greater area. Lot 44 comprises level to gently undulating forest country, which in its original state was moderately timbered with poplar gum, Moreton Bay ash and tea-tree. The soils are predominantly Barratta clays, with smaller areas of clay loams and some sandy loams. Some 1470 hectares were considered to be suitable for development for furrow irrigation of sugar cane. At the date of resumption (22 December 1990), approximately 45 hectares had been cleared to cultivation, 20 hectares of which was growing irrigated sugar cane. Approximately 575 hectares had been cleared and burnt and was carrying light regrowth, while a further 20 hectares (according to the respondent’s valuer) had been pulled, but was carrying regrowth. -- 7 of 78 -- 8 An equipped irrigation bore with electricity connected, was situated near the southern boundary, with a waterworks licence with a nominal allocation of 454 megalitres to supply Lot 44. There was also a small earth dam. Lot 44 is situated about 15 kms south-west of Ayr, with access at the date of resumption by means of the formed gravel Sexton Road. There was a mill tramline siding approximately 2.5kms from the property boundary on Sexton Road. A tramline easement had been granted to the Pioneer Mill on land immediately to the south. Lot 42 is level to gently undulating forest country, broken by a number of watercourses, with seasonally flood prone frontage to Barratta Creek on the east. It was originally timbered with poplar gum, Moreton Bay ash and tea-tree. The main soil types are Barratta clays, with areas of clay loam and areas of sandy loam. Some 961 hectares were considered to be suitable for furrow irrigation of sugar cane. At the date of resumption (18 December 1992), about 41 hectares had been pulled, carrying moderate to heavy regrowth, with a further 15 hectares cleared to grass. A waterworks licence with a nominal allocation of 332 megalitres had been granted to supply Lot 42, but had not been acted upon and there were no irrigation bores on Lot 42 at the date of resumption. Stock water consisted of three excavations or small earth dams. Lot 42 is situated about 28 kms west of Ayr, with access at the date of resumption by means of 2 kms of formed gravel road, or track, to the Bruce Highway. A mill tramline was located 6 kms from the north-west corner. Lot 43 is level to gently undulating/sloping forest country, broken by a number of watercourses, with seasonal flood-prone frontage to Barratta Creek. It was originally timbered with poplar gum, Moreton Bay ash and tea-tree. The main soil types are Barratta clays and clay loams, with some sandy loam. Some 1019 hectares were considered to be suitable for furrow irrigation of sugar cane. At the date of resumption (18 December 1992), approximately 159 hectares had been pulled, with moderate to heavy regrowth and 6 hectares had been cleared to grass. An application for a waterworks licence had been made in July 1990, but it does not seem to have been granted or refused. In accordance with the respondent’s groundwater allocation policy of 0.25 megalitres per hectare, Lot 43 would have been entitled to a nominal allocation of 332 megalitres per annum. Stock water consisted of two dams/excavations and one equipped bore, licensed for stock water. -- 8 of 78 -- 9 Lot 43 is situated about 30 kms west of Ayr, with access at the date of resumption to the Bruce Highway by means of 4 kms of bush track. A mill tramline was located about 4 kms from the south-west corner. Lot 5 is level to gently undulating to gently sloping forest country, broken by a number of watercourses, with seasonal flood-prone frontage to Barratta Creek on the east. It was originally timbered with poplar gum, Moreton Bay ash, tea-tree and some beefwood. Soil types vary from Barratta clays to clay loams, to loamy sands and sandy loams, some alluvial soils and swampy areas. It was considered by all relevant witnesses to be good grazing and fattening country. Some 1259 hectares were considered to be suitable for furrow irrigation of sugar cane. At the date of resumption (5 November 1993), about 78 hectares had been pulled and, according to the respondent’s valuer, part stick-raked and burnt with moderate to heavy regrowth, while the claimants’ valuer said it had light regrowth. An application for a waterworks licence to irrigate sugar cane had been made in July 1990, but it seems this had been neither granted nor refused. In accordance with the groundwater allocation policy of 0.25 megalitres per hectare, Lot 5 would have been entitled to a nominal allocation of 445 megalitres per annum. Stock water consisted of a concrete well and three earth dams. Lot 5 is situated about 32 kms south-west of Ayr, with access at the date of resumption by means of 7 kms of bush track to the Bruce Highway, or about 1.5 kms of track to Up-River Road to the west. Lot 15 comprises generally level, lightly to moderately timbered forest country, originally timbered with poplar gum, Moreton Bay ash and tea-tree, particularly in a flood- prone area to the north-east. The soils are predominantly Barratta clays and clay loams. Some 311 hectares were considered to be suitable for furrow irrigation of sugar cane. At the date of resumption (7 September 1991), approximately 256 hectares had been cleared, stick- raked and burnt, with light regrowth (according to the claimants’ valuer) or pushed, stacked and burnt (according to the respondent’s valuer). Lot 15 was subject to two easements in favour of the Ayr (later Burdekin) Shire Council for water storage conservation diversion and ancillary purposes. These easements are in the south-eastern corner of the resumed land, but neither valuer has mentioned them as affecting its value. -- 9 of 78 -- 10 At the date of resumption, there was an irrigation bore on the unresumed part of Lot 15, the waterworks licence for which provided for a nominal allocation of 153 megalitres per annum. However, it seems to be agreed that only 87 megalitres of this is attributable to the resumed land, while the balance 66 megalitres is attributable to the unresumed part. A Water Board channel is constructed in the north-east corner of Lot 15, but no irrigation water is available, as the subject land is outside the Water Board area. Stock water supplies were permitted, but the Board bylaws prevented irrigation supplies being available to the subject land. An area of 122.8 hectares of the resumed land had been leased to an adjoining owner, Mr G.O. Poli, from 14 May 1990 to 31 December 1994, for the purpose of growing sugar cane. The lease was terminated by the resumption, but it seems that Mr Poli arranged to grow cane on part of the retained land, which he subsequently purchased. There was evidence that as a temporary measure, Mr Poli was permitted to use NBWB water. There was also a stockwater bore on the resumed land and a small dam. Lot 15 is situated about 12 kms south-west of Brandon and about 18 kms south-west of Ayr. Access at the date of resumption was by means of about 2 kms of gravel and bush track to a bitumen road. A mill tramline was located about 1.5 kms away. The Effect of the Burdekin Scheme In these cases, as in the Davco case, there was no dispute between the parties that any effect that the Burdekin scheme had on the value of the claimants’ lands must be disregarded in determining compensation, in accordance with the principles in Pointe Gourde Quarrying and Transport Co Ltd v. Sub-Intendent of Crown Lands [1947] AC 565 and Melwood Units Pty Ltd v. Commissioner of Main Roads [1979] AC 426. As in the Davco case, that gave the whole proceedings a sense of unreality, because much of the evidence and argument was directed not at what has happened, but what would have happened if there had not been a Burdekin Dam and the resulting Burdekin scheme. In the Davco case, the claimants contended that the value of the resumed land had been depreciated by the Burdekin scheme, while the respondent contended that the scheme had enhanced its value. The Court found that the proclamation of the Davco land as part of the BRIA in 1980 had prevented the Cox family from financing the development of their land by the subdivision and sale of part of it. The Court also found that the evidence did not establish that the Davco project would have been successful, nor did it prove that it would not. There was simply too much doubt about its technical feasibility and its financial viability. The best that could be said was that it might have been successful. -- 10 of 78 -- 11 Therefore, the Court could not make any finding as to how far the Davco project would have progressed by the date of resumption, if there had been no Burdekin scheme. It found that it could not be said that, but for the Burdekin scheme, the Davco project would have been completed. In that case, the claimant contended that the Court must find that at the date of resumption the resumed land would have had irrigation water provided by the Davco project. The claimant relied for that contention on the decision of Hardie J. of the Land and Valuation Court of New South Wales in Woollams v. The Minister (1957) 2 LGRA 338, which concerned compensation payable for land resumed for the construction of the Warragamba Dam. In that case, Hardie J. assumed that if it had not been for the announcement of that scheme, the amenities and economic and social conditions in the area would have improved and not deteriorated in the period between the decision of the resuming authority to proceed with the dam project and the date of resumption. In the Davco case, the Land Court rejected the proposition that the principle in Woollams could be extended to include the assumption of the successful completion of a private irrigation scheme. The Land Appeal Court upheld that finding and went on to state at page 7 of its judgment: “ These are, however, different times, and we see no justification for extending such an assumption-making process to a case concerned with the sugar industry in Queensland from April 1980 to May 1990, and more particularly with the possible completion of the private irrigation scheme undertaken by people unable to finance it from their own resources and dependent upon the approval of regulatory authorities. Such a process is no proper substitute for evidence from which reasonable inferences may be drawn. ” However, the Land Court did assume that there would have been an expansion in the sugar industry, a tramway would have been constructed and the values of irrigated cane land and land with that potential, would have increased in value. The Land Appeal Court endorsed the approach of the Land Court in finding that part of the resumed land which was suitable for cane growing could be irrigated in accordance with the then existing WRC groundwater allocation policy of 0.25 megalitres per hectare and that such land would be selling for prices higher than were being achieved for irrigated land at the BRIA auction sales at the date of resumption. It also endorsed the finding of the Land Court that a prudent purchaser would have paid something extra for the remaining land which was suitable for the growing of cane, because of the possibility that the Davco project would have provided irrigation water to that land at some time in the future. -- 11 of 78 -- 12 After re-examining the evidence, the Land Appeal Court affirmed the value of $6,000 per hectare determined by the Land Court for irrigable arable land. However, while agreeing that the evidence supported the Land Court’s finding that a hypothetical prudent purchaser would have paid some premium for dry arable land with potential for sugar cane growing for the benefit that might flow from the Davco project, the Land Appeal Court was persuaded that the assessment of $2,000 per hectare by the Land Court was more generous than justified on the evidence. It considered that $1,700 per hectare was more appropriate. The Land Court’s determination of $400 per hectare for the grazing land was not challenged on appeal. In the present cases, both the parties relied on the Davco decision, as endorsed and amended by the Land Appeal Court. However, counsel for the claimants, argued that while it was not possible for the Court to find the extent to which the Davco project would have progressed at the date of resumption if it had not been for the Burdekin scheme, it was open to the Court to find that it would have progressed further than it had actually done at that date. I have no difficulty in coming to that conclusion. However, I cannot see how that much assists the claimants. The same uncertainties remain as to the technical feasibility or financial viability of the Davco project. In the Davco case, the Court was unable to assume that the Davco project would have been providing water to the resumed land at the date of resumption. In these cases, the subject lands are, with the exception of Lot 15, further removed, so there is even less likelihood of them being supplied with irrigation water. It was submitted that I should find that, but for the Burdekin scheme, more of the Davco lands would have been subdivided and developed, and/or further channels would have been dug to service those lands, and/or an above ground storage would have been built. For the reasons already discussed, I cannot make such specific findings. I can only find on the evidence before me that it is likely that the Davco project would have been further advanced than it was at the dates of resumption. However, there is another aspect of this argument which must be considered and that relates to the respondent’s groundwater allocation policy. The evidence in this regard, like so many other aspects of these cases, involved a large degree of conjecture on the part of the witnesses. Of course, no one can be certain just what would have happened if the Burdekin scheme had not been announced in early 1980 and the Burdekin Dam had not been built. The witnesses on each side had different views. The role of the Court, as I see it, is to consider the evidence upon which those views were based and to decide what is most likely to have happened. -- 12 of 78 -- 13 Groundwater Allocation Policy At the date of resumption of the subject lands, the WRC had a policy of granting waterworks licences for sub-artesian bores for irrigation purposes on the basis of 0.25 megalitres per hectare per annum, for the area in which the subject lands are located. That groundwater allocation policy has continued. Mr ML Leach, who was employed at the relevant time by the WRC as Senior Hydrologist, Northern Region, based at Ayr, gave evidence for the respondent. He explained that the subject lands are situated in a sub-artesian bore locality where a licence is required for construction of a sub-artesian bore for purposes of irrigation. For the sub-areas 600 and 700 in which they are situated, the WRC allocation policy was 1 bore for each 800 hectares or part thereof, and a nominal allocation of 0.25 megalitres per hectare per annum. Mr Leach was unable to trace the source of that allocation policy. He said that it was in existence when he arrived in the Burdekin district in 1987, and he felt that it was related to rainfall infiltration of 25 millimetres per annum. Mr Leach provided the following summary of the entitlement of each of the subject lands: Lot 44 - Entitlement 454 megalitres; licence granted and bore constructed; Lot 42 - Entitlement 332 megalitres; licence granted, but no bore constructed; Lot 43 - Potential entitlement 332 megalitres; application for licence, but no bore constructed; Lot 5 - Potential entitlement 445 megalitres; application for licence, but no bore constructed. Lot 15 - Entitlement 87 megalitres; application for licence, but no bore constructed on resumed land. Mr Leach went on to explain that if the claimants had applied for additional allocation over and above 0.25 megalitres per hectare per annum, under the provisions of section 4.18(1)(b) of the Water Resources Act 1989, the Chief Executive must have caused inquiry to be made into:  the availability and sufficiency of groundwater to satisfy the requirements of existing licensees and the applicant;  the effect the granting of the licence would have on others; and  any other matters the Chief Executive thinks fit. In Mr Leach’s opinion, the Chief Executive’s foremost responsibility was to preserve the right of existing licensees and as far as practicable, to maintain equity in the management of the groundwater resource when granting, modifying or refusing applications for additional bores. -- 13 of 78 -- 14 Mr Leach had examined the results of Departmental investigation drilling prior to 1987. Since that date he had personally overseen such investigation. His evidence provided an insight as to what his attitude would have been as the officer responsible for implementing the groundwater allocation policy in the Burdekin district. Mr Leach was of the opinion that the Department must take into account the fact that underground water may not become available for several years after rainfall, depending on the permeability of the aquifer and the water table gradient. It may undergo changes in chemistry as it permeates through the aquifer. He advanced the following propositions: Because of the extensive clay blanket of the Burdekin Plain, the downward percolation of rainfall is impeded and the full response may not be observed for up to eight to twelve months. Most of the recharge is derived from rainfall and only a little more than 2.5% of average rainfall may reach the aquifer. Some recharge can occur as seepage from beds or banks of rivers, but because the Burdekin River is incised below the level of the plain, only limited recharge may reach the aquifer as seepage during periods of high river flow. Water levels east of the Barratta Creek show only minor water level response following rainfall; it has a thin bed of clayey sand overlying clay which would severely impede recharge and only limited recharge could occur. The long-term average recharge from rainfall is a little over 25 millimetres per year, equivalent to an extraction rate of 0.25 megalitres per hectare per year. Mr Leach explained that departmental monitoring had shown that water quality had degraded in some areas due to over-use of ground water. There had been a problem in the Mona Park area in the late-1970s into the 1980s and in the Giru area in 1987, following which, as a temporary arrangement, farmers were allowed to grow cane in the Horseshoe Lagoon area, which also resulted in groundwater quality problems, and in the Red Lily area. Those problems will be resolved with the introduction of BRIA water. However, it seems to be accepted that water quality beneath the subject lands is generally satisfactory, except for the south-east corner of Lot 15, where it is marginal for irrigation. To the north of the subject lands the salt water wedge is located in the vicinity of the Bruce Highway, with the potential for salt water intrusion with any lowering of the water table. Mr Leach’s conclusions regarding water availability were that:  groundwater is of limited quantity due to limited recharge;  the allocation policy of 0.25 megalitres per hectare per year attempts to balance licensed extraction with long-term recharge, to protect the rights of existing users and maintain groundwater levels and quality;  the natural groundwater resource was unable to sustain any further extraction without lowering water tables during dry years and causing further deterioration of water quality. -- 14 of 78 -- 15  Water quality problems had occurred in the Mona Park, Giru, Horseshoe Lagoon and Red Lily areas as a result of overpumping and will be resolved only with BRIA water. In 1983, the WRC had commissioned Australian Groundwater Consultants Pty Ltd (AGC) to study the groundwater resources in the Mona Park/Barratta Creek area. The WRC had received an application for extraction of groundwater for irrigated farming (perhaps by members of the Cox family) and was concerned that if it was granted, other applications would follow. It seems that the officers of the WRC felt that the AGC report confirmed the Department’s groundwater allocation policy of 0.25 megalitres per hectare per annum. However, the AGC report was not an assessment of the safe yield of the aquifer, or of the rate at which pumping could safely be permitted. AGC was given various options by the WRC for the extraction of groundwater and asked to report on the probable consequences of adopting each of those options. Its conclusions relevantly were:  that extraction from areas “A” (where the Davco lands are situated) and “B” (where the subject lands are situated) together, according to the policy of 0.25 megalitres per hectare per year, would have only moderate effect on groundwater levels in then present irrigation areas (Mona Park) and at the coast; it was unlikely to have a detrimental effect on then current users;  that an extraction of 2 megalitres per hectare per year over areas “A” and “B”, although unlikely to cause an ingress of salt water intrusion, would have a detrimental effect upon the then present irrigation by decreasing water levels in those areas;  that full extraction (8 megalitres per hectare per year) from either or both areas “A” and “B” simultaneously, could not be sustained for more than twelve months without having a dramatic effect upon water levels in then present irrigation areas. Salt water intrusion problems would be caused by these pumping rates after five years. According to Mr Leach, an earlier report by Coffey and Hollingsworth Pty Ltd on the possibility of additional availability, also concurred with an assessment made by the Department. However, the 1975 report by Coffey and Hollingsworth Pty Ltd did not address the question of a groundwater allocation policy of 0.25 megalitres per hectare, but was concerned with other matters. In Mr Leach’s opinion it would have been inappropriate to have granted more than 0.25 megalitres per hectare because there was poor quality groundwater to the south and east of the subject lands, while to the north and north-east, salt water intrusion would have occurred if additional allocations in excess of 0.25 megalitres