Barns v Director-General, Department of Transport [1997] QLAC 125 (1996-1997) 16 QLCR 22

IN THE LAND APPEAL COURT Re: Appeal from Decision of the Land Court - Compensation payable consequent upon resumption of land for future road requirement purposes - Acquisition of Land Act 1967 and Transport Infrastructure (Roads) Act 1991 (A93-57). James Thomas Barns and Lynette Joy Barns Appellants v. Director-General, Department of Transport Respondent J U D G M E N T Delivered at Brisbane this fifteenth day of August 1997. This is an appeal against the decision of the Land Court determining the amount of compensation payable by the respondent to the appellants at $494,267. There were no applications by the parties to adduce further evidence before the Land Appeal Court, so this was an appeal on the record rather than a hearing de novo. The claim for compensation arose from the resumption of 15.1471 hectares from the appellants' property which, prior to the resumption, contained an area of about 170.02 hectares, resulting in an area of about 155 hectares after resumption. The land was taken on 18 September 1992, for "future road requirement" purposes associated with the Sunshine Motorway. However, we were informed that the road constructed on the land taken is not strictly part of the road designated as the Sunshine Motorway. The property is situated about 3.5 kms west of Peregian, with access before resumption by way of gravel roads. It was irregular, but roughly rectangular in shape and comprised mainly gently undulating sandy loam coastal forest country, with low ridges intersected by a series of shallow gullies and flats. The resumed land was a strip of about 70 metres in width, which traversed the property from its north-western corner, in a generally south-easterly direction to its south-eastern corner. The resumption created a north-eastern severance of 2. about 92.6 hectares, roughly triangular in shape, and a south-western severance of about 62.4 hectares, in the shape of two adjoining triangles, described by the Member below as "irregular sawtooth-shaped". [1997] QLAC 125 -- 1 of 15 -- 2 At the date of resumption, the property was zoned "Rural A" under the Shire of Maroochy Town Planning Scheme. The preferred dominant land use in the Strategic Plan for that Shire designated the land partly "Urban" and partly "Rural". The details of the claim for compensation and the valuations on behalf of the claimant and the respondent are set out in the judgment of the Land Court, together with the supporting town planning and engineering evidence upon which the valuers for the respective parties relied. It is sufficient for the present purposes to say that the appellants' valuer, Mr RR Henderson, arrived at an assessment of compensation payable of $4,293,000, based upon his opinion that the highest and best use of the land was for an integrated urban development. The valuer for the respondent, Mr AF Carrick, assessed compensation at $280,000, based on his opinion that the highest and best use of the land related to its subdivisional potential as zoned. The Approach of the Valuers. Both valuers adopted the "before" and "after" method of valuation, relying on hypothetical subdivision of the land. However, their valuation exercises were quite different, because of their different conclusions as to the highest and best use of the claimants' land. Mr Henderson proceeded to undertake extensive and detailed hypothetical subdivision exercises on the basis the land had potential for almost immediate urban development, while Mr Carrick was of the opinion that such an approach was fanciful and that the land had potential for Rural A subdivision only. In addition, Mr Henderson had investigated sales of in globo land and by direct comparison with those sales, he valued the land before resumption at $5,523,500, or $32,500 per hectare. However, he did not attempt a direct comparison valuation after resumption. It seems, therefore, that this approach was of little assistance to him. Mr Henderson's principal method of assessing compensation was the "before" and "after" valuations of the claimants' land by hypothetical subdivisions, which were based on proposals produced by Mr N Covey, a consultant civil engineer. The hypothetical subdivision before resumption was for a staged development comprising a total of 1,301 lots, principally residential, but including Residential B, Commercial and Light Industrial lots. The hypothetical subdivision after resumption was for a similar type of development but, because of severance by the resumption, development costs were more expensive. Mr Covey's plan provided for the linking of the two severances by a bridge over the road and development of a total of 1,106 lots. It is unnecessary to set out the details