High Court of Australia Jacobs J Albany v The Commonwealth Judgment reserved 9 December 1976 Jacobs J. On 15 June 1973 the Commonwealth acquired, pursuant to the Lands Acquisition Act 1955-1966 Cth an area of 32 square miles situated immediately to the east of the lands comprising Darwin and its environs which had been acquired by the Commonwealth under the Darwin Lands Acquisition Act 1945 Cth. The first-named plaintiff, whom for convenience I shall hereafter generally call "the plaintiff", was at the date of the 1973 acquisition the owner in fee simple of a substantial area of land in the 32 square miles then acquired, and in the present action claims compensation for these lands. The other plaintiffs were purchasers of lots in portion of the lands owned by the plaintiff, namely, section 111 in the Hundred of Bagot, and likewise claim compensation in respect of their respective interests. The original town of Darwin is situated upon the southwestern tip of a peninsula in Beagle Gulf which is bounded by Hope Inlet on the north and East Arm and Elizabeth River on the south. The peninsula is approximately 15 miles from east to west and 10 miles from north to south. The lands acquired by the Commonwealth in 1945 were the lands extending from the original site of Darwin to a north-south line approximately 9 miles to the east (the 1945 Darwin acquisition boundary). The 1973 acquisition of 32 square miles was immediately to the east of the 1945 Darwin acquisition boundary in or towards the centre of the peninsula. It would appear that the lands to the north and south of the acquired area were existing Crown lands. The highest part of the peninsula is little more than 150 feet above sea level. Around the peninsula, particularly on the north and south, there are extensive swamp areas. The peninsula is divided along its length by the old North Australian railway and the Stuart Highway. In the centre of the peninsula towards the western end and immediately north of the Stuart Highway is the airport with its associated civil and military installations. The position of the airport and of its associated installations is definitive of the manner in which the city has been extended within the 1945 acquisition boundaries and in which, within those boundaries and beyond, it can extend in the future. Once the town began to extend beyond the southwestern tip of the peninsula the first suburbs were situated on each side of the railway and the highway adjacent to the early development. Then development extended further north between the western coast of the peninsula and the airport boundary through Ludmilla and Bagot. As the population grew the suburbs which are known as the northern suburbs have gradually been developed north of the airport towards Lee Point which is situated at the northwestern tip of the peninsula. Then, more recently, as the suburbs to the north have begun to be fully developed, further developments, still north of the airport, but further to the inland of the peninsula, have developed or are now in course of development. These are the suburbs of Wulagi, Anula, Malak, and Karama. Further development of the suburbs to the north is precluded at least for the present by Air Force and Civil Aviation installations south from Lee Point and to the east of these installations but still within the 1945 acquisition area is the very large Leanyer Swamp. To the south of the airport and of Stuart Highway is an industrial area, and, in addition, there are substantial defence installations. To the east of the airport, in an area largely affected as far as the 1945 acquisition boundary by aircraft noise, there are elevated swamp areas, a characteristic of the peninsula, and various nature reserves — Holmes Jungle and Thorak Reserve — and further defence and aviation installations. The result is that in the very large area within the 1945 acquisition boundary only a comparatively small area has been able to be developed for residential purposes and, so long as the airport remains in its present situation, and the defence forces establishments likewise remain, there is comparatively little area within the 1945 acquisition boundary which is still available for residential development. The purpose of the acquisition of the 32 square miles by proclamation in the Gazette of 15 June 1973 was expressed to be "the planned development and control of the City of Darwin and its adjacent areas". The claim of the plaintiff is that the lands compulsorily acquired from him immediately to the east of the 1945 acquisition boundary had substantially as their highest and best use urban and residential development. I shall now briefly describe the locality and nature of these lands. The land of the plaintiff is in two areas, both contiguous with and extending along the western boundary of the 32 square miles area from the northwest corner thereof to the southwest corner thereof but separated into the two areas — the northern area and the southern area — by what has been described as the Churcher estate subdivision and one further small portion of the boundary at section 72. At the northwestern corner is section 111. This section had been subdivided by the plaintiff into 20-acre blocks and each of those lots had been sold on terms contracts. The purchasers of lots 3 and 4, 9, 10 and 12 are the other plaintiffs in this action, and it will be convenient to defer further consideration of section 111 at this stage. Leaving aside section 111, the plaintiff's northern land consists of sections 106, 101 and 94, all contiguous with the western boundary of the 32 square mile area, sections 102, 105 and 126 which may be conveniently described as "the quarry lands", and section 127 which lies to the east of the quarry lands. The northern area contains 1612 acres. Sections 106, 101 and 94 — 800 acres — are fairly level, elevated land, with the exception of the southwestern corner of section 94, which is swampy as the result of the intrusion into that corner of Cemetery Plains Lagoon. The western half of section 105 and the whole of section 102 are likewise elevated and fairly level, but the eastern half of section 105 and much of section 126 and section 127 are affected by the intrusion of Milner's Swamp, a swamp which extends substantially to the north. The northern area which I have been describing is 1.5 miles and more north of the Stuart Highway. Section 106 has been cleared, but except for that and except for the quarrying operations the land in the northern area is unimproved. The ordinary means of access to the land is by way of Thorak Road which leads off the Stuart Highway about 7 miles from Darwin as the crow flies and about 10 miles by road, and then along the southern boundary of section 107 to the southwestern boundary of section 106. From this point there is a good road to Shoal Bay naval communication base to the north, and a good road along the southern boundary of section 106 to the quarry area on sections 102 and 105. The latter is a private road, but it would appear that, pursuant to the Control of Roads Ordinance 1953-1959 NT, the road to Shoal Bay, though described as a navy road, is a public road. In any event it can, in my opinion, be taken as certain that it would become a public road at least as far as the northwestern corner of section 111. There is also rough access to the south of the northern area by Yarrawonga Road which leads off the Stuart Highway approximately 13 miles by road from Darwin to the north along a dedicated road which passes to the east of the Churcher estate subdivision and up to the southeast corner of section 94. This access is at present not practicable during the wet season. I should, at this stage, mention that the weather pattern in the Darwin area is one of virtually complete dryness between May and October (the dry) and of heavy monsoonal rain conditions between October and April (the wet). The rainfall over the latter period is about 60 inches. The period of heaviest rainfall is between December and February, and there can be very heavy monsoonal deluges. The southern area of the plaintiff's land contains about 2,896 acres. It is bisected in its northern part by the Stuart Highway. To the north of the Stuart Highway are sections 76 and 77 and most of section 73. Along the northern border of sections 76 and 77 facing Wallaby Holtz Road there had prior to the acquisition been subdivision and disposition. On section 77 is what has been described as the "foreman's cottage". This was owned by the plaintiff at the time of the acquisition, but the compensation in respect thereof was agreed between him and the Commonwealth prior to the commencement of the present proceedings. Immediately south of the Stuart Highway are section 72 and the balance of section 73. Part of section 72 was owned by the plaintiff at the time of the acquisition. On this part of section 72 there was at the time of the acquisition what has been described as the Albany house. This house and its land of 5 acres is by agreement reached during the course of the hearing to be valued at $187,500. Apart from the Albany house and land, the balance of the southern area contained approximately 2,890 acres. Sections 76 and 77 are elevated land, close to the highway and the old railway, and to Wallaby Holtz Road. The part of section 73 which is north of the highway is affected by a perched swamp. Such a swamp is one which exists on elevated ground and appears to be caused by the lack of a porous substructure and of any means whereby collected waters can run off to sea level. South of the Stuart Highway below section 72 is a single area consisting of sections 78, 79, 80, 83, 88, 128, 134, 135 and 136. The total area south of the highway is approximately 2,250 acres. It can broadly be described as a wide rim of elevated land surrounding an extensive depression. The depression consists of various floodways which extend like fingers as re-entrants in to the elevated land, and the floodways drain into a large basin towards the western boundary of the land and out therefrom into East Arm, which, it will be recalled, is the water south of the Darwin peninsula. Thus the land in this area varies from elevated land with a height above sea level as high as any on the peninsula to a saucer-like depression which at its lowest point is not more than 30 feet above sea level. It should be noted that the land furthest south — almost 800 acres — is well drained land with vacant Crown land to the south extending into the mangrove fringe along East Arm and Elizabeth River. The case initially presented on behalf of the plaintiff is that, leaving aside section 111 and the amounts due to him under the terms contracts for sale of the lots in that section, the total value of his lands as at 15 June 1973 was $8,500,000. This sum includes a sum of $277,000 in respect of sections 102, 105 and 126, the quarry lands. It also includes a sum of $200,000 in respect of the Albany house lands on section 72 (later agreed at $187,500) and a sum of $77,000 in respect of lot 127 which, it will be recalled, is isolated beyond the quarry lands and half of which is subject to the encroachment of Milner's Swamp. The value is arrived at upon the basis that the best use of the land at the date of acquisition was for urban development, mainly residential but also including some commercial and industrial areas. The valuers called on behalf of the plaintiff proceeded upon the basis that the lands other than the quarry lands and the isolated section 127 could suitably be subdivided for purposes of urban development in accordance with a plan prepared by Messrs Gutteridge, Haskin and Davey. This plan envisaged, apart from six 20-acre blocks carved out of the land in the northern area closest to the quarry lands, the subdivision of the whole of the lands in order to provide 11,230 lots of residential land together with sites for shopping centres, schools, and open space. Upon the basis of such a subdivision the plaintiff's valuers valued the land. They used a method of valuation described as one of "discounted cash flow". By this method an estimate is made of the period of years during which the process of subdivision will take place and the sales of subdivided land will be effectuated. For each year the cash inflow by way of sales and the cash outflow by way of development costs is estimated and a net figure of cash inflow or cash outflow for the year is determined. In the first year, after the hypothesized purchase of the land, the net flow in dollars is taken at par. Thereafter in each year of development the net flow for the year is discounted at an annual interest rate which on the valuation made is a rate of 25 per cent. The discounted net flow in each year, plus or minus, is then computed over the period of development and the result is determined to be the value of the land, the price which a developer could and would pay for the land. On the assumptions made by the valuers in this exercise, the figure reached by the calculation is $8,477,000. This figure takes into account the quarry lands, the adjacent 20-acre lots to the west of the quarry lands, and the Albany house lands. The process of discounted cash flow is one which is known as a method of estimating present value of a capital asset in accounting processes. It is not a process which had previously been used by any of the plaintiff's valuers in the valuation of land. It is a process known to one of the defendant's valuers, Mr Fenwick, although he did not consider it an appropriate method in the present case. Without at this stage expressing any view upon the validity of the method as a process for the valuing of lands suitable for subdivision, it