per hectare had been granted. -- 15 of 78 -- 16 According to Mr Leach, further and ongoing studies by the DNR of the effect of irrigation from the Burdekin scheme on groundwater are continuing. They have shown that while there may be minor accessions of between 50 and 75 millimetres per year to the groundwater storage resulting from the deep percolation of irrigation waters from the scheme, there will also be additions of salts to the groundwater storage. He thought that some additional use of this enhanced groundwater may then be possible in areas of suitable and stable groundwater quality, such as adjacent to Barratta Creek. However, he warned that without prudent management of existing salinity levels during this period of transition, it would not eventuate. In Mr Leach’s opinion, the WRC allocation policy was appropriate to control the effects on other licensees. Although the full entitlement of 0.25 megalitres per hectare per year had not been sought in respect of all of the subject lands, he thought that it was likely to have been granted, as it would have had little effect on existing licensees. The Polletti Line - The Polletti Line takes its name from a line of bores drilled in the early 1970s from the Red Lily area in the east to the Haughton River in the west, which ran along the southern boundaries of Lots 42 and 44. It seems that the WRC considered that it was unsafe to grant groundwater pumping licences for irrigation purposes north of the Polletti Line. However, it seemed to be accepted that irrigation bores located close to the southern boundaries of Lots 42 and 44 could be used to supply irrigation water to those lots. Quite contrary to that policy, however, in February 1980 a waterworks licence was issued to the Hoeys equivalent to 6 megalitres per hectare per annum, in respect of their land situated to the north of Lot 44 and therefore well north of the Polletti Line. Much of the claimants’ case was directed at endeavouring to demonstrate that the respondent’s groundwater allocation policy was far too conservative and that, if there had been no Burdekin scheme, it would have been changed to allow groundwater extraction at the rate of 2 megalitres per hectare per annum. However, before considering the evidence of the various experts in relation to the water resources available in the aquifer beneath the subject lands, it is necessary to deal with some other matters. The North Burdekin Water Board (NBWB) The subject lands are all outside the NBWB area, but it abuts the northern and part of its eastern boundary of Lot 15, and the eastern boundary of Lot 44. Part of the claimants’ -- 16 of 78 -- 17 case was that without the Burdekin Dam, there would have been an expansion of the NBWB area to include at least part of those lands. It is therefore necessary to consider the validity of that proposition. The NBWB was established in 1965 as the result of pressure by farmers for the establishment of water conservation measures and improvement to the availability of groundwater in the area. The Board consisted of eight members, comprising two cane growers’ representatives from each of the Kalamia and Pioneer Mill areas, a representative from each of those mills, a representative of the Burdekin Shire Council and a representative from the then Irrigation and Water Supply Commission (the predecessor of the WRC). The Board’s operations were financed by levies on farmers and mill owners and by way of Government grants and subsidies. The original charter of the Board was to improve the replenishment of underground water supplies in the Board’s area, so as to ensure the continued availability of water to existing farms and to enable expansion of cane farming operations. The Board’s area is in respect of a locality referred to as “the delta”, on the north side of the Burdekin River, running north from near Mount Kelly. That area comprised most of the cane growing lands north of the river prior to the Burdekin scheme and it seems that the NBWB area was intended to include those lands with cane assignments. There is also a South Burdekin Water Board (SBWB), south of the Burdekin River, but apart from the fact that some of the sales used by the valuer for the claimants are in that area, the SBWB has no relevance to these cases. In keeping with its charter, the NBWB developed and carried out many separate schemes and was very successful in improving the availability of underground water to allow for considerable expansion of cane growing within its area. The Board pumped water from the Burdekin River directly into natural and artificial recharge areas in order to recharge the aquifer. Although there is a variety of soils in the delta area, the majority of the area comprises highly permeable alluvial soils. Prior to the availability of BRIA water, irrigation in the NBWB area was mainly by pumping from underground supplies. The construction of the Burdekin Dam gave the Board a year round pumping capacity. However, before the construction of the dam, supplies of water for recharge purposes were obtained by pumping from the Burdekin River while it was running. To extend the period during which water could be pumped from the river, the Board constructed sand dams to retain water, allowing pumping to continue long after the river had stopped flowing. Despite these measures, the amount of water available to the Board for recharge purposes was limited and this in turn limited the amount of expansion of irrigation in its area. -- 17 of 78 -- 18 In July 1974, during a period of expansion in the sugar industry, the Board extended its area to include Portion 40V, Portion 27, Portion 564 and other lands which were immediately to the north of Lot 15 and to the east of Lot 44. However, there is evidence that those lands were included, not as part of a general expansion of the NBWB area, but because they were assigned lands which were inadvertently omitted from the Board’s area in the first place. Evidence relating to the NBWB was given by Mr FG Kelly, who was called by the claimants. Mr Kelly had been farming in the Burdekin District for more than 50 years and had been a member of the NBWB for about 12 years, between 1977 and 1989. He explained that during his time on the Board, there were several schemes which would have the effect of improving the availability of underground water in the general vicinity of the eastern boundary of Lot 44. In particular, he referred to the “Waterview Scheme”, where a number of alternatives were considered, the basic intention of which was to introduce water into the aquifer to improve the availability of water to farmers who were running short of underground water. Eventually, the only scheme that proceeded was the pumping of water into “The Sandpit” located on Portion 55. However, that scheme was implemented only three or four years ago, after the construction of the Burdekin Dam, when the Board’s water availability difficulties had been solved. There was also the “Red Lily Scheme”, which involved the pumping or diverting of water from Sheep Station Creek into Red Lily Lagoon and then by means of an open channel, thereby allowing approximately six growers in Portion 40V to augment their underground supplies by use of surface water from the channel. That scheme was implemented in late 1988, again after construction of the Burdekin Dam. However, prior to the implementation of the Red Lily scheme, there was a temporary arrangement for water to be pumped from Sheep Station Creek into Red Lily Lagoon. That scheme was further extended by the construction of an open channel from Red Lily Lagoon to Corica Road, where it joined an agricultural drain which had been constructed by the Burdekin Shire Council. That allowed, as Mr Kelly put it, “a considerable additional number of farmers to access the water...” Mr Kelly stated that while he was a member of the Board, there was an emphasis on pushing water into the northern areas to recharge the aquifer in that location. Mr Kelly explained that farmers in the NBWB paid for water on the basis of the crop produced, rather than the quantity of water used, which was the basis of payment for water in the BRIA. It was an offence for water from the NBWB area to be used on land outside that area. -- 18 of 78 -- 19 In Mr Kelly’s opinion, if there had been no Burdekin Dam, with the expansion of the sugar industry, the NBWB would have actively promoted the extension of its area to include land that was suitable for cane growing outside its designated area. That had happened in 1974 with the inclusion of Portion 40V and other lands. He acknowledged that initially expansion would have taken place on suitable lands within the NBWB area, but the expansion in the late-1980s and early-1990s would have required development of lands outside the Board’s area. He believed that the sugar industry, both millers and growers, would have taken steps to ensure the expansion of the industry in the Burdekin was not hindered or halted by the lack of water. Since the NBWB could not expand its area to the north towards the sea, the only way it could expand was to the west, to include Lots 44 and 15. The thrust of Mr Kelly’s evidence was that if there had been no Burdekin Dam, additional water would have been obtained from somewhere; for example, if the Board’s pumps had been increased in size, they could have pumped more water from the Burdekin while the river was running. It was apparent that Mr Kelly had great faith in the “Waterview Scheme”, which he described as a “marvellous replenishment scheme”, to have significantly improved the availability of water in the northern part of the Board’s area and to other lands, such as Lots 44 and 15, located immediately adjacent. Mr Kelly was the only witness called by the claimants who gave evidence directly related to the possible expansion of the NBWB area, if there had been no Burdekin scheme. However, despite his optimism, his evidence showed that there was not an over-abundance of water in the area and there had been water quality problems. The Board was continually seeking ways to improve its water supply. If additional water was obtained, the Board would have applied it to those areas of potential cane land within the NBWB area, before the area was expanded to include outside lands. The 1974 expansion of its area provides no precedent for further expansion. I accept that it was necessary to include cane land which had been inadvertently omitted. In my view, the evidence has not demonstrated that there was much likelihood of expansion of the NBWB area to include parts of Lots 44 and 5. Therefore, it is not likely that a prudent purchaser would pay more for that possibility. The best that can be said is that Lot 44 in particular, is well situated to benefit from recharge from percolated irrigation water from the NBWB area. The Agricultural Drain -- 19 of 78 -- 20 The agricultural drain referred to previously had been constructed by the Burdekin Shire Council to carry away storm water and irrigation runoff water from the farms in Portion 40V, which at that time were used for cane farming and rice growing. Prior to the construction of the drain, two of the farmers had sought permission from the then-owners of Lot 44, Cecil and Vivian Cox, to construct drains into Lot 44 to carry their irrigation runoff waters. However, those drains proved to be insufficient to carry away the quantity of water. Therefore, it was necessary for the Council to construct the agricultural drain, which also served to carry stormwater runoff in times of heavy rainfall. The drain was dug through a ridge to a depth of about 2 metres on the western boundary of Lot 574, into Lot 44 for some distance and then turned at right angles and into the Hoey’s Lot 27, which was generally regarded as a very good recharge area, and from there to Collinsons Lagoon. The agricultural drain followed the western boundary of the NBWB area, except for the diversion into Lot 44. It had originally been intended to truncate the most easterly corner of Lot 44 and sever a triangular area. However, as the Coxes intended to grow cane on Lot 44, they persuaded the Council to alter the drain to extend into Lot 44 and then turn at right angles, leaving the severed area rectangular in shape, which was much more satisfactory for cane growing. It could also be attached to their cane land on the adjoining Lot 574. They hoped that an easement through Lot 44 would make it easier for them to get the land transferred into the NBWB area. However, it seems that no easement was ever arranged over the area occupied by the drain. All lands served by the agricultural drain were in the NBWB area and many at that time were growing rice. Since farmers in the Board area paid an annual levy based on crop production and not on quantity of water used, there was no great incentive to use water efficiently. As a result, there was always a large quantity of runoff irrigation water in dry times when farmers found it necessary to irrigate. In wet times, the drain carried runoff rainwater. Mr Lex Cox estimated that the runoff tailwater could be as high as 20% of irrigation water applied. In July 1989 the Coxes approached the Council for permission to divert waters from the drain which ran through their property, Lot 44. In September 1989 they were granted permission to construct an open earth channel to divert water “to a private dam for irrigation purposes”, subject to certain conditions. Mr Lex Cox explained this would have taken all the water in the drain, not just the overflow, so that very little would have got through to the Hoey’s Lot 27. However, he contended that the water from the agricultural drain was not used by the Hoeys and it was not at that time used for recharge purposes. That came later, when the NBWB started using it as a recharge drain, with BRIA channel water. -- 20 of 78 -- 21 Mr Lex Cox explained that they had intended that “the dam” be a channel or trench, rather than a conventional dam. However, because of the uncertainty of resumption hanging over their lands, they did not proceed with the proposal to divert water from the agricultural drain. Since then, in the development of Lot 80 (an area from Lot 44 developed for cane growing with the approval of the respondent), Mr Cox has constructed a trench for recycling purposes. This trench extends for approximately 3.1 kms and is approximately 3 metres wide. According to Mr Cox, it is similar to the diversion trench which was proposed in 1989 and which he believed could have held at least 10 megalitres of water. That water, together with the water that they were able to pump from their irrigation bore would, he believed, have allowed the claimants to irrigate approximately 100 hectares of cane on Lot 44. In other words, water from the agricultural drain would have allowed them to irrigate an additional 50 hectares of land. Mr Cox explained it in this way: the 10 megalitres in the trench/dam would allow him to start irrigating the same day as his neighbours and not have to wait until the agricultural drain picked up their tail water. That would allow him an additional 24 hours of pumping, which could continue as the drain would by then be picking up tail water. The drain would also catch tail water from their own 1 kilometre long drills, as he envisaged developing an area 1km x 1km. Mr Cox further explained that once the Burdekin scheme was providing water, the NBWB saw the benefit of using the agricultural drain as a channel. He believed that it would have done so even if there had been no Burdekin Dam, because expansion was coming. Before proceeding further, it is necessary to consider briefly the recent history of cane growing in the area to the north of the Burdekin River. Cane Growing in the Burdekin Prior to the construction of the Burdekin Dam, the growing of sugar cane in the vicinity of the subject lands had been largely confined to the alluvial soils of the NBWB area, where cane was irrigated from pumping from underground supplies. However, cane was successfully grown in other areas, notably in the Clare and Giru areas. In the Mona Park area near Clare, immediately to the south of the Davco lands, cane had been grown since the early 1960s, largely irrigated from underground supplies. It seems that the then IWSC permitted pumping at the rate required for successful irrigation of sugar cane, about 8 megalitres per hectare per annum. However, the quality of groundwater deteriorated, because of increasing salinity from over-pumping. -- 21 of 78 -- 22 Similar problems were experienced in other areas. In the Red Lily Lagoon area increasing salinity caused the NBWB to investigate several possible solutions. There is evidence that the salt problems in that area may have been caused by leaching of salt from the bedrock near Mount Kelly, rather than from over-pumping. In the Giru area to the north-west of the subject lands, increasing salinity forced the temporary transfer of some assignments to the Horseshoe Lagoon area, immediately to the north-west of Lot 42. It seems that in 1988, farmers were allowed to temporarily transfer assignment and were given licences to pump groundwater. Again, salinity problems arose. That area is north of the Polletti line and such pumping was always likely to have an adverse effect on the aquifer in the Horseshoe Lagoon area. There was also a suggestion that the problems which arose in that area were the result of illegal use of water by farmers, as they were alleged to be far exceeding their licensed water allocations. These examples of declining groundwater quality, largely the result of over-pumping, were used by witnesses for the respondent to demonstrate that the groundwater allocation policy of 0.25 megalitres per hectare was appropriate, as it was a pumping rate which was considered to be safe. That policy was in effect at the date of resumption of the subject lands and remained in effect at the date of hearing of these matters. The claimants, as mentioned previously, considered that the policy was far too conservative and contended that a safe extraction rate from the aquifer would have been 2 megalitres per hectare per annum, if there had been no Burdekin scheme. That issue will be considered in detail later in this judgment. The Approach of the Valuers Mr GW Eales, a registered valuer in private practice, gave evidence for the claimants, while Mr RJ Moloney, a registered valuer employed by the Department of Natural Resources, gave evidence for the respondent. Both valuers made their valuations on the hypothesis that the Burdekin scheme was not in existence at the dates of resumption of the subject lands. However, their approaches differed considerably, depending on how they envisaged what the circumstances would have been at the various dates of resumption, if there had been no announcement of the Burdekin scheme in 1980, which effectively put an end to the private development of lands in the BRIA area. Mr Eales took what might be termed an optimistic view of what would have been the progress in the area. In his view, the sugar industry would have expanded in line with the expansion in other areas in Queensland; there would have been considerable political and local pressure for development of further areas of irrigated cane land with water being made -- 22 of 78 -- 23 available from various sources; and the market for irrigated cane land would have increased considerably. Mr Moloney was much less optimistic about what progress would have occurred in the area in the absence of the Burdekin Dam and that was reflected in his approach to his valuations. It was clear that he did not think there was any prospect of worthwhile irrigation supplies from any other source and, in those circumstances, the situation would remain much as it had been at the date of the announcement of the Burdekin scheme. The valuers’ approaches were very similar to those which they had adopted in the Davco case. The Davco decision chartered a course somewhere between the optimism of Mr Eales and the pessimism of Mr Moloney. Although each of them claimed to accept that decision, it seems that they did so reluctantly and sought opportunities to depart from the findings of the Court when they felt that they could, to further return to something like their original positions. Be that as it may, they both agreed that the key to any progress in the Burdekin area between 1980 and the dates of resumption would depend upon the availability of irrigation water from whatever source, be it from the Davco scheme, the NBWB, the groundwater aquifer, or perhaps some other scheme. Mr Eales’ valuations proceeded on the basis that a hypothetical prudent purchaser as envisaged by the High Court in Spencer v. The Commonwealth (1907) 5 CLR 418, would have taken into account the likelihood of obtaining supplies of irrigation water significantly greater than permitted by the respondents’ groundwater allocation policy. Needless to say, Mr Eales’ assessment of the prospects of success was optimistic. This was reflected in the price which he felt such a hypothetical prudent purchaser would be prepared to pay for each of the subject lands at the respective dates of resumption. The Davco project has been discussed in detail in the Davco decision and the Court’s findings of the prospects of success of that project are set out therein. In the present cases, and central to Mr Eales’ valuations, is the reasoning that in the absence of the Burdekin scheme, the WRC would have been persuaded to change its groundwater allocation policy from that which existed at the date of announcement of the Burdekin scheme of 0.25 megalitres per hectare. His valuations were based on what Mr Eales considered that a hypothetical prudent purchaser would have paid for the potential for a change of policy by the WRC, or on appeal, by the Land Court. Mr Eales’ assumptions of the likelihood of a change of policy were, in turn, based on the opinions of hydro-geologists, Mr DR Woolley and Mr NP Merrick, who gave evidence for the claimants. They had been requested to assess the extent to which groundwater could -- 23 of 78 -- 24 reasonably be developed by the claimants for irrigation of sugar cane on their properties, if