of Mr Henderson's exercise and a summary is sufficient for present purposes. Construction costs, excluding interest, -- 2 of 15 -- 3 amounted to $35,571,370, or $27,340 per lot before resumption, and $34,391,475, or $30,840 per lot after resumption, the higher costs of development per lot in the "after" situation being largely due to the construction of the bridge over the road. Based on sales of developed lots in estates closer to the coast, Mr Henderson assessed a gross realisation before resumption at $71,893,750 and at $59,503,500 after resumption. Using a "profit and risk" allowance of 40% in both the "before" and "after" exercises, he arrived at an in globo value of $6,350,000, or $37,350 per hectare before resumption and $2,057,000, or $13,280 per hectare after resumption. The difference between the "before" and "after" valuations of $4,293,000 was Mr Henderson's assessment of compensation payable. On the other hand, Mr Carrick felt that the land had very limited potential for rezoning or subdivision for residential purposes and that there was no added value for the partial Urban designation in the Strategic Plan. His opinions were supported by town planning evidence from Mr JC Franklin. Mr Carrick's primary basis valuation was a hypothetical subdivision of the claimants' land as a Rural A development of eight lots before resumption and of seven lots after resumption, based on designs produced by Mr Franklin. The town planning evidence was crucial to the decision of the Member below. Mr Henderson proceeded on the basis that there was no risk in obtaining approval for appropriate urban rezoning from the Maroochy Shire Council. Mr Carrick's valuation was based on his opinion that the land was not ready for subdivision and that such rezoning would be difficult, if not impossible, to obtain. After considering the town planning evidence, the learned Member below found that, while the prospects of a successful rezoning application before the resumption could not have been regarded as a mere formality and devoid of risk, a fair assessment of the market value of the land could not ignore its potentialities. He found that the prospects of urban rezoning of the north-eastern severance after resumption were even more positive, because of its enhanced access. The Member therefore rejected Mr Carrick's valuation, as it was based on the land's potential being limited to subdivision into Rural A zoned lots. He then turned his mind to Mr Henderson's hypothetical subdivision exercises and made a number of specific criticisms, which are summarised below: • The gross realisation was based on direct comparison with sales of lots in developed estates in the Tewantin/Noosaville and coastal dunal lands, which was an overly optimistic view. • Mr Henderson had been optimistic in his allowances for the advertising and legal components of the selling expenses. -- 3 of 15 -- 4 • As Mr Henderson accepted that there was minimal risk in obtaining the necessary rezoning, his allowance for "profit and risk" of 40% would probably be too low. • The sufficiency of the allowance for external roadworks was questionable, because of evidence that "costs of significance" should have been allowed for works at the Woodland Drive/David Low Way intersection. • It seemed "theoretical and impractical" to adopt an investment rate of interest when, in reality, a development of the scale proposed would be likely to be dependent upon borrowed funds. The Member concluded that most of the criteria fed into Mr Henderson's hypothetical subdivision exercises would result in an overly optimistic assessment of in globo value. Although Mr Henderson had made no difference in his profit and risk allowances in the "before" and "after" exercises, the Member found the risk of rezoning for the north-eastern severance had been lessened after resumption, because of the availability of a readily accessible major arterial road to that severance. However, he found that there was an access disability suffered by the south-western severance after resumption. Despite these findings, the Member did not attempt to recast Mr Henderson's hypothetical subdivision exercises. Instead he preferred to base his assessment on direct comparison with the transaction which became known as the "Cox sale". Although both valuers had some knowledge of the Cox sale, they were not aware of the details of the sale until Mr Covey, who had sighted and actually witnessed the contract, gave his evidence to the Court below. Those details were later confirmed by Mr Carrick who, during the course of that hearing, spoke to one of the directors of the purchasing company. We will return to the details of the Cox sale later in this judgment. The Member below found the Cox sale could not be ignored. Indeed, he based