is necessary to refer to certain features of it. First, it should be noted that the rate per cent of discount for the future cash flow reflects the amount of profit and the degree of risk involved in the venture. In addition, the rate of discount must take account of the interest payable upon the amount outlayed in purchase of the lands. In the method of valuation based on a hypothetical subdivision which has been used in those cases where such a method of valuation has been found to be appropriate, specific provision is made for the interest on the purchase price of the land to be subdivided. Secondly, the estimate of incomings and outgoings in the projected number of years of development takes account of the estimated rise in the value of land over the period and the estimated increase in development costs over that period. The figures selected by the plaintiff's valuers in this connection are an 8 per cent rise per annum in the price of land sold and a 6 per cent rise per annum in development costs. In this respect particularly, factors are introduced into the subdivisional projection which are not present in the commonly adopted method of valuation on the basis of a hypothetical subdivision. Sale prices of the subdivided land and cost of development of the land are taken in to the calculation at current values. A profit and risk factor is calculated as a matter of judgment based upon comparable developments. There is some degree of analogy or similarity between the profit and risk factor in the commonly adopted method and the discount factor in the method of calculation by discounted cash flow. There is no evidence that there is a sufficient identity by way of percentages between the one and the other to make a comparison worthwhile but, broadly speaking, the common area between the profit and risk factor and the rate of discount is the provision made by both for the profit of the developer and the degree of risk. Both methods involve many assumptions which must necessarily be made. The projected period of development must be determined. The cost of development must be estimated. The factor of profit and risk must be determined in each case. There is, however, in the case of a projection by a discounted cash flow, the further projection of future rises in land prices and development costs. Before I proceed to examine the assumptions involved in the plaintiff's valuation, I shall deal first with the basic assumption that the best use of the land at the date of acquisition was for urban subdivision. I have concluded that, with necessary allowance for a degree of contingency and risk, the land was, by 15 June 1973, ripe for urban planning and subsequent subdivision. In order to explain this conclusion it is necessary to say something of the development of Darwin in the post-war years. During the War, the civilian population of Darwin was reduced practically to nil, but by 1961 the population had grown to about 15, 500. In 1966 it was 21,500 and in 1971 the population was 37, 000. In 1973 the population was estimated to be a little under 43,000. Between 1968 and 1971 the population increased at an annual rate of about 12 per cent. In 1972 and 1973 the rate of growth was 7.5 per cent annually. The growth in population had led to the planning and development of the northern suburbs to which I have already referred and the further development north of the airport inland from the other northern suburbs was in course or was in an advanced planning stage. With the development of these suburbs and a coastal suburb at Brinkin in the Casuarina area the suburban development within the 1945 acquisition area would be virtually complete unless defence establishments were resited. Planning for the future expansion of Darwin commenced in the late 1960's and was largely carried out by the South Australian firm, P G Pak Poy and Associates. They made three reports, one in November 1970, one in April 1971, and one in December 1971. They concluded that the urban growth of Darwin should be planned around the existence of the present airport. This was an important recommendation and in the hearing before me the resiting of the airport has not been canvassed as a possibility which would have been given any, or any more than minimal, weight by a purchaser in June 1973. The same may be said in respect of most of the defence installations with the particular exception of the Lee Point area and some areas contiguous with the eastern boundary of the 1945 acquisition. The Pak Poy reports, which have played an important part in the evidence in this case, recommended provision for the future expansion of Darwin in the area which in 1973 was acquired by the Commonwealth. The last of the three reports was made public in April 1973 and its contents were, I am satisfied, well-known to interested persons at least in the weeks or months prior to the acquisition and most likely over a considerably longer period. Although the reports, particularly the two earlier ones, considered various alternatives, the direction of all of them was towards a conclusion that future development lay in the creation of a new town east of the airport and in the area which now falls to be considered. The second report envisaged a satellite town in the vicinity of the subject land with a regional centre east of the 1945 acquisition boundary and industrial areas east of the airport. It was noted that the broad spine of peninsula provided suitable land and it was recommended that the freehold lands outside the 1945 acquisition area be acquired as far as the Howard Springs Reserve. In the third report more precise recommendations were made. It was recommended that the regional centre be in the area of the plaintiff's northern land. Residential development in the northern area was recommended. But it may be noted that the Marlow's Lagoon area, the plaintiff's southern land, although it was recognized as good attractive residential land, was not recommended for development in the initial stages. A recommendation that the Marlow's Lagoon area be developed in the first stage of the new town with the regional centre adjacent to the railway and the Stuart Highway in the general area of section 73 and 77 of the plaintiff's land emerged later in 1973 and in 1974 with the preparation of a report after the acquisition by the National Capital Development Commission (NCDC). The development and planning of Darwin within the 1945 acquisition area were closely controlled and largely undertaken by the Commonwealth and the Northern Territory Administration. Since the Commonwealth was the owner of all the freehold, the stages not only of planning but also of development were wholly within Commonwealth control. A very considerable proportion of the population of Darwin consisted of public servants, including defence personnel, and residential development was largely undertaken by the Commonwealth. It has been estimated that one-third of the residences built during the years of development preceding 1973 were built by the Commonwealth for its own housing purposes, one-third were built by the Housing Commission, and one-third of the land was sold on what may be taken to be perpetual leases at auctions which were held a number of times in each year. The auctions were of two kinds. First, there were restricted auctions open only to individuals who had not within the 5 years preceding the auction owned other land, freehold or leasehold, in the Territory. Persons qualified to bid were entitled to obtain only one parcel of land at auction. A minimum deposit was required but terms were available. The lessee was required to have owned the lease for 5 years before he could, without the consent of the administrator, transfer or assign the lease. Secondly, there were unrestricted auctions. In both cases there was an obligation to erect a residence to a minimum cost in accordance with a covenant within 5 years and there was no right of sale until that condition had been complied with. As might be expected, the price paid for land at a restricted auction was considerably less than the price paid on an unrestricted sale. During each of the 5 years 1968-1972 inclusive an average of approximately 1,000 lots was developed. It is apparent, therefore, that approximately 350 lots each year were disposed of at auction, both restricted and unrestricted, to private persons for residential building purposes. In the 6 years prior to the acquisition the average number of houses built by or for private persons in the town area of Darwin was a little over 400 houses per annum. Outside the town area, that is to say the area within the 1945 acquisition boundary, subdivision of land into parcels, where the parcels were of less than 20 acres or where the opening of a public road was involved, required the approval of the administrator. The practice, therefore, developed of subdividing into areas of not less than 20 acres and of giving access by a private right of way. On the day before the acquisition the Town Planning Ordinance was amended to require the approval of the administrator to a subdivision which involved the granting of a right of way. Where approval was required, it was necessary to submit plans and details as to any proposed roads, drainage and sewerage works, and in addition evidence was required of the financial capacity of the applicant to complete the project. The administrator might refuse approval if, in his opinion, the subdivision would involve the government in undue expense in providing services to the land. Until 1971 there had been extensive approvals given to subdivisions into 5-acre lots. But on 7 April 1972 a policy was adopted and publicly announced whereby subdivisions into parcels of less than 20 acres would not thereafter be approved and, in fact, no approval to subdivision of freehold land into parcels of less than 20 acres was approved subsequent to that date. There was, however, continued subdivision into parcels of not less than 20 acres and an example of it is the subdivision by the plaintiff of section 111. It does not appear to me that there can be much doubt that it was a generally held view following the disclosure of the approach made in the Pak Poy reports that the development of a new town east of the 1945 acquisition boundary would be by acquisition of the land by the Commonwealth and the preparation of a development plan. It is convenient here to state the approach which I take in this connection. The compulsory acquisition, or the likely compulsory acquisition, of the land prior to or in conjunction with the proposed development of a new town should not be taken into account. It has been submitted that likewise the purpose of the acquisition, the planned development and control of the city of Darwin and its adjacent areas, should not be taken into account. I would agree that the purpose of the acquisition as such should not be taken into account but, in my view, the correct approach is to take account of the fact that the town area of Darwin would be extended in order to cater for the increasing population and that the extension would be in accordance with a scheme of development designed by the administration. It is therefore necessary to ignore the fact that the development would be by way of acquisition but to recognise that the development would be controlled according to a designed and ordered planning scheme. At the same time, in accordance with established principle the Commonwealth may, in the course of determining what was the highest and best use of the land at the time of the acquisition, be regarded as among the possible purchasers of the whole or part of the land. I conclude, therefore, that the land was ripe for development as the most probable site of the new town and that a developer would have been aware of that fact at the date of acquisition and would have treated it as a high probability. At the same time a developer would have regarded it as highly probable that development for residential and other purposes would not have been allowed to proceed until a scheme of development had been settled by the administration, and that haphazard residential development would not have been allowed. It is important to bear this in mind when considering the number of years which would have elapsed between purchase of the land and its full development and disposal. I return now to the valuation by the plaintiff's valuers upon the basis of a discounted cash flow. Although I propose to analyse the factors and assumptions which have been made in this valuation, I should now say that I am not satisfied that this could be an acceptable method of valuation in the present case. I express no opinion upon the question whether or not, in other circumstances and in other cases, a method of valuation by way of discounting the anticipated cash flow is a proper method of valuation of land. There is not sufficient material before me upon which I could express a concluded opinion upon this matter. As I have earlier stated, none of the valuers who gave evidence (except Mr Fenwick) has previously applied this method in the valuation of land. There is no evidence that the application of this method has either in theory or in experience produced results consistent with methods of valuation based on comparable sales or on that method of valuation upon the basis of hypothetical subdivision which has, where necessary, been applied in the past. Nevertheless, I propose to examine the factors and assumptions made by the plaintiff's valuers in their estimate of discounted cash flow. The main factors as I see them are as follows: (1) The probable time within which development would commence and continue to completion would depend largely upon the probable time within which a structure plan for the new town area would be completed at least to the extent where zones of development had been determined and detailed development planning could proceed. This factor which in the case of valuation on a basis of hypothetical subdivision is important upon the question of the time during which interest will be payable at least on the initial purchase price, is important also in the discount cash flow method because the longer the period of time becomes the greater discount must be allowed on incoming moneys from sales. (2) The number of lots likely to be obtained from the subdivision of the lands. (3) The cost of development per lot. (4) The prices likely to be obtained for the various lots. (5) The period of time over which the cash would flow in from sales, and (6) The rate of discount of the cash flow which would reflect not only the profit in the light of the risk involved but also the interest payable on the initial purchase moneys and on any accumulation of outgoings above incomings, particularly during the earlier years of development. It is obvious that the rate of discount selected will be closely inter-related with the degree of conservatism or optimism in the approach adopted in respect of the other factors which I have listed. 