there had been no Burdekin scheme. Mr Woolley did so by making an objective assessment based on a study of various reports, including the AGC report, and information from official sources, such as DNR and the Bureau of Meteorology. On the other hand, Mr Merrick personally conceptualised, designed and ran a computer-based numerical groundwater model of the area. Mr Moloney’s valuations were based on the opinions of the respondent’s experts that, in the absence of the Burdekin Dam, there would have been no prospect of altering the respondent’s water allocation policy of 0.25 megalitres per hectare per annum and no prospects of the resumed lands gaining irrigation supplies from any other source. Evidence for the respondent was given by hydro-geologists, Mr JR Hillier and Dr RS Evans, as well as by Mr Leach. Because the opinions of these experts were so fundamental to the valuation approaches taken by the respective valuers, it is necessary to consider the water evidence in some detail to assess the soundness of the foundations for the approaches taken by the valuers. The Water Evidence Evidence of the safe extraction rate from the aquifer beneath the subject lands was given by both Mr Woolley and Mr Merrick. Mr Woolley’s Evidence Mr Woolley produced a detailed report, the objective of which was two-fold:  to examine the groundwater yielding potential of the alluvial deposits in the Burdekin Valley; and  to make an assessment of the extent to which groundwater could reasonably have been developed for the irrigation of sugar cane on the claimants’ properties. The AGC report had estimated recharge from rainfall at 2.5%, or 25 millimetres for an average year. However, Mr Woolley warned that this is only a guide and might not be realised for the whole valley. He regarded it as a reasonable broad estimate to use over the area of his study. In considering the proportion of irrigation water which infiltrates to ground water storage, Mr Woolley concluded that an average of 20% seemed conservative and could be adopted as a reasonable estimate. It seems that the figure of 20% for deep furrow recharge was based on an article by Raine and Bakker entitled “Increased Furrow Irrigation Efficiency Through Better Design and Management of Cane Fields”, published in 1996. -- 24 of 78 -- 25 Mr Woolley felt that the Barratta Creek and Haughton River systems are important sources of recharge to the alluvial aquifers. Although the Haughton River drains a larger catchment than Barratta Creek, Mr Woolley pointed out that for much of its course it traverses very thin alluvium near the western edge of the alluvial filled valley and the proportion of its flow which enters the aquifers is uncertain. In support of his contention that recharge from the Barratta and the Haughton is substantial, Mr Woolley referred to the AGC report, which estimated the recharge attributed to rivers and streams during the wet summer year 1973-74 and the average summer year 1978-79, in a defined study area of about 600 square kilometres, as 274,000 megalitres and 159,700 megalitres respectively. However, he noted that those figures appear to include recharge from rainfall infiltration. If the AGC estimates for rainfall infiltration of 25 millimetres, or 0.25 megalitres per hectare per year, or about 15,000 megalitres (60,000 hectares x average rainfall recharge of 25 millimetres) over the whole study area are subtracted, then recharge attributed to infiltration from rivers is approximately 260,000 and 145,000 megalitres respectively. Mr Woolley subsequently amended the latter figure to 140,000 megalitres as being more appropriate for an average year. From an assessment of material contained in the AGC report, Mr Woolley concluded that it would be reasonable to assume that substantially more than half of the recharge was the result of infiltration from Barratta Creek and the Haughton River, suggesting a total recharge from these two sources in the order of 100,000 megalitres during an average year. That figure was for joint recharge, because Mr Woolley knew of no quantitative way of apportioning it. Although the Barratta has a smaller flow, Mr Woolley thought that a greater proportion of its flow goes to recharge. Mr Woolley felt that his conclusion was supported by the salinity data contained in the AGC report, which showed a consistent area of lowest salinity along or close to Barratta Creek, suggesting that it is an important source of recharge. He gained further support from the Value Engineering Study carried out by the WRC in 1987, Figure 1 of which showed groundwater flowing from the west in the vicinity of a steep water table gradient area along the southern part of Barratta Creek. He also drew support from DPI salinity diagrams, which showed low salinity along Barratta Creek, similar to that of the 1983 AGC report, which he considered to be the result of recharge from the Barratta Creek system. Because of insufficient data, the extent of discharge by groundwater pumpage could not be quantified precisely. Therefore, Mr Woolley made an estimate based on crop areas determined from satellite imagery. He concluded that the amount of groundwater being -- 25 of 78 -- 26 pumped for irrigation exceeded the authorised amount by a factor of more than two. He felt that his conclusion was confirmed by anecdotal evidence. Mr Woolley also had regard to the interface of the fresh groundwater with highly saline sea water, the Salt Water Interface (SWI). After examining the data from a number of bores, he concluded that the natural position of the SWI seemed to be in the area between the railway line and the Townsville Road. Although pumping in the vicinity of Lot 67 (the Horseshoe Lagoon area to the north-west of Lot 42) may have caused some southerly movement of the SWI, there had been little or no movement since 1970. He also concluded that pumping from locations further up-gradient in the aquifer had contributed to the southern migration of the SWI. Based on similar bore data, Mr Woolley concluded that the salinity encountered in the Red Lily area was consistent with the drainage of water from the bedrock into the alluvial aquifer, modified to some extent by pumping. There did not appear to be any long-term trend to increasing size of, or salinity within, the area affected. While he was of the opinion that the presence of the saline water source should not prevent the use of groundwater for irrigation on Lot 44, it would have a bearing on the location of bores. He thought that there was little doubt that over-pumping exacerbated the problem at Red Lily. Excessive pumping had led to salinity problems at Mona Park, but he understood that the pumping rate in that area was 5 or 6 megalitres per hectare. He thought that there had been a similar pumping rate at Horseshoe Lagoon, where farmers had been allowed to transfer cane growing, following the groundwater problems at Giru. Mr Woolley arrived at the conclusion that a safe extraction rate of 2 megalitres per hectare per year could be maintained, based on  analogy with previous conclusions about the capacity of the aquifer in the Mona Park area;  the position of the subject lands in relation to favourable recharge conditions along Barratta Creek, which he assessed as being in the order of 100,000 megalitres per year;  analysis of the 1983 AGC report, which indicated that in this part of the aquifer a withdrawal of 2 megalitres per hectare per year would not cause saline water intrusion problems; no allowance had been made in the AGC report for deep drainage of irrigation water, which he estimated is likely to have been at least 20%. In respect of Lot 15, Mr Woolley felt that it was unlikely that irrigation from groundwater pumping could be maintained close to Mt Kelly, as the water would be too saline. However, cane had been grown to the north and east of Lot 15 for many years and he thought that groundwater from the northern half could be used. -- 26 of 78 -- 27 Mr Woolley was criticised by the respondent for not making a quantitative assessment. However, he said that his contribution was descriptive rather than numeric. He had left that to Mr Merrick. Mr Woolley conceded that he relied heavily on the AGC report, but that as that report had made no distinction between rain water and river water recharge, he had to make a calculation to apportion the extent of river water recharge by subtracting the volume of infiltration from rainfall. Mr Merrick’s Computer Model Mr Merrick, who is a Senior Lecturer at the National Centre for Groundwater Management at the University of Technology, Sydney, developed a groundwater model for part of the Burdekin Valley, the objective of which was to assess the extent to which groundwater could reasonably be developed for the irrigation of sugar cane on the subject lands. That involved a computer simulation of the real system. He explained that a groundwater model provides a mechanism to gain a better understanding of how groundwater will respond to a number of simultaneous processes which often defy intuitive analysis. Models can enable predictions to be made about aquifer behaviour under alternative development schemes. Mr Merrick explained that in this case, he developed a numerical model which attempted to simulate some complex interactive processes. In order to determine parameters for development of the model, he first made a critical analysis of all the raw data collected in the study area. In conceptualising the model, he had regard to at least five earlier studies. He explained that models are set up for a particular time scale as well as for a particular spatial scale. In this case, it was a long-term regional model. Mr Merrick’s model was set to start in January 1971 and proceed in monthly steps until December 1988, the dates chosen to address a full climatic cycle and because the model aimed to replicate pre-Burdekin scheme conditions. After analysing data from a number of bore hydrographs to gauge the interaction between stream peaks and groundwater level peaks, Mr Merrick concluded that the qualitative analysis suggested that the bed of Barratta Creek has a lower leakage characteristic than the Burdekin or the Haughton. However, he thought that substantial volumes of water could still enter the aquifer from Barratta Creek, because of its higher propensity for flooding and greater exposure to the aquifer. Mr Merrick concluded that there was a clear correlation between residual rainfall mass and the behaviour of groundwater in each of the bores. That suggested that an important mechanism in the aquifer system is rainfall, or stream recharge correlated to rainfall. There -- 27 of 78 -- 28 was the same behaviour in the 44 bores looked at, which were either on, or close to, the subject lands. After having made the residual mass comparison with all hydrographs, Mr Merrick was certain that recharge was occurring from either rainfall or streams. He then undertook a comparison of stream hydrographs with bore hydrographs to determine whether stream recharge was significant, or whether rainfall recharge was the sole mechanism. The hydrographs showed there was a decrease in the stream signature with distance from the stream. Mr Merrick explained that the data used in the model included assumptions which he made in the absence of firm data, such as for groundwater use. Groundwater usage being one of the major stresses on a system, was vital to the model. He calculated the areas of the crops that were growing in the study area from three published reports. He adopted a similar approach to that adopted by Seccombe and Arunakumaren (1990) to estimate usage on the basis of crop areas determined by satellite imagery. He estimated usage to range from about 50,000 megalitres to 180,000 megalitres in any one year, with median about 100,000 megalitres and average about 110,000 megalitres. The model calibration suggested that streams were the most important source of recharge and that it was almost balanced by net abstraction of groundwater from bores. Averaged over the 18 years of the simulation period, recharge to the aquifer from streams was estimated to have been about 115,000 megalitres per year and from rainfall about 36,000 megalitres per year. Allowing for infiltration to the aquifer of irrigation water, net groundwater usage was estimated to have averaged about 110,000 megalitres per year, with about 35,000 megalitres per year discharged by evapo-transpiration and outflow to the sea. Over the simulation period, the model showed that there was a net gain in the aquifer storage of about 8,000 megalitres per year. Mr Merrick said that all three streams that are represented in the model are an important source of recharge. In order of importance, he would rank them as Barratta Creek first, Haughton River second, and Burdekin River third. Mr Merrick pointed out that the records of groundwater use in the area are very poor. He was unable to achieve calibration of the model against key bore hydrographs with estimates of groundwater usage based on metered use, or on estimates based on fully efficient irrigation. From those bore hydrographs, he concluded that actual groundwater usage was much higher than might otherwise have been expected in the early 1970s, probably due to inefficiency, and about 20% to 30% higher than might otherwise have been expected in the mid-to-late 1980s, probably due to expansion of cane farming. He concluded that during the -- 28 of 78 -- 29 period 1971 to 1973, farmers applied about 2 times the amount of water needed to irrigate crops efficiently. The calibrated groundwater usage is shown in Figure 31 of Mr Merrick’s report for each of the 18 years, with median and average usage about 150,000 megalitres per year. He assumed net usage would be about 20% lower to account for deep drainage to the aquifer after irrigation, based on the percentage in the article by Raine and Bakker. Having achieved calibration, Mr Merrick’s model was run in a transient mode to predict how the aquifer would have responded from 1971 to 1988 for a hypothetical usage scenario. That scenario was that all the Cox land and all the land south of the Polletti Line, had a given allocation of 2 megalitres per hectare. Existing licensed allocations both north and south of the Polletti Line were taken into account; for those south of the Polletti Line, only if the actual allocation was greater than 2 megalitres per hectare. Seasonally adjusted crop requirements for groundwater in the NBWB area were also assumed to be active. Mr Merrick explained that for that particular scenario, the model results showed that the one metre groundwater level contour would have moved about 8 kilometres northward, thus, in his view, “obviating the threat of saline intrusion;” water levels would have been generally half a metre higher between the highway and the railway line; and two metres higher at Mona Park. They also showed that there would have been no decline in groundwater levels north of the Polletti Line. The maximum decline in level would have been about two metres in the south-west, where there had been no historical abstraction. Those somewhat surprising results could be explained because the scenario on which the model was run resulted in less water being extracted from the aquifer than had actually been extracted, because of significant unauthorised over-use by farmers. Mr Hillier’s Evidence Mr RJ Hillier, Principal Hydrologist, Water Assessment and Planning, Resource Services Centre, DNR, gave evidence for the respondent. Mr Hillier prepared reports on the hydrogeology of the subject lands and on groundwater modelling. His study area and the model area were bounded by the Haughton River to the west, the Burdekin River upstream of Mount Kelly and Sheep Station Creek to the east, the Coral Sea to the north and to the south, by a line from Clare to the Haughton River. Mr Hillier’s Hydrogeology Report Mr Hillier explained that the purpose of the report was to describe the nature and occurrence of groundwater in the area and for that purpose an analysis of the aquifer system and the groundwater quality and quantity had been undertaken. -- 29 of 78 -- 30 He acknowledged that there was a possibility that the Burdekin and Haughton Rivers and Barratta Creek provide some recharge to the aquifers, due to the apparent presence of groundwater mounds beneath those drainage lines. However, he pointed out that flows from Barratta Creek are seasonal and groundwater movement from the Burdekin River is restricted by a basement ridge marginal to its banks and underlying its bed, and from the Haughton by low transmissivities. Mr Hillier said that the Haughton River was always regarded as hydrologically separate from the Burdekin system, because of the existence of a deep underlying layer of clay. He thought that Barratta Creek was similar, but being a smaller watercourse had very limited access to aquifer sands and gravels. Originally Mr Hillier thought there was no connection between the Haughton and the main aquifer, but after looking at the 1993 report by Arunakumaren, he accepted there was some connection, although limited. Mr Hillier went on to explain that north of the subject lands in the vicinity of the railway line, groundwater levels approach sea level and often fell below it, which gave rise to major concern over the position of the SWI, which can adversely affect the quality of bore water. To prevent the salt water boundary from advancing landward, he contended that groundwater levels must remain above sea level. Mr Hillier referred to the vulnerability of fresh water resources to sea water inundation. There was a depression of fresh water levels to the north-west of Lot 42 (Horseshoe Lagoon), with values up to 3 metres below sea level caused by pumping, which he considered to be extremely vulnerable to sea water intrusion from the north. It was essential that fresh water head levels do not fall below a point that could cause any threat of salt water intrusion from the sea. Mr Hillier explained that DNR monitors groundwater quality on a regular basis to detect any areas that may be experiencing deterioration of groundwater quality. An observation of conductivity in the area between June and July 1997 showed that values ranged from fresh to very saline. Within the subject lands, water quality was slightly better on the east side of Barratta Creek than on the west side. Mr Hillier explained that past management practices adopted by DNR have accepted that the average annual recharge is a little over 25 millimetres per year in the Haughton- Burdekin alluvial plain, based on the 1983 AGC report. He referred to those AGC conclusions which, he said, recommended that the area containing the subject lands should be allocated extraction rates of 0.25 megalitres per hectare per year to prevent encroachment of the northern sea water boundary. However, as mentioned previously, the AGC report made -- 30 of 78 -- 31 no such recommendation, simply concluding that the current policy would have only a minor effect on water levels. Mr Hillier also said that in its final assessment, AGC stated that an increased extraction rate of 2 megalitres per hectare per year may not cause immediate sea water encroachment, but would have a detrimental effect upon present irrigation by reducing surrounding groundwater levels. However, as mentioned previously, the AGC report made no allowance for infiltration of irrigation water. Mr Hillier commented that the AGC report concentrated on land further inland than the subject land and its model was based on water levels from 1978 to 1982. He confirmed that the AGC report was not the genesis of the 0.25 megalitres per hectare per year policy, saying that the policy pre-dated that report. He stated that in addition, a 1981 Departmental report and an independent study by Coffey and Hollingsworth in 1975, concluded that allocations (at the time 204 megalitres per 800 hectares) should not be increased in any area north of the Polletti Line, because of concerns about salt intrusion. He went on to say that since then, numerous other bore holes have been drilled, and water level variations and quality changes in the coastal area tend to support those assessments. In summary, Mr Hillier emphasised that the aquifer sediments in the BRIA are covered by a blanket of clays and silts deposited from floods of the Burdekin and Haughton Rivers, which impede the downward percolation of rainfall to the aquifer system. Strata log descriptions often over-simplify the aquifers and do not always indicate the proportion of clays in the sediments, which can lead to an over-approximation of specific yield values. North of the subject lands, groundwater levels have been drawn down below mean sea level, resulting in sea water intrusion into the main aquifers. Corrected saline water levels indicate that the potential for further intrusion may be greater than initially perceived. Apart from the area intruded by salt water, groundwater quality is generally quite good. However, groundwater levels show long-term decreases during periods of below-average rainfall, leading to the conclusion that because of the limited volume of recharge and the threat of seawater intrusion, the management practices adopted by the DNR and based on independent consultants’ analyses, of issuing allocation at a rate of 25 millimetres per hectare per year, were appropriate. The DNR Groundwater Model Mr Hillier also prepared a report on the development of a groundwater model of the BRIA, bounded by the Burdekin and the Haughton Rivers. The objective of the study was to investigate groundwater supplies and to develop a computer-based model which could be -- 31 of 78 -- 32 used to simulate groundwater conditions in the area of the subject land. The model was developed to investigate the impact of different combinations of water supplies on groundwater levels. Mr Hillier said that he conceptualised the model personally to a large extent, but did have several other people assisting him in its construction. Despite the submission by the claimants that he had little to do with the model, I accept that he supervised and guided the project. Mr Hillier explained that model calibration started in 1981 