his assessment of compensation upon it. He found that the sale provided a basis for the valuation of the north-eastern severance after resumption and adopted $12,000 per hectare for that land. In relation to the south-western severance, the learned Member found that it had very limited potential for rezoning because of its shape and access difficulties. In addition, most of its area was designated "Rural" in the Strategic Plan. He found that it had a closer identification with the objectives of the "Rural" designation than with those of urban designation. It was severed from, and to the west of, lands which would be likely to be the subject of successful rezoning applications. Therefore, he adopted $3,000 per hectare for that severance, which, he said, was arrived at with the assistance of Mr Carrick's evidence of "Rural A" in globo values. -- 4 of 15 -- 5 The Member below adopted $10,500 per hectare as the in globo value of the claimants' land before resumption. He reasoned that it was "seen to fit comfortably" with the value of $12,000 per hectare which he had adopted for the north-eastern severance after resumption. His reasons were set out in his judgment, but he clearly made a direct comparison with the Cox sale. The Appellants' Argument before the Land Appeal Court Mr G W Diehm, Counsel for the appellants, argued the appeal on two bases: (a) The learned Member of the Land Court had misapplied the sales evidence; and (b) The learned Member had erred in rejecting Mr Henderson's hypothetical subdivision exercises. Direct Comparison with Sales The appellants argued that the primary difference between the parties was the potential of the claimants' land for residential subdivision. The Member below had determined that issue substantially in favour of the appellants. Therefore, it was argued, the Member's determination of compensation at $487,500 was well out of proportion to his finding. It was contended that Mr Henderson's evidence of in globo sales should not be ignored, unless there were actual sales which provided a better basis of valuation. If a valuer was unable to find directly comparable sales then he must make a judgment as to the extent of the differences. Here, the appellants contended, there were four sales with prices ranging from markedly higher to markedly lower than the value prescribed. Mr Gibson QC, Counsel for the respondent, countered that argument on the basis the Member had found that Mr Henderson had effectively put aside his opinion as to the value of the land before resumption on the basis of direct comparison with the sales he had considered. The evidence shows that the appellants conceded that Mr Henderson had some difficulty with the comparability of the sales, while Mr Carrick thought that there were no comparable in globo sales. The learned Member found that Mr Henderson's decision to put aside that method of valuation in favour of the hypothetical subdivision method was understandable, as the sales were of land with little comparability with the subject land. In the circumstances, we are not surprised that the Member made such a finding. It was one which was not only open to him, but one which was proper for him to make. -- 5 of 15 -- 6 The appellants' first submission therefore fails. The Hypothetical Subdivision Method The appellants' principal argument was that the Member was in error in rejecting the hypothetical subdivision method of valuation. They contend that even if there was comparable sales evidence, then the hypothetical subdivision method should be used as a check: Turner v. Minister for Public Instruction (1955-56) 95 CLR 245 at 268, per Dixon CJ. In the course of his argument, Mr Diehm invited a comparison between the assessment of Mr Henderson based on the difference between the "before" and "after" hypothetical subdivisional valuations of $4,293,000 and the result which would be obtained by deducting the determination of the Land Court from the "before" resumption valuation made by Mr Henderson, based on his so-called "direct" comparison with comparable sales. The similar result of $4,226,000 was said to be "remarkable", considering the different sources of the figures. However, as we have already rejected Mr Henderson's so-called "direct" comparison with sales, we need not take that matter further. The main thrust of the appellants' argument was in respect of the Member's criticisms of the elements of the hypothetical subdivision which resulted in his finding that they would be expected to result in an overly optimistic assessment of in globo value. In order to consider the appellants' argument, it is necessary to examine the Member's finding in respect of each of those elements. (a) Gross Realisation, Legal and Advertising Allowances and Profit and Risk. The Member