1. The probable time within which development would commence and continue to completion: The analysis made by the plaintiff's valuers predicated the sale of the quarry and quarry lands and of lot 127 east of the quarry lands during the first year, and sale of the six 20-acre lots adjacent to and west of the quarry lands during the second year. It predicated $1,247,000 being expended on physical development in the third year, and a further $5,287,000 being so expended in the fourth year. It predicated sales taking place during the fourth year to a value of $2,317,000 and in the fifth year $8,177,000. Thereafter it predicated that there would be substantially a course of development through the sixth year after purchase to the thirteenth year after purchase in which land developed during the year wold be matched by sufficient sales to equal the number of lots developed so that by the thirteenth year all the land would have been developed and sold. There are a number of matters which I conclude in the plaintiff's favour in the sense that I conclude that a purchaser as at 15 June 1973 would not regard them as involving a very high degree of risk, though I recognise that some allowance in the risk factor would no doubt be made by a purchaser in respect of them. The first matter is one which I have already stated, namely, that the planning of a new town area immediately east of the 1945 acquisition boundary was imminent, and would have been known by interested persons to be imminent, at 15 June 1973. A purchaser would have regarded it as less probable that both the northern and the southern areas would have been included in the structure plan for development simultaneously, but I conclude that a purchaser would have regarded it as very likely that, whichever area was first to be developed, the portion of the plaintiff's land to the north of the southern area, particularly that portion north of the Stuart Highway, would have been included in planning for development in the first stage. The second matter is that a purchaser would, I conclude, have proceeded upon the basis that structure planning for the new town would proceed with all expedition. Subsequent events in 1973 and 1974, until the occurrence of the devastating cylcone in December 1974, bear out this conclusion. Thirdly, I conclude that a purchaser would regard it as highly probable that necessary head service works would be carried out by the Commonwealth and the Northern Territory Administration concurrently with the urban development once the structure plan had finally evolved. Particularly important in this connection was the provision of sewerage treatment works. It would appear that one works would be needed to take the flow towards the north of the peninsula and another works to take the flow to the south, unless pumping stations were installed. A purchaser would have recognised a likelihood that both areas — north and south — could not be developed simultaneously because of the need for sewerage headworks; but he would have recognised that sewerage services would have been available in one or the other area and wold have become available in the second area in a course of time quite likely to be contemporary with the development of whichever area in the ultimate structure plan became the area of second development. Fourthly, I conclude that a purchaser in June 1973 would have concluded that it was highly probable that public services of other kinds to serve a new town area would be developed by the administration concurrently with the residential development. I here refer particularly to schools, external road works, and recreation areas. Here again, the place of their development in the first instance — north or south — would depend on the town structure plan which was evolved. I reach these various conclusions by recognition of the large degree of responsibility taken by the administration for the proper development of the town of Darwin. The interests of the Commonwealth in Darwin were very great indeed both because of defence and because of its obligations for the administration of the Northern Territory as a whole. It was described as a "government town" at one stage during the submissions, and that description is apt. Once the administration determined that the subject area was to be a new town area and once that development was proceeding, I cannot conceive, and I do not think that a purchaser would have in the circumstances conceived, that the development would be bereft of those public services required by the new town. Although I take account of all these matters in favour of the plaintiff for the reasons which I have stated, I have come to the conclusion that the speed at which the structure planning of the town and development of basic services could proceed was considerably over-estimated in the analysis initially made by the plaintiff's valuers.The latter envisaged substantial sales in the fourth year, that is, in 1976. I am satisfied that a period of four and a half to five years, as estimated by Mr Cherry and Mr Gilchrist respectively, was a much more realistic estimate. I do not need to recount the evidence of Mr Cherry and Mr Gilchrist in this regard. It is sufficient to say that they were both well qualified from experience to express their opinions. I conclude, therefore, that turn-off of blocks would not have commenced until 1978. The time taken for subdivision and sale thereafter depends to a considerable extent upon the number of residential lots obtainable from the plaintiff's land. 2. The number of lots likely to be obtained on subdivision: The plaintiff's plan of subdivision showed a total of 11,230 lots. The average frontage of each lot upon this plan was 60 feet, and the average size of each lot was about 7,850 square feet. Lots of this size are considerably smaller in frontage and in area than the average in past Darwin subdivisions. I accept the evidence that in a tropical area such as Darwin a wider frontage is necessary and that 70-foot frontages are a more acceptable basis of calculation. Mr Gilchrist, on behalf of the defendant, gave his opinion that the land would provide approximately 7,500 blocks. Although I have found his analysis helpful in many respects, I regard his estimate of 7,500 blocks as too conservative. He based it upon a block yield of 2.85 blocks per developable acre, a figure which had been found appropriate in the Woden/Weston Creek development in the Australian Capital Territory. As I understand his evidence, the figure of 7,500 blocks relates to blocks occupied by residences because he estimates an occupancy rate of four persons per block and a consequent population of 30,000. These estimates appear to me to involve the assumption that the developer will provide a disproportionate area of the land for various public services and that he would be obliged to do so as a condition of the development. I am prepared to assume that a developer would be required to dedicate substantial areas for open space, recreation, and possibly for arterial roads, but it cannot be assumed that the developer could be required to dedicate free of charge all the lands necessary for all public services. In the plaintiff's plan of proposed subdivision, the sites for commercial development do not appear to be as large as those estimated as required by Mr Gilchrist and school sites are in some cases placed on areas of land which are classified by Mr Gilchrist as adversely affected and not suitable for the purpose. If the school sites are to be assumed to be placed differently from that shown on the plaintiff's plan, and if the flood-affected areas are to be excluded as open spaces and recreation area from the calculation of block yield per acre it would not be correct to assume a dedication by the plaintiff of all land required for such public uses. On the other hand, some of the areas designated by the plaintiff's plan are partly flood-affected, and, in my opinion, some allowance should be made in this respect. Upon the whole, I am of the opinion that a proper figure for the number of residential lots obtainable is approximately 9,000. 3. Cost of development per lot: The plaintiff's valuers have assumed a cost of development of $3,700 per lot. This figure is based on the average cost of development per lot in subdivisions in the northern suburbs of Darwin within the 1945 acquisition boundary. Although I proceed on the basis that basic offsite costs will all be met by the Northern Territory Administration and that the new town structure plan will be made by and at the cost of the administration, I am of the opinion that the cost of development of the subject land would be greater than the figure of $3,700 per lot. There is also to be taken into account the reduction in the number of lots available and a consequent increase in development costs for each lot. In my opinion an estimate of $5,000 per lot development cost for 9,000 lots would be a proper figure to be taken. 4. Prices to be obtained: The average price for a lot in the Darwin subdivisions on unrestricted auctions during 1973 was a little under $6,700 per lot. Prices for lots sold at restricted auctions varied from 50 per cent to 65 per cent of the prices realised for unrestricted land. I have concluded that the prices realised at restricted auctions are of no assistance in determining the price which would be brought for lots of land in new subdivisions. It could not be assumed that the Commonwealth could acquire lands at a cheaper price in order to develop it for sale on a restricted auction basis. The Commonwealth, having no substantial Crown lands in a suitable locality within the planned new town area, would, if it wished to continue the restricted auction sales, have been forced to buy or acquire at market price and in effect subsidise the restricted auctions. Therefore, except insofar as it should have been envisaged that the Commonwealth would develop and sell cheaply on restricted auction lands already owned by it within the old Darwin boundary, I do not see that the existence in the past of restricted auctions would substantially have affected the projections of a subdivider in the freehold area in 1973. He would expect the Commonwealth either to purchase land in the freehold area for the purpose of sale on a restricted auction basis, or to discontinue the restricted auction sales. He would not expect the Commonwealth to develop other areas of land which might be Crown land but which fell outside the planning scheme which was imminent at the time. What I have said in relation to restricted auctions and the need of the Commonwealth for land would apply also to the need of the Commonwealth for land within the planning scheme for government houses and for Housing Commission houses. I conclude that $6,700 per lot, about the average price obtained at the unrestricted auctions during 1973, is a proper price to be adopted. 