Alexandria Landfill Pty Ltd v Roads and Maritime Services; Boiling Pty Limited v Roads and Maritime Services

15.5 Consideration - highest and best use

1. Upon consideration of the evidence and submissions, I accept the Respondent's submissions on the highest and best use, and have come to the following conclusions: 1. On the DOA, there existed the potential to continue the filling of the landfill void, on Area E, as a profitable enterprise, provided the fill material attracted no landfill levy. This could be achieved by allowing fill consisting of excavated natural material (ENM), and could be totally filled in 8 years; and 2. Resource recovery (RR) activity was permitted under existing DCs, but was limited primarily to a maximum of 240,000 tonnes per annum, and time-limited to one further five-year extension, subject to the continuation of the landfill and the construction of a building in which to conduct RR; and 3. When the activities (1) and (2) above cease, at the end of the 8 years, the highest and best use of the land would be to liquidate it by sale of the unsubdivided areas post closure of the landfill, and to provide for long term leachate and land fill gas infrastructure and maintenance.
2. I shall now elaborate on my reasoning.
3. The Court accepts Mr Eastman's summary of the geotechnical considerations, which affect the highest and best use for Lot 2 (Tp2636, LL1-18): The way the geotechnical evidence affects my case directly is to say the highest and best use of this land is not for placement of an RRWTF on area E at the end of the landfilling operation and then have a discounted cashflow, to immediately project income from, I think we discussed, day 1 of year 9 yesterday, and I said to Mr Lancaster I think it is day 3,300, or something like that, but that's effectively what it is. The question is the applicants' valuation commences its income on the RRWTF from day 1 of year 9. That is not viable, it is not possible, and cannot be part of the highest and best use. That, on my case, is perhaps the critical issue that arises out of the geotechnical evidence and also what I think I perhaps described in questions to Mr Webster is what might be characterised as the disarray in the applicants' case of coordination between different experts on who is dealing with which part of timing and which part of the works that are being done on each of these components of the land.
4. Mr Eastman described the competing evidence, as follows (Tp2638, L29-p2639, L13): Your Honour might recall in a general sense I asked Mr Mostyn some questions about a lot of academic articles and about what projections were made for settlement, and what seemed to be germane to that were two things: whether you'd look at a snapshot like Mr Mostyn did, or whether you would look more broadly, like Dr Thomas did; and, secondly, if you would make some safe assumptions about what's already under the ground, which Mr Mostyn thought is pretty clean and unlikely to be biodegradeable and therefore causative of differential settlement over time, whereas Dr Thomas took a different view and he based that on bore hole logs and other things. That essentially means, if you were to accept Mr Mostyn's view, you are accepting as the applicants' (sic) put in their written submissions, yes, settlement might take a long period of time, but it's not of a significant magnitude that couldn't be dealt with. On the contrary, the respondent's evidence is you can't make that projection and to do so would be to deny two critical facts: one is what information we have on what's actually under the landfill; and, secondly, the approach that the academic articles have taken. If you accept Mr Mostyn, you've still got the first problem I have identified, but if you accept Dr Thomas, there is no way that there would be any real projection of doing development in the way that the applicants' (sic) have projected on essentially any of areas C, D and E without waiting or, alternatively, incurring such significant costs that before you'd even factor that into a DCF, that approach would be rejected. That's what Dr Thomas essentially said in the second joint report, which is court book tab 15. That then is the critical issue between them.
5. The Court prefers and accepts Dr Thomas's geotechnical evidence, on three grounds: 1. he holds qualifications, and has extensive experience, in assessing the geotechnical and geo-environmental engineering aspects of landfills, and in contaminated land regeneration. I accept his approach to the due diligence requirements, which are required to address the geotechnical risks associated with differential settlement, the decomposition of fill containing significant portions of wood waste, and engineering foundations required to develop the site. In contrast, Mr Mostyn has recommended limited due diligence considerations, beyond the AECOM geotechnical investigations. 2. Dr Thomas was more thorough in researching the differential settlement rates, and he considered extensive research done in regard to similar landfill sites, and the settlement of waste fill, both prior to and after the filling of the sites with structural fill. Noting the thickness of waste fill in PDA2 of the site, Dr Thomas's advice to the hypothetical purchaser considers the structural risks which would likely affect the site's development, if additional piling or an alternative foundation system were not to be adopted. 3. Mr Mostyn's evidence was premised on the assumption that the hypothetical purchaser holds "experience in developing large sites for industrial/commercial uses". Such an assumption flies in the face of authority. In Macarbell Pty Ltd v RTA; Nasser v RTA [2006] NSWLEC 366, Jagot J examined the "conventional" application of the Spencer test to the characteristics of the "hypothetical prudent purchaser". In particular, Her Honour observed (at [9]-[10]): 9 In applying the Spencer test, it is conventional to refer to the views of the "hypothetical prudent purchaser". I understand this to encompass the ultimate point at which the notional buyer and seller posited by the statute would meet (s 56(1) of the JTC Act). For convenience, I generally adopt the terminology of the "hypothetical buyer" on the basis that the reference includes the notional buyer and seller, cognizant of all circumstances which might affect the value of the land and acting on ordinary business considerations (as identified by Isaacs J in Spencer ). 10 Various circumstances potentially affecting the development potential of land (and thus its value) may arise. The relevant issue is the view of the hypothetical buyer and seller about those circumstances and their effect on the value of the land, not the circumstances per se ...
6. The parties to the hypothetical sale would have sought geotechnical advice regarding: 1. The extent and nature of geotechnical investigations that a hypothetical purchaser would be advised to undertake, to ascertain the state of Lot 2; 2. Whether, as at 19 December 2014, any part of Lot 2 was, or could be made, suitable for the erection of buildings for the purposes of industrial development; 3. The type, scale and structure of any buildings, which could be constructed and maintained on Lot 2; and 4. The extent of geotechnical works that would be necessary to enable any parts of Lot 2 to be used for future industrial purposes.
7. Although the Applicant and Respondent accepted the first component of the highest and best use of Lot 2, they proposed differing inputs (and businesses) for the agreed period Years 1 to 8. The Applicant suggested recycling operations on various parts of the site (Areas B, D and E) at line items 36 to 92 of the Years 1-8 Assumptions spreadsheet (CB 128AAA), but the Respondent provided competing final calculations in response to those line items at Annexure B to its final submissions.
8. Taking into consideration the two alternative business models, I accept that the Years 1 to 8 operations should be limited to the Respondent's model.
9. The relevant disputed line items (CB 128AAA) are: LINE ITEM APPLICANT RESPONDENT Line 34. Recycling activities Line 35. Include recycling activities? Y/N Y N Line 36. Other streams received (tonnes / year) 70,000 0 Line 37. Other streams % saleable 88.60% 0.00% Line 38. Other streams % waste timber (residual calculated) 11.40% 100.00% Line 39. Mixed waste tonnes recycled and sent offsite p.a. 168,000 134,400 Line 42. Plastic % of tonnes recycled 7.00% 0.00% Line 44. Timber % of tonnes recycled 25.00% 18.00% Line 46. Waste to landfill (residual calculated) 34.90% 48.90% Line 47. Initial Capital costs - recycling operations Line 50. Site establishment (year 0) $0 $139,842 Line 51. Site preparation (year 0) $0 $44,279 Line 52. Foundations and ground enhancements (year 0) $0 $502,000 Line 53. Construct final covered facility (year 1) $2,240,000 $2,372,000 Line 59. Contingency - % of building works 10% 20% Line 68. Operating revenue - recycling Line 69. Other streams gate fees $/tonne $31.35 $12.00 Line 70. Other streams sales price $/tonne $8.61 $8.00 Line 71. Mixed waste Gate fees $/tonne $130.00 $149.50 Line 77. Operating expenses - recycling Line 79. Wages - $/tonne (variable cost) $11.58 $17.06 Line 80. Timber disposal ($/tonne) $30.00 $75.00 Line 81. Inert fraction disposal ($/tonne) $5.00 $8.00 Line 91. Transport inert fraction ($/tonne) $4.50 $7.50