and went to 1987, the period being chosen because crop-cover data was not reliable back past 1981. The model was verified in the period 1988 and 1989. Mr Hillier, like Mr Merrick, noted the lack of complete groundwater use records in the model area. He also calculated the areas of crops growing in the study area in order to estimate groundwater usage. He considered that the correct estimation of groundwater withdrawals was a critical step in model development. From crop coverage maps compiled by Departmental staff in about 1988 for the years 1981 to 1985 and 1986 to 1987, and 1988 satellite imagery of vegetation in the model area, the irrigation use from groundwater for crops in the area was simulated. The water balance of the model simulation showed the average annual rainfall recharge to be 25,607 megalitres over the model area of 88,975 hectares, estimated to be 29 millimetres per year. Further water balance calculations showed that groundwater was leaving through parts of the Burdekin and Haughton Rivers from the model area. The resultant average recharge from the Burdekin and Haughton Rivers was estimated to be 600 megalitres and 500 megalitres. One of the major differences between Mr Merrick’s model and the DNR model was that the latter did not recognise that there was any recharge from Barratta Creek. Mr Hillier explained that at the conceptualisation stage there was no water provided into the model through Barratta Creek except by rainfall, because it did not show up in any of the water level contours, so it was impossible to calibrate it. The model was run to provide for extraction at the rate of 2 megalitres per hectare over all the land south of the Polletti Line, or if the existing allocation was over 2 megalitres per hectare, at that rate. It was found there was an unrealistically high usage. It was then run at 2 megalitres per hectare over the whole of the subject land and that was also found to be excessive. It was then run to provide for additional groundwater extraction of 2 megalitres per hectare from south of the Polletti Line in the subject lands. The additional groundwater -- 32 of 78 -- 33 extraction was estimated to be 6,403 megalitres per year. It showed that groundwater quality was deteriorating in the area north of the subject lands. Mr Hillier drew the following conclusions from the groundwater model: the additional extraction from the subject lands caused the water level to drop below -1.0 metres AHD. As a freshwater head of between +0.5 and +1.0 metres was required to balance the salt water, a fall to -1.0AHD would cause movement of salt water into the aquifer. Such ingress of salinity would not be acceptable, and use from the aquifer at the suggested rate would not be sustainable. Mr Hillier had also produced a water balance for the Haughton-Barratta area using the AGC study. This showed that recharge from the Haughton, the Burdekin and the Barratta was 66,000 megalitres. From the contours on Figure 15 of the AGC report, he concluded that the majority of recharge is from the NBWB area. Recharge from the Burdekin and from the Haughton was limited, with virtually no recharge from Barratta Creek. When the DNR parameters were applied, recharge from streams fell to 26,800 megalitres. From water levels in bores in 1978-79, Mr Hillier concluded that there was direct infiltration across the area and assumed that rainfall was the predominant recharge. While there was some recharge from the Haughton, there was no evidence of any movement of water from Barratta Creek. He said that the 1975 Coffey and Hollingsworth report supported that conclusion. The main differences between Messrs Woolley and Merrick on the one hand and Mr Hillier on the other are: (1) the stream recharge, and (2) the amount of water used. According to Mr Hillier there is no evidence that Barratta Creek is the source of recharge. He said that if more groundwater usage was assumed, there must be more recharge, but it could come from rainfall. Mr Hillier was prepared to accept that each of the streams was providing some recharge due to the presence of the groundwater mounds, but only in the downstream area towards the railway line. He asserted that there was no evidence of any possibility of Barratta Creek providing significant amounts of recharge upstream of the highway. In Mr Hillier’s opinion, Mr Woolley got the hydrogeology wrong. Mr Hillier thought that Mr Merrick had over-estimated the thickness of the aquifer, that his hydraulic conductivity values were too high, but that his storativity values seemed acceptable. -- 33 of 78 -- 34 The crop areas used in the DNR exercise, particularly for sugar cane, are significantly less than those used by Mr Merrick, being only about one-third of the sugar cane area that he showed. It emerged in evidence that the satellite imagery of crop areas was produced from office assessment only, with no ground verification. Mangoes were a comparatively new crop in the Burdekin, but were grown in commercial quantities by June 1988. Mr Merrick’s crop areas did not include mangoes. The Evidence of Doctor Evans Doctor RS Evans, employed by the consulting engineering company, Sinclair Knight Merz as Principal Hydrogeologist, gave evidence for the respondent. He had been requested to review all the data and, in particular, to provide comment on the reports of the claimants’ witnesses. He had produced a report, the stated purpose of which was to provide an assessment of the technical and management veracity of the reports prepared by Mr Woolley and Mr Merrick. Dr Evans’ Comment on the Report of Mr Woolley - Doctor Evans concluded that Mr Woolley had significantly over-estimated the groundwater resources; that his conclusions were not consistent with the available data. He thought that Mr Woolley failed to emphasise the main difference between the Burdekin delta sediments which rainfall can readily percolate to recharge the aquifer, and the sediments deposited in the Barratta/Haughton area, where the “universal” clay layer severely restricted recharge. However, under cross-examination Doctor Evans agreed that the clay layer was not universal, as there are areas where the clay was not present and recharge was potentially greater. Doctor Evans noted that Mr Woolley had accepted as reasonable a 20% average return of irrigation water to the aquifer, while he felt that for the cracking clays of the Barratta area, an average recharge would not exceed 10%. However, he conceded that he was not aware of the areas of different soils, his discussions with Mr Hillier and his staff had led him to understand that a substantial proportion of the area consisted of cracking clays. Doctor Evans contended that Mr Woolley grossly over-estimated the volume of recharge from the Haughton River and Barratta Creek; most of his figures came from the 1983 AGC report, adjusted to exclude infiltration from rainfall; he failed to take into consideration the fact that as the period from 1971 to 1978 was a very wet period, the recharge from rainfall would also be much above average. Doctor Evans went on to say the figures in the AGC report show that a significant part of the recharge came from the delta area. Once that influence was removed, most of the area -- 34 of 78 -- 35 had restricted recharge and Mr Woolley’s assertion that the recharge from the Haughton and Barratta is 100,000 megalitres per annum is without foundation. While Doctor Evans conceded that the contours indicate some small recharge from the Haughton, he thought that the extensive clay layers restrict its extent. He dismissed Mr Woolley’s opinion that the excellent quality of water near Barratta Creek was proof of good recharge from the creek; he agreed that it indicated recharge in the vicinity, but it did not quantify volumes. However, Doctor Evans conceded that the excellent quality water near Barratta Creek extended over a large area. Doctor Evans asserted that Mr Woolley’s estimate of groundwater use was excessively high, but left it to Mr Leach to deal with that aspect . Doctor Evans made the general statement that the subject land had poor quality water all around it, but he had not looked at the raw data. He relied on Mr Hillier’s report for his assertion that groundwater quality was deteriorating in the area north of the subject land. He attributed the deterioration in groundwater quality to pumping , if the bores are located too close to the SWI. Doctor Evans disputed Mr Woolley’s conclusions regarding groundwater salinity, on the basis that water quality monitoring by DNR showed deterioration of water quality over time and any lowering of the water table below sea level would induce the flow of salt water into the aquifer. He alleged that Mr Woolley tried to justify his case for increasing groundwater allocations by comparing water levels in various bores. In his opinion, comparison of trends between bores means little. He asserted that recharge from Barratta Creek has been shown to be quite limited, the Barratta having an annual flow over the period since records began in 1975, of only 118,000 megalitres. He reasoned that if 1% resulted in recharge, this would be about 1200 megalitres per annum, nowhere near Mr Woolley’s estimate of 100,000 megalitres. He also took issue with Mr Woolley’s reliance on the AGC report to support his proposal that allocations could have been increased to 2 megalitres per hectare, pointing out that the AGC investigation was carried out in 1982 when water levels were still high from the extremely wet period in the 1970s. In the dry periods of the 1980s and 1990s, water levels were much lower and a further decline of 3 metres would have resulted in water levels well below sea level. Such a drop in water levels so close to the SWI would be unacceptable and not be sustainable. However, Mr Woolley had pointed out there had been no allowance for infiltration under irrigated land in the AGC study and that there would have been probably more than -- 35 of 78 -- 36 20% infiltration to groundwater. In his opinion that would have made a substantial difference to the impact of groundwater pumpage. In summary, Doctor Evans’ criticisms of Mr Woolley’s report were:  the whole of the Barratta aquifer is overlain by a thick clay layer which severely restricts rainfall infiltration for aquifer recharge;  both Barratta Creek and the Haughton River are underlain by significant clay thicknesses which restrict infiltration of stream flow;  groundwater usage has been grossly over-estimated;  the threat of salt water intrusion is a very real limitation on the long-term sustainable yield of the system;  the work carried out by AGC was at the end of a very wet period and some of its results are not applicable when dry season water levels are considered;  in this area, the groundwater resources must be managed in a cautious manner; fresh water levels need to be maintained at between 0.5 and 1.0 metre above sea level just to balance the salt water and any additional use which will have an effect of increasing the risk of salt water intrusion must be restricted. Doctor Evans’ Comments on Mr Merrick’s Report - Dr Evans thought that Mr Merrick’s model appeared to be deficient because:  it was calibrated over the 18 year period, but not verified outside that period and so failed to prove the model’s accuracy and reliability;  hydraulic conductivity, a key model parameter, was generally significantly greater than those in the aquifer material;  the model was developed based on uniform rainfall recharge and uniform conductance along the rivers and on that basis it contained errors;  the model was developed based on doubtful data, as the groundwater extraction used in the model was unrealistically high;  errors associated with estimating groundwater extraction, rainfall recharge, stream recharge and initial conditions were present in the model. He rejected Mr Merrick’s conclusions as not acceptable. He thought that the developed model was a poor representation of the groundwater system of the BRIA. He was critical of the fact that the model area extended into the NBWB area, where groundwater is replenished by an artificial recharge scheme and where the deltaic soils are much more permeable. However, he had to agree that good modelling required the model area boundaries -- 36 of 78 -- 37 to be located away from the area being examined and that necessitated including the NBWB area in this case. Doctor Evans thought that Mr Merrick’s estimate of groundwater usage was unrealistically high. He felt that surface water irrigation areas, and areas irrigated from flood harvesting, were included as groundwater, in addition to the delta area with its artificial recharge scheme. He also commented that Mr Merrick had not attributed any area to mangoes. He contended that Mr Merrick compounded the already over-estimates to ensure calibration, by altering the usage estimates to allow for irrigation inefficiencies, which he considered to be completely unrealistic, especially on heavy Barratta clays where, at 2.5 inefficiency, paddocks would be flooded. Although some water recharges, he thought it was a small percentage and the majority would be lost to evaporation and runoff. Inefficiency to the extent of 2.5 was very unlikely in Doctor Evans’ experience. He concluded that “Changing water usage in order to obtain a calibrated model has resulted in unrealistic values which have been needed to allow other parameters to also remain at quite unrealistic values”. Doctor Evans was critical of the model’s use of a uniform net recharge factor of 2.5% of rainfall. The DNR model indicated an average rainfall recharge of 29 millimetres. He was also critical that the conductance values used in the model were consistent with artificial recharge trials in the delta, an area quite unrepresentative of the area in which they have been applied. He criticised the fact that groundwater extraction was adjusted, along with other parameters, in the model calibration. He said this was not an acceptable procedure in groundwater model development. However, he conceded that in other cases that he had been involved with, there had been some indication of groundwater use, whereas here they had to be estimated. He concluded his criticism of Mr Merrick’s modelling by setting out several key issues which led him to the conclusion that the model was not a realistic representation of the aquifer system:  there is no top clay layer in his model;  the model made no provision for the spatial variation of recharge;  the values used for groundwater usage and stream recharge were quite unrealistic;  the calibrated parameters did not generally agree with the hydrogeological characteristics of the area;  the procedure used for model calibration was not acceptable, as both input and model parameters had been varied during calibration;  the model had not been validated. Doctor Evans endorsed the DNR policy of groundwater management of 0.25 megalitres per hectare per year, which he felt would ensure no long-term over-development of -- 37 of 78 -- 38 the groundwater resource. However, he was not able to refer to any reports which justified that policy, apart from Mr Hillier’s report, which showed that sea water intrusion was gradually occurring under the current pumping regime. However, if Mr Woolley and Mr Merrick were correct, pumping may well have exceeded authorised use. Doctor Evans agreed that good groundwater management was about equitably sharing between conflicting requirements. While he considered that the policy limiting allocations to 0.25 megalitres per hectare per year was appropriate, he would not argue that it could not be increased; but to suggest that it could be increased to 2 megalitres per hectare, was not consistent with the data. Clawing back over-allocated resources was a major problem. In his opinion, it was far more prudent to gradually increase allocations and observe how the groundwater resource responded so that a more prudent and cautious approach can be developed. He concluded that the weight of technical data and evidence supported the view that the current allocation policy of 0.25 megalitres per hectare per year was a prudent approach. To suggest that it could be increased to 2 megalitres per hectare per year was, in his opinion, grossly excessive and clearly not sustainable. Under cross-examination, Doctor Evans admitted that in hindsight it probably would have been desirable to include Barratta Creek as a recharge source in the DNR model, provided that realistic conductance values and realistic flow figures were used. However, he thought that Barratta Creek would not have been a significant source of recharge and that leaving it out did not detract from the model. The DNR model calculated the total inflow into the aquifer, even though it did not attribute any recharge to Barratta Creek. Mr Leach’s Comments on Mr Woolley’s Report Mr Leach also thought that Mr Woolley’s estimate of groundwater use was high. He said that Mr Woolley seemed to rely on the report of Seccombe and Arunakumaren (1990), for the areas that were irrigated; but the cultivated areas in the Seccombe and Arunakumaren Report (pre-1985 and post-1985), were mostly in areas marginal to the study area, with little use of the central area. Most of the cultivated area for sugar cane was in the NBWB area, where groundwater was supplanted by artificial recharge and there were no authorised volumes. Mr Leach thought that the groundwater use adopted by Mr Woolley of 8 megalitres per hectare could not be correct. In the Seccombe and Arunakumaren 1990 study, the maximum groundwater use was 56,000 megalitres in 1992 (a dry year) and the minimum use about 26,000 megalitres in 1989 (a wet year). However, Mr Leach agreed that the average -- 38 of 78 -- 39 use could be about 42,000 megalitres per year. If that was divided by the average of Mr Woolley’s irrigated area of 8,000 hectares, the result is an average use of 5.25 megalitres per hectare. But that covers part of the NBWB area, which further complicates matters. Findings in relation to the water evidence. It was contended by the claimants that they were able to demonstrate that, in the absence of the Burdekin Dam, they would have been able to produce evidence which would have persuaded the respondent to modify his policy of restricting groundwater allocations in this area to 0.25 megalitres per hectare per year. In the event that the respondent refused to grant additional entitlement to a landowner who had applied for a waterworks license, that landowner could appeal to the Land Court. The inference was, that the Court would have been persuaded to overturn the respondent’s decision and grant the additional entitlement. The evidence of Mr Woolley and Mr Merrick was directed towards establishing that a safe pumping rate for the aquifer would be 2 megalitres per hectare per year. The evidence of Mr Hillier, Doctor Evans and Mr Leach was directed towards showing that it would not, and that the policy of 0.25 megalitres per hectare per year would not have been, and should not be, altered. The claimants’ arguments therefore differ from those advanced in the Davco case, where it was sought to establish that there was sufficient unsaturated material in the aquifer to sustain artificial recharge and that sufficient quantities of water could be pumped from the Burdekin River, artificially recharged into the aquifer and later extracted, to enable the irrigation of sugar cane on the Davco lands. Although the arguments are different, there are findings in the Davco case which are pertinent to the subject lands, particularly to Lot 44 and Lot 15. However, quite apart from the Davco decision, in these cases the claimants have endeavoured to demonstrate that, in the absence of the Burdekin Dam, there was sufficient groundwater in the aquifer to justify a pumping rate of 2 megalitres per hectare per annum for each of the subject lands. The claimants’ argument proceeds on the basis that if there was sufficient water to allow pumping at that rate without the risk of affecting groundwater quality or the rights of other landowners, then it would be unreasonable for the respondent to refuse to allow such allocations, and any such decision would be reviewed by the Land Court. It seems to me that this argument should be considered at two levels: First, whether the respondent (or on appeal the Land Court) would have been persuaded to grant additional entitlement in the period between the announcement of the Burdekin scheme and the dates of resumption of the subject lands; and/or -- 39 of 78 -- 40 Second, whether a hypothetical prudent purchaser would have been prepared to pay a premium for the subject lands for the prospects that in the future, the respondent (or on appeal the Land Court) would have been persuaded to grant additional entitlement. The first proposition is an extension of the Woollams principle, while the second, although differently based, is somewhat analogous to the finding in the Davco case in relation to the value of dry arable land with potential for irrigation from the Davco project. The Likely Attitude of the Respondent The respondent’s witnesses left no doubt that their attitude was that there would have been no relaxation of the allocation policy. Essentially that was based on their opinions that extraction of groundwater must be balanced by recharge, the present policy of 0.25 megalitres per hectare per year being directly related to average annual infiltration of rainfall of 25 millimetres per year. Where extraction has exceeded that rate, such as at Mona Park, Giru, Horseshoe Lagoon and perhaps Red Lily, there has been a deterioration in groundwater quality. Once water quality has been affected, it is very difficult to correct, the solution in each of those cases being dependent upon the supply of channel water from the Burdekin scheme. Therefore, in the absence of the Burdekin scheme, I have no doubt that the attitude of the respondent would have been cautious and conservative. In normal circumstances, it was argued, it would have been most unlikely that the respondent would have changed that policy at any time in the forseeable future. That leaves unexplained the departure from that policy by