5. Period of time for sale: The period estimated by the plaintiff's valuers from the time of purchase or acquisition to completion of subdivision and disposal of the lands is 15 years. In later calculations, the same period of 15 years from the time of acquisition has been taken, but the calculations of cash flow have been altered so that no inflow is predicated until the sixth year after acquisition, that is to say, until 1978; but at the same time the period thereafter during which disposal will take place is compressed by taking account of the reduction in the number of blocks which will be turned out from the subdivision. In a number of the new alternatives to the valuers' original analysis, an estimate is made that there will be a turn-off and sale of 1,000 lots per annum from and including the sixth year after acquisition. At or about the time of the acquisition, estimates were made of the maximum possible population increment between 1973 and 1980 and of the number of residential lots which would be required. The maximum population and serviced block requirement estimates were as follows: Year Population Serviced block requirements 1973 47,000 1200 1974 53,000 1300 1975 59,000 1300 1976 65,000 1300 1977 72,000 1500 1978 80,000 1750 1979 87,000 1500 1980 95,000 1750 It should be emphasised that these were maximum projections. It was anticipated that the development of the new suburbs within the 1945 acquisition boundary would provide all requirements up to and including the year 1975. In 1976 and 1977 part of the demand could be so met but thereafter the old area would be fully developed, and a short fall would exist of 1,200 lots. When the possible requirements tabulated above for the years to 1980 are taken into account, and if it be accepted, as the planners accepted, that the population would continue to grow during the subsequent years at a high rate, though perhaps not at such a high rate as previously, it is apparent that there would be a continuing demand for residential blocks which would extend over the whole period of the projected development of the plaintiff's lands. In the later calculations of the plaintiff's valuers which appear in tables K, L and M of the final submissions, calculations are made upon the basis that the turn-off of blocks between 1978 and 1986 would be 1,000 per annum. In the case of an ordinary subdivision situation, an expectation of being able to capture the proportion of the market represented by these figures would be over-optimistic. However, it must be realised that once the suburbs within the old boundary were fully developed and the plan was adopted for the new town beyond the acquisition boundary, then a very large part of the better land for development was in the plaintiff's ownership. There were, it is true, considerable physical restraints attaching to parts of this land, but it had the great advantage that it was closest to the city of Darwin proper. I do not think that, given all the special circumstances, a turn-off rate averaging 1,000 blocks per annum was wildly optimistic, even when account is taken of the fact that population would not necessarily grow at the maximum rate projected and even when account is taken of the fact that there were other lands which could be developed and little doubt that the Commonwealth itself would need to be regarded, as its counsel has stressed, as a competitor in the field of land development at and beyond the 1945 acquisition boundary. The only land which on a large scale would compete with that of the plaintiff would, in my view, be the area of the Churcher subdivision lying between the northern and southern areas of the plaintiff's land. This land is not dissimilar from the plaintiff's land in its favourable location. Indeed it is better located in the sense that, whether the first development of a new town took place in the north, as the Pak Poy report envisaged, or in the centre and south of the acquisition area, part at least of these lands would be in the area of development. However, portions of it present the special problems of drainage associated with perched swamps. The existence of this land must be taken into account but it does not deny the likelihood of early and continued demand for land in the plaintiff's area. In the situation hypothesized, where the Commonwealth is the planner but not the acquirer of the land for development by itself, consideration has to be given to the possibility that the Commonwealth would, on its existing lands or on other lands purchased by it at a convenient location, carry out its own development in competition with the development by the plaintiff. Some development by the Commonwealth of its own lands within the 1945 acquisition boundary but close to its eastern border should have been envisaged by a purchaser in 1973. I take the Commonwealth into account as a competitor in the field of land development but I do not assume that as a competitor it would depart from planning principles most suited to the needs of Darwin. I think that a turn-off of the whole area by 1986 would be regarded by a developer as optimistic, but not as wildly optimistic. 6. Rate of discount of the cash flow: The evidence upon this question is quite sparse. The plaintiff's valuers say that they determined that it was the proper method and that their information came from the manager, or previous manager, of a large firm of developers. Of the defendant's valuers, Mr McDonald had no information on the subject, and Mr Fenwick regarded a figure of 25 per cent as far too low. If I felt that it was proper or possible to accept a valuation of land upon the basis of discounted cash flow in the present case I would have little or no material upon which it would be possible securely to select any other rate than the 25 per cent advanced by the plaintiff's valuers. It appears to me that even upon an assumption that a method of discounting cash flow is a method which can lead to an accurate valuation of land in circumstances such as the present, the plaintiff substantially fails to disclose a value by this method which approaches the value of approximately $8,500,000 claimed to be revealed on the initial analysis of the plaintiff's valuers. Error has occurred by underestimating the time between the date of acquisition and the date when a turn-off of developed blocks might have been expected, by underestimating the cost of development per block, by overestimating the number of blocks, and by overestimating the price likely to be obtained for each block. It would appear to be necessary in projections based on discounted cash flow to take account of rises in costs and likely rises in prices obtained. Rises in costs for the purposes of the analysis have been estimated at 6 per cent per annum and rises in prices at 8 per cent per annum. It is hardly necessary to remark that the basing of a present price upon projections of this kind could be very dangerous without allowing for a wide margin of error by means of a heavy discount factor. The plaintiff's valuers at the conclusion of the hearing made further estimates, still retaining a projection of 6 per cent per annum rise in costs and 8 per cent per annum rise in land prices obtained, but allowing for delay in commencement of turn-off of blocks and for higher development cost per block as at 1973 and lower average price per block as at 1973 and a smaller number of blocks to allow for larger frontages and areas. There are a number of different tables presenting various alternative calculations. I propose to refer to table L, because I think that that table comes closest to an analysis based on the projections which in my conclusion would have been reached on times and costs in 1973. This table assumes the sale of the quarry lands and of section 127 in the first year, 1973. It assumes the sale of the 20-acre lots to the west of the quarry lands in the second year. It correctly, in my opinion, excludes the cost of the initial structure planning of the area. It correctly assumes that sewerage treatment plants and external works will be the responsibility of the Northern Territory Administration but it takes account of headworks for the area itself. It assumes that actual subdivisional development will be able to commence during the fifth year after acquisition and that sales of residential blocks and of commercial blocks will take place during the sixth year after acquisition, 1978. It then assumes sales of 1,000 blocks in 1978 and of the same number per annum thereafter to 1986 with the sale of 301 blocks in 1987. This takes up the whole 9,301 blocks envisaged in the calculation. It assumes an average price per block in respect of the southern land of $7,158 and an average price per block for the northern land of $6,500. It assumes a larger area for commercial development in accordance with the NCDC proposals, with a correspondingly larger return from sales for commercial purposes. It takes an average development cost per block of $5,075. On this basis the amount which could be expended on the land itself, allowing for the discount of the cash flow at 25 per cent per annum, is $3,786,000. The table most nearly accurately estimates development cost per block but it overestimates the number of blocks by 301 and it overestimates the average price per block in 1973 which, as I have stated, cannot in my view be taken as higher than $6,700. It is not difficult to adjust the table in respect of the reduced number of blocks. Incomings in the fifteenth year will be reduced on a discounted basis by $240,000, taking the discount rate of 25 per cent.This adjustment reduces the amount which could be paid for the land in 1973 to about $3,500,000. An adjustment would still need to be made in respect of the lower average price per block which I adopt as correct. I have carried out this exercise in order to show how far wide of the mark was the initial valuation of the plaintiff's valuers because of incorrect assumptions made as the basis therefor. However, I would not consider it safe to adopt the indicated figure as a correct valuation of the lands, because I am not satisfied of the suitability in this case of a method of valuation based on discounted cash flow. I turn now to the evidence of the defendant's valuers, Mr McDonald and Mr Fenwick. The latter valued the plaintiff's land, other than the quarry land and the Albany house land, at $1,577,500. He reached this conclusion upon the basis of a hypothetical subdivision with minimum block sizes of 20 acres, but with regard to the ability to sell some sundry blocks of less than 20 acres, those held in individual titles at the relevant date. He allowed a profit and risk factor of 90 per cent, an interest rate of 12 per cent on moneys expended, and a term of 6 years as the selling period. He considered the best use of the land to lie in its potential for subdivision to accommodate people not wishing to live in the established areas of Darwin. Mr McDonald also based his valuation on his opinion that the best use to which the subject land could be put was subdivision into 20-acre allotments for rural living not involving developmental costs for services and headworks, but with the use for commercial and industrial purposes of smaller areas already effectively subdivided along the Stuart Highway. He found it likely that there would be present among purchasers a motive of capital gain as a hedge against inflation and that this motive was more prominent than the desire permanently to reside outside the city limits. In reaching these conclusions, he had regard to the town planning legislation and the policy of the government at the date of acquisition which limited the use of the land to subdivision into parcels containing not less than 20 acres and to the fact that any potential for a more intensive use of the land would depend upon a change of policy at some time in the future. However, he concluded that with or without regard to the town planning legislation and the government policy, the best use of the land was not subdivision into residential allotments but subdivision into larger allotments for rural living. Mr McDonald considered three alternative methods of valuation of the lands other than the quarry lands and the Albany house lands. He first considered sale as a single area of approximately 3,835 acres. Secondly, he considered sale of the land as 31 separate lots sold on the one day. Thirdly, he considered sale of the area by hypothetical subdivision into 20-acre allotments and such smaller areas as were already held as such in separate certificates of title or as were already effectively subdivided by roads. He concluded that, in the very difficult problem of valuation presented by the land, although ordinarily the first method would be the most acceptable by direct application of evidence of comparable sales, the scarcity of evidence of sales in the locality of areas comparable with the subject property made it less reliable than it would ordinarily be. He regarded the third method as also unreliable because of the difficulty of determining the correct assumptions as to an appropriate interest rate, an appropriate period of development and sale, and an appropriate profit and risk factor. Adopting the first method, recognising the difficulties involved by the shortage of evidence of comparable broad acre sales in the Darwin locality, but taking account of an option which the first-named plaintiff had given to A V Jennings Pty Ltd on 30 November 1972 as an indication that there were purchasers who were prepared to consider the purchase of a property of the size and nature of the subject land in the Darwin locality; and regarding that option as showing a price which a vendor would be satisfied to receive on such a sale on the conditions of that option and with discount to present value; and taking account also of sales of land in the area of the Australian Capital Territory for small rural living areas with some hope that at some future date it would be required for the future expansion of the city of Canberra, he concluded that the overall value of the land in question sold in one lot was $2,000,000. On the second method of valuation, regarding the land as divided into 31 separate lots sold on the one day and allowing a discount of 20 per cent in order to attract buyers for all lots at the one time and deducting legal expenses, and commission, and advertising, he concluded that the net realisation thereby would be $1,750,000. The third method of valuation by hypothetical subdivision into 20-acre allotments except where smaller areas were already effectively subdivided, was substantially similar to that adopted by Mr Fenwick. Mr McDonald expressed the opinion that this method of valuation was the least reliable. He stated that the valuation by this method would be between $1,348,723 and $1,967,413 depending upon the assumptions made in respect of developmental costs, interest rate, selling period, and profit and risk factor. It appears to me that both Mr McDonald and Mr Fenwick made the error of failing to distinguish between the likelihood of the Commonwealth acquiring the