accepted Mr Carrick's opinion that the gross realisation could have been in the range of 10% less than estimated by Mr Henderson. Mr Diehm submitted that even if that was correct, the allowance of 40% for profit and risk would take account of such variation and would also cover any underestimate of the allowances for legal and advertising expenses. In support of this argument, Mr Diehm relied upon a passage in the judgment of Dixon CJ in the Turner case at 264: " To no small extent the 'risk' is of the estimate of the net proceeds of sub- divisional sale proving too low. The reason may be found in the estimate of the prices for blocks being too high, the sale of the blocks being too slow, the estimated costs attending sub-division and sale proving too low or in any or all of such causes... " This submission seems to us to be refuted by the Member's finding that the -- 6 of 15 -- 7 allowance for profit and risk made by Mr Henderson was itself overly optimistic. This finding was made on the basis of Mr Henderson's assessment of the risk of rezoning on the claimants' land from "Rural A" to the appropriate urban zoning. Mr Henderson felt there was minimal risk and made no allowance for risk of rezoning in his profit and risk allowance. The Member found that if Mr Henderson ignored the existence of any risk, his allowance would probably be too low. The appellants did not accept that it was appropriate that any risk of not obtaining rezoning be taken into account in the allowance for profit and risk. They say it is something that should be taken into account later in the exercise, once the cost of development expenses had been deducted, as it was a matter relating to the land only and was not connected with the gross realisation or expenditure. Mr Gibson argued that the submission was erroneous as a matter of principle, as the profit and risk allowance really reflects the considerations which a prudent purchaser would take into account in determining the price which he would be willing to pay to purchase the property. The claimants' land required rezoning before development could commence. The valuers agreed that the land was not immediately ripe for subdivision, although they disagreed about the timing. Having regard to the evidence on this point, we agree with the learned Member that rezoning was attendant with some risk and that risk should be taken into account in determining the proper allowance for profit and risk. (b) Allowance for Cost of External Road Works The Member below questioned Mr Covey's allowance for external road works without making a specific finding in that regard. The appellant submitted that, to the extent that Mr Covey may have underprovided for such costs, his allowance for contingencies was sufficient. It is clear that the Member below had some doubt about the sufficiency of Mr Covey's figures, including his allowance for contingencies, or he would not have included that matter amongst his criticisms of the hypothetical subdivisional method. It is a further indication of his doubts about the accuracy and appropriateness of that method. We accept his criticism as being well founded. On the state of the evidence below, it is not possible to make a finding about the accuracy of the allowance for cost of external roadworks. It is sufficient that the Member below was not satisfied and expressed his doubts about that element of the exercise. During the appeal there was some unresolved debate about the legality of the Council imposing such a requirement in respect of an intersection situated so far from -- 7 of 15 -- 8 the subject land. It is therefore sufficient to say that the appellants have not satisfied us that the Member's doubts in this regard were not justified. (c) Allowance for Interest The appellants argued that the Member erred in finding that the interest rate should be at the borrowing rate rather than the investment rate. In support of their argument, they cited earlier decisions of the Land Court: JR Constructions Pty Ltd v. Brisbane City Council (1977) 4 QLCR 254 at 262, and Consolidated Development Pty Ltd v. The Crown (1968) 35 CLLR 109 at 124/125. It is clear that these cases were decided on the assumption that the hypothetical purchaser had the ability to finance the project himself. Certainly the explanation given by the learned Member of the Court, Mr Dodds, in the Consolidated Development case at 126, reflects the accepted "text book" approach to "lost opportunity" cost of investment monies. However, Mr Henderson's evidence was to the effect that the development costs would exceed $35 million in the present case, which would almost certainly be funded by borrowed money. Even Mr Henderson was prepared to concede that the borrowing rate would be more appropriate than the investment