1. That table of figures assists the Court in assessing the financial feasibility of the operation in years 1 to 8. I reviewed that table, and the expert evidence from the business valuers, waste operations experts, and quantity surveyors, in light of the requirements for an intending purchaser to undertake a detailed and extensive due diligence investigation, prior to purchasing the site. I also considered the relevance of the future costs associated with the geotechnical works, landfill closure and the specific environmental management of Lot 2 in the post-closure period forthcoming years.
2. I accept the Respondent's submissions on the recycling operations in years 1 to 8, on four grounds:
3. Firstly, the town planning experts agreed that DC would be required for the construction of a temporary shed: CB 3, p19; Tp208, LL30-35. They also agreed that DADI had not complied with the conditions of the waste recycling consent: Tp206, L41-p207, L8. The hypothetical purchaser is already presumed, on either scenario, to either negotiate with the relevant authority or comply with the necessary regulatory approvals. More importantly, the Court is concerned with the very minimal time considerations taken into account in Mr Webster's proposed negotiations with Council. Further, Messrs Webster and McLandsborough's suggested construction of an undercover facility, on three occasions within an eight to ten year period, increases capital costs dramatically for a hypothetical purchaser.
4. There are no cogent reasons for the Court to accept that the hypothetical purchaser could derive income from day one, or even in year one, after the DOA.
5. Secondly, the Court prefers the waste operations evidence given by Messrs Haywood and Berkefeld, which would be cogent advice for a hypothetical purchaser, due to the existing DC, EPL, and the recycling operations, existing at the DOA. I have also considered the significant limitations of the recycling operations.
6. Messrs Haywood and Berkefeld provided a detailed analysis of the cash flow projections, and considered three options for the waste operations business: firstly, landfilling for 8 years, by importing waste soils; secondly, operating a mixed waste recycling business, with disposal of residuals offsite; and, thirdly, operating a temporary crushing operation, to crush existing concrete stockpiles for re-use on site. Observing the key operational limitations of the site, I accept Messrs Haywood and Berkefeld's characterisation of four principal issues: 1. The hypothetical purchaser would continue to operate for the remaining three years of the existing DC and then likely seek to obtain a five year extension: CB 46, par 55. 2. The hypothetical purchaser/operator would be required to construct an undercover facility prior to commencing recycling operations. The town planning experts agreed that the shed would need to be constructed, in accordance with DA No 200700278.01 and DA No 200300514.01. Accordingly, the recycling operations would need to be delayed for the first 15 to 18 months, in order to allow for the shed's construction. 3. The hypothetical purchaser/operator would have ongoing obligations to manage existing and future environmental issues arising from its operations, such as leachate, landfill gas, noise, dust, traffic and stormwater: CB 44, p20, pars 86-87. 4. The hypothetical purchaser/operator could accept only a maximum volume of 240,000 tonnes per annum of recycling waste under the condition of the EPL. However, the recycling operations would have to cease within six months of the cessation of landfilling. Crushing operations would not be viable, as the recycling DCs include crushing restrictions, and the crushing operation would suffer from low returns, and require additional costs by way of both capital and labour. Mr Haywood correctly opined that the importation of waste soils over eight years would be the most economically viable operation.
7. Thirdly, the Court has reviewed the contingency costs for the construction of the multiple recycling facilities. Mr Lawson's QS evidence is to be preferred, because Mr McLandsborough did not adequately justify aspects of the project design, nor outline contingent costs associated with the suggested plan. In contrast, Mr Lawson was an impressive and clear witness, who included considerations which would be appropriate to account for the risks and indirect costs associated with the QS aspects of the project design. I accept the Respondent's submission, in relation to the quotation from "Taylor Constructions", which was not able to be tested in Court, and did not include any consideration of the information which was used to determine the estimated cost. Accordingly, I accept that a contingency cost of 20% was more reasonable, in advising the hypothetical purchaser on the quantum of risk and associated costs with either project design option.
8. The final consideration relates to Mr Lunney and Dr Ferrier's "disregard" of the Years 1 to 8 recycling operations. The Applicant oversimplified the Respondent's approach, by stating that this business was rejected because "Mr Lunney advised Dr Ferrier that recycling activities would not take place" (reply subs p12, par 50). Mr Lunney and Dr Ferrier's joint advice refers rather to the Applicant's expert evidence (CB 128, pars 3.1.-3.2.): 3.1. Dr Ferrier notes that the Joint Waste Expert Report indicates that Messrs Haywood and Berkefeld "would advise the HP to allow for a period of between 15 and 18 months after the acquisition before waste recycling operations could commence" (paragraph 15). This period is necessary for the completion of construction of the undercover recycling facility. 3.2. The consequences of the delayed commencement of operations (resulting in a shorter operational life), the high initial capital costs and the low operating profitability of the waste recycling operations are such that the net present value of the cash flows from those operations is less than the market value of the land (Area B and, possibly, Area A) which would be used for those operations…
9. Mr Lancaster relevantly recorded the opinion of Mr Lunney in these terms (Tp2725, LL7-28): What he did say was that if there were identified areas of land not required for immediate operational purposes, that that could be the subject of a lease and receipt of ground rent, as he describes it. After obviously a great deal of subsequent evidence and analysis of other alternatives and possibilities, with the exception of the waste management operations being undertaken by the incoming purchaser, that is, in essence, what the RMS still contends a purchaser would regard as a reasonable and feasible use of the land. The opinion of Mr Lunney, as we record in paragraph 1020, was that an intending purchaser of the subject property as at the DOA would capture the terminal land value in a DCF calculation by assuming a sale of the subject property after the completion of landfilling activities eight years after the [DOA]. We invite your Honour to make a finding to that effect and to accept that proposition as the highest and best use of the land…
10. To this point, I have generally reviewed the viability of the various business operations in Years 1 to 8.
11. However, beyond those components of the DCF model, I assessed the viability of the Applicant's plan of subdivision and proposed RRWTF business in years 9 to 29.
12. The Court does not accept the propositions for that extended period, and prefers the Respondent's submission that Lot 2 would be sold at the end of year 8, without any prior subdivision of the land, rather than the Applicant's suggested subdivision of surplus land and operation of a RRWTF in years 9 to 29.
13. Without repeating all that has already been said, I should briefly summarize why I reject the proposed subdivision: 1. The Applicant has submitted inconsistent plans for subdivision, being SKC23, SKC23B and SKC33B, in support of its submissions on different aspects of the plan. These include: 1. In its closing submissions (par 36), the Applicant relies on SKC22B for the fill profile, and SKC23 for the staging of development, in accordance with filling and development (see subs pars 253-255, 258, 266, 267, and 328). However, the Applicant relies on SKC33B in its submissions in reply (pp59; 84; and 86). 2. In its submissions, the Applicant relies on SKC23 to justify the construction of retaining walls, which would be "fully-functional keystone earthen walls": Applicant subs par 393. In its reply submissions (Appendix 1, par 86), the Applicant relies on SKC33B to disregard the necessity for certain retaining walls: 1. The hypothetical purchaser would need to factor in several key limitations, which would delay any subdivision of Areas A to E - filling of different aspects of the site (including a structural fill layer and capping), settlement, variation or applications for planning and environment instruments (EPLs, DCs, modification applications, easements, licences, post-closure plans etc.), post-closure requirements for waste facilities, and renegotiating or excising licence areas. 2. The hypothetical purchaser would need to consider existing environmental management infrastructure, including the Botany Sands Interceptor, the herringbone leachate drains under the land, the SBR, and the discharge to trade waste. Further works would also be required to establish an active gas management system, and upgrade the leachate plant, stormwater retention ponds and gas flare. Any subdivision would require consideration of significant environment management works, differential settlement, project designs, and regulatory requirements. 3. The hypothetical purchaser would be required to construct an internal road, in order to facilitate access to proposed areas of any subdivision. There is insufficient evidence before me on how the Applicant's DCF accounts for the capital costs involved, the timing of the road construction, regulatory approvals (including access, easements etc.), and design amendments to account for the environmental management infrastructure.
14. Mr Lancaster put to Mr Dyson, in cross-examination, the twenty-five steps (to which reference is made at [495] cf., [510] above).