land for the future expansion of Darwin, a factor which it was proper to disregard, and the likelihood of the Commonwealth recognising the need for the future expansion of Darwin and consequently planning that expansion and thereafter imposing land use controls designed to facilitate rather than to restrict urban expansion. I have referred to this distinction earlier in these reasons. It is a distinction which must be made in order to determine the true value of the lands having proper regard to the degree of possibility or probability of their place in Darwin urban expansion and yet at the same time having no regard to the possibility or probability of the Commonwealth itself acquiring the lands. A result of a failure to make this distinction has been a tendency to discount what Mr McDonald described as the "speculative" element in certain comparable sales. Speculation that the Commonwealth itself would acquire can, standing by itself, be properly disregarded; but speculation that urban expansion would take place and that planning controls would alter, cannot be disregarded. When this error emerged during the course of the hearing, a supplementary statement was made by Mr McDonald and Mr Fenwick in which they made the assumptions that there was at the time of the acquisition a proposal by the Commonwealth to provide for the expanding population of Darwin in the new town to be established in the 32 square mile acquisition area and that the plaintiff's land would form part of the area which would be designated for urban use and that the owner for the time being of the plaintiff's land would, in due course, be permitted to develop the land for urban and/or residential purposes. They assumed that such development would need to conform with the overall planning of the area and that this would necessitate from the commencement of development the preparation by the Commonwealth of a town planning scheme including a town structure plan denoting land use and zoning and designating the locality of major utility services such as roads, water, sewerage and drainage systems, electricity services, and the location of community facilities. They further assumed that the plan of development finally adopted would substantially accord with that outlined by Mr Gilchrist in his evidence and that development and block turn-off would accord with his timing and rates, but with the variation that intervals of servicing and block production would be at 12 months rather than 6 months. They assumed that the owner of the land would not be obliged to pay any part of the costs of the preparation of the planning scheme and structure plan and that trunk services would be brought to the boundaries of the plaintiff's land at no cost to the developer. They assumed a period of 5 years before first turn-off of blocks. On these and other assumptions not unfavourable to the first-named plaintiff, they concluded that these factors would have had no effect on the value of the land at the date of acquisition. They severally state in this further statement that, even if the land had been bought by a purchaser making all the assumptions, he would not have paid a price for the land exceeding the values which they had separately ascribed to it. I find difficulty in accepting this bald conclusion. It would mean that there was no difference in the value of land regarded as suitable only for extra-urban, semi-rural living which had a potential that some time in the future closer development might be permitted and land which was ripe for development once the necessary structure planning had taken place. Nevertheless, the approach which I find most useful is the analysis made by Mr McDonald upon the basis of a sale of the land at the date of acquisition in 31 separate lots. This approach permits the individual examination of various areas depending upon their particular locality, particular advantages and particular constraints. It makes more useful the evidence of the only truly comparable sales which are entirely, or almost entirely, to be found in the sales of the lots in section 111 and the sales in the Churcher subdivision and, in addition, the sales of land adjoining or in close proximity to the Stuart Highway. I do not consider that other sales further afield can be regarded as comparable with any substantial degree of usefulness. I propose therefore to examine the basis of Mr McDonald's separate values of his suggested 31 lots sold on the one day and to indicate where and how I find certain of the values placed by him on the lots to be deficient. I shall refer to the separate lots by the parcel numbers given to them by Mr McDonald in his statement and in annexure L thereto. It should be noted that on the one hand certain of the numbered parcels are not included in the total of 31, namely parcels No 1 and No 8, and that in other cases a single valuation consists of more than one of the 31 parcels. Annexure L needs to be considered in conjunction with plate No 11 attached to Mr McDonald's statement. Parcel No 2: This parcel comprises lot 7 of section 72 and was valued by Mr McDonald at $70,500, ie approximately $3,000 per acre. It has an area of approximately 23.5 acres. It is situated on the Stuart Highway and slopes in a southwesterly to southerly direction towards Marlow's Lagoon. The frontage to the Stuart Highway falls away somewhat steeply. There are sales of other land sufficiently comparable to assist in the valuation. Part of section 73, Hundred of Bagot, sold on 15 September 1971 for $15,000. It had an area of 10 acres 2 roods, 30 perches. It was a triangular piece of lowlying land in the northeast corner of section 73 on the north side of the railway. It was thus well away from the Stuart Highway. Its price was about $1,500 per acre. Lot 23 of section 84, Hundred of Bagot, comprising approximately 5 acres, sold on 17 July 1972 for approximately $6,800 per acre. This land is some 1.5 miles further from Darwin, has a similar frontage to the Stuart Highway, and is reasonably level. In this last respect it has an advantage over the land in parcel No 2, but it may be doubted whether that advantage is so great that the difference between $6,800 and $3,000 per acre can thus be justified. It was a smaller area and this must be taken into account although, on the approach which I adopt, envisaging the early development of the subject area, not too much emphasis should be placed on differences of this scale in size of lots. I conclude that 20 per cent should be added to Mr McDonald's valuation in respect of this area making a total value for the parcel a sum of $84,600. Parcel No 3: This parcel comprises 78 acres in part of section 72. Its frontage to the Stuart Highway is not great and it slopes away towards the southwest. In an area north and south across it there is the upper end of one of the arms of the area which is subject to inundation. This would undoubtedly have an effect upon the value of the land so subject and it makes the land further to the west of less value than the part of the land adjoining the highway. In addition, of course, the land further west is less immediately accessible. Mr McDonald took into account the added value of the land fronting the highway for industrial purposes, that is to say, its immediate usefulness at the time of the acquisition. On the basis of his approach, he did not give weight, or any substantial weight, to the key position of this land in the planning of an early new development of a new town immediately east of the old Darwin acquisition area. As a result, in my opinion, he undervalued this land when he placed on it the value of $1,400 per acre. It appears to me that the area east of the depression to which I have referred, an area of approximately 26 acres, should be given a value the same as the land in parcel No 2, that is, $3,600 per acre. The area affected by the depression, an area of about 17 acres, should be given a comparatively low value because of the work which will be required in filling in order to relieve that land of the effect of the depression. It must be remembered that the land is at the upper end of one of the arms of the main depression, but no doubt the work would be substantial and I allow a value of only $500 per acre for these 17 acres. The land beyond the depression, an area of about 35 acres, is affected by the presence of the depression and by the further distance from the Stuart Highway and, in my opinion, a value of $1,500 per acre is appropriate. The total therefore for this parcel is $154,600. Parcel No 4: This parcel comprises 3.25 acres, being that part of section 73 which is south of the highway. It adjoins the land in parcel No 3 which is to the west thereof. An area of the same size towards the north of the same section, more regularly shaped, was sold in November 1970 for $9,248 per acre. Lot 14 in section 84, 2.25 acres in area and some three-quarters of a mile further down the highway, sold in January 1973 for $5,800 per acre. Mr McDonald placed upon parcel No 4 a value of $9,000 per acre. I think that this is a little conservative in the light of all the factors which I take into account but I am not disposed to say that it is incorrect and I will adhere to Mr McDonald's valuation of this parcel at $29,200. Parcel No 5a: This parcel comprises approximately 8 acres, part of section 73. It is land with a long frontage to Stuart Highway opposite parcels No 3 and No 4. It has not a great depth in comparison with its length and Mr McDonald took the view that its depth was such as to restrict its use. This view was based on existing uses without regard to any immediate or early potentiality for closer development in a planned urban area. When it is so regarded, the depth is clearly sufficient for many valuable purposes except at the northwest end of the land which tapers to a point. Very little of the land is affected by this degree of narrowing. In my view, seven of the acres should be valued in the same sum as the land in parcel No 4, $9,000 per acre, and the remaining acre at $5,000 per acre, making a total of $68,000. Parcel No 5b: This parcel comprises about 100 acres, part of section 73 in the Hundred of Bagot. The centre of the land is subject to inundation in the wet season, being affected by a perched swamp. The land has a very small frontage to Stuart Highway but on the south there is an unmade road which, when made, would extend Wallaby Holtz Road to the highway. Although the land has the deficiency of being partially affected by the perched swamp, its location is excellent once regard is had to the degree of likelihood which there was in June 1973 of early urban development east of the 1945 acquisition area. Whether the planners placed the regional centre north of this land or even somewhat further east, section 73 was in a position where, once the degree of likelihood of early development of a new town is recognised, it could not fail to be in an area of very early development. I bear in mind that the part of section 73 north of the railwayline, a triangular piece of land with an area of 10.5 acres which was all, or virtually all, lowlying, was sold in September 1971 for almost $1,500 per acre. I bear in mind that almost all that land was lowlying whilst only portion of the subject land is so affected. On the other hand I bear in mind that the 10.5 acres was a smaller area and therefore would not need as great expenditure for development in smaller parcels. I conclude that a proper value per acre overall of this parcel is $1,600 per acre, making a total of $160,000. Parcel No 6: This parcel comprises 209 acres, being lot 22 of section 76, Hundred of Bagot. It is situated on the northern side of the railway line, distant from Stuart Highway by the whole length of section 77. It is good land, but in my opinion a purchaser in June 1973 would not regard it as being within an area which was so likely to be designated for early development in a town plan that he would pay more than the $700 per acre estimated by Mr McDonald. I therefore adhere to Mr McDonald's valuation of this parcel in the sum of $146,300. Parcel No 7: This parcel comprises a 5-acre area in section 77 just north of the old railway line with considerable frontage to Wallaby Holtz Road. It adjoins parcel No 9b which is a considerably larger area to the south and east. Parcel No 7 is valued by Mr McDonald at $3,000 per acre and I see no reason not to accept his valuation of $15,000. Parcel No 9a: This is an area of 25 acres, being portion of section 77. It has the advantage of close proximity to Stuart Highway. Mr McDonald states that portion of the land is lowlying and subject to some inundation in the wet season, but it is not shown as being so affected in any of the maps which have been prepared either by the plaintiff or the defendant. Mr McDonald has valued this parcel at $2,400 per acre. It appears to me that it is land excellently situated for the future development and must play an integral part in the early stages of any such development. In my opinion it is not less valuable than No 7 which is situated north of the railwayline. Indeed, it is more valuable, but account must be taken of its greater size and the necessity for greater expenditure on its internal subdivision as part of an eventual urban area. I place on the land a value of $3,200 per acre, that is to say, a value of $80,000 in all. Parcel No 9b: This parcel is also situated in section 77. It has an area of 42 acres on the north side of the railwayline. The land is triangular in shape, and access to it from Wallaby Holtz Road is limited. Mr McDonald describes it as lowlying in part, but it does not appear that this could be a serious