the granting of a licence to Hoey with an allocation of 802 megalitres for 132 hectares, or over 6 megalitres per hectare in February 1980, and the later renewal of that licence. Mr Leach could only suggest that the land is in a different sub-area. He could offer no other explanation. However, the Hoey land is north of Lot 44, north of the Polletti line and closer to the SWI. The claimants argue that if there had been no Burdekin scheme, the circumstances would have been far from normal. The Court found in the Davco decision that, in the absence of the Burdekin scheme, there would have been some expansion in the sugar cane industry, although not to the extent that occurred after the construction of the Burdekin Dam. It was also found that in such circumstances, land which was suitable for cane growing and which had access to irrigation water, would have commanded premium prices, certainly higher than those being achieved at the BRIA auction sales. -- 40 of 78 -- 41 Once the suitable land within the NBWB had been exhausted, the only possible direction for cane expansion would be west, onto the subject lands. There could be no expansion to the north-west, because of the danger of salt water intrusion from the sea. Those circumstances would have placed enormous local and political pressure on the respondent to relax his groundwater allocation policy, or at least to review it. The argument proceeds that faced with the evidence presented by Messrs Woolley and Merrick, and the precedent of the Hoey allocation, the respondent would have good reason to allow groundwater pumping to at least 2 megalitres per hectare per year. However, it could equally be expected that the respondent would also have received advice of the type presented in evidence by Mr Hillier, Doctor Evans and Mr Leach. Faced with that conflicting evidence, I have no doubt that the respondent would have continued to adopt a cautious and conservative approach. In the circumstances of these cases, there can be no conclusive evidence of what would have happened if the Burdekin Dam had not been built. Nor is it possible to resolve all the differences between the water experts for the claimants and the respondent. It is a matter of weighing that lengthy and complicated evidence and deciding as best I can, on the balance of probabilities, what was likely to have happened. If a landowner had appealed to the Land Court against the respondent’s decision on his application for a waterworks licence, then there is no doubt that the Court would also have taken a careful and conservative approach. That being so, it is highly unlikely that the respondent or the Court would have approved a pumping rate of 2 megalitres per hectare per year, or four times the prevailing allocation policy, by the dates of resumption. Instead, it is much more likely that the respondent would have adopted what was agreed to be good resource management practice by proceeding slowly and monitoring the results of any increase in pumping rates. In making this finding, I pay no regard to the evidence that the respondent has not in fact altered the policy, notwithstanding the introduction of Burdekin scheme channel water to the area. Mr Leach seemed to rely on that fact as part of his argument that there should be no increase in groundwater pumping rates. However, with the introduction of Burdekin scheme channel water, there was no need for the respondent to alter his policy, as irrigation water was available from the BRIA channels, rather than groundwater. Mr Leach was prepared to admit that the rate of groundwater pumping will have to be addressed in the future, as there is evidence that the water table is rising as a result of percolation of irrigation water from the Burdekin scheme. -- 41 of 78 -- 42 The claimants’ witnesses were criticised for their reliance on various aspects of the AGC report for the assumptions which they made. However, the respondent’s witnesses also relied on that report, but departed from it where they thought it necessary. There is no doubt that the AGC report played an important part in these cases. That is not surprising, as it is one of the few studies dealing with the water resources of the aquifer in the area. However, as pointed out previously, the AGC findings did not give unqualified support to extraction at the rate of 2 megalitres per hectare per annum. Neither did it give such support to the allocation policy of 0.25 megalitres per hectare per annum. Having regard to the whole of the evidence, the respondent has not persuaded me that the groundwater allocation policy should not have been cautiously increased. The respondent’s witnesses steadfastly refused to admit that there was any possibility of any increase in groundwater allocations. They seemed to have great difficulty in accepting that if there had been no Burdekin scheme, there would have been very little progress in the Burdekin district. Only Dr Evans, the only “outsider” amongst the respondent’s witnesses, was prepared to admit that the allocation policy was somewhat arbitrary and could have been increased at least to some extent. Although he was critical of much of the evidence of Mr Woolley and Mr Merrick, he was prepared to concede that some of those matters criticised could be explained. Of those that remained, many seemed to me to be influenced by the views of the respondent’s witnesses, which is not surprising, as DNR was the source of much of Dr Evans’ information. I think that it can reasonably be assumed that by the date of resumption of the first of the subject lands in December 1990, the respondent, or the Land Court, would have increased the allocation rate south of the Polletti Line to 0.5 megalitres per hectare per year. It is not likely that this would have increased further by the date of resumption of the last of the subject lands, as the respondent would still have been monitoring the effect of the increased pumping rate. The Likely Approach of a Hypothetical Prudent Purchaser The question remains as to whether a hypothetical prudent purchaser of the subject lands at the various dates of resumption would have been prepared to pay an additional amount for dry arable land for the possibility that the respondent would further alter his groundwater allocation policy. It must be assumed that such a hypothetical purchaser would “... be cognizant of all circumstances which might affect its value, either advantageously or prejudicially, ... the then -- 42 of 78 -- 43 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”. (Isaacs J in Spencer v. The Commonwealth (1907) 5 CLR 418 at 441.) If one makes that assumption, such a purchaser would have been armed with the knowledge of the type of evidence given by Messrs Woolley and Merrick and the contrary views of Mr Hillier, Doctor Evans and Mr Leach. In such circumstances, I think that the hypothetical purchaser would have come to the following conclusions:  there is simply too much doubt about the capacity of the aquifer to sustain pumping at the rate of 2 megalitres per hectare per year;  there will be irrigation of at least part of the subject lands and other lands at the rate of 0.5 megalitres per hectare per year;  there is likely to be at least partial success of the Davco scheme which will be irrigating lands to the south of Lot 44;  in the longer-term, there will be recharge of the aquifer from infiltration of those irrigation waters at the rate of between 10% and 20%;  therefore, there is the likelihood of greater recharge to the aquifer than at the dates of resumption;  the extraction rate of 0.5 megalitres per hectare will itself be proven to be conservative;  in those circumstances, there is the likelihood that the respondent (or the Land Court) would increase the allocation further;  however, the likelihood of that allocation being increased more than 1.0 megalitre per hectare per year was remote. On that reasoning, I think that a hypothetical prudent purchaser would have been prepared to pay something extra for dry arable land suitable for cane growing for the possibility that, in the not too distant future, the allocation would be increased from 0.5 megalitres per hectare per year to 1.0 megalitre per hectare per year. The amount of that additional payment will be discussed later in this judgment. The Soils Evidence -- 43 of 78 -- 44 Evidence regarding soils and land suitability was given by Mr GA MacGregor of MacGregor and Associates, Agricultural and Irrigation Consultants of Bowen, for the claimants and by Mr JI McClurg, a self-employed agricultural consultant of Mackay, for the respondent. There is little disagreement between the soils experts about the areas of each of the subject lands that are suitable for furrow irrigation of sugar cane. This is not surprising, as they have both used the same soils suitability maps. Where they differed, I have adopted the greater area, sometimes that of Mr MacGregor and sometimes that of Mr McClurg. The real difference between them is in respect of the suitability of the soils for trickle irrigation of horticultural crops. Mr MacGregor was of the opinion that all land suitable for furrow irrigation of sugar cane would also be suitable for trickle irrigation of horticultural crops. His opinion was largely based on his first-hand knowledge of the experience of the Rapisarda Farming Company, which grew horticultural crops on Barratta clays, and of farmers who were growing such crops on cracking clays in the Bowen district. On the other hand, Mr McClurg was of the view that only relatively small areas of the subject lands would be suitable for trickle irrigation of horticultural crops. He thought that Barratta clays were totally unsuitable, because of wetness, leading to the increased possibility of disease and trafficability difficulties. His opinion was based largely on his knowledge that the Rapisarda Farming Company had abandoned its horticultural activities on Lot 240, which at the date of the hearing was all under cane. He was also aware that a Mr Quinn had attempted to grow horticultural crops on Barratta clays in 1995, but had to abandon the venture with severe losses. Both matters were clarified. It was established that the Rapisarda Farming Company had successfully grown horticultural crops on Barratta clays on Lot 240 for about five of the last ten years, but in 1998 the land was all under cane. It seems that there were difficulties in using Barratta clays for horticulture. It could be successful, provided crops were planted after one wet season and harvested before the next wet season. It also seems that Mr Quinn abandoned his operations, not because of any fault in Barratta clays, but because of an insect-borne disease. Mr MacGregor had first-hand knowledge of this, while Mr McClurg was not aware of it. Trickle irrigation of vegetable and rockmelon crops was well established in the Burdekin District by the late-1980s. In Mr MacGregor’s opinion, Classes 1 to 3 soils would be suitable for trickle irrigation of vegetable crops, as well as for furrow irrigation of sugar cane. While DPI land suitability maps showed land suitable for rice, maize, mangoes and capsicums, Mr MacGregor believed the best use of the land was for sugar cane and -- 44 of 78 -- 45 horticultural vegetable crops. He thought that the land suitable for sugar cane would also be suitable for horticulture. Mr MacGregor believed that in the period 1990 to 1993, there would have been interest in the use of 250 hectares of the subject lands for horticultural crops. That opinion seemed to be based on the fact that in the early 1990s, there was an expansion in the melon market, melons being grown on whatever land was available. He noted that the Brandon airstrip was located nearby and could be used for aerial spraying and fertilising. He thought that rockmelons would be the major, but not the only crop. Using an average water requirement of 2.5 megalitres per hectare for the 250 hectares of horticultural crops, the total requirement would be 625 megalitres per year. He thought that the 250 hectares of horticultural crops could be grown on Lot 5 and Lot 44, 125 hectares on each, because they had the best access. The balance of the annual water allocation would be used for sugar cane production. Mr MacGregor had direct experience with trickle irrigation on Barratta clays, having established a computer irrigation system for the Rapisarda Farming Company, which grows small crops. However, he admitted that apart from that company he did not know of any other growers of small crops using trickle irrigation on Barratta clays. He thought that Barratta clays were very similar to the Bowen and Gumlu clays. Mr McClurg thought it would be difficult to locate a large enough area with suitable soils for horticultural crops on Lot 5. He agreed there was plenty of suitable soil, but all in small areas. That made it more difficult and more expensive for horticulture and therefore less attractive. Mr McClurg’s evaluation consisted of two possible agricultural uses: the irrigation of a range of crops where an allocation of high quality irrigation water was available; and rain fed cropping, where no irrigation was available. Mr McClurg was convinced that the soils in the Bowen area are not the same as soils on the subject lands. The Bowen clay is not as heavy as Barratta clays. Bowen soils have different soil physical features, horticultural crops being grown mostly on alluvial soils which have different land forms and parent materials. In the Gumlu and Guthalungra areas, the soils used for horticulture are not heavy clays, but mostly creek flats, with some 1Ug, which were more permeable and had less wetness problems than 2Ug. Those soil types are not comparable with the Barratta clays and Oakey soils in the BRIA. -- 45 of 78 -- 46 Mr McClurg based his opinion on DPI soil surveys in which he had played a part. A field study in 1989 or 1990 by the relevant experts from Bowen and the Burdekin, including himself, had arrived at a general consensus of opinion that they were different soils. It seems that it is difficult but not impossible to grow horticultural crops on Barratta clays. However, because of those difficulties and the lack of evidence of widespread use of such lands for horticulture, it is difficult to see why they should be used for trickle irrigation of horticultural crops instead of furrow irrigation of sugar cane. Indeed, there is evidence that most of the horticultural crops in the Burdekin are grown on well-drained levee soils. However, Mr MacGregor did not suggest that the whole of the potential cane growing land would have potential for horticulture. He limited it to only 250 hectares. He felt that 125 hectares on each of Lot 44 and Lot 5 would be suitable, because of their superior access. However, the 125 hectares he identified on Lot 44 is all Barratta clays. While both soils experts agree there is at least 125 hectares of suitable soils on Lot 5, it is in scattered, relatively small areas, making it expensive to establish the spray lines and other infrastructure necessary for trickle irrigation. It would seem that such a venture would not be attractive to farmers. Therefore, I have come to the conclusion that the evidence has not established that there is a higher and better use for any of the subject lands for trickle irrigation of horticulture. Certainly there is no reason why a potential prudent purchaser would envisage that 125 hectares on each of Lot 44 and Lot 5 would have potential for trickle irrigation of horticultural crops, taking into account the risks and costs of establishment. It is most unlikely that such a purchaser would take any such potential into account in deciding what to pay for Lots 44 and 5. Therefore, I find that the highest and best use of those areas is for cane land, either irrigated or potential, depending on whether water is available, or potentially available. The Valuation Evidence Both valuers, Mr Eales for the claimants and Mr Moloney for the respondent, relied on sales of comparable properties and on comparisons with previous Court decisions (including the Davco decision) for the valuations of the various categories of land. However, as pointed out previously, their approaches differed according to the information obtained from the water and soils experts acting for each party. Although they both relied upon findings in the Davco decision, Mr Eales did so more heavily than Mr Moloney, who -- 46 of 78 -- 47 preferred to revert to the findings in the earlier decision of the Land Court in Fabrellas v. The Commissioner of Water Resources (A91-21) Land Court, 11 December 1991 (not reported). Mr Eales’ Reasoning Mr Eales reasoned that the subject lands were located in an area of the Burdekin immediately adjacent to existing agricultural areas which were used for the growing of sugar cane, with good quality soils, proven underground water supply, close proximity to mill tramlines, with 3-phase power and good access. He contended that prior to the Burdekin scheme, the owners of properties in the area had a general expectation that water would become available hand-in-hand with the future expansion of the sugar industry. Therefore, a prudent purchaser would pay a premium price for the subject lands, not only for the lands which could be irrigated with their present entitlement, but for lands with irrigation potential, with irrigation water from the Davco scheme and other sources being available in the future. According to Mr Eales, if there had not been a Burdekin scheme, there would have been the prospect of water from a number of sources, namely:  replenishment of underground supplies by a water board type scheme or the Davco project;  expansion of the NBWB area;  proving up of existing underground supplies;  direct open water pumping from a water board channel;  the Burdekin Dam as outlined in the 1952 Kemp Report;  a development such as the Majors Creek Dam, which was one of the alternatives outlined in the “Caneland Expansion Study” undertaken by McIntyre & Associates and James Cook University, for the Haughton Sugar Co Ltd in 1975. All those possible sources of water would have affected the value of potential irrigable arable land in accordance with the Davco decision, which affirmed the principle that land that had potential to obtain irrigation water had a higher value than dry arable land and grazing land. Based on the advice of Mr Woolley and Mr Merrick, Mr Eales concluded that in the absence of the Burdekin Dam, the WRC allocation of 0.25 megalitres per hectare could have been supplemented by a further 1.75 megalitres per hectare potentially available, a total of 2 megalitres per hectare. Mr Eales was confident that even without the Burdekin scheme there would have been expansion of the sugar industry in the area. He said that prior to the scheme, studies had been commissioned by the sugar mill proprietors to investigate the possibility of future expansion within the Burdekin area. A study was carried out for the Haughton Sugar Company Limited in May 1975, which set out a proposed development plan from 1974 to 1995, with a planned expansion of available area for sugar cane. There were similar reports commissioned by -- 47 of 78 -- 48 Pioneer Sugar Mills Ltd for the Pioneer and Inkerman Mills in June 1976, and by CSR in 1988. According to Mr Eales, the industry was being pressured to increase production because of the world’s sugar shortage. With modern machinery and more efficient farming practices, farmers were seeking to expand. The government would also have been pressured. The process of deregulation of the sugar industry, which occurred in 1991 and 1992, was known about in 1990, and would have put further pressure on the industry to expand. Mr Eales relied on the following findings in the Davco decision: the cane industry would have expanded in the area; the land that had an irrigation supply would have achieved sale prices higher than those achieved at BRIA auction sales at the date of resumption; the determination of the value of irrigable land at $6,000 per hectare; and the determination of the value of dry arable land with potential for irrigation at $1700 per hectare. He pointed out that the value of that latter category was based on the possibility of the ultimate success of the Davco project, not from the potential for proving up existing irrigation supplies, which he regarded as a further potential. It depended upon the opinions of Mr Woolley and Mr Merrick being accepted by DNR or, on appeal, by the Land Court. Mr Eales was of the opinion that potential from that source was “much higher” than the potential found in the Davco decision. In respect of Lots 44 and 5, he relied on Mr MacGregor’s opinion that 125 hectares on each of those lots had potential for trickle irrigation of horticultural crops. As trickle irrigation of horticultural crops required only 2.5 megalitres per hectare, rather than the 8 megalitres required by sugar cane, the additional water increased the area of dry arable land with potential for sugar cane on each of those lots. Furthermore, he considered that the potential from the drain/dam water from the agricultural drain also provided an immediate potential for a further 50 hectares of irrigable arable land on Lot 44. Mr Eales reasoned that in addition to being encouraged by the prospect of ultimate success of the Davco project, a potential prudent purchaser of Lot 44 and Lot 5 “would have been very confident” that the NBWB would have expanded its area to include part of those lots, or at the very least, the replenishment of the underground supplies from the NBWB area, would have been available to those two lots. Mr Moloney’s Reasoning Although acknowledging that the Land Appeal Court had determined a value of $6,000 per hectare for irrigable arable land, Mr Moloney adopted that value (adjusted for the -- 48 of 78 -- 49 state of development) only for the irrigable arable lands on Lot 44 and Lot 15. For such land on Lots 42, 43 and 5, he applied values of $3,700 per hectare for irrigable arable soils with development and $3,500 per hectare for irrigable arable soils with no development, those values being derived from his sales of irrigable arable lands and from the determination of the Land Court in Fabrellas. For the values which he applied to dry arable and grazing lands, Mr Moloney relied upon three sales in his Sales Schedule No 2, comprising grazing and dry arable sales. He also relied on his apportionment of the Land Court determination in Fabrellas. He applied values of $750 per hectare for dry arable land with development and $550 per hectare for dry arable land with no development; for the grazing lands with no development he applied $330 per hectare and $530 per hectare for grazing lands with development. The Valuations It is necessary to explain how Mr Eales and Mr Moloney arrived at such different valuations for each of the subject lands. Their tasks were difficult enough, as they were making retrospective valuations, but they were further complicated by the requirement that the land must be valued on the hypothesis that the Burdekin Dam had not been built. In that exercise they relied substantially on the opinions of the various experts, but it was the responsibility of the valuers to investigate what evidence was available and to apply it. First, I will set out the means by which Mr Eales and Mr Moloney arrived at their valuations of each of the subject lots and then examine the sales evidence which they used as a basis for those valuations. Lot 44 Mr Eales valued Lot 44 as fully economically developed and then deducted the cost of bringing the land to that state. 