15. Relevantly, Mr Lancaster's submissions drew the following from the cross-examination of Mr Dyson (Tp2725, L4 to p2726, L22): It became very clear when I asked Mr Dyson about the matters that he considered when expressing his valuation opinion, that he did not consider as a valuer any question of proposed feasibility of the subdivision proposal that's contained in SKC23. I put to him the series of steps that have now found their way into our written submissions that I addressed previously, and it's probably fair to say that he hadn't turned his mind and/or expressed an opinion or conclusion about any of those important steps. What he's relying on is not really clear. His opinion, in my submission, cannot be taken to be a free-standing expert opinion of a valuer that something like SKC23 was achievable or viable from his perspective as a valuation expert. He can't express that opinion, because he didn't take into account the matters that would be necessary to be taken into account before expressing an opinion like that. What he did agree, as we record in 1025, and this is important, your Honour, is that if the highest and best use of the land is not some sort of subdivision proposal like SKC23, the land would be sold at the end of the filling process in one lot. That alternative is of course the alternative that we put forward as the highest and best use of land. Even then, he has a different valuation in terms of a rate compared to Mr Lunney, but he agrees that if subdivision isn't viable, then that's the approach that the incoming purchaser of lot 2 would take to fixing a price.
16. I accept the Respondent's submissions that the RRWTF would not form part of the highest and best use of Lot 2, as it is "speculative, and not a proper assessment of market value": Respondent subs par 236.
17. The most relevant dispute in the evidence relates to the conflicting opinions of the business valuers, on the anticipated cash flows, and appropriate discount rate. For the Applicant, Mr Samuel propounds a uniform 8.7% discount rate, whereas Dr Ferrier, for the Respondent, applies a 50% increase to his original discount rate for the Years 1 to 8 businesses, and subsequently arrives at a 20.9% discount rate.
18. Mr Hemmings criticised Dr Ferrier's discount rate, as follows (Tp2402, L36 to p2404, L24): Then you've got Dr Ferrier, with the greatest of respect to him, carrying out a totally unacceptable and arbitrary step but one which makes many, many tens of millions of dollars of difference, and that is, he takes his already, in our submission, wrong and too high 13.9 per cent, and the court will recall just adds 50 per cent. Whereas beforehand there are comparable sales and analysis of EBITDA and calculations of multiples and all sorts of complex and able-to-be-tested analyses carried out, all he does is add the 50 per cent and it's entirely unacceptable and, in our submission, will be rejected and, as I say, hides the very significant difference. In fact, it changes the future operations from being unprofitable to profitable, even if one just adopts or continues to adopt his 13.9 per cent, let alone if the court does what it says we would submit is the correct approach, and that is to adopt the 8.7. … Now, there is suggestion by Mr Lunney and Dr Ferrier that there needs to be an intimate connection which is not a limitation that we accept. But even if it is one and there needs to be that intimate connection in order to use the DCF, there is here a clear example where you have an historical landfill where there are continuing obligations to carry out about half a million dollars a year for the next 20 to 30 years ongoing environmental management tasks and costs to have the person with those obligations remaining on the land, and not only the land but to the great satisfaction, one would have thought, of someone like the EPA or the then current licensing body, to know that they are not just relying upon the financial assurances, for example, that are put in licences, but rather they have an owner of land with a continuing and significant income stream because of the ongoing resource recovery and waste transfer facility that will be on area E. … The other concern, as we understand it, by Dr Ferrier was it's a new business. With respect, the court will ultimately prefer the evidence of Mr Samuel on this point where there was no real understanding of the new business. It's a continuing landfill resource recovery operation by an experienced operator where, yes, licensing and consent regimes change, but that is already a component part of the discount rate, and it's already a component part not of Dr Ferrier's extra 50 per cent, because that's already included in the discount rate for the continuing operations on the site where it's accepted. Even now there is the ability to obtain consents, modify consents, comply with licensing regimes and other policy requirements. That appears to be no reason for the departure from the DCF. The third thing was well it's in year nine. The forecasting of cashflows, as Mr Samuel tells us, is something which is common and frequently done on a 20-year timeline. It is part and parcel of the discounted cashflow model. There is no reason to depart from the use of the otherwise agreed process to the valuing of the land merely because one is looking at a cashflow in year nine as opposed today a cashflow in year one. Otherwise, the matters in the table are consistent.
19. On the other hand, Mr Lancaster's oral submissions on the differences between the discount rates (Tp2753, L43 to p2755, L38) included the following: The approach that Mr Samuel takes to that supposed business is to apply his 8.7 per cent discount rate to the anticipated perpetual business income from that facility starting in year 9 and thereafter. Your Honour's right, there is an overlap between that topic 3, paragraphs 1158 to 1166, and the submissions we have made at paragraphs 1138 through to 1149 address the derivation of the discount rate for years 9 to 29. We probably should have put paragraphs 1138 and following in the topic 3 assessment. Your Honour, as a matter of conflicting opinion on the applicable discount rate for that year 9 and thereafter operation, the competing expert opinions of Mr Samuel and Dr Ferrier are, of course, Mr Samuel with his 8.7 per cent which, by his adoption of the same discount rate as the operations as they are to be conducted in the first eight years necessarily assumes and conveys that those cashflows have the same risk in his view. That's an important point to note, because we rather impress upon the court, consistently with Dr Ferrier's approach, that an incoming purchaser of lot 2 would see a markedly different risk profile for the suggestion that there is a new business that can be implemented on a new area of land in year 9 after I buy this property, the RRWTF, and I'm going to apply exactly the same approach to my assessment of risk of that income as I do to the income I can earn in years 1 through to 8 from a business just like the business that's conducted currently on the land, the landfilling operation. At that broadest of levels, we say Mr Samuel's assessment does not ring true in the sense that it does not reflect commercial reality, surely, that an incoming purchaser of lot 2 would think that those year 9 and following cashflows have the same risk profile as the first eight years. … [Dr Ferrier] does say, "If I need to apply a discount rate to it" - in other words, if he is meeting his opposite number's assumption - "there should be a discount rate applied to the cashflow for those years." He has put forward a discount rate of 20.9 per cent, and we refer to this in paragraph 1143. His reason for doing so was certainly robust. It was broadbrush but, nonetheless, robust, in my submission. He added half on again to the calculated discount rate that he applied to year 1 to 8 cashflows, a 13.9 per cent. He added another 7 per cent, 50 per cent of that existing. One can understand why Dr Ferrier took a broadbrush, robust approach, in my respectful submission, and that is because of the character of the cashflows that he was being asked to advise about. They did have the character of great uncertainty and ambiguity. This wasn't even then land that was capable of maintaining an RRWTF. That was something that the land from which this enterprise was to take place was not even in place. It was something that had to be filled and capped and dealt with. All the other steps that needed to be taken to achieve this pie in the sky, this area E, RRWTF, had to be achieved before the first dollar was earned that was to be discounted, according to the analysis. Our friends have been deeply critical of Dr Ferrier for his 20.9 per cent discount rate for those cashflows in year 9 and following but, in our submission, in the circumstances that he was faced with and being required to come up with a discount rate, he did a reasonable and supportable job of it… It is obviously preferable, as a matter of expert opinion, to Mr Samuel's insistence with the same 8.7 per cent that he applied to that cashflow because, as I said a few minutes ago, it is absolutely plain that there are very different, additional and substantial risks associated with the idea of earning that income from the RRWTF in year 9 and following. There must be some adjustment. It cannot possibly be the case that the same risks are associated with that future cashflow as they are with the short-term future cashflows. Mr Samuel's position is simply unjustifiable, in our respectful submission.
20. On one hand, Mr Samuel has applied a uniform discount rate, without a clear consideration of identifiable risk, beyond the rate itself.
21. On the other hand, Mr Lancaster relevantly records that Dr Ferrier increased the years 1 to 8 discount rate, in order to account for "apparent risk uncertainty, ambiguity, about the way in which those future cashflows could be earned": Tp2755, L47 to p2756, L2.
22. Applying Mosca, at [15] (see [126] and [478] above), the "basic principle of compensation law is that the land must be valued at the relevant date in its existing condition with all its potentialities as potentialities". On a regulatory level, Mr Lancaster relevantly records (Tp2756, LL4-21): We have identified and summarised in paragraph 1144 just how different the business that's proposed from the RRWTF is considered by the applicant to be. Rather than an enterprise that deals with 240,000 tonnes per annum of material, as was permitted on lot 2, the theory is this the RRWTF can deal with half a million tonnes a year. Unlike the operation on lot 2, it will be able to receive putrescible waste, apparently. We don't know the basis for that or how that could be thought to be permissible or consistent with the Environment Protection Authority's attitude to the land. It involves a shed that's three times as large as any shed that's been approved on the balance of lot 2 historically. It is expected to operate in perpetuity, not to have consents and approvals limited in time, as every consent and approval that has ever been applied to lot 2 has had imposed on it. ...
23. The RRWTF would require considerable regulatory, financial, environmental and geotechnical consideration, in order to be accepted as part of the highest and best use.