defect as it is comprised in an area which Mr Cherry describes as "gently sloping, well-drained, with no poor soil or floodways". It adjoins parcel No 7 which Mr McDonald has valued at $3,000 per acre. Upon the approach adopted by Mr McDonald, with its emphasis on existing planning restrictions, he regarded the parcel as limited in use as a single parcel. However, in my opinion, greater emphasis should be given to its potential for early urban development. It is well situated for such development, though by no means as well situated as some of the other parcels of land with which I have already dealt. Account must be taken of the cost of its development in urban planning and of a greater likelihood of it not being part of the first stage of such urban planning. Nevertheless, I have come to the conclusion that a value of $1,000 per acre is too low and that a proper figure is $1,500 per acre, $63,000 in all. Parcel No 9c: This parcel comprises 170 acres, also in section 77. It lies south of the railwayline from parcel No 9b, and extends across to Yarrawonga Road. It is separated from the Stuart Highway by a narrow area of land through which pass watermain and electric powerlines. It is superior land well situated for early development in an urban plan, and the greater part of it lies in what may be described as the nucleus area which would be regarded by a purchaser as an area very likely indeed to be comprised in the initial stages of the new town planning and development. In these circumstances I regard the value placed thereon by Mr McDonald of $1,200 as too low. In my opinion, a proper value to place thereon is $1,800, a total of $306,000. Parcels Nos 10-17: These parcels comprise eight residential lots each of 0.25-acre area. They are situated in section 78 with frontages to Stuart Highway. I accept the valuation of Mr McDonald of $5,500 each, a total of $44,000. Parcels Nos 18a-19: These parcels contain 10 acres and are part of section 78. The land, made up of two triangular portions, is of comparatively small depth, but it has a long frontage to the Stuart Highway. It is immediately east along the Stuart Highway from parcel No 5a, and is substantially comparable therewith. In my opinion a proper value to be placed thereon is $7,000 per acre, making a total of $70,000. Parcel No 18b: This parcel of 18 acres is a triangular shaped piece of land separated from parcels No 18a to No 19 by Crown land through which passes an electric powerline and waterline. It is immediately west of parcel No 9a, separated therefrom by an unmade road. Its greater proximity to Stuart Highway gives it a somewhat greater value than parcel No 9a. In my opinion a proper value to be placed upon the land is $3,600 per acre, or $64,800 overall. I come now to parcels numbered 18c, 20, 21-22, 23, 24, 25 and 26-27. These parcels comprise the bulk of the plaintiff's southern lands. They are the lands which are largely affected by the depression which leads them to be described as the lagoon area. The higher parts of these lands have been described as forming an amphitheatre round the saucerlike depression of which the lagoon forms part. The plaintiff's valuers envisaged the early development of all of these lands, except those portions which were unusable, in urban residential subdivision. It has been correctly shown by the defendant's witnesses, particularly Mr Cherry, that such a development would involve very considerable expenditure in engineering works. This must be regarded as having a great effect upon the value of the lands regarded as a whole. In particular, access to the southwestern part of section 80, which is the part of that section which contains land suitable for development, is made difficult by the wide lowlying area in section 80 immediately to the north of the good land. This is the area across which pass the waters draining from the various arms of the depression. Likewise, access to sections numbered 128, 134, 135 and 136 is substantially affected by the wide depression and floodway which covers the southern part of section 88. In these circumstances, in my opinion, a purchaser would not regard the southern half of section 80 and the sections below section 88 as likely to be the subject of early urban development, or,if that land were so regarded, it would not be considered able to be developed without considerable expenditure on the provision of access, an expenditure which might or might not be warranted depending on the form which the town plan might take. I am therefore of opinion that only a low value can be placed upon these lands. Further, most of the northern half of section 80, the northwestern part of section 83, and part of the southern-central part of section 78 is well within the depression and it is conceded by all that it is to a large extent not useful for urban building development. However, there remains the broad amphitheatre. I deal first with the area constituted by the western part of section 78, section 79, the most northern part of section 80 above the depression, and the northwest corner of section 83. These lands are divided from the eastern part of section 78, which has a long frontage to Stuart Highway, by some lowlying ground and a floodway, but it must be borne in mind that the area of land so affected is comparatively narrow and cross-access could be constructed comparatively easily. The degree of affection by the depression is in no way as serious as it is in the southern central part of section 78, most of the western part of section 83, and the northern part of section 80. The constraint which separates section 79 from ready access to Stuart Highway cannot be regarded as a serious constraint. Next, much of the northern and eastern part of section 78 is not affected by the depression and provides good land in proximity to the highway. Access to the greater part of section 83 — the eastern half and a large area in the southwestern quarter — and to the northern half of section 88 — is not seriously affected by the depression. There is a tongue of lowlying area which approaches close to the Stuart Highway in the southeastern corner of section 78, but this does not provide a serious engineering constraint either by way of access to the parts of sections 83 and 88 further south or by way of difficulty in reclamation. Therefore, although I regard the areas of the plaintiff's southern land furthest to the south as seriously constrained in their early use, I do not regard the lands in the northern and northeastern parts of the amphitheatre as suffering from the same serious constraints. In those circumstances they must be regarded as a whole as good lands which, by virtue of their proximity to the Stuart Highway and the fact that they are the lands closest to the 1945 acquisition boundary, are likely to be the earliest, or amongst the earliest, of the lands planned for the new town development. Upon this basis I examine the values of the various parcels. Parcel No 18c: This parcel comprises 270 acres in section 78. It has the considerable frontage to the Stuart Highway to which I have already referred. There is a fairly steep fall from the highway in the form of an escarpment at the southeastern corner. I have already described how the centre of the southern part of section 78, comprised in the present parcel, is well within the wide depression. No substantial value can be given to these lands nor to the land comprised in the northern arm of the depression which is towards the northwest of the subject parcel. There remains, however, a substantial area of very good land eminently suitable for early development in a town plan. I regard the land in section 78 as divisible into three classes, all roughly equal in area. First, there is the land in close proximity to Stuart Highway and elevated clear of the depression. In my opinion this land has a value per acre not substantially different from parcels No 5a and Nos 18a-19, which face it across the highway. However, account must be taken of the cost of development of the subject land, even though it is close to the highway. I would place on the 90 acres in this class a value of $3,000 per acre, $270,000 in all. Then the next class of land in this parcel is the land, also of good quality, which is, however, further removed from the highway with consequent greater cost of development and generally lower value. I would place on this class of the land a value of $1,500 per acre, a total of $135,000. Upon the approach which I have adopted, I would place no specific value on the remainder of the land in this parcel. Thus I place a value of $405,000 upon this parcel — more than twice the value placed upon it in Mr McDonald's valuation. In my opinion, the basis of his valuation, namely, use of the land in subdivision into not less than 20-acre lots except in respect of a comparatively small area suitable for industrial uses, failed to take account of the particular potential of this land for early urban development. In respect of that part of the area on which I have placed a substantial value, the physical constraints are not great, and, apart from those restraints, the land is so situated that it would be recognised as an area most likely to be developed in the early stages of a new town development. Parcel No 20: This parcel comprises section 79 and contains 160 acres. It is practically free from inundation. The constraint on its development in an urban plan is the need to cross the floodway on section 78 to which I have already referred and which I have concluded does not present a great obstacle at this point. The land is situated about a mile from the Stuart Highway but has the advantage of being close to the 1945 acquisition boundary. When it is regarded as a site of potential urban development in a new town, it appears to me that it is comparable with parcel No 9b which is about the same distance from the highway on the other side thereof. It appears to me that it would certainly be regarded by a purchaser as most likely to be included in an area of early development of the new town. Mr McDonald valued this land at $700 per acre, but I am satisfied that that valuation was too low. In my opinion a proper valuation was $1,200 per acre, making a total for the land of $192,000. Parcels No 21 and No 22: These parcels comprise sections 80 and 83, a total area of 640 acres. I have already described how section 80 is grossly affected by the lagoon depression and its associated floodways. Some 40 acres at the north of it and some 15 acres at the northwestern corner of section 83 are comparable with the land in parcel No 20 and have a comparable value. The usable part of section 80 south of the floodway and adjacent to the lagoon itself, some 80 acres, is land for which a purchaser would, in my opinion, pay no more than $300 per acre, the same price as in Mr McDonald's valuation of section 128, which lies southeast of section 80. Section 83 is affected to the extent of almost one-quarter of its area by the depression, but the balance of section 83 appears to me to be in its location and its prospect very good land. At its northeast corner it is very close to Stuart Highway. Much of it is elevated and has interesting ridges and slopes with distant views towards the water and the Port of Darwin. It is affected to some extent by a narrow tongue of flood-subject land, but this tongue of land, being narrow, presents no major obstacle. I take account of the cost of development and subdivision and having done so I reach the conclusion that three-quarters of section 83 consists of land ripe for early development and that this part of section 83 should be valued at $1,500 per acre. In parcels No 21 and No 22 I therefore value 40 acres at the north of section 80 and 15 acres at the northwestern corner of section 83 at $1,200 per acre, the same value per acre as I give to the land in parcel No 20, an overall total of $66,000. I value the land in section 80 below the floodways and west and south of the lagoon, some 80 acres, at $300 per acre. I value the 240 acres in section 83 east of the floodway at $1,500 per acre, in all $360,000. Thus I value the whole of parcels Nos 21 and 22 at $450,000. Parcel No 23: This parcel is section 88 containing 320 acres. It is immediately south of section 83. It is divided by a floodway which presents a substantial constraint on the use of any land south thereof. However, the land north and east of the floodways is good land not dissimilar to the good land in section 83, but less valuable because it is more distant from the centre which a purchaser would envisage as almost certain to be developed in a new town development. The area north and east of the floodway is approximately 120 acres and, in my opinion, this land had a value overall of $1,200 per acre. The land unaffected by the flood areas south of the main floodway in section 88 comprised approximately 70 acres which should, in my opinion, be given a value of $300 per acre. I place no value on the substantial area affected by floodways and inundation. The overall value of parcel No 23 is therefore $165,000. Parcel No 24: This parcel of 320 acres lies south of the floodway and is largely free from the inundation associated therewith. Its value is reduced by the growing distance from what was likely to be the centre of any new town and by the physical constraint presented by the inundated area and floodway on the southern half of section 88. I accept Mr McDonald's valuation of $300 per acre, making $96,000 overall. Parcel No 25: This parcel comprises section 134, containing an area of 160 acres. It has advantages of elevation over much of its area. It is free from inundation, but distance and