56.8ha of irrigable/arable @ $6,000/ha = $ 340,800 50.0ha of dry arable (with dam) potential @ $3,000/ha = $ 150,000 483.5ha of dry arable with underground potential @ $3,000/ha = $1,450,500 713.93ha of dry arable with potential @ $1700/ha = $1,213,681 513.35ha of grazing @ $400/ha = $ 205,340 Total = $3,360,321 -- 49 of 78 -- 50 Less Timber treatment 11.8ha desuckering, stickpicking, knifing and laser-levelling @ $800/ha = $ 9,440 558.2ha desuckering, stickpicking, knifing and levelling @ $500/ha = $279,100 689.23ha clearing, stickpicking, knifing and levelling @ $700/ha = $482,461 $ 771,001 Total value of land $2,589,320 Forty-five hectares of the land had been cleared to cultivation and of that, 25 hectares were under irrigated cane at the date of resumption. 570 hectares had been cleared to cultivation, with light regrowth. Mr Eales reasoned that Lot 44 had a water entitlement of 454.4 megalitres which, at 8 megalitres per hectare, would irrigate 56.8 hectares, to which he applied $6,000 per hectare, as found in the Davco decision. He considered that a further 50 hectares could be irrigated from the drain/dam, which he valued at half the rate applied to the irrigable arable land. As I understand his evidence, that allowed for both what he considered to be the risk of implementing the system and its cost of construction. He felt that it was a low level risk. He then assumed that the whole area of 1,817.58 hectares was eligible for an additional 1.75 megalitres per hectare, or 3,180.75 megalitres. However, Mr Eales reasoned that as Mr MacGregor had identified 125 hectares of Lot 44 as having potential for horticultural crops, at 2.5 megalitres per hectare for trickle irrigation, 312.5 megalitres would be required, leaving 2,868.25 megalitres for the irrigation of sugar cane. At 8 megalitres per hectare, that would irrigate 358.5 hectares. Therefore, the total dry arable land with potential for irrigation from additional groundwater allocation was 483.5ha, to which he applied $3,000 per hectare. He reasoned that a potential prudent purchaser would have been “very confident” of obtaining additional water; the rate of $3,000 per hectare, or 50% of the irrigable arable rate, was adopted to take into account the risk of persuading WRC, or on appeal, the Land Court. He further reasoned that another 713.93 hectares of dry arable land had irrigation potential, from a combination of the Davco and NBWB schemes. He thought there was less potential from the Davco project for Lot 44 than there was for the lands which were the subject of the Davco decision, but more potential from the NBWB. If the Court was to reject these arguments and find that there was no further potential for irrigation, then in Mr Eales’ opinion, cleared dry arable land on Lot 44 would have a value of $1400 per hectare. In such a scenario, the total dry arable area would be 1247.43 hectares. Mr Eales’ grazing value of $400 per hectare was derived from the sales and from the Davco decision. He felt that the grazing area included land with potential for growing cane in -- 50 of 78 -- 51 the future, but the possibility of a prudent purchaser paying more than grazing value was too remote. The allowances made by Mr Eales for timber treatment required to bring the land on each of the lots to full economic development are in line with those adopted in the Davco decision:  clearing, stickpicking, ripping and laser-levelling to cultivation $1,000 per hectare;  clearing, stickpicking, ripping and levelling to dry/arable standard $700 per hectare;  desuckering, stickpicking, ripping and levelling to dry/arable standard $500 per hectare;  clearing $200 per hectare. He claimed that these costs were supported by figures supplied by an earthmoving and treeclearing contractor at Ayr. Mr Moloney valued Lot 44 quite differently. Instead of valuing the land as fully economically developed, he valued each category of land as it was developed at the date of resumption. Land (valued as treated, fenced and watered) (a) Irrigable/arable 45 ha irrigable coastal forest soils, cleared to cultivation @ $6,000/ha including development; (exclusive of any added value of the sugar cane assignment, sugar cane stools or crop which remained the property of the dispossessed owner) $ 270,000 12 ha irrigable coastal forest soils @ $5,300/ha including development (timber pulled with parts formerly tordoned) $ 63,600 (b) Dry arable lands: lands with some form of arability in rainfed conditions 479 ha coastal forest soils $900/ha including timber treatment (timber pulled with parts formerly tordoned) $ 431,100 707ha coastal forest soils @ $600/ha with no timber treatment $ 424,200 (c) Grazing: lands suited to grazing only in rainfed conditions 84ha coastal forest soils @ $700/ha including timber treatment (pulled with parts formerly tordoned) $ 58,800 20ha coastal forest soils @ $700/ha including timber treatment (pushed now carrying regrowth) $ 14,000 471ha coastal forest soils with no timber treatment @ $400/ha $ 188,400 Total Land and Development $1,450,100 -- 51 of 78 -- 52 For the 57 hectares which could be irrigated from the licensed irrigation bore, he valued 45 hectares already developed to cultivation at $6,000 per hectare, in accordance with the Davco decision, and to the remaining 12 hectares which were developed to a lesser standard, he applied $5,300 per hectare. Mr Moloney rejected completely Mr Eales’ proposition that there was any potential for irrigation from any other source, be it from the drain/dam, the Davco scheme, increased groundwater allocation, the expansion of the NBWB area, or any other possible project. Relying on Mr McClurg’s soils suitability report, he concluded that there were 1,186 hectares of dry arable land, suitable for cultivation in rainfed conditions. He reasoned that in Fabrellas, the Land Court determined the value of dry arable land at $550 per hectare, excluding development, and at $1241 per hectare, cleared to cultivation. In comparing the dry arable land on Lot 44 with that on the Fabrellas land, he concluded that the remaining 479 hectares of cleared land, which had been pulled, with parts formerly tordoned, should be valued at $900 per hectare, while the 707 hectares of dry arable land, with no timber treatment, should be valued at $600 per hectare. For the grazing lands, he adopted $700 per hectare for the 84 hectares, which have been pulled, with parts formerly tordoned (the same as for Fabrellas), while the remaining 471 hectares of grazing land, with no timber treatment, he valued at $400 per hectare. Lot 15 Mr Eales valued Lot 15 as follows: 11.0 ha of irrigable/arable @ $6000/ha $ 66,000 75.12 ha of arable with underground potential @ $3000/ha $ 225,360 224.58ha of grazing with potential @ $2500/ha $ 561,450 33.8ha of grazing @ $400/ha $ 13,520 Total $ 866,330 Less Timber treatment 11.0ha desuckering, stickpicking, knifing and laser levelling @ $800/ha $ 8,800 244.0ha desuckering, stickpicking, knifing and levelling @ $500/ha $ 122,000 56.58ha cleared, stickpicking, knifing and levelling @ $700/ha $ 39,606 $170,406 Total Value of Land $695,924 (Adopt $695,900) Mr Eales reasoned that the 87 megalitre allocation attributed to the resumed area, would irrigate 11 hectares of cane land, to which he applied $6,000 per hectare, directly from -- 52 of 78 -- 53 the Davco decision. On the basis that the whole area of 344.5 hectares would have had the potential for an allocation of 2 megalitres per hectare, or 689 megalitres, less the 87 megalitres, would leave a net of 602 megalitres available. At 8 megalitres per hectare, that would irrigate an additional 75.12 hectares (actually 75.25 hectares). In applying a value to that land, Mr Eales reasoned that in addition to its potential from the ultimate success of the Davco project, that area had immediate potential for the proving up of existing underground supplies (as proved by Messrs Woolley and Merrick) and that DNR, or the Land Court on appeal, would be persuaded to increase the water allocation to 2 megalitres per hectare. In his opinion, the immediate potential for irrigation of that area was much higher than the potential found in the Davco case. Therefore, he applied $3,000 per hectare to the 75.12 ha with irrigation potential. He also reasoned that in the absence of the Burdekin Dam, any prudent purchaser would have been very confident that the NBWB area would have expanded to include all of Lot 15. Therefore, he felt that the potential was greater than in the Davco case, so he applied $2,500 per hectare to 224.58 hectares. To the 33.8 hectares of grazing land he applied $400 per hectare. The allowances for timber treatment were the same as adopted for Lot 44. Mr Moloney adopted a different approach. His valuation proceeded as follows: Land (including development) (a) Arable 11ha irrigable/arable forest soils partially developed by pushing, stacking and burning @ $5400/ha $ 59,400 58ha dry arable potential partially developed by pushing, stacking and burning @ $1,575/ha $ 91,350 14ha dry arable potential forest soils (with no development) @ $1175/ha $ 16,450 Total 83ha $ 167,200 (b) Non-arable 187ha forest soils suited to grazing only partially developed by pushing, stacking and burning @ $900/ha $ 168,300 74.5ha forest soils (with no development) @ $500/ha $ 37,250 Total 261.5ha $ 205,550 Total Land and Development 344.5ha $ 372,750 His reasoning for the valuation of the 11 hectares of irrigable arable land was the same as that of Mr Eales, except that he allowed $600 per hectare to bring that land to full development. For the 58 hectares of partially developed dry arable land with potential for irrigation, he adopted the finding in the Davco decision of $1700 per hectare which adjusted -- 53 of 78 -- 54 for state of development and size, came to $1,575 per hectare, while he adopted $1175 for the 187 hectares of partially developed grazing land and $500 per hectare for the 74.5 hectares of grazing land with no development. Lot 42 and Lot 43 Mr Eales considered that Lots 42 and 43 were better grazing country than Lot 44 (which he regarded as similar to the lands in the Davco case). They had been used for growing cattle, whereas Lot 44 had been used for breeding only. He realised that there was no potential in those lots for irrigation from the Davco project or from expansion of the NBWB area, but considered there was potential from increased allocations of underground water and from other possible schemes. His valuation proceeded as follows: 83.0 ha of irrigable/arable @ $8000/ha $ 664,000 581.0ha of arable with underground potential @ $4000/ha $2,324,000 1200.0ha of dry arable with potential @ $1650/ha $1,980,000 792.35ha of grazing @ $650/ha $ 515,027 Total $5,483,027 Less Timber Treatment 83.0ha desuckering, stickpicking knifing and laser-levelling @ $800/ha $ 66,400 112.0ha desuckering, stickpicking knifing and levelling @ $500/ha $ 56,000 1669.0ha clearing, stickpicking, ripping and levelling @ $700/ha $1,168,300 $1,290,700 Total Value of Land $4,192,327 Mr Eales reasoned that Lots 42 and 43 would have a water entitlement of 664 megalitres, which at 8 megalitres per hectare would irrigate 83 hectares of cane land. Having regard to the Davco determination of $6,000 per hectare for irrigable arable land, he adopted $8,000 per hectare to make allowance for what he considered to be the increase in values between the dates of resumption. He further reasoned that the value for dry arable land with potential for irrigation would increase by the same percentage and, as the Court had adopted $1700 per hectare, dry arable land with potential should be valued at $2,250 per hectare, if Lots 42 and 43 had potential similar to that of the lands in the Davco case. However, Mr Eales realised that there was no potential from the Davco scheme for lots 42 and 43. He contended that their potential -- 54 of 78 -- 55 arose from the possibility of development of the Majors Creek Dam and other possible schemes. There was also the immediate potential from the proving up of the existing underground supplies, as explained earlier. In his opinion, the immediate potential to irrigate up to an additional 581 hectares from that source was much greater than the potential found in the Davco case, so he applied $4,000 per hectare. However, he reasoned that the location of the lots would lessen that potential for dry arable lands which did not have that immediate underground potential. Therefore, he adopted $1650 per hectare for dry arable land with potential from other sources. He assessed the grazing values by comparison with his sales evidence at $650 per hectare. His allowances for timber treatment were the same as for Lot 44. Mr Moloney valued Lot 42 and Lot 43 as follows: Lot 42 - Land (valued as treated, fenced and watered). (a) Potential irrigable arable 26 ha potential irrigable arable forest soils @ $3700 per hectare including development (pulled with moderate to heavy regrowth) $ 96,200 16ha potential irrigable uncleared arable forest soils @ $3500 per hectare $ 56,000 (b) Dry arable lands: lands with some form of arability in rainfed conditions 483ha uncleared dry arable forest soils @ $550/ha $ 265,650 (c) Grazing:lands suited to grazing only in rainfed conditions 15ha of forest grazing soils @ $730/ha including development (cleared to grass) $ 10,950 15ha of forest grazing soils @ $530/ha including development (pulled with moderate to heavy regrowth) $ 7,950 773ha uncleared forest grazing soils @ $330/ha $ 255,090 Total Land & Development $ 691,840 Lot 43 - Land (valued as treated fenced and watered) (a) Potential irrigable arable 42ha potential irrigable arable forest soils @ $3700/ha including development (pulled with moderate to heavy regrowth) $ 155,400 (b) Dry arable lands: lands with some form of arability in rainfed conditions 109ha dry arable forest soils @ $750/ha including -- 55 of 78 -- 56 development (pulled with moderate to heavy regrowth) $ 81,750 521ha of uncleared dry arable forest soils @ $550/ha $ 286,550 c. Grazing: lands suited to grazing only in rainfed conditions 6ha forest grazing soils @ $730/ha including development (cleared to grass) $ 4,380 8ha forest grazing soils @ $530/ha including development (pulled with moderate to heavy regrowth) $ 4,240 642ha uncleared forest grazing @ $330/ha $ 211,860 Total Land & Development $ 744,180 Mr Moloney reasoned that the water entitlements of Lots 42 and 43 would irrigate 42 hectares on each of them, which in accordance with his apportionment of the determination in the Fabrellas case, he valued at $3,700 per hectare for the areas that were cleared, but with regrowth, and $3,500 per hectare for the uncleared area on Lot 42. The dry arable land was valued at $730 per hectare for the cleared areas and $530 per hectare for the uncleared areas. The grazing lands he valued at $330 per hectare if uncleared, $530 per hectare if cleared with regrowth, and $730 per hectare if cleared to grass. Lot 5 Mr Eales valued Lot 5 as follows: 55.7ha of irrigable/arable at $8,000/ha $ 445,600 475.7ha of arable with underground potential @ $4000/ha $1,902,800 727.81ha of dry arable with potential @ $1650/ha $1,200,886 522.621ha of grazing @ $700/ha $ 365,835 Total $3,915,121 Less Timber treatment 55.7ha desuckering, stickpicking, knifing and levelling @ $800/ha $ 44,560 19.3ha desuckering, stickpicking, knifing and levelling @ $500/ha $ 9,650 1184.2ha clearing, stickpicking, knifing and levelling @ $700/ha $ 828,940 $ 883,150 Total Value of Land $3,031,971 From the water entitlements for Lot 5 of 445.5 megalitres, Mr Eales concluded that 55.7ha could be irrigated. On the same reasoning that he adopted in respect of such land on Lots 42 and 43, he applied $8,000 per hectare. Similarly, as he did for the same categories of land on Lots 42 and 43, for the 475.7 hectares of dry arable with underground potential, he applied $4,000 per hectare and for the 727.81 hectares of dry arable with potential, he adopted $1650 per hectare. For the 522.621 hectares of grazing land, he adopted $700 per hectare, as Lot 5 was fattening country. -- 56 of 78 -- 57 His allowances for timber treatment were the same as those adopted for Lot 44, with slight variations. Mr Moloney valued Lot 5 as follows: Land (valued as treated fenced and watered) (a) Potential irrigable arable 56ha potential irrigable arable forest soils @ $3700/ha including development (pulled with moderate to heavy regrowth) $ 207,200 (b) Dry arable lands: lands with some form of arability in rainfed conditions 5ha of (cleared to grass) dry arable forest soils @950/ha $ 4,750 12ha dry arable forest soils @ $750/ha including development (pulled with moderate to heavy regrowth) $ 9,000 694ha of uncleared dry arable forest soils @ $550/ha $ 381,700 (c) Grazing: lands suited to grazing only in rainfed conditions 10ha of forest grazing soils @ $530/ha including development (pulled with moderate to heavy regrowth) $ 5,300 1005ha of uncleared forest grazing soils @ $330/ha $ 331,650 Total Land & Development $ 939,600 Essentially, Mr Moloney adopted the same reasoning in applying values to the various categories of land as he had for Lots 42 and 43, making allowances for differences in the state of development for similar land on Lot 5. He agreed with Mr Eales that the water entitlement for Lot 5 would irrigate 56 hectares, to which he applied $3,700 per hectare. The figures which he adopted for dry arable land and for grazing land were the same as for Lots 42 and 43, adjusted for the state of development. The Sales Evidence Irrigable/Arable Land The Davco decision determined a value of $6,000 per hectare for irrigable arable land. Both valuers adopted that rate per hectare for the irrigable arable land on Lots 44 and 15. However, they departed from that rate per hectare for the irrigable arable lands on Lots 42, 43 and 5. Mr Eales adopted $8,000 per hectare for what he contended was an increase in value between the dates of resumption of the Davco lands (effectively 5 May 1990) and the dates of -- 57 of 78 -- 58 resumption of Lots 42, 43 and 5 (18 December 1992 and 5 November 1993). Mr Moloney adopted only $3,000 to $3,700 per hectare, depending on the state of development. Mr Eales’ basis for the irrigable arable lands comprised a mixture of sales of irrigated farms inside the Water Board areas and outside those areas, plus sales of BRIA lands. His first schedule of cane farm sales contained the details of 13 sales of farms ranging in area between 35.21 hectares and 69.76 hectares, which sold between May 1992 and December 1993, which he analysed to show values ranging from $7,941 per hectare to $12,245 per hectare on what he termed “watered/cleared level to cultivation”. Each of those sales was supplied with water from the NBWB or the SBWB. His second schedule of sales contained the details of sales of 18 farms in the Mulgrave and Northcote areas, which sold between January 1988 and November 1991, which he analysed on a similar basis to show values ranging from $3,480 per hectare to $10,166 per hectare. It was the same schedule of sales which he relied on in the Davco case and the details of which were discussed in the Davco decision (particularly by the Land Appeal Court) in arriving at $6,000 per hectare for irrigable arable land. On the other hand, Mr Moloney relied principally upon Land Court determinations in previous Burdekin scheme resumptions, particularly that of Fabrellas. He had also relied on those Land Court determinations in the Davco case. For the reasons set out in the Davco decision, the Land Court preferred the sales evidence of Mr Eales, particularly of the combined sale, referred to as Sale No. 10/10A, from Haselton to Roncato, to Mr Moloney’s evidence of the value of irrigable arable land, determining the value of such land at $6,000 per hectare, watered and cleared level to cultivation. Mr Eales explained that he had included his first schedule of cane farm sales to demonstrate the increase in value of irrigable arable land disclosed by those sales, compared with the sales in his second schedule. In particular, he compared the sale from Haselton to Roncato (Sale 10/10A on Schedule 2) of 335.826 hectares in July 1990 for $3.1 million, which analysed to show $7,605.00 per hectare, with the sale from Watt to Davey (Sale 1 on Schedule 1) of 57.162 hectares in April 1993, for $700,000, which analysed to show $12,245 per hectare. Both sales were analysed as watered and cleared level to cultivation. He reasoned that as the Davco decision had determined the value of irrigable arable land at $6,000 per hectare as at May 1990, principally on the basis of Sale 10/10A, then Schedule 1 and particularly Sale 1 on that schedule, indicated an increase of 33% by late 1993. Mr Moloney accepted Mr Eales’ analyses of the sales in