15.6 Conclusion - highest and best use

1. I accept the approach urged upon the Court by the Respondent's submissions (pars 237 to 239): 237. The respondent's approach, as a consequence of this is to: a. Value the land on the basis that its best potential, is to be filled over 8 years and sold; b. Consider and cost the recycling operations during that 8 year period, but given it is not commercially feasible (and makes a loss) to dismiss that as any component of highest and best use; c. Apply a valuation pursuant to the DCF method having regard to the income to be generated from filling and the expenses associated with the land use; d. Include a terminal value for the land to be input, on the basis it will be sold (as a single lot) at the conclusion of 8 years; and e. Dismiss the subdivision and long term RRWTF options as either speculative or without foundation on the basis of the information presented to the s 56 parties (and the Court). 238. As has been set out above, the respondent has prepared a spreadsheet being what it contends is the appropriate DCF method and model to be adopted. It does not account for subdivision, it does not account for any income (or loss) from the Yrs 1-8 recycling business and it does not speculatively project income from the non-existence RRWTF for Years 9-29. 239. That document, Appendix A, to these submissions, is the Yr 1-8 landfilling, with a terminal land value. That is the highest and use (sic) from a regulatory, physical and economic perspective.
2. In the interests of brevity I will not include in this judgment the detailed spreadsheet in Appendix A to the Respondent's submissions, but I accept it (and Appendix B).
3. Accordingly, I have concluded that the RRWTF operations are no more than speculative, and would not form part of the highest and best use of Lot 2, which, put shortly, I find to be to fill the land for 8 years and then sell it in a single parcel.

16.1 Introduction

1. Having assessed the highest and best use, it is now necessary to settle on appropriate figures to determine the market value of Lot 2. Some of those elements were ultimately agreed upon by the parties' experts.
2. However, I have borne in mind what Allsop P (as His Honour then was) opined in Caruso, at [3]-[4] (Sackville AJA agreeing, at [191]): 3 The general principle that in determining compensation to a dispossessed owner doubts should be resolved in favour of a more liberal estimate is well-known: see generally A Hyam The Law Affecting Valuation of Land in Australia [("Hyam")] (4th Ed 2009 Federation Press) at 316-318. That does not, however, detract from the need to engage with and evaluate evidence and competing witnesses. If, however, upon engagement and assessment, the judicial valuer finds, for example, as Anderson J did in Cook and Edwards v City of Sterling (1991) 4 WAR 469, that the reasoning of both valuers was not fallacious, that their respective capitalisation rates were open, that none took into account irrelevant considerations and no errors otherwise appeared, the proper conclusion might be that there are simply two open views on the relevant issue - as there can be in ascribing a value: cf Fenton Nominees Pty Ltd v Valuer-General (1981) 47 LGRA 71 at 76-77. In such circumstances, applying the general principle would be uncontentious. 4 It is not helpful to examine the scope of the general principle in the abstract beyond saying that it is not a licence to accept one expert over another without undertaking the task of assessing the evidence in the usual way. If a judge properly undertakes that task, the evaluation of the evidence may well persuade the judge to accept the evidence favouring the resuming authority. That would be a product of assessing the evidence. That process is not to be abandoned as the statement of the judge at [81] of her reasons would suggest she did.

16.2 Contamination Considerations

1. Line items concerning site investigations (Line 95) and treatment of non-compliant stockpile(s) (Line 96) required consideration of the contamination experts' opinions, (see CB 21 to 31, and section 10 above). The parties primarily contested the costs associated with handling the non-compliant stockpiles, especially SP21.

16.2.1 Applicant's Submissions

1. The Applicant submitted the Court should accept the advice of Dr Ryall, Dr Martens and Mr Webster, on two grounds.
2. The first ground related to the credibility of Mr Clay as a witness. At first instance, the Applicant stated that Mr Clay "is not qualified to advise operators since his experience is limited to carrying out auditing functions rather than actual operations" (par 183). Further, the Applicant raised significant concerns with the AECOM (2015) Phase 2 Environmental Site Assessment (Draft) dated 6 May 2015 because Mr Clay was a reviewing author of that document. In its submissions (par 182), the Applicant contended that Mr Clay's evidence should be dismissed because: "As a witness he is not suitable to give objective evidence to either of the hypothetical parties due to the fact that he had already provided advice to the acquiring authority - regarding its specific purposes and notably at a time when that client was understanding only environmental constraints on its proposed use - which creates inherent conflicts of interests: Willoughby City Council v Transport Infrastructure Development Corporation (No 2) [2008] NSWLEC 238 at [11]."
3. The Applicant listed (subs par 184) several reasons for submitting that Mr Clay's evidence was "particularly partisan". In particular, the Applicant criticised his demeanour during cross-examination, and complained that his advice was premised on a "reasonable worst case" scenario.
4. The Applicant's second ground required the Court to accept Dr Ryall's classification of the stockpiled materials. The Applicant advanced the following propositions (par 187), derived from Dr Ryall's evidence: "• The relevant Clean Up Notices required only that (sic) sensible action referable to the adoption of the Proposal. Indeed, it is agreed to be a "reasonable position" that the various Clean Up Notices given by the EPA could only apply to material added to the Site after 2007/2009. ... • The work required under the relevant Clean Up Notices was at or nearly complete at the [DOA]; • Stockpiled materials did not, of themselves, require any classification or qualification under [Resource Recovery Operation]; • Classification and qualification would follow processing if there was a desire to sell such materials as new product; • Subsequent evidence - ie that not strictly available at the [DOA]- could confirm a foresight that such material could be reasonably foreseen to be fit to be sold at a profit - this includes any material in Stockpile 21 if this was desirable."
5. In particular, the Applicant emphasised (par 180) that the hypothetical purchaser would not "need to make any allowance for disposal of materials stockpiled in the recycling premises or, alternatively, would make a significantly smaller allowance for the net cost of sorting and disposal of unusable parts of those stockpiled materials than to simply 'condemn' extremely large volumes of material to disposal".