rate for expenditure on development of such a scale. He thought that in 1992 the borrowing rate would have been 12%. Mr Carrick was more tentative, but thought that on loans of over $1 million, the interest rate might have been of the order of 13.5%. The appellants submitted that an adverse finding as to the rate of interest would not render the hypothetical subdivision method unusable. It was simply a matter of adjusting Mr Henderson's analysis. However, interest in this case was not simply limited to a development and selling period of two or three years. Mr Henderson estimated that a period of some 15 or more years would elapse before all allotments were sold. His calculation of interest purports to take account of the fact that in reality development on such a scale would be staged, with income from the early stages financing later stages. On the other hand, Mr Carrick disagreed that there was any prospect of short-term development of the claimants' land for residential purposes. Messrs Rost & Collins, the authors of "Land Valuation and Compensation in Australia", Third Edition, 1984, make the following observation in respect of hypothetical subdivision exercises: " When circumstances favour the use of loan funds for development at highly geared ratios of loan funds to cash equity, an estimate of in globo value based on the hypothetical subdivision of a subject area may be unreliable. " -- 8 of 15 -- 9 We can but agree. Findings in respect of the Hypothetical Subdivision Exercise We do not accept the appellants' submission that this Court should make any adjustments that are necessary for Mr Henderson's exercise. From our earlier comments it should be clear that we question the use of the hypothetical subdivision method in the present circumstances. Doubtless the method has its place in appropriate cases where the land is ripe for subdivision and where the various components can be better proved. But here, where rezoning would have been necessary, development would have been on a scale and over such a period as to be almost unprecedented on the Sunshine Coast, and where profit and risk depends solely on a valuer's opinion rather than being market related, we can have no confidence in the method even as a check. It would be, as Mr Gibson put it, "merely tinkering with the figures". We therefore reject the appellants' argument in respect of the hypothetical subdivision method of valuation. The Cox Sale As stated earlier in this judgment, the Member below relied for his assessment of the "before" and "after" valuations of the claimants' land on direct comparison with the Cox sale. Before us, the appellants submitted that the Member erred in treating the Cox sale as evidence of value for both "before" and "after" valuations, as the witnesses had agreed that the sale was evidence of the "after" resumption value only. In doing so, it was contended, the Member below had failed to place any weight on the other methods of valuation open to him (the hypothetical subdivision method) and failed to give proper regard to the extent to which the land had become disadvantaged by the resumption, including the access difficulties suffered by the south-western severance. The evidence in relation to the Cox sale in the Court below was somewhat unusual. Neither party tendered the contract of sale and the evidence in relation to the whole transaction is the oral evidence of Mr Covey and Mr Carrick. What evidence there is indicates that the Cox land of about 340 hectares and situated immediately to the south-east of the claimants' land, was the subject of a development proposal report by Antony Cashmore and Associates Pty Ltd at some time between late 1989 and early 1992 (Exhibit 21). The proposal was for the development of the land as a golf course estate and it mentioned that the Sunshine Motorway was then under construction. Part of the northern area of the Cox land was resumed and the Motorway is immediately to -- 9 of 15 -- 10 the north of the remaining land, which at some time was subdivided into Lots 1, 2 and 3, with a total area of about 320 hectares (Exhibit 44). On 17 September 1992, it seems that the land was the subject of a contract and options agreement between members of the Cox family and Edgeworth Bay Pty Ltd. However, as virtually no documentary evidence of the transaction was placed before the Land Court, it is not possible to verify the oral testimony. However, that testimony was not challenged. Both Mr Henderson and Mr Carrick knew of the sale. However, apart from mentioning it, neither of them relied upon it in their formal valuation reports (Exhibit 8 and Exhibit 15). Mr Henderson dismissed it as being not comparable, while Mr Carrick felt that while the sale was adjacent to, and had the same zoning and strategic