access reduce its value. I accept Mr McDonald's valuation of $400 per acre, $64,000 in all. Parcels Nos 26 and 27: These parcels have a total area of 307 acres. They are substantially free from inundation but have not got the advantage of the elevation which parcel No 25 possesses. There are the same difficulties of access and distance. I accept Mr McDonald's valuation of $300 per acre, $92,100 in all. I turn now to the northern land other than the quarry land. The valuation of this land, other than section 127 east of the quarry lands, is aided by the existence of sales of 20-acre lots in section 111 over a period not long prior to the acquisition date and, to some extent, by sales of 5-acre lots in the Churcher estate south of the subject lands. I am satisfied that the value of land in the area was rising over the year or two preceding the acquisition. In my opinion the rise in values was largely referable to the growing possibility or probability of comparatively early development of a new town east of the 1945 acquisition boundary. By the time of the 1973 acquisition there was common knowledge among interested persons of the contents of the third Pak Poy Report which recommended that the new town should have its centre in this northern area. On the other hand, there was the known fact that the quarry works were situated immediately east of the lands and these works, I am satisfied, affected the eastern part of sections 94 and 106. In my opinion, a potential purchaser would not have regarded the early development in a new town of the northern part of the plaintiff's lands as having a degree of likelihood equal to the degree of likelihood of early development of the northern portion of the plaintiff's southern lands. The greater suitability of the southern lands was subsequently borne out by the NCDC recommendations later in 1973. Nevertheless, the northern lands had the advantage of being immediately continguous to the 1945 acquisition boundary and no further away from the old town than the northern part of the plaintiff's southern lands. Although on my approach I do not regard it as useful to contemplate the division of the northern lands into 20-acre lots, nevertheless I regard the rise in values of the 20-acre lots in section 111 as of significance. In my opinion, a purchaser at the acquisition date would have regarded the inclusion of sections 94, 101, and 106 in fairly early urban development as being likely. This would be so, even though it would involve the construction of a second sewerage treatment works; but the construction of a second works was inevitable unless the site of the new town were placed well out along the Stuart Highway and this does not appear to have been at all likely. Bearing these various factors in mind I turn to the valuation. Parcel No 28: This parcel comprises section 94, and contains 320 acres. About one-quarter of it at the southwest is subject to inundation from perched swamps. On the east the land is affected to some extent by quarrying operations on section 93. Mr McDonald valued the land overall at $500 per acre. In doing so he had some regard to the sales of 29-acre allotments in the nearby section 111 and sales of broad acre freehold sections further east and south from the Darwin peninsula. He gave details of these broad acre sales in plate No 8 attached to his valuation, and in a schedule thereto which is annexure F. It does not appear to me that the sales of broad acres south and east from the peninsula are in any way comparable as a result of the particular potential for urban development which resided in the subject lands. The sales of 20 acre lots in section 111 are of much greater assistance, but it is necessary to evaluate the extent to which the prices paid for them represented a wish or desire of purchasers to escape from settled urban living or represented a hope in purchasers that their purchases would become the subject of urban redevelopment at a comparatively early date. The tendency of Mr McDonald to depreciate the latter factor was, in my opinion, incorrect for the reasons which I have already stated. However, it is necessary to bear in mind the fact that, whereas the purchaser of a small area might be content to wait for a considerable time before urban development became a reality, he having the advantage and enjoyment of the land in the meantime, a purchaser of a large area in a single parcel could not afford to wait in the same way. The money invested in the purchase would be entirely idle. For these reasons there must be a very substantial discount from the price which the purchaser of a small area such as an area of 20 acres would be prepared to pay. A balance must be struck between the various factors.In my opinion a price per acre of $800 in respect of section 94 is a proper valuation when account is taken of the area subject to flooding, the period of delay before urban development might take place and the effect in that regard of the continued quarrying operations on the land to the east. I therefore value the land in this parcel at $256,000. Parcel No 29: This parcel contains 164 acres. It is good land, which is shielded from the quarrying operations by section 125. Otherwise the same general considerations (apart from flooding) apply as those which I have expressed when dealing with the last parcel. In my opinion a value of $1,000 per acre is appropriate, an overall value of $164,000. Parcel No 32: This parcel comprises section 106, an area of 320 acres immediately south of section 111. It is a good well-drained piece of land. It must be borne in mind that at the east thereof enjoyment of the land for urban purposes will be affected by quarrying operations so long as those operations continue, which will be for a period of 12.5 years or so. I am of the opinion that a value of $900 per acre is a proper one, an overall value of $288,000. Parcel No 34: This parcel comprises section 127 and contains 160 acres, at least half of which is subject to tidal inundation. It is lowlying land considerably further east from the other land in the northern part which I have so far considered. In my opinion, a proper valuation of section 127 is $300 per acre, or $48,000 overall. The total value of all the parcels with which I have dealt above is thus $3,505,600. I accept the approach of Mr McDonald that, in order to envisage their sale all on one day, it is necessary to take account not only of selling, advertising, and legal costs, but also of a discount in order to obtain such a sale. In my opinion the discount of 20 per cent which was adopted by Mr McDonald is an appropriate rate. I therefore subtract legal, selling, and advertising expenses of $137,600. The resulting figure of $3,368,000 I reduce to $2,666,880. The Quarry Lands These lands comprise sections 102, 105 and 126 in the Hundred of Bagot. The total area is approximately 648 acres, 2 roods. By an agreement of 25 September 1970 between the plaintiff and Darwin Crushed Metal Pty Ltd, the latter company was granted a licence which effectively gave to that company exclusive use of the land for quarrying purposes, subject to the payment of an annual sum of not less than $30,000 per annum and subject to an additional payment each year of 25 cents for each and every ton of material removed in excess of 120,000 tons. A rate of extraction of metal exceeding 120,000 tons per annum has not been reached. The licence continues for the life of the quarry which was estimated to be between 12.5 and 15 years. The plaintiff's valuers assumed a life of 12.5 years with a return of $30,000 per annum, the minimum amount payable. They then took the present value of $30,000 per annum for 12.5 years at 10 per cent which, on figures taken from Inwoods Tables, amounts to $208,740. These valuers then noted: "This sum will provide a return of 10 per cent and allow replacement of capital at the same rate over a period of 12.5 years." Mr McDonald envisaged a maximum return of $36,000 per annum during a period of 15 years. He took a capitalisation rate of 15 per cent in view of the risks of not realising the maximum return and bearing in mind that the life of the workings might not extend for the 15 years. In addition, he made provision for a sinking fund to replace capital at the end of 15 years and assumed an accumulative rate of interest of 8 per cent per annum on the sinking fund, and income tax on the interest so earned at 42.5 per cent per annum. Calculations on this basis resulted in a value of $185,000. Mr Fenwick calculated the value of the plaintiff's interest on the basis of maintaining a royalty rate of $30,000 per annum over a 15-year term. He took a capitalisation rate of 10 per cent. He also made allowance for a sinking fund with interest on its accumulations at 8 per cent and provision for tax at 40 per cent. He determined a value of $186,000. In my opinion the approach of the plaintiff's valuers was the correct approach. The acquisition from an owner of land of an assured right of that owner to receive every year for 12.5 years a sum of $30,000 results in the loss to that owner of that income over that period and he is entitled to be compensated accordingly. This approach accords with the example given by Messrs Rost and Collins in their book Land Value and Compensation in Australia, at 368. A question arose, during the submissions made to me by counsel, whether in the example given in this book (at 368) the present value of $1 per annum was calculated on the ordinary compound interest tables or on the sinking fund tables. A reference to the tables in Inwood makes it clear that the calculation was made on the ordinary, not the sinking fund, tables. Likewise the figure taken by the plaintiff's valuers from Inwoods Tables is the simple calculation of the present value of $30,000 for 12.5 years at 10 per cent. It is not a figure taken from the sinking fund tables. Clearly what the plaintiff's valuers mean by their comment which I have quoted above is that as the sum of $208,740, if it is to be wholly extended in 12.5 years, will provide $30,000 per annum, that $30,000 can be expended as a return of 10 per cent on the capitalised sum with the balance of the assumed $30,000 per annum being used to replace capital. In other words, the passage quoted is a comment, not a method of calculation. It is, therefore, not correct to state that both the plaintiff's valuers and the defendant's valuers assumed that provision would have to be made in the method of calculation for a sinking fund. The possibility of a sinking fund is an incident of allowing the full capitalised present value of $30,000 per annum at 10 per cent. I am satisfied that the correct approach is to take the full capitalised value in accordance with the example given in the textbook. The quarry lands will have a residual value at the conclusion of quarrying operations. The plaintiff's valuers assume an overall value per acre at the date of acquisition of $400 per acre and discount this figure. For the Commonwealth, Mr McDonald assumed a value upon reversion of $100 per acre and Mr Fenwick estimated that the maximum value which could be placed on the reversion was $200 per acre. The eastern part of the land is substantially affected by lowlying reaches of Milner's Swamp and, of course, the land which has been the subject of quarrying will be substantially affected by the carrying out of the quarrying operations. The value of the land in these circumstances is very much a matter of conjecture. I propose to adopt a figure of $300 per acre in respect of the 558 acres free from swamp and to deduct an area of 5 acres which is subject to a 2,000 year lease and which may be otherwise ignored. The value of these acres at $300 per acre is $167,400. Since I have in respect of the royalties taken a period of 12.5 years, it is appropriate to take the same period when calculating the present value of this estimated realisation figure. The present value of $167,400 deferred for 12.5 years at 10 per cent is $50,863. I therefore value the quarry lands at $259,600. It is agreed that the value of the Albany house lands is $187,500. It is also agreed that the amount outstanding on the section 111 contracts was $264,438, and on a contract of sale of lot 3 in section 76 was $5,320. It is further agreed that at the date of acquisition there was accruing to the plaintiff in respect of the terms sale contracts of the section 111 land interest for which he is entitled to compensation in the sum of $2,185. I can therefore summarise now the compensation to which the plaintiff is entitled: $ Albany house land 187,500 Section III contracts 264,438 Section 76 lot 3 contract 5,320 Interest on section III contracts 2,185 Quarry land 259,600 Other land 2,666,880 Total 3,385,923 A sum of $2,909,000 has been paid by the defendant. The first named plaintiff is therefore entitled to judgment in the sum of $476,923. The plaintiff makes a further claim, namely, for interest in addition to the interest on unpaid compensation for which the statute provides. Section 36 of the Lands Acquisition Act 1955-1966 Cth makes provision for interest on compensation from the date of acquisition to the date of payment. Section 31 of the Act provides that where the court is of opinion that the application of any of the provisions of the Act would result in an acquisition having been made otherwise than on just terms, the court may determine such compensation or make such order as, in its opinion, is necessary to ensure that the acquisition has been made on just terms. The statutory rate of interest is, in the circumstances of the present case, 3 per cent until 19 December 1973 and 6.2 per cent from 19 December 1973 