16.2.2 Respondent's Submissions

1. The Respondent contended that Mr Clay's evidence should be preferred, as his advice takes into consideration the risk profile of Lot 2, and its significant effect on the purchase price. In particular, the Respondent submitted that Mr Clay's advice should be preferred on several grounds:
2. Firstly, the Respondent contests the reliability of Dr Ryall's evidence and the ADE reports, in relation to waste classification, processing and compliance regarding SP21. In particular, ADE had tested only 21,016m3 of SP21 for asbestos, and had concluded that the rest of the stockpile complied with the Clean-Up Notice requirements. In contrast, Mr Clay utilised the ENVIRON and AECOM reports to confirm his foresight that SP21 and other stockpiles contained asbestos. Further, RMS relies upon the EPA letter to Mr Jewell dated 8 July 2015 (TB 267), in order to confirm SP21's volume and that further clean-up action was required.
3. Mr Clay also considered ADE's classification of SP298 as non-putrescible waste. Since SP298 was reported to contain asbestos, he confirmed that any stockpile containing asbestos should be classified as "special waste asbestos". In accordance with the EPA Waste Classification Guidelines, ADE's misclassification of SP298 was, therefore, potentially unlawful. Accordingly, Mr Clay's evidence would be preferred, as he relies on consultant data to estimate risk, in accordance with the Clean-up Notices, and relevant waste classification guidelines.
4. In relation to the other stockpiles, Mr Clay's evidence is that the advice that would be given to the willing but not anxious hypothetical parties to the sale of Lot 2, on the basis that Lot 2 was subject to a Clean-Up Notice at the DOA, would cause concern to a hypothetical purchaser that the other stockpiles may also carry significant liability. Furthermore, the Environ Report demonstrates that 21 of the 23 stockpiles on Lot 2, at the DOA, were not able to be immediately processed and sold, without further work and testing. In the Respondent's submission, Dr Ryall and Dr Martens fail to consider, or even acknowledge, the significant risks associated with the other stockpiles, which is not the advice that would reasonably have been provided to the hypothetical vendor and purchaser of Lot 2.
5. Finally, the Respondent noted that the "processing" and "blending" costs set out in Table 1 - Other Stockpiles, were agreed between the waste operations experts. It is, therefore, only the revenue that was not agreed between them on a rate per tonne basis. The Respondent submits that Mr Clay's position on processing costs should be preferred, for the reasons set out above, in relation to the classification and processing of the other stockpiles. Further, the Respondent submitted that Dr Ryall appears to have made mathematical errors in his costings, and did not adequately explain why he departed from the processing costs advised by the Applicant's waste operations expert, Mr Webster.
6. In terms of Mr Clay's credibility, the Respondent noted that he has extensive experience as an environmental consultant and auditor, qualifying him to provide advice regarding the pre-sale due diligence, regulatory compliance, Clean-Up Notices, contamination, and asbestos. For all stockpile processing costs, Mr Clay relied on the waste operations experience and expertise of Mr Haywood.
7. The Respondent also refuted the charge that Mr Clay's evidence was "partisan". He had genuinely attempted to assist the Court, by, firstly, preparing eight comprehensive expert reports; secondly, utilising consultant reports post-acquisition to confirm his foresight; and, thirdly, providing adequate reasons for his amendments to final costings for non-compliant stockpile treatment.
8. The Respondent also clarified Mr Clay's use of the term "reasonable worst case". He used the term specifically within the context of determining the liability cost, which the hypothetical purchaser could reasonably incur in managing the non-compliant stockpiles.
9. With regard to the compliance issues, the Respondent emphasised that the DCF model is not "inherently suitable to resolve" risks. Rather, the hypothetical purchaser, acting reasonably, would consider Mr Clay's evidence, as part of its pre-sale due diligence investigations. In particular, the hypothetical purchaser would recognise that the EPA's Clean-up Notices were directed to a volume of 164,995m3, instead of to "placed", "stockpiled", and "cover" materials, as categorised by Dr Ryall. Accordingly, the hypothetical purchaser would be informed of the risk, based on the specific terms of the Clean-Up Notices and the EPLs.
10. The Respondent also emphasised the significance of the extensive consultation process between DADI and the EPA, in which the EPA negotiated several variations to the clean-up notices. Accordingly, the hypothetical purchaser would not assume that the EPA would disregard this consultation process, and reduce the stockpile volumes for its new waste operations business.

16.2.3 Consideration

1. Both experts are appropriately qualified to advise the hypothetical purchaser, and have assisted the Court in determining the relevant costs. Having considered the competing considerations advanced by both witnesses, I have accepted Mr Clay's evidence on the appropriate values to insert into the DCF spreadsheet for line items 95 and 96.
2. It is relevant to highlight here Mr Lancaster's oral submissions on the hypothetical purchaser's position on contamination and stockpile management issues (Tp2684, LL3-8 - emphasis added): …If the clean-up notice meant what it said, obviously that would be a very substantial monetary liability immediately after the purchase of the site, and that would be something that would be taken into account in fixing the sale price by effectively taking it out of what would otherwise be offered as the sale price.
3. Taking into consideration the hypothetical purchase and sale, Mr Lancaster relevantly identifies Mr Clay's interpretation and investigation of the site contamination issue (Tp2685, LL6-21 - emphasis added): By way of background for the use of the site in terms of DADI's business operations taking advantage of what was permitted on the site by the EPLs, Mr Clay looked, among other things, at the historical uses of the land. In paragraphs 457 and 458 we reproduce tables from his report indicating historical non-compliances with the environment protection licences. That has a relevance, your Honour, because, as we'll come to see, there was evidence in the proceedings, certainly in relation to stockpile 21 but also in relation to other stockpiles in the site, they were working stockpiles for many years, in the sense that the operator had been adding to and subtracting from the stockpiles as time progressed, the precise configuration and location of the stockpiles on the land varied over time and the volume, of course, in particular of stockpile 21, but also other stockpiles, changed over time.
4. Mr Lancaster relevantly characterises Dr Ryall's evidence (Tp2685, LL23-38 - emphasis added) as follows: It is part of our eventual proposition that one of the reasons that Dr Ryall's theory about a three-way stratification of stockpile 21 and his admittedly made-up identification of the labels of that three-way stratum that he identified in stockpile 21 is an unrealistic view of what must have been the condition of the stockpiles given that they were working stockpiles that changed dramatically in volume and shape over very many years of operations. I'll come back to it, of course. It was Dr Ryall's view that there was a distinct top layer that contained asbestos that could be removed, but then a clear middle stratum that didn't have to be taken to landfill or otherwise dealt with by the incoming purchaser below which lay another stratum which, likewise, formed the other slice in the asbestos sandwich, as it were, is an entirely unrealistic approach to have taken to the analysis of stockpile 21.
5. I also record Mr Lancaster's submissions regarding SP21, and its inherent liability for the hypothetical purchaser (at Tp2688, LL11-45): As we observe, the cleanup notice remained on foot and, we say, unsatisfied, certainly not amended or withdrawn, by the EPA at the date of the acquisition. Stockpile 21 itself, as I mentioned, was a stockpile that was a working stockpile over the years, and its precise boundaries no doubt changed from time to time, but there is a depiction of it at two particular times that we've reproduced in paragraph 467. The green line is the June 2011 drawing of stockpile 21's boundaries by Vekta, as our footnote 206 records, and the black outline is the AAM December 2014 depiction of the stockpile 21 boundary, a slightly larger area than back in 2011, which reflects its movement over time. As we record at the end of paragraph 469, what Dr Ryall says is that stockpile 21 represents a liability to a hypothetical purchaser of about $1.2 million. Contrast that with Mr Clay's advice, who would have advised the purchaser that none of stockpile 21 can be considered as a potential resource, that there would be an applicable levy of about $120 per tonne required to be paid on a volume of approximately 143,979 cubic metres. This is recorded in paragraph 470 of our written submissions. Your Honour, that 143,000, almost 144,000 cubic metres, reflects the volume identified in the clean-up notice, or thereabouts, less about 20,000 or 21,000 cubic metres that had been taken out pursuant to the "Proposal" before the [DOA]. So, as at the [DOA], the incoming purchaser would have appreciated that there was a volume of about 144,000 cubic metres of stockpile 21 that the clean-up notice required to be removed. If one puts that into dollar terms, [it is] a very substantial immediate liability for $31,332,709 for stockpile 21.
6. In accepting reports produced after the acquisition, the Court carefully restricts such evidence to confirming the foresight of the substantial due diligence process and associated costs, which a hypothetical purchaser would undertake upon purchase of the land at the DOA.
7. Dr Ryall's choice of categories to describe materials within the stockpiles is neither related to any approved study, nor prescribed by any relevant regulatory body, or environmental report. Mr Clay correctly identified the issues with Dr Ryall's reliance on the ADE reports. Accordingly, the Court accepts Mr Clay's calculations for the costs in line items 95 and 96.