designation as, the claimants' land, it could not be used as evidence because the sale was conditional upon rezoning to "Residential A". He further commented that "It is at least an after-resumption sale that demonstrates the enhancement caused by the Sunshine Motorway". Neither of the valuers had detailed knowledge of the circumstances of the Cox sale when they prepared their reports. However, Mr Covey, who had actually sighted and witnessed the contract, was able to give evidence about the transaction. Because of the importance of the sale, it is necessary to examine Mr Covey's evidence in some detail. Mr Covey's Evidence of the Cox Sale After explaining that there had for some time been a proposal to develop the Cox land, Mr Covey was asked about the sale of Lot 1 for $2,067,000. He explained that the purchaser had a long-standing relationship with the Cox family. Before purchase, there had been various discussions and agreements, which were, as he put it "... for the purposes of easing up-front costs, easing the accessibility from the purchasers' point of view to the site in the provision of services, ... ". Mr Covey went on to say that the site was subdivided into three rural parcels, with access limitation strips around all sections in order to secure appropriate development in line with the discussions, or the preferred manner of development of the owner. The original contract was signed on 17 September 1992, in respect of Lot 1 for $2,067,000. A non-refundable sum of $90,000 was payable before signing the contract, a further $200,000 to be paid on 28 September 1992, $560,000 on 30 November 1992 (or seven days after the issue of separate title for that parcel) and the balance of $1,217,000 to be paid by three-monthly payments of $12,000 each and with a further -- 10 of 15 -- 11 payment or $1,017,000 forty-eight (48) months later. Mr Covey explained that a proposal had been drawn up by consultants some years earlier for a lake development and golf course, and the agreement, which included the contract and the further options, had been agreed to and assessed on the basis of a favourable and long-standing relationship between the two parties. The contract for Lot 1 included four options for the purchase of the other land. Option "A" was in respect of the purchase of Lot 2 of 48.17 hectares for $2 million, exercisable on 16 September 1996, or four years after the date of the signing of the contract. A sum of $200,000 was to be payable on that date, with the balance $1,800,000 payable on 15 October 1996. Option "B" was in respect of the purchase of Lots 2 and 3, with a total of 95.696 hectares, for $3 million, also exercisable on 16 September 1996. A sum of $300,000 was to be payable on that day, and the balance $2,700,000 payable on 15 October 1996. Option "C" was also in respect of the purchase of Lots 2 and 3, for $4 million, also exercisable on 16 September 1996, with $100,000 payable on that day, and the balance $3,900,000 payable on 16 September 1999. Option "D" was for the purchase of Lot 3 alone for $2 million, once again exercisable on 16 September 1996, with a sum of $200,000 payable on that day and the balance $1,800,000 payable on 16 October 1999. Mr Covey went on to say that all options were conditional upon the purchase of Lot 1, together with the appropriate development of that lot. Based on the preliminary reports of the development consultant, the total area of 320 hectares would yield approximately 1600 lots. It was Mr Covey's understanding that the funding, or much of the funding, for the purchase would be by means of vendor finance. Mr Covey explained that the option agreement had been signed, but only the contract for purchase of Lot 1 had gone ahead on 17 September 1992. At the time of giving his evidence, the options had not been exercised, but none was exercisable until 16 September 1996. Mr Covey thought that apart from the low-lying areas of Lot 1, 60 to 70 hectares of which would be developed into a lake and golf course, the remaining developable area of that lot would yield 450 to 500 lots. The development of the lake system and golf course, would make it a high quality, rather than a middle of the range development. Mr Henderson agreed. He considered the Cox land to be different to the claimants' land, as it had low-lying areas which were to be developed into lakes and golf course. He thought that once the development was completed, the allotments would be -- 11 of 15 -- 12 Contract and Option "A" (Lots 1 and 2) 210.27 ha $ 2,970,570 $14,134 per ha Contract and Option "B" (Lots 1,2&3) 305.966 ha $ 3,627,051 $11,854 per ha Contract and Option "C" (Lots 1,2&3) 305.966 ha $ 3,637,188 $11,888 per ha Contract and Option "D" (Lots 1 & 3) 257.796 ha $ 2,616,383 $10,149 per ha much higher priced