his second schedule, but he thought there were sales closer to Lots 42, 43 and 5, which were more relevant, as most of the -- 58 of 78 -- 59 18 sales were in the old Clare irrigation area and had been developed and farmed for many years. He did not accept that they were appropriate as a basis of valuation, a criticism he had also expressed in the Davco case. He disagreed with Mr Eales’ analyses of the 13 sales on Schedule 1, and although his analyses of Sales 2 to 13 were generally at lower rates per hectare than Mr Eales’ figures, overall the differences were not significant, as his analyses of those sales ranged from $6,890 to $9,889. However, he differed markedly in his analysis of Sale 1, Watt to Davey, which he analysed to show $9,796 per hectare. After making further investigations, Mr Eales conceded that he had erred in the analysis of that sale by underestimating the value of the structural improvements. His re-analysis showed $10,820 per hectare. However, he still maintained that the revised analysis supported his proposition that there had been an increase in value of 33% between the date of resumption of the lands in the Davco case and the dates of resumption of Lots 42, 43 and 5. Mr Moloney rejected that contention. In his opinion there had been no increase in value. He thought the conclusion drawn by Mr Eales was not correct. Because of the differences between the two sale properties relied on by Mr Eales, Mr Moloney felt that they were simply not comparable. While conceding that they both draw water from the river and have riverfront soils, he asserted that there the comparison ended, drawing attention to the differences in their situation, size and sale price. He felt that they were at different ends of the market spectrum. He questioned whether Sale 1 was supplied with water by the NBWB, or had a river pumping licence. I cannot accept that Mr Eales has demonstrated that there has been an increase of 33% in the value of irrigable arable lands between May 1990 and December 1993. Quite apart from any errors which he made in his analyses of the sales in his second schedule and the criticisms made by Mr Moloney, a comparison of his derived values from the sales on his first schedule with those derived from the sales on his second schedule, indicates that there were several sales on Schedule I which showed values between $8,000 and $10,000 per hectare, the upper range of the values derived from the sales on his second schedule. It is very difficult to prove an increase in values by comparing the values derived from sales of farms such as Sales 10/10A and Sale 1, which differ in so many respects. More convincing evidence would have to be provided, such as the sale and resale of the same property over the relevant period. Mr Eales had a second limb of reasoning for his contention that there had been an increase of 33% in the value of irrigable arable land. For this he relied on the increase in -- 59 of 78 -- 60 the WRC auction sales between 1990 and 1993, particularly the higher prices paid in late 1993. Both valuers agreed that there had been little or no increase in prices between Auction 1 in early 1988 to Auction 8 in late 1991, when a number of lots were passed in. More lots were passed in at Auction 9 in June 1992. Mr Moloney explained that they were passed in because of low returns following a cyclone and floods, at a time when there was a lack of both money and confidence in the BRIA farms. This was followed by a good harvest from BRIA lands in 1992. Delta farmers became interested when they realised that BRIA farms grew good cane and development costs were not as high as they had thought. That was followed by a ballot in November 1992, followed by higher prices achieved in Auctions 11, 12 and 13 in late 1993/early 1994. Mr Moloney felt that this increase in prices was assisted by the various incentives which were offered by the Department to purchasers of BRIA lands at those later auction sales, which he thought made a big difference to the prices achieved. For those reasons, he was of the opinion that the conclusion could not be drawn that the prices achieved at those auction sales supported an increase of 33% in the value of irrigable arable land between 1990 and 1993. I accept Mr Moloney’s explanation of the reasons for the increase in the auction prices. However, it must be remembered that the Davco decision found that the price of irrigable arable land was depressed by the number of BRIA auction blocks coming onto the market. That, combined with the financial incentives offered by the WRC in the latter part of that period, lead me to conclude that those auction sales do not support Mr Eales’ contention. Therefore, I find that there is no evidence to support any increase in value for the irrigable arable lands on Lots 42, 43 and 5, over the $6,000 per hectare found by the Land Court and affirmed by the Land Appeal Court in the Davco decision. However, Mr Moloney was of the opinion that a lower value should be applied. He applied values of $3,700 per hectare for irrigable arable lands with development and $3,500 per hectare for such land with no development. Those values were derived from his sales of irrigable arable lands and also from the determination of the Land Court in Fabrellas. Mr Moloney relied on eight sales of irrigable arable lands between September 1991 and June 1994, with areas ranging from 41.8 hectares to 213.9 hectares and which, when analysed by excluding the value of improvements and timber treatment, showed values ranging from $1,924 per hectare to $5,016 per hectare. In addition, as he did in the Davco case, Mr Moloney relied on his apportionment of the Land Court determination in Fabrellas, as explained in the Land Court Davco decision at page 75. The Land Court preferred to rely on recent sales evidence as a basis of valuation -- 60 of 78 -- 61 (page 92) and that approach was confirmed by the Land Appeal Court at page 15 of its judgment. Mr Moloney was of the opinion that the value for irrigable arable land found by the Davco decision should not be applied for such lands on Lots 42, 43 and 5, for several reasons: they were further removed from developed areas; they had different access; they had different levels of development (e.g. no irrigation bores); and they were in a different area. I cannot accept Mr Moloney’s proposition. Lots 42, 43 and 5 adjoin the Davco lands to the west, being separated only by Barratta Creek. The evidence indicates that the irrigable arable lands on those lots are at least equal in quality to that of the lands the subject of the Davco case, and adjustments can be made for different levels of development and other differences. The determination of the Land Appeal Court of the value of irrigable arable lands at $6,000 per hectare must be the starting point for the determination of the values of similar lands, unless the sales evidence indicates that it should be departed from. I have found that Mr Eales has not demonstrated that there was an increase in that rate per hectare so far as these three lots are concerned. It remains to consider whether the sales produced by Mr Moloney show that the rate per hectare should be lower than that found in the Davco case. Three of Mr Moloney’s sales (Sales 1, 2 and 3) are situated in the vicinity of the Fabrellas land, to the south of the three subject lots which are much closer to the Bruce Highway. The other five sales are similarly, or even better situated than the subject lands. There is evidence to the effect that at least three or four of Mr Moloney’s sales were of retention areas and would therefore be competing on a market which was depressed by BRIA auction sales. However, having regard to the position of all eight sales, they would all to some extent be competing with the auction sales being held at the relevant dates. That, combined with the fact that the sales from early 1993 (Sales 3 to 8) would not have been offered the financial incentives which were available to BRIA auction purchasers, could well have influenced the prices paid. The claimants also argue that, but for the Burdekin scheme, none of Mr Moloney’s sales would have been irrigated, as they are all supplied by BRIA channel water. In my opinion, that aspect alone renders all Mr Moloney’s sales inappropriate as a basis, because it is the scheme itself which gives the land its irrigable arable value. Whatever criticism can be levelled at Mr Eales’ sales upon which the Davco decision for irrigable arable land was based, they were irrigated farms prior to the introduction of the Burdekin scheme. -- 61 of 78 -- 62 Therefore, I find that the Davco determination of $6,000 per hectare for the value of irrigable arable land should apply also to Lots 42, 43 and 5, with any necessary adjustments for state of development or other differences. The Areas of Irrigable Arable Land and Land with that Potential There is no dispute in these cases as to the areas of land on each lot that could have been irrigated in accordance with their groundwater entitlements based on then existing WRC allocation policy. Those areas were determined on the basis that sugarcane requires irrigation water at the rate of 8 megalitres per hectare per annum. There is no dispute that those areas should be valued as irrigable arable land. In these cases I have found that during the period between April 1980 to 22 December 1990, the WRC allocation policy would have been changed if there had been no Burdekin scheme, and water entitlements of the subject lands would be 0.5 megalitres per hectare per annum. That finding of fact means that twice the area should be valued as irrigable arable land. Mr Eales thought that Mr Woolley and Mr Merrick had proved up groundwater resources sufficient to convince a prudent purchaser to believe that at some time in the future water entitlements would be at the rate of 2 megalitres per hectare per annum. He reasoned that because those entitlements would be granted in the future, a prudent purchaser would be prepared to pay only half the irrigable arable rate, or $3000 per hectare. As pointed out earlier, I think that the evidence indicates that it would be sound management practice to increase groundwater entitlements gradually, monitoring the effects of any increase for some time before further increases were made. I have also concluded that based on the evidence of the various experts, groundwater extraction at the rate of 2 megalitres per hectare could not be sustained, but extraction at the rate of 1 megalitre per hectare might well be, after a reasonable period of monitoring each progressive increase. Therefore, I do not accept Mr Eales approach. On the other hand, Mr Moloney did not accept that, in the absence of the Burdekin scheme, there would have been any increase in groundwater entitlements. As already discussed, I think that the evidence indicates otherwise. It was argued by the claimants that the reason for WRC officers refusing to consider any allocation in excess of 0.25 megalitres per hectare for the subject lands after April 1980, was related to the cost of resuming irrigable arable land. The claimants suggest that the reason that the Hoey land was not resumed was because of the expense of resuming land with a water entitlement of 6 megalitres per hectare per annum. -- 62 of 78 -- 63 While the evidence did not go so far as to warrant drawing that inference, it certainly can be said that once it had been decided to resume the Cox lands, it would have been irresponsible for the respondent to have granted any additional water allocation to those lands. However, the fact that he did not do so, seems to have influenced the thinking of at least some of the respondent’s witnesses. The Value of the Dry Arable Land with Irrigation Potential With the exception of the dry arable land on Lot 15, Mr Moloney did not accept that such land on the other four lots had any potential for irrigation. Accordingly, he valued the dry arable land on Lots 5, 42, 43 and 44 at values which reflected no potential for irrigation. On the other hand, Mr Eales valued the dry arable land on the various lots, depending on what he considered to be likelihood and immediacy of that potential:  On Lot 44 at $3000 for the 483.5 hectares with potential from additional groundwater allocations, and $1700 per hectare for the 713.93 hectares with potential from a combination of the ultimate success of the Davco project and from future expansion of the NBWB area;  On Lot 15 at $3000 for the 75.12 hectares with potential from additional groundwater allocations, and $2500 with potential from future expansion of the NBWB area;  On Lots 42 and 43 at $4000 for the 581 hectares with potential from additional groundwater allocations; and $1650 for the 1200 hectares with potential from “other schemes”.  On Lot 5 at $4000 for the 475.7 hectares with potential from additional groundwater allocations; and $1650 for the 727.81 hectares with potential from “other schemes”. Apart from the potential for future increase from groundwater sources to a total of 1 megalitre per hectare, and from the Davco project in the case or Lot 15, I have rejected the possibility of irrigation water being available to the subject lands from any other source. The other possible sources of water, apart from the Davco project and the NBWB, were the Burdekin Dam, as proposed by the 1952 Kemp Report, and the Majors Creek Dam, as proposed in the 1975 Caneland Expansion Study. While Mr Eales raised those proposals as examples of the various alternative water supply schemes that would have been further investigated if there had been no Burdekin scheme, I do not think that they could be regarded as likely to be implemented in the forseeable future. In my view, a hypothetical prudent purchaser would regard any such likelihood as too remote to pay any premium for dry arable land which is suitable for sugar cane. -- 63 of 78 -- 64 However, for the possibility of being granted further allocations up to a maximum of 1 megalitre per hectare, I think that a prudent purchaser would have paid something over and above the dry arable value. As in the Davco case, I do not think such a purchaser would pay a great deal more. Therefore, I propose to adopt the same value as found in the Davco case of $1700 per hectare for land in that category. While the reasons are different, I think the prospect of getting irrigation water in the future could be regarded as similar. Dry Arable/Grazing Sales Appended to Mr Eales’ reports were schedules of ten sales, which he referred to as “grazing sales”. However, they include lands which have the potential for cultivation as dry arable lands. The evidence shows that only three of those sales are in any way comparable to the subject lands. For various reasons, the other sales can be rejected: Sale 1 - An earlier sale of part of the land in Sale 4; Mr Eales conceded that it can be ignored; Sales 2 and 3 - Apart from other reasons, those sales which occurred in December 1984 and June 1986 are simply too old; Sales 5 and 6 - Those sales occurred in July and September 1993, they are in the Black River area north of Townsville, in a different market environment to the subject lands; Sale 7 - The sale of 108.6 hectares near the town of Brandon in July 1993; I accept that it is more indicative of the value of a grazing rural hobby farm than of the value of commercial grazing land; Sale 9 - The sale of 2,291 hectares of low-lying coastal forest tidal flats, with an extensive ocean frontage for $6,679,500; I accept the evidence that the property had potential for development quite different to that of the subject land and for that reason it is not comparable. That leaves Mr Eales’ Sales 4, 8 and 10. Sales 4 and 10 were also relied on by Mr Moloney and will be discussed later. Sale 8 is a property of 633.8 hectares, situated on the Bruce Highway near Giru, which sold for $540,000, or $852 per hectare, in May 1991. Mr Eales described the land as timbered gently undulating coastal forest grazing land. Since the sale, it has been selectively cleared and grassed with improved pastures, and other structural and fencing improvements effected. He regarded it as having limited potential for “dry arable rainfed cultivation”. It seems that he regarded the $852 per hectare as a fenced and watered value, but with no timber treatment. The purchaser used the property principally for grazing and fattening beef cattle. -- 64 of 78 -- 65 Mr Moloney did not rely on that sale, as he did not consider the property to be comparable to the subject land. He thought it was superior in a number of respects: it was very well situated, it had a greater potential for subdivision in the future, it had a better carrying capacity with the potential even greater, it was in a higher rainfall area, it had a higher component of dry arable land, and it could grow cane. However, despite Mr Moloney’s concerns, the fact remains that the sale is situated in the same general vicinity as Lots 42, 43 and 5, and cannot be ignored. Apart from the two sales that he had in common with Mr Eales, Mr Moloney relied on the sale of a property from CSIRO to TS and JS Griggs, comprising 15 lots with a total area of 1,178.533 hectares, in April 1995, for $480,000. It is situated about 44 kilometres south of Townsville, with three kilometres of unformed access from the Flinders Highway. Physical access is through a neighbouring property from the Giru-Woodstock Road. Mr Moloney analysed that sale to show $466,062 treated, fenced and watered, which he classified as follows:  dry arable land: 32 hectares cleared to cultivation @ $900/ha 146 hectares cleared to grass @ $650/ha 110 hectares pulled and burnt or poisoned @ $550/ha, and 132 hectares without timber treatment or regrown @ $500/ha.  grazing land: 778.5 hectares of coastal forest grazing @ $277/ha. Overall he concluded that the dry arable and grazing lands on Lots 42, 43 and 5 were “marginally superior” to those on the sale property, due to their marginally better situation and country. He felt that it was a fairly good comparison with those lands, but he conceded that there was a problem with its access. Mr Eales rejected that sale as a basis of valuation. He was of the opinion that the property was inferior to the dry arable and grazing lands on Lots 42, 43 and 5; quite apart from its access problem, it is situated in a different area, related more to the grazing areas of Thuringowa Shire than the coastal grazing locality of the subject lands. The two sales common to both valuers were the sale of a property known as “Dingo Park” and the sale of a property near Gumlu, about 40 kilometres south of Ayr (the Gumlu sale). “Dingo Park” has an area of 5.199.895 hectares, including 1241.124 hectares of Special Lease Purchase Freehold. It is situated about 60 kilometres south of Townsville, with -- 65 of 78 -- 66 access by 10 kilometres of formed gravel road from the bitumen sealed Woodstock-Giru Road. It sold in March 1992 for $1 million, which Mr Moloney adjusted by adding a further $147,342 for the “payout figure” of the leasehold land (SLPF). There is little between the two valuers in their analyses of the sale on a treated, fenced and watered basis. Mr Eales analysed it to $200 per hectare and Mr Moloney to $202.40 per hectare. However, Mr Moloney classified the land and attributed a value to each classification:  arable land: 60 hectares cleared by raking and burning @ $450/ha 45 hectares partially raked and burnt @ $375/ha 600 hectares pulled/parts tordoned @ $300/ha 428 hectares pulled only @ $280/ha  grazing land 355 hectares partially raked but not burnt @ $263/ha 400 hectares pulled/parts formerly tordoned @ $188/ha 2700 hectares pulled only @ $168/ha, and 612 hectares not cleared at $138/ha. Overall Mr Moloney regarded the dry arable and grazing lands on Lots 42, 43 and 5 as superior per hectare to those on the sale property, due mainly to their situation. Mr Eales did not classify the land, but described it as “semi and open forest country with creek frontages to Majors Creek”. He did not agree with Mr Moloney’s classifications or the values ascribed to them. “Dingo Park” is situated in the same area as Mr Moloney’s Sale No 2, and Mr Eales was of the opinion that it also was inferior to the grazing lands on Lots 42, 43 and 5, because it was in a different area and could not be regarded as coastal grazing. On the other hand, Mr Moloney did not think that there was any evidence that a premium was paid for coastal grazing lands over and above those situated further inland. He regarded the sale as a good comparison for dry arable and grazing lands. It was a well- developed, well-watered property, with basically the same carrying capacity as the subject lands and with potential for pasture improvement. The other sale relied on by both valuers was a property of 955.2 hectares situated just north of Gumlu. It was sold in 1993, in either March (Mr Moloney) or July (Mr Eales), for $460,000 and was analysed by Mr Eales to show $300 per hectare, partly treated, fenced and watered, and by Mr Moloney to show $288.72 per hectare, treated, fenced and watered. Mr -- 66 of 78 -- 67 Eales described it as open coastal forest country, with a small area of cultivation, while Mr Moloney classified it as follows:  dry arable: 28 hectares formerly cultivated forest @ $600/ha 56 hectares tordoned and then pushed @ $450/ha 70 hectares tordoned/rung @ $375/ha 346 hectares uncleared arable forest @ $350/ha  grazing 10 hectares tordoned, rung @ $240/ha 442 hectares uncleared forest @ $190/ha Overall, Mr Moloney regarded the dry arable and grazing lands on Lots 42, 43 and 5 as superior to those on the sale, because they were better situated; while the sale property was good grazing land, he admitted that its value was at the lower end of the scale. Mr Eales regarded it as substantially inferior to the subject lands. The Value of Dry Arable Land Mr Eales did not value any of the subject lands as dry arable land, because he felt that all the arable land had some potential for irrigation from some source. However, he did express the opinion that if the Court should reject the argument that the arable land should be valued without potential for