16.3 Quantity Surveying

1. As part of the valuation process, the Court is required to determine the relevant inputs for project designs subject to capital costs, and rates for contingencies and other margins. Both parties rely on the evidence of their respective quantity surveying experts (section 12 above), in order to resolve disputes regarding a range of line items in the DCF.

16.3.1 Applicant's Submissions

1. The Applicant made submissions only in relation to the "scope of works"; and accepts that the quantity surveying evidence is dependent on the Court's findings on the "highest and best use", and the other expert evidence.
2. Where there was a margin of difference, the Court was urged to prefer Mr McLandsborough's evidence, because "Mr Lawson could not identify that Mr McLandsborough was 'wrong' and ought not to be accepted" (Applicant subs par 392).
3. On the Applicant's best case, the fill profile is across the whole of the site, necessitating construction of retaining walls at the perimeter. In that event, the evidence of Mr McLandsborough as to the construction type, and cost, should be preferred, in that a fully-functional keystone earthen wall could suffice for the purpose of giving advice, and could be significantly less expensive than a unitary block wall system, with "core rebar" and a substantial toe-footing (at up to four times the cost).
4. In any event, as Exhibit A13 shows, an alternative position is still economically viable: that is to fill the Site to only level RL10 (cf., RL11 - see [272] and 495 above). That involves a loss of potential fill material of up to 230,000m3 (with consequent loss of income), but provides for a contoured final landform capable of supporting future land uses without significant retaining walls (and their cost), or, by way of further alternative, moderate retaining walls (at some cost), but allowing for a restoration of 180,000m³ of fill (and its value as a revenue source).

16.3.2 Respondent's Submissions

1. The Respondent advanced four submissions, as to why Mr Lawson's evidence would be preferred by the Court:
2. Mr McLandsborough trained not as a quantity surveyor, but as a civil designer, and does not have the qualifications or experience to provide advice on costs related to tenders for work on: 1. The closure of any site similar to the subject. The only site in his CV with any similarity was a site used as a dump, but the work there required only removal of material that could not be compacted. There was no leachate or gas infrastructure. The dumped material was simply removed and other material was then imported and compacted; 2. Any cost estimates for works related to landfill closures including leachate and gas systems; 3. The capping of a landfill. Whilst he has had experience in laying and compacting material, this is not relevant, as other works, such as leachate and gas control are incorporated into the capping works; and 4. EPA requirements for capping works.
3. In contrast, Mr Lawson has qualifications and experience, which are relevant to providing cost estimates for works such as those listed above, and landfill projects similar to that on Lot 2.
4. Secondly, Mr McLandsborough relied on costs provided by Taylor Constructions for the RRWTF building, foundations and ground enhancements (Exhibit A9, pp6, 8 and 12). The Respondent considers this evidence "unsafe", because the Taylor Constructions evidence ([534] above) was untested, and the quote did not disclose the considerations which were used to provide the cost estimate.
5. Thirdly, the Respondent submitted that Mr McLandsborough was "the draftsman who … represented the opinions of others as to certain matters on SKC23". The Respondent relies on the evidence given by Mr McLandsborough in cross-examination, and on Exhibit R19 (at 4-5), to support this conclusion. In cross-examination, Mr McLandsborough conceded that he had not incorporated leachate and gas management systems. Further, he had not determined: 1. The size or location of proposed buildings on Area E; 2. The location of the internal road; 3. SKC23 as the highest and best use for the land; 4. The delineation of Areas A to E, or why Mr Mostyn's suggested subdivision was amended; and 5. The implications of filling the site (independently of the other experts).
6. Specifically, achievement of finished levels of RL11 (see [272], 495, and [583] above) would result in a difference in levels of up to 9m to adjoining sites. The Respondent observes that these issues have very significant implications for the site's development, as such factors affect the amount of waste fill that may be brought onto the land, and thus the profit that the existing operations could have made in the next 8 years.
7. Moreover, it also affects Mr Dyson's valuation (for the Applicant) of the subdivision of Lot 2. In particular, Mr Dyson assumed that the levels of the allotments would be the same as adjoining land, and would not have large walls to adjoining neighbours.
8. In order to avoid the inconsistency between the assumption made by Mr Dyson and what SKC23 actually showed, Mr McLandsborough prepared a revised plan of finished levels, SKC33 Revision B. One result of this was to reduce the amount of fill by almost a quarter of a million cubic metres, which could result in reduced cash flow of the order of $20m-$30m. It would also appear likely that the landfilling would be completed more quickly than that in the Applicant's pleaded claim, but the claim has apparently not been adjusted in this regard. Alternatively, Mr McLandsborough suggests a wall up to 2.4m, or a batter with a different grading.
9. The fourth submission relates to contingencies.
10. Mr Lawson allows 20% for contingencies in all scenarios, and the Respondent states that his view should be accepted, having regard to: 1. The schematic and concept nature of what is being costed. There is either no, or only preliminary, design, and scoping; 2. The evidently unclear and apparently fluid nature of the proposal, as set out above in terms of SKC23; 3. The high degree of regulatory involvement in many aspects of the work, which has the potential to change the scope and cost; and 4. His experience generally as a quantity surveyor, and specifically in relation to landfill closures.
11. Mr McLandsborough's differential contingencies in allowing a lower amount for the short-term scenarios should not be accepted. He agreed that the works in the long-term scenarios were not as complicated.
12. The short-term scenarios include the landfill closure works, in respect of which Mr McLandsborough is not qualified at all. Mr McLandsborough was unable to say anything about the likely impact of regulatory requirements on costs: Tp1527, LL23-38. Accordingly, his evidence on these aspects and the relevant contingency should not be accepted.