than those from the claimants' land, $70,000 to $75,000, compared with about $53,600. Analysis of the Cox Sale by Mr Carrick After Mr Covey had given his evidence concerning the Cox sale, Mr Carrick contacted Mr Peter Smith, a financial director of the purchasing company, Edgeworthy Bay Pty Ltd. Mr Smith confirmed the details given by Mr Covey. Mr Carrick prepared an analysis of each part of the transaction, adopting a discount factor of ten percent compound interest, because of the vendor finance and what he described as its "fairly generous terms". Mr Carrick calculated the present value at the contract date for Lot 1 (area 162.1 hectares after resumption) at $1,627,737, or $10,041 per hectare. He also calculated the present value for each of the options combined with the original contract for Lot 1, the results of which were as follows: From his discussions with Mr Smith, Mr Carrick had concluded that the Sunshine Motorway was a major influence in the purchase of the property. Mr Smith had told him he would not have purchased the property without it. Mr Carrick was of the opinion that the Cox property had been enhanced in value by the presence of the Motorway. Mr Carrick admitted that after being informed of the details of the Cox sale, he had changed his opinion of its usefulness as a basis for the valuation of the claimants' land. While he said that he found the sale difficult, he felt it was the most relevant evidence. It was almost adjacent to the claimants' land and the date of sale was close to the date of resumption. In his opinion it could not be ignored. As he put it, "... it's the light at the end of the tunnel, so it's there and it has to be used ... " However, because of the options, Mr Carrick found the sale difficult to apply. He came to the conclusion that the parties did not appear to have made any variation in the rates per hectare for the 170 hectares of Lot 1, or the 320 hectares for the three lots. He felt that the rate of $12,000 per hectare would sit comfortably with those figures. Having arrived at that conclusion, Mr Carrick proceeded to compare the Cox land with the claimants' land. He reasoned that, apart from being enhanced by the -- 12 of 15 -- 13 Sunshine Motorway, the Cox land was closer to the services at Coolum, the sale was conditional on the land being rezoned to Residential A and Mr Smith had told him that he had engineers' reports which suggested the lot yield could be increased to 2,100. Those attributes caused Mr Carrick to conclude that the Cox land was superior to the claimants' land. He therefore altered his opinion of the "before" to $6,000 per hectare and the "after" value to $4,000 per hectare, based on direct comparison with the Cox sale. The result was an alteration to his assessment of compensation to $380,000. The Cox Sale as Evidence of Value Mr Carrick's analysis of the Cox sale was not challenged in the Court below. It was relied on by the learned Member, although he did not accept Mr Carrick's comparisons with the subject land, either before or after resumption. Somewhat surprisingly, the appellants did not challenge the validity of the sale as a basis of valuation, but rather the Member's finding as to its comparability in both the "before" and "after" valuations. Although both Counsel were prepared to accept the sale as evidence, we had some concerns as to whether the Cox sale, with its particular terms, conditions and options, was a transaction which could be regarded as providing any evidence of value. Even if the contract for the sale of Lot 1 could be accepted as evidence of value, we had some doubt as to what weight could be placed upon it because of the four options, none of which, as far as we knew, had been exercised at the date of hearing. Indeed, the time for exercising any of those options had not run its course. Options to purchase do not have the same evidentiary value as completed sales and have long been regarded as little better than offers: Stanfield v. Commissioner of Main Roads (1968) 35 C.L.L.R. 192 at 200/201. The High Court rejected offers as evidence of value in McDonald v. Deputy Federal Commissioner of Land Tax (1915) 20 C.L.R. 231. In delivering the judgment of the Court, Isaacs J. said at 239-40: " When the matter has reached the point of a concluded contract, there has been a definite concrete fact established, which not only evidences value, but to some extent helps to create or modify it. Where an owner has actually parted with his land for a fixed sum and a buyer has parted with his money for the land, a clear event has arisen, which, based on the ordinary instincts and impulses of human nature, indicates a consensus of opinion between two adverse parties in the community respecting the -- 13 of 15 -- 14 value of similar lands... But