irrigation, he would have valued the dry arable land on Lots 42 and 43 at $1550 per hectare cleared to cultivation and at $850 per hectare uncleared, the cost of clearing to cultivation being $700 per hectare. When asked his opinion of value of similar land cleared to cultivation on Lot 44, he said $1400 per hectare. However, when asked a similar question in respect of dry arable land, cleared to cultivation, without irrigation potential on Lot 5, he replied, “I haven’t really looked at that particularly, but $850 to $900 a hectare on that property is what I believe the sales, the grazing sales show me”. If that response was in respect of the question asked, then the values are totally inconsistent with the values he gave for similar land on Lots 42 and 43. There is no evidence that the dry arable lands on Lot 5 are in any way inferior to those on Lots 42 and 43. Such values are also inconsistent with the $700 per hectare which he applied to the uncleared grazing land on Lot 5. I have come to the conclusion that Mr Eales’ answer was in respect of the uncleared dry arable value, not the value cleared to cultivation. If the cost of clearing to cultivation of $700 per hectare is added to the values advanced by Mr Eales, the result is consistent with his opinion of the value of dry arable land, cleared to cultivation, on Lots 42 and 43. -- 67 of 78 -- 68 Mr Moloney adopted $600 per hectare for uncleared dry arable land on Lot 44 and $550 per hectare for such land on Lots 42, 43 and 5, probably because they are differently situated. If the cost of clearing of $700 per hectare is added, Mr Moloney’s values for dry arable land, cleared to cultivation, would be in the range of $1250 to $1300 per hectare. The sales do not assist in resolving the differences between the valuers in respect of the value of dry arable land without potential for irrigation. The Land Appeal Court in the Davco decision determined the value of dry arable land with Davco irrigation potential at $1700 per hectare. In so finding, the Land Appeal Court reasoned that in analysing the decision of the Land Court in Fabrellas, Mr Moloney apportioned $550 per hectare to uncleared dry arable land and $1241 per hectare to former cultivation (very similar to the figures above). After considering the other evidence concerning the sales of dry arable land, the Land Appeal Court concluded that the value of dry arable land without potential for irrigation from the Davco project would have been greater than the value of the Fabrellas land ($550 per hectare uncleared and $1241 per hectare cleared to cultivation), but something less than the value of the 1980 Cox sales ($2,150 per hectare to $2,500 per hectare uncleared). However, the Court made no finding as to the value of dry arable land without potential for irrigation. In the circumstances, I propose to adopt Mr Eales’ values of $1400 per hectare for cleared dry arable land without potential for irrigation on Lot 44 and $1550 per hectare for such land on Lots 42, 43 and 5. The evidence is to the effect that there is no such land on Lot 15, as all the potentially dry arable land is included in the land with irrigation potential. The Areas of Dry Arable Land I had some difficulty determining the area of dry arable land without irrigation potential on Lots 44, 42, 43 and 5. Mr McClurg set out the various areas of each lot which were suitable for different uses. In respect of “Rainfed Cropping” and “Furrow Irrigation of Sugarcane” his land suitability tables showed: Rainfed Cropping Sugarcane (Furrow) Lot 44 1235.7 hectares 1469.7 hectares Lot 42 524.6 hectares 961 hectares Lot 43 671.5 hectares 998 hectares -- 68 of 78 -- 69 Lot 5 767.4 hectares 1170.4 hectares Mr MacGregor did not determine a separate category for dry arable land. He concentrated on the land suitable for the furrow irrigation of sugar cane and the trickle irrigation of horticultural crops. He concluded that the same land could be used for either purpose. Mr Eales did not determine a separate area for dry arable land without potential for irrigation. In his opinion, all the land suitable for sugar cane had some such potential. However, it seems clear that when he gave his opinion of the value of dry arable land, he was referring to those areas which he valued as land suitable for growing sugar cane, with potential for irrigation. He admitted that he was not a soils expert and for the suitability of various soils, he had relied on the two experts, principally the report of Mr MacGregor, but he also had regard to Mr McClurg’s report. Mr Eales valued Lots 42 and 43 together, so the area of potential irrigable arable land on both lots amounts to 1781 hectares; and for Lot 44 for that classification valued 1247.43 hectares, while for Lot 5, he valued 1204 hectares. Those areas exceed the areas of “rainfed cropping” calculated by Mr McClurg. Mr Moloney adopted Mr McClurg’s areas for rainfed cropping. Reference to the soil suitability maps shows that to a large degree the areas suited to furrow irrigation of sugar cane and those suited to rainfed cropping are the same land. It would seem that suitability for dry land farming depends at least to some extent on soil moisture retention ability, but avoiding excessively wet areas. Barratta clays seem to be amongst the most suitable. However, the areas suited to rainfed cropping (dry arable) are, on each of the four lots, smaller than the areas suited to furrow irrigated sugar cane. From Mr McClurg’s evidence, the inference can be drawn that there are areas of land which are suited to growing irrigated sugar cane, which are not suited to rainfed cropping. Mr MacGregor did not address this issue. In the circumstances, I am not convinced that the total areas on those three lots which Mr Eales considers should be valued as dry arable land with potential for irrigation, should also be considered as suitable for dry farming. In the absence of any evidence to the contrary, I will adopt the areas calculated by Mr McClurg as suitable for rainfed cropping (dry arable): Lot 44 1235.7 hectares Lot 42 524.6 hectares Lot 43 671.5 hectares Lot 5 767.4 hectares -- 69 of 78 -- 70 Determination of Compensation Applying the findings I have made in respect of each of the subject lands, compensation is determined by arriving at the value of each lot as fully economically developed at the date of resumption, and then deducting the cost of achieving that state of development. In making these calculations, I will adopt the development costs used by Mr Eales. Lot 44 - 1,817.577 ha Value fully economically developed (treated, fenced and watered): 57 hectares irrigable arable land (from the WRC water allocation policy of 0.25 megalitres/ha) @ $6,000/ha $ 342,000 57 hectares irrigable arable land (because of the finding of an increase in water allocation by a further 0.25 megalitres per hectare by date of resumption) @ $6,000/ha $ 342,000 50 hectares dry arable land with potential for irrigation from the dam/drain @ $3,000/ha $ 150,000 114 hectares dry arable land with potential for increase in the future of water allocation policy by a further 0.5 megalitres per hectare @ $1700/ha $ 193,800 1072 hectares dry arable land without potential for irrigation @ $1400/ha $1,500,800 (Balance of the total of 1236 hectares dry arable land, less the land with irrigation potential, of 164 hectares) Grazing lands: 468 hectares grazing land similar to the lands the subject of the Davco decision @ $400 per hectare $ 187,200 Value fully economically developed (TFW) $2,715,800 Development required to bring Lot 44 to fully economically developed (TFW) At the date of resumption approximately 45 hectares had been cleared to cultivation, approximately 575 hectares had been cleared and burnt, but with light regrowth, while a further 20 hectares had been pushed, but with regrowth. An equipped irrigation bore was situated near the southern boundary with power connected and, presumably, a haul-out road constructed. Therefore, a further 69 hectares would need to be -- 70 of 78 -- 71 developed to the standard of laser levelled cultivation at $800 per hectare $ 55,200 That leaves 506 hectares, of the 575 hectares which had been cleared and burnt, to be developed to dry arable standard at a cost of $500/ha. $253,000 That would leave a further 730 hectares to be developed to dry arable standard at a cost of $700 per hectare. $511,000 The grazing area would require no timber treatment. No further allowance need be made as there was already an irrigation bore, power and a haul-out road. Total development required to bring Lot 44 to fully economically developed (treated, fenced and watered) $ 819,200 Therefore compensation payable for Lot 44 is assessed at $1,896,600 Lot 15 - 344.5 hectares Value fully economically developed (treated, fenced and watered): 11 hectares irrigable/arable land (in accordance with WRC water allocation policy) @ $6,000/ha $ 66,000 11 hectares irrigable arable land (because of the finding of an increase in water allocation by a further 0.25 megalitres per hectare by date of resumption) @ $6,000/ha $ 66,000 289 hectares of land with potential for increase in the future of water allocation policy of a further 0.5 megalitres per hectare (22 ha) and the balance (267ha) from the Davco scheme, @ $1700/ha $ 491,300 34 hectares grazing land (similar to Davco lands) @ $400/ha $ 13,600 Value fully economically developed (TFW) $ 636,900 Development required for full economic development (TFW): At the date of resumption approximately 256 hectares had been cleared, stick raked and burnt, with light regrowth. To bring 22 hectares to laser levelled cultivation would cost $800 per hectare. 22 hectares @ $800/ha = $ 17,600 -- 71 of 78 -- 72 That leaves 234 hectares of the 256 hectares of cleared land to be developed to cultivation, which would cost $500/ha. 234 hectares @ $500/ha $ 117,000 The remaining 55 hectares (of the 311 hectares with irrigation potential) would cost $700 per hectare to bring to dry arable standard. 55hectares @ $700/ha = $ 38,500 The total development required to bring Lot 15 to full economical development (TFW) $ 173,100 Therefore, compensation payable for Lot 15 is assessed at $ 463,800 Lot 42 - 1,328.178 hectares. Value fully economically developed (treated, fenced and watered): 42 hectares irrigable arable lands (in accordance with WRC water allocation policy) @ $6,000/ha $ 252,000 42 hectares irrigable arable land (because of the finding of an increase in water allocation of a further 0.25 megalitres per hectare by date of resumption) @ $6,000/ha $ 252,000 83 hectares dry arable land (with potential for increase in the future of a further 0.5 megalitres per ha) @ $1700/ha $ 141,100 442 hectares dry arable land, without potential for irrigation (balance of the 525 hectares of dry arable land less land with irrigation potential 83 hectares) @ $1,550/ha $ 685,000 719 hectares grazing land (superior to Davco lands and Lot 44) @ $500 /ha $ 359,500 Value fully economically developed (TFW) $1,563,600 Development required for full economical development (TFW): At the date of resumption about 41 hectares had been pulled, with moderate to heavy regrowth and a further 15 hectares had been cleared to grass. To bring the pulled area to laser levelled cultivation would cost $800 per hectare. 42 hectares (say) at $800 per hectare $33,600 To bring the remaining 15 hectares of cleared land to laser levelled cultivation would cost $500/ha. 15 hectares @ $500 per hectare $ 7,500 To bring another 27 hectares of uncleared land to laser levelled cultivation would cost -- 72 of 78 -- 73 $1000 per hectare. 27 hectares @ $1000/ha $ 27,000 To bring 525 hectares of uncleared dry arable land to cultivation would cost $700 per hectare. 525 hectares @ $700/ha $367,500 In addition, a bore must be sunk, power provided and a haul-out road constructed at a cost of at least $50,000. $ 50,000 Therefore, the total development cost required to bring Lot 42 to full economical development (TFW) $485,600 Therefore, compensation payable for Lot 42 is assessed at $1,078,000 Lot 43 - 1,328.178 hectares. Value fully economically developed (treated, fenced and watered): 42 hectares irrigable arable land (in accordance with WRC water allocation policy) @ $6,000 per hectare $ 252,000 42 hectares irrigable arable land (because of the finding of an increase in water allocation of a further 0.25 megalitres per hectare by date of resumption) @ $6,000 per hectare $ 252,000 83 hectares dry arable land (with potential for increase in the future of a further 0.5 megalitres per hectare) @ $1,700 per hectare $ 141,100 589 hectares dry arable land, without potential for irrigation (balance of the total area of dry arable land of 672 hectares less 83 hectares with irrigation potential) @ $1550 per hectare $ 912,950 572 hectares grazing (superior to Davco lands and Lot 44, but similar to Lot 42) @ $500 per hectare $ 286,000 Value fully economically developed (TFW) $1,718,050 Development required to bring Lot 43 to full economical development (TFW): At the date of resumption approximately 159 hectares had been pulled, with moderate to heavy regrowth, and 6 hectares cleared to grass. To bring 84 hectares of the pulled area to laser levelled cultivation would cost $800 per hectare. 84 hectares @ $800 per hectare $ 67,200 To bring the balance 81 hectares of cleared country to dry arable cultivation would cost $500 per hectare. -- 73 of 78 -- 74 81 hectares @ $500 per hectare $ 40,500 To bring 591 hectares of uncleared land to dry arable land cultivation would cost $700 per hectare. 591 hectares @ $700 per hectare $ 413,700 In addition a bore must be sunk, power provided and a haul-out road constructed at a cost of at least $ 50,000 Cost of total development required in Lot 43 to full economical development (TFW) $ 571,400 Therefore, compensation payable for Lot 43 is assessed at $1,146,650 Lot 5 - 1781.831 hectares. Value fully economically developed (treated, fenced and watered): 56 hectares irrigable arable land (in accordance with WRC water allocation policy) @ $6,000 per hectare $ 336,000 56 hectares irrigable arable land (because of the finding of an increase in water allocation of a further 0.25 megalitres per hectare by date of resumption) @ $6,000 per hectare $ 336,000 111 hectares dry arable land (with potential for increase in the future of a further 0.5 megalitres per hectare) @ $1700 per hectare $ 188,700 656 hectares dry arable land without potential for irrigation (balance of the total dry arable land of 767 hectares less 111 hectares with irrigation potential) @ $1550 per hectare $1,016,800 903 hectares grazing (superior to Lots 42 and 43) @ $600 per ha $ 541,800 Value fully economically developed (TFW) $2,419,300 Less development required to bring Lot 5 to full economical development (TFW): At the date of resumption about 78 hectares had been pulled, part stick-raked and burnt, but with some regrowth. It would cost $800 per hectare to bring that land to laser levelled cultivation. 78 hectares @ $800 per hectare $ 62,400 To bring the remaining 34ha of irrigable arable uncleared land to laser levelled cultivation would cost $1000 per hectare. 34 hectares @ $1000 per hectare $ 34,000 To bring the 767 hectares of dry arable land to cultivation would cost $700 per hectare $ 536,900 In addition a bore must be sunk, power provided and a haul-out road constructed at a cost of -- 74 of 78 -- 75 at least $50,000. $ 50,000 The total development required to bring Lot 5 to full economical development (TFW) $ 683,300 Therefore, compensation payable for Lot 5 is assessed at $1,736,000 Disturbance Valuation and Legal Fees During the hearing the parties agreed to the claims for legal fees as set out in the respective amended claims. These may be summarised as follows: Lot 44 - $1500, paid 19 January 1998. Lot 15 - $1000, not paid. Lots 42 & 43 - $1500, paid 19 January 1998. Lot 5 - $1000, paid 19 January 1998. However, the claims for valuation fees were not resolved. These claims were as follows: Lot 44 - $4514, paid as to $2257 on 19 August 1993. Lot 15 - $2500, not paid. Lots 42 & 43 - $9028, paid as to $2257 on 19 August 1993. Lot 5 - Nil, no valuation made. There was some confusion about the basis for those fees. When cross-examined about them, Mr Eales said the valuation fee for Lot 15 was in accordance with the standard fee recommended by the AIVLE, while the fees for the valuations of Lots 42, 43 and 44 were “twice the standard fee”. When re-examined, he explained that he made a single valuation report for Lots 42, 43 and 44, with fees split one-third to each. He then went on to say, “They are generally in line with the recommended scale of fees”. From that I infer that Mr Eales based his fee of $13,542 on the total of the valuations of those three lots then, for the purposes of these claims, apportioned one-third to each regardless of quantum. Since he valued Lot 42 and Lot 43 together, the apportionment for them was two-thirds. While the AIVLE recommended Scale of Fees makes provision for charging twice the standard fees for valuations for compulsory acquisition, a perusal of the Scale of Fees as at 1 January 1992 indicates that the fees charged by Mr Eales do not exceed the recommended standard fees. -- 75 of 78 -- 76 The respondent has not agreed to the claims for valuation fees, but has not argued the matter. It may be because the claims for compensation were substantially amended on the first day of hearing. However, it has been the practice of this Court to award reasonable valuation fees necessarily incurred in the lodgment of compensation claims. Mr Eales gave evidence that the valuations were made for the purpose of assisting the claimants in lodging their claims for compensation, except of course for Lot 5, in respect of which, for some reason not explained, no valuation was made. Mr Eales’ evidence was not challenged, nor any alternative fees suggested. The fact that the valuations were substantially amended and that the fees have not been paid in full, are matters for the claimants and Mr Eales, and not for this Court. The claimants are entitled to the award of reasonable valuation fees as claimed. Lot 44 $ 4,514 Lot 15 $ 2,500 Lot 42 $ 4,514 Lot 43 $ 4,514 Interest Under the provisions of section 28 of the Acquisition of Land Act 1967, the Court has a discretion to award interest on compensation determined. In these cases there was no argument or submissions concerning interest. Therefore, I propose to follow the usual practice of this Court and award interest on compensation determined in each case. Orders Lot 44 In this case I determine compensation payable by the respondent to the claimant under all heads of claim at One million, nine hundred and two thousand, six hundred and fourteen dollars ($1,902,614) (made up of loss of land, $1,896,600, legal fees $1500 and valuation fees $4514). The respondent is also ordered to pay to the claimants interest at the rate of 8.75 percent per annum on $1,896,600 from the date of resumption, 22 December 1990, up to and including the day immediately preceding the date upon which payment of compensation is made. -- 76 of 78 -- 77 The respondent is further ordered to pay to the claimants interest at the rate of 7.75 percent per annum on $2,257 from 19 August 1993 up to and including the day immediately preceding the date upon which payment of compensation is made. Lot 15 In this case I determine compensation payable by the respondent to the claimant under all heads of claim at Four hundred and sixty-seven thousand, three hundred dollars ($467,300)(made up of loss of land $463,800, plus legal fees $1000 plus valuation fees $2500). The respondent is also ordered to pay interest at the rate of 8.25 percent per annum on $463,800 from the date of resumption (7 September 1991) up to and including the day immediately preceding the date upon which payment of compensation is made. Lot 42 In this case I determine compensation payable by the respondent to the claimant under all heads of claim at One million, eighty-three thousand, two hundred and sixty-four dollars ($1,083,264) (made up of loss of land $1,078,000, legal fees $750 and valuation fees $4,514). The respondent is also ordered to pay the claimants interest at the rate of 8 percent per annum on $1,078,000 from the date of resumption (18 December 1992) up to and including the day immediately preceding the date upon which payment of compensation is made. The respondent is further ordered to pay to the claimants interest at the rate of 7.75 percent per annum on the amount of $1,128.50 from 19 August 1993, up to and including the day immediately preceding the date upon which payment of compensation is made. Lot 43 In this case I determine compensation payable by the respondent to the claimant under all heads of claim at One million, one hundred and fifty-one thousand, nine hundred and fourteen dollars ($1,151,914) (made up of loss of land $1,146,650, legal fees $750 and valuation fees $4,514). The respondent is also ordered to pay to the claimants interest at the rate of 8 percent per annum on $1,146,650, from the date of resumption (18 December 1992) up to and including the day immediately preceding the date upon which payment of compensation is made. The respondent is further ordered to pay to the claimants interest at the rate of 7.75 percent per annum on the amount of $1,128.50 from 19 August 1993, up to and including the day immediately preceding the date upon which payment of compensation is made. Lot 5 -- 77 of 78 -- 78 In this case I determine compensation payable by the respondent to the claimants under all heads of claim at One million, seven hundred and thirty-seven thousand dollars ($1,737,000)(made up of loss of land $1,736,000, and legal fees $1,000). The respondent is also ordered to pay to the claimant interest at the rate of 7.75 percent per annum on $1,736,000, from the date of resumption (5 November 1993) up to and including the day immediately preceding the date upon which payment of compensation is made. I give the parties liberty to apply on five days’ notice to the other in respect of any of the compensation and interest calculations. (JJ Trickett) President of the Land Court -- 78 of 78 --