16.3.3 Applicant's Submissions in Reply

1. The Applicant did not make any specific submissions in reply to the Respondent's first submission (on relative qualifications of the QS witnesses).
2. In respect of the Respondent's second submission, the Applicant generally contended that (Tp2841, LL27-32): ... The costs of another of the large items was the construction of the shed. Those costs had been fixed by both of the experts using experience and also in the case of Mr McLandsborough being cross-checked against an actual quote. So there is certainty in relation to the cost.
3. In relation to the third submission, the Applicant responded (reply subs Chapter O, par 11): "the Respondent has attempted to set up a straw man argument about [SKC] 22 'authored' by Mr McLandsborough". In support of this conclusion, the Applicant relied on the following evidence: 1. Mr Mitchell's evidence that Lot 2 had the potential for consolidation of existing operations, allowing surplus land to be released: CB 2, p29; 2. Mr Mitchell's evidence that no control mandates particular lot sizes, and, therefore, other experts could be engaged to design the layout: CB 2, pars 93-98; 3. Dr Ryall's evidence as to the utility in consolidating operations at the Canal Road frontage: CB 21, p15; 4. Mr Mostyn's evidence on the suggested subdivision of land, in consideration of the Mitchell report: CB 12, p25; and 5. Mr Mitchell's evidence regarding the ability to fill to surrounding levels: CB 2, p28.
4. In consideration of this evidence, the following plans were developed: 1. SKC22, being the concept plan for filling, consolidating and subdividing the land; and 2. SKC23, being the staging plan.
5. The Applicant's opinion is that the Respondent's environmental experts accepted the modelling as appropriate for modelling "as proposed by the HP": CB 42, at 56. Mr Lunney's evidence (in CB 129 and 129A) was noted as accepting that Lot 2 would indeed attract value based on this concept and some staging. Moreover, the Applicant submitted that Mr McLandsborough had refined the boundaries to allow grading of the fill levels, to meet surrounding levels, as envisaged by Mr Mitchell (SKC33B): CB 127A.
6. In response to the fourth contention regarding Mr Mostyn's evidence, the Applicant submitted (reply subs p56, par 6) that contingency rates were dependent upon particular circumstances of the quote. The Applicant's assessment of Mr Lawson's evidence was (reply subs p56, par 7) that he: ... had selected a high figure of 20 per cent which reflects a perceived risk involved with regulatory approvals. [However] in cross examination he accepted that there was no relevant "impact" from approvals in the first 8 years because there was existing approval for landfilling and recycling and the building of the shed to cover mixed waste processing.
7. In contrast, the Applicant submitted (reply subs p56, par 8) that: ... Mr McLandsborough took express account of the circumstances of the particular scope of works being costed. His view on contingency for the early years was that a large component of the cost was a specific, fixed, cost associated with a particular item (capping) and for that item there was complete agreement between the management experts: see CB 42 at 81 on the capping layer/works required. The cost of that one item was 50 per cent of the whole cost of what would be done in years 1-8: T.1526.43-47. Another large item in the schedule for the years 1-8 was the construction of the shed. These costs had been fixed by both experts using their experience and Mr McLandsborough had his cross-checked against an actual quote. Accordingly, there is also certainty involved in the cost of this item. In respect of these two items, there is little to no question of regulatory risk on the evidence - the shed could be commissioned immediately and would (sic) in the interests of the hypothetical operator to do so. Similarly, given the degree of agreement from the environmental experts on capping requirements, it is difficult to see any regulatory problem with submitting that type of agreement to the EPA for commission of the capping works to commence. Accordingly, there is little risk involved in large items of the early works. A lower contingency is entirely appropriate and better reflects the actual evidence than a general view that there is "risk" and so 20 per cent should be adopted.

16.3.4 Consideration

1. The Court accepts Mr Lawson's quantity surveying advice, and, accordingly, the Respondent's inputs for the DCF valuation model, for the following reasons.
2. Firstly, Mr Lawson's experience and qualifications indicate that he is more appropriately able to advise the hypothetical purchaser. During cross-examination, Mr McLandsborough was unable to respond to, or did not consider, aspects of the brief, including: 1. The future prospect and likely costs of relocating the planned waste processing facility, similar to that approved in an earlier development application, to a more optimal part of Lot 2, with a transition stage of a temporary facility: Tpp1461-1463; 2. The designing, operating and costing of a leachate management system, and landfill gas system: Tpp1464, and 1472; 3. The incorporation of an internal road system along Canal Road: Tpp1464, and 1472-1473; 4. The change in boundary lines between Areas D and E, from the original plan of subdivision in Mr Mostyn's individual expert report (CB 12): Tpp1468-1469. 5. The inclusion in, and then removal from, the plans, of a workshop in the south-west corner of SKC23: Tpp1471-1472. 6. The origin of the lot layout for SKC23: Tp1472. 7. In his initial reports, the consideration of opportunities and risks, including financial risks (e.g. retaining walls) in estimating costs: Tp1475. 8. The design for a batter or a vertical wall: Tpp1477-1478; 9. The costs required for ground treatment or stabilisation works: Tp1478; 10. The impact of reduced fill levels (as shown in SKC33) on waste operations: Tp1478; 11. The staging and capping of the landfill: Tpp1483-1484; 12. The risk involved in the subdivision and sale of areas A and B: Tp1484; 13. The required easements for access to the private road within the site: Tp1484; 14. The provision to Taylor Constructions of the relevant DC, and a preliminary pricing for the building: Tp1522; and 15. The costs and regulatory risks associated with the closure works for the landfill: Tp1524.
3. Appreciating the above quantity surveying issues, Mr McLandsborough did not appropriately justify aspects of the project design nor outline contingent costs associated with the suggested plan. In contrast, Mr Lawson included considerations which would be appropriate to account for the risks and indirect costs associated with the quantity surveying aspects of the project design. Accordingly, Mr Lawson's evidence is to be preferred, in advising the hypothetical purchaser on the quantum of risk and associated costs with either project design option.
4. Secondly, I accept the Respondent's second submission, in relation to the quote from Taylor Constructions. This evidence was not able to be tested in Court. Further, the quote did not include any consideration of the information which was used to determine the estimated cost.
5. The third contention related to the Applicant's view that the Respondent had set up a "straw man" argument regarding Mr McLandsborough's authorship of SKC23. The submissions, in relation to authorship, are not relevant to quantity surveying advice to the hypothetical purchaser. Rather, the more appropriate approach is to consider whether Mr McLandsborough has relevantly costed the risks and materials required to develop SKC23. Upon review of his approach, I conclude that Mr McLandsborough failed take account of all of the fifteen factors listed above ([604]).
6. In respect of the fourth contention, Mr Lancaster submitted (Tp2719, L21 to p2720, L3): … There are at least four reasons for accepting Mr Lawson's 20 per cent contingency amount. The first is the very schematic and concept nature of what it is that [he has] been asked to address his quantity surveying skills to. If there is at best only preliminary design and scoping, a quantity surveyor is going to be very hard pressed to come up with a final number without a substantial contingency to take account of the lack of specificity of what's being proposed. We rely, of course, on that. One other factor that Mr Lawson referred to is the high level of regulatory interest and involvement in many aspects of the work that would be required on lot 2. It's not as though it's a remote greenfields site that is of not much interest to any regulator, and that justifies in a quantity surveyor's reasonable opinion, in my submission, a healthy contingency amount. Of course, we rely on his experience that has specifically been obtained in landfill closure situations as a quantity surveyor. Mr McLandsborough, on the other hand, has a contingency of 10 per cent for short-term scenarios, 15 per cent for long-term scenarios. This is a little odd, because he agreed that long-term scenarios were not as complicated as short-term scenarios, so one wonders why the differential worked in the way it did. But, in any event, Mr McLandsborough does not have sufficient direct experience of landfills to be able to advise with the same reliability as Mr Lawson on this topic.
7. In determining the appropriate contingency for the associated projects, I am content to rely on the experience of Mr Lawson, and his considerations, and I adopt the Respondent's contingency of 20%.