if the negotiations do not end in a concluded bargain, the field is at once open to a multitude of other considerations before the same point of opinion is reached. Excursions into the realm of collateral circumstances would be endless. They would so add to the cost, delay and uncertainty of litigation as on the whole to render a great disservice to the cause of justice. The Court might have to inquire whether the other or the other party really terminated the negotiations, and, if so, for what reason... Such inquiries would render litigation intolerable, and defeat the purpose for which they were permitted. " The matter was recently considered by Wilcox J. of the Federal Court in Goold v. Commonwealth of Australia (1993) 79 LGERA 407. At pp. 414-416, His Honour examined the cases dealing with the admissibility of offer evidence, before concluding at p.417: " It is true that, in McDonald, Isaacs J. went beyond the matter requiring the Court's determination. Although they were obiter dicta, his comments about offers over other land must be accorded respect. But, in considering them, it must be remembered that his Honour was discussing the use of offer evidence as direct evidence of value, not the use of offer evidence as an indication of the existence of a person willing to pay a higher price than market price. Bearing these matters in mind, it seems to me that, despite the absoluteness of some of Isaacs J's language, he should not be understood to have intended to exclude all offer evidence in all cases. " In the present circumstances, the transactions in respect of the Cox land comprise a contract of sale for Lot 1, together with four options for the future purchase of one or both of the other two lots. The parties in the present case agreed that the sale does provide evidence of value, but disagreed about its comparability. In those circumstances, we are prepared to accept the transaction as providing evidence of the value of the claimants' land. There was no challenge to Mr Carrick's reasoning in reducing the contract and options to present value as at the date of sale of Lot 1. Nor was there disagreement that the sale and options as a whole would reflect approximately $12,000 per hectare for the Cox land of about 320 hectares. While not endorsing the method by which Mr Carrick reduced the sale and options to present value terms, in the absence of evidence to the contrary, we are prepared to accept that analysis as evidence of $12,000 per hectare for the Cox land at 17 September 1992, the date of the contract of the sale of Lot 1. The Comparability of the Cox Sale We now turn to the matter of comparability. The appellants argued that the -- 14 of 15 -- 15 Member below misapplied the sale. While they conceded that the sale can be used, with the appropriate adjustments, they contended that the sale should be secondary to their primary basis for the valuation, the hypothetical subdivision exercises. For reasons given earlier, we do not accept that the hypothetical subdivision method is appropriate in the present case. Nor do we accept the appellants' further contention that the sale and the subject land should be compared on a value per potential lot basis. For such a comparison to be valid, the appellants would have to compare the 1600 potential lots from the Cox land with the 1300 potential lots from the claimants' land. Instead, they attempted to compare the per lot values of the 450 to 500 potential lots from Lot 1 of the Cox land. We prefer the method adopted by the Member below, comparing the sale and the subject land on a per hectare basis. It is common ground that the Cox sale is an "after" resumption sale. Having arrived at an appropriate rate per hectare in the "after" situation, the Member below had to compare it with the claimants' land in the "before" resumption situation. He reasoned that before the resumption, before the Cox land was enhanced by the Motorway, the claimants' land would have been considerably superior to it. However, that had to be offset by the unfavourable zoning. In the circumstances, we can find no fault with that reasoning. After resumption, there is no doubt that the Cox land is superior to the subject land. It did not have a major road cutting diagonally through it, it was closer to the services at Coolum, it was sold subject to rezoning, it did not have part of its area severed, and no part of its area was designated "Rural" by the Strategic Plan. We agree with the reasoning of the Member below in his assessment of the "after" valuation. The appellants have not therefore persuaded us that the learned Member was in error. Accordingly, the appeal must fail. Judge of the Supreme Court President of the Land Court Judge of District Courts and Member of the Land Court -- 15 of 15 --