until payment. Certain payments have been made. The plaintiff claims that the evidence establishes a rate of interest currently obtainable on moneys invested and currently charged on terms contracts of not less than 10 per cent. I accept that this is so. The plaintiff then claims that the court has power under s 13(3) of the Act to make such order as it thinks just in the special circumstances of any particular case and that in the special circumstances of this case it would provide just terms under s 31 if interest were allowed at a rate of 10 per cent on unpaid compensation rather than at the statutory rate. It is not suggested that the statutory rate offends against the requirement of just terms of acquisition in s 51(xxxi) of the Constitution. It could not be so contended in light of the decision in Grace Bros Pty Ltd v Commonwealth (1946) 72 CLR 269; [1946] ALR 209. What is said is that a provision for interest at the statutory rates may satisfy the requirement of just terms in s 51(xxxi) of the Constitution, but that it is a different question whether in this particular case it is necessary pursuant to s 31 and s 13(3) of the Act to fix a higher rate in order to ensure that the acquisition is made on just terms. It is submitted that whereas the Constitution requires that the Act generally provide for acquisition on just terms and though it may be said that, generally, the statutory provision for interest satisfies the constitutional requirement, nevertheless there is a power which should be exercised to require payment of interest at current rates to provide just terms in the circumstances of the case. I do not think that the distinction can be drawn between the use of the words "just terms" in s 31 and their use in s 51(xxxi) of the Constitution. The clear intention of s 31 is to ensure that the Act cannot operate in such a way that the constitutional requirements will be infringed. It is established that the statutory rate of interest does not infringe that requirement. In these circumstances I do not think that the court can, or indeed should, substitute a different rate of interest. In my opinion, the compensation which I have expressed above is the proper compensation in all to which this plaintiff is entitled, together with interest in terms of the statute. I come now to the claims of the other plaintiffs in respect of the section 111 land acquisitions. The plaintiffs other than the first-named plaintiff are the owners of lots in the section 111 subdivision. Section 111 is good land unaffected by the problems associated with some of the land which I have discussed earlier in these reasons. It was subdivided and sold by the first-named plaintiff in 14 lots between December 1971 and December 1972. Access to the lots generally is from a public road on the east of section 111 by a right of way running from that road into the subdivision. Two of the lots, 9 and 10, have a frontage to a road running north and south on the west of section 111. This road leads to the Shoal Bay naval reserve. It has not been formally dedicated as a public road, but it is used by the public and is built on Crown land: see Control of Roads Ordinance 1953 NT, as amended, s 5, in the definition of road and s 7. The land in section 111 is about 11 road miles from Darwin and about 2.5 miles from the Stuart Highway at its nearest point. On the west it adjoins the boundary of the 1945 acquisition area. On the findings which I have made earlier, the land is in a position which in June 1973 was very likely to be developed as an urban area in a Darwin new town. It should also be noted that it was in a part suggested in the third Pak Poy report, which was released in April 1973, as a site for initial development, that area being suggested as the place for the regional centre. The lots which were owned by the plaintiffs, other than the first-named plaintiff, at the date of acquisition are as follows: Koorala Estates Pty Ltd 2nd plaintiff lots 3 and 4 F E Henry and N J Walker 3rd and 4th plaintiffs lot 9 B R Ostermeyer and W Wegschaider 5th and 6th plaintiffs lot 10 Murran Investments Pty Ltd 7th plaintiff lot 12 The claim of the eighth plaintiff, M R Deegan, was settled prior to the conclusion of the hearing, and I have already made a consent order in respect of that claim. I set out a table of the prices paid on the original purchases from the first-named plaintiff in the chronological order of the "striking of the bargains"; between the vendor and the purchasers from him. I include the date of the formal contracts of sale. It has been submitted that only the date of formal contract is significant but in the determination of price movements, if any, over the relevant period, I am of the opinion that the date when the price was fixed is of significance. Although it is true that in law the vendor could have resiled from his oral undertaking to sell and could have demanded a higher price, it is common knowledge that on sales of this magnitude such conduct — gazumping — is comparatively rare and is generally frowned on if there has been no failure on the part of the purchaser strictly to comply with his oral undertakings. In these circumstances the price agreed on is significant when it so agreed: Lot Date at which price agreed Contract date Approximate price per acre $ 1 Dec 1971 1/1/1972 1,000 2 Jan 1972 12/2/1972 1,500 6 Feb 1972 20/5/1972 1,500 3 Apr 1972 9/5/1972 1,500 4 Apr 1972 9/5/1972 1,500 14 Jul 1972 21/11/1972 1,500 11 Aug 1972 30/11/1972 1,500 12 Aug 1972 12/9/1972 1,500 5 Sep 1972 20/11/1972 1,500 8 Sep 1972 30/11/1972 1,500 13 Sep 1972 7/12/1972 1,400 7 Oct 1972 7/12/1972 1,400 9 Nov 1972 30/11/1972 2,000 10 Nov 1972 11/1972 2,000 Some sales were on a cash basis, others on terms, but generally the terms provided for payment of currently obtainable interest, 10 per cent. No discount for the terms of payment need be made. I am not satisfied that the price of lot 1 represents the general level at December 1971. The vendor informed the plaintiffs' valuer, Mr Mooney, that the sale was to personal friends. Moreover, lot 1 is partly affected by disturbance from quarrying operations, according to the plans tendered by the defendant. Mr Mooney expressed his opinion that the value of the lands generally across the subdivision increased in value from $1,500 per acre to $2,000 per acre during 1972 and by a further 12.5 per cent to the date of acquisition. He discounted the view that lots 9 and 10 had a special value because they had a frontage to the navy road on the west and were closest to Darwin itself. He valued all the lots at the date of acquisition at $2,250 per acre. He took into account settlements of claims by other landowners in section 111. These settlements were at $1,750 per acre. He also took into account other settlements of claims in respect of lands in sections 66, 72, 77 and 84. In my opinion he was, to say the least, unwise as an expert to do so. Settlements of other claims, regarded in the same way as comparable sales, satisfy none of the conventional valuing tests of an assumed willing vendor and purchaser. As admissions of value by the defendant, they have so little weight as to be practically worthless. On the other hand, the defendant's valuers claimed that lots 9 and 10 were not representative of the subdivision as a whole. Their conclusion was that there was no increase in values above the prices of which the various lots had been sold in 1972. I am satisfied that there was a rise in values during 1972 and into 1973. I think that part of the larger price paid for lots 9 and 10 is attributable to this factor. In addition, there is the rise in value of lands in the Churcher estate during 1972 — from $1,400 to $1,600 per acre, with a further rise in early 1973 to $1,700 per acre. These sales were of 5-acre blocks, but I conclude that the rise in values was more probably due to a growing consciousness that urban development was unlikely to be long delayed than to an increase in the value of 5-acre blocks as areas for extra-urban living. Although I accept the estimate that there was a rise in values throughout 1972 and that the rise would have continued on into the first half of 1973, when account is taken of the rising value of urban land in the Darwin subdivisions, nevertheless I do not think that it can be inferred that the sales of lots in section 111 in and around the middle of 1972 — from April to August — were at an undervalue. The value of the land at that time, apart from lots 9 and 10, was $1,500 per acre. The general rate of increase in value over the whole period was around 25 per cent per annum. I conclude that from August to the end of the year there was a rise in value of 12.5 per cent and a similar rise in the first half of 1973. Therefore, by the date of acquisition, lots 3, 4 and 12 which were purchased for $1,500 between April and August were worth $1,900 per acre. As to lots 9 and 10, I am of the opinion that part of the price of $2,000 per acre represents their additional worth as land and part represents rising value of land. Of the price of $2,000 per acre in November, I regard about $275 as attributable to the higher value of lots 9 and 10 and about $225 as attributable to the increase in land values by the end of 1972. I am satisfied that by the date of acquisition lots 9 and 10 were worth $2,250 per acre. I turn now to the particular claims of the various plaintiffs. Koorala Estates Pty Ltd: This plaintiff was the owner of lots 3 and 4, an area of 40 acres purchased in April-May 1972. The terms of sale provided for payment by performance of work. It is agreed that work to the value of $6,718 was done. The plaintiff claims that $1,000 of this sum should be regarded as payment off the purchase price, the balance being interest to the date of acquisition. The plaintiff claims $1,000 as the value of improvements. I conclude that both these claims are established. The plaintiff is entitled to the increase in value of the lands at the date of acquisition, namely, $400 per acre, a total of $16,000. The plaintiff also claims additional interest in order to provide just terms, relying on the submissions made on that aspect by counsel on behalf of the first-named plaintiff. I have rejected that submission and for the same reason I reject the present claim. The plaintiff also claims a sum of $3,350 as an amount which would be required, by way of estate agent's commission and legal fees, in order to replace the land. I do not think that this claim can be allowed. The plaintiff will receive the full value of the land acquired. It may or may not expend the compensation in the purchase of other land. If it had wished to sell the subject land and purchase other land it would have had the expense of agent's commission and legal costs. I do not think that the possible expenses of acquiring other land should be allowed, at least in a case where compensation or value is not calculated on a reinstatement basis. I therefore find the compensation to which the plaintiff is entitled to be $18,000. It is agreed that a sum of $7,618 was paid on 21 December 1973. Henry and Walker: These plaintiffs were the owners of lot 9. This land at the date of the acquisition was of a value of $45,000. An amount of $10,000 was owing to the vendor. I do not allow the claim for additional interest over and above the statutory rate. No other sums are claimed. I therefore assess the compensation at $35,000. Ostermeyer and Wegschaider: These plaintiffs were the owners of lot 10. The area of lot 10, excluding the right of way, is 24 acres. The value at the date of acquisition was $2,250 per acre, a total of $54,000. No part of the purchase price of $46,000 had been paid. I do not allow the claim for additional interest or for agents and legal expenses which would be incurred in replacement of the land, for reasons which I have earlier given. A sum of $4,600 interest was paid in advance for the year from November 1972. These plaintiffs lost the benefit of a proportion of that sum, and claim $1,916. I allow that claim. Improvements were of a value of $1,200, on the evidence of the defendant's valuer which I accept as favourable to the plaintiffs. I therefore assess compensation at $11,116. Murran Investments Pty Ltd: This plaintiff was the owner of lot 12. The area was a little over 23 acres and I assess the value thereof at the date of acquisition at $1,900 per acre, making a total of $44,000. A sum of $34,650 was due to the vendor. The value of the plaintiff's interest was therefore $9,350. I do not allow additional interest for reasons which I have stated. I assess the compensation due to this plaintiff at $9,350. I therefore make the following orders: Orders: 1st plaintiff: (1) Compensation assessed in the sum of $3,385,923. (2) Defendant to pay the plaintiff $476,923. (3) Interest pursuant to the statute. (4) Defendant to pay plaintiff's costs. 2nd plaintiff: (1) Compensation assessed in the sum of $18,000. (2) Defendant to pay to the plaintiff $10,382. (3) Interest pursuant to the statute. (4) Defendant to pay plaintiff's costs. 3rd and 4th plaintiffs: (1) Compensation assessed in the sum of $35,000. (2) Defendant to pay to the plaintiffs $35,000. (3) Interest pursuant to the statute. (4) Defendant to pay plaintiffs' costs. 5th and 6th plaintiffs: (1) Compensation assessed in the sum of $11,116. (2) Defendant to pay to the plaintiffs $11,116. (3) Interest pursuant to the statute. (4) Defendant to pay plaintiffs' costs. 7th plaintiff: (1) Compensation assessed in the sum of $9,350. (2) Defendant to pay to the plaintiff $9,350. (3) Interest pursuant to the statute. (4) Defendant to pay plaintiff's costs. The usual order with respect to exhibits.