16.4 Geotechnical Considerations

1. In terms of the void space and tonnage for the onsite landfill, the Court is required to assess the differences on relevant line items in the DCF.
2. The Court examined (in sections 8, 11, and 12 above) the expert evidence, from competing geotechnical experts, environmental management experts and quantity surveyors, in order to deduce appropriate amounts. The primary focus of that evidence was the geotechnical considerations for the void space and fill.

16.4.1 Applicant's Submissions

1. In its written submissions, the Applicant noted (pars 27-41): 27. The problem with that approach commenced with modelling a concept that did not allow for or plan for a subsequent land use [CB 38, at 4 [2.1(6)-(7)]]. Mr Gamble had identified this outcome as something he needed to know [CB 36, at 52 [169]]. He had anticipated a "future for waste management purposes" [CB 36, at 52 [170]]. But this was not part of his design [CB 33, at 24; 26]. 28. In addition, the Gamble design overstated the need for cover materials [CB 42, at 55 [4.3]]. In his reply, Mr Gamble noted that the final slope design on his proposed concept allowed for less fill cover over the Site reducing the financial return that could be made [CB 40, at 18 [63]]. This did not, at that time, cause him to re-consider the original design. 29. However, by the joint report of environmental experts, Mr Webster had identified that Mr Gamble's design did not "take into consideration the proposed final use for the site and the elevations that would be necessary to achieve this" [CB 42, at 55 [4.1(3)]]. The Respondent's experts (Mr Gamble and Ms Horlyck) acknowledged that in place of a 5% gradient (put in the original design), parcels for development could be designed at 1% and that, as this is what had been done in the Applicant's concept design, the SCK22 concept plan "is what would be proposed by the Hypothetical Purchaser" [CB 42, at 56 [4.6(2), (4)]]. 30. Based on that agreement, it was noted that volumes for fill profiles would need to be recalculated [CB 42, at 56 [4.8(2)]]. Despite this acknowledgement, the need for a revised fill profile was not taken into account by the Respondent's environmental experts in designing infrastructure to allow for subsequent landuse [Tp815, LL11-21]. 31. The operational experts, by comparison, understood that additional material should be anticipated for acceptance on the site to achieve a final landform [CB 48, at 5[6]]. Yet, despite this, Mr Heywood and Berkefeld relied on Mr Gamble's original calculations for the land fill void [CB 48, at 6[12]; 20[96]]. Similarly, Mr Lawson was not provided with updated information [Tpp1446-1448]. Further, many of Mr Lunney's adjustments to comparable sales evidence, similarly, rely on the original position of Mr Gamble rather than assuming a useable landform at completion of landfilling [Tp1687, LL6-40]. 32. This failure to address an acknowledged flaw in the Respondent's concept design becomes a further problem that Mr Heywood and Berkefeld's model, which again relies on Mr Gamble's original calculations, is adopted by Dr Ferrier [CB 60, at 44-45 [128];[132]]. 33. The failure to correct the Gamble/Horlyck approach, following the JER Environmental, has infected the entirety of the Respondent's case. 34. This is highly significant -but the extent of departure in the Applicant's and Respondent's case is masked in the different economic models. On their face, the models assume only a modest difference in landfill void for the Site in the 1-8 year assumptions. This is a coincidence more than being an input that is close-but-different on the modelling of the voidspace. … 36. …[T]he Respondent's fill profile has more fill deposited at the Princes Highway side of the Site (that is, more than the Applicant would place) and less as the profile slopes towards, but stops well before, the other boundary. The Applicant's fill profile, by comparison, assumes a more uniform fill envelope across the whole of the Site (with SKC22B suggesting a modification to allow for a modest slope towards the east). Again, the Respondent's own experts recognised a need to modify this design but did not do so, which radically understates the amount of fill that could be placed on the Site. … 37. The Applicant has by comparison properly planned for the full future potential of the Site and obtained expert opinion evidence from Mr Geoffrey Webster as an experienced consultant [CB43, at 5-6] to the waste industry who has been able to build and contribute to economic models finally considered by Mr Samuel that involve several different assumed uses of the Site. … 40. The Applicant's concept for future uses of the Site that maximise return is based on two sketch concept drawings: SKC23 [CB 52, at 18] and SKC23B [CB 127A, at 18]. … 41. These drawings show multiple overlapping layers of advice that would be of interest to a purchaser and/or vendor as to the potential for the rapid increase of landfill activity to facilitate the consolidation of recycling operations on the area marked "E" over 8 years. While that takes place, over that time, surplus lands could be sold for other industrial purposes and a long-term recycling operation could be approved and established on Area E allowing the purchaser to draw income while maintaining its environmental obligations for the rest of the Site during a long post-closure period.
2. During his closing submissions, Mr Hemmings pointed out that the Applicant's position on the total void space was dependent on the Court accepting two key assumptions: firstly, that SKC22 and 23 formed part of the highest and best use, and, secondly, that SP21 would be addressed, in accordance with the evidence of Dr Ryall and Mr Webster. Relevantly, Mr Hemmings observed (Tp2396, LL1-17): … One example of it is here, for the total void space. The court will recall I think I asked the experts about this on three different occasions - firstly when we had the group of nine. I said, "You've said in your contribution to the joint report that you need to recalculate the volume. What are you waiting on that should have been done?" They were waiting on a decision by the court as to what was to happen with stockpile 21 - was it going to be taken off-site, was it going to be kept in the hole, was it going to be processed? As we understand it, that position still pertains, so there is still a need for final calculation, or agreement of calculation, of the total void space applying SKC22 and 23, that they have already agreed, once the court has determined what happens to stockpile 21. That's one thing that arises from that part of the debate.
3. If the Court accepted the Respondent's evidence on either or both assumptions, Mr Hemmings noted (Tp2397, LL1-4): The state of the evidence as it is, that would, for example, require the experts to go away and agree upon the total void space, consistent with the court's finding, so that can then be put into the model.

16.4.2 Respondent's Submissions

1. In its written submissions, the Respondent observed (pars 447 and 448): 447. Essentially, the difference between the parties and this area of expert evidence, is the approach to settlement. Dr Thomas (sic) evidence should be preferred for the reasons set out above: mainly that he has proper regard to the available information as to the conditions under the surface, and, he also has proper regard to the academic literature on settlement. 448. The consequences of the Court's acceptance of this evidence would be: a. It demonstrates that a purchaser would not accept the feasibility of the putative McLandsborough subdivision; b. It also demonstrates that the RRWTF facility on Area E is speculative, potentially very costly and likely to be disregarded by a potential purchaser of Lot 2; and c. And finally, that the relevant inputs to the DCF in relation to geotechnical matters ought be those input in the respondent's column, as advised by Dr Thomas and Mr Lawson.

16.4.3 Consideration

1. The Court prefers the approach of Messrs Clay and Lawson, over that of Dr Ryall and Mr McLandsborough, and has accepted the Respondent's suggested "highest and best use" (section 15.6 above).
2. In response to Mr Hemmings's submissions, the Court notes that both parties have, in fact, quantified the total void space (line item 29), total void space tonnes (line item 31) and tonnes to onsite landfill (line item 33): see CB 128AAA.

16.5 Environmental Management (Leachate and Landfill Gas)

1. The Court has considered systems which may be required to address ongoing environmental issues with the site, especially the generation of leachate and landfill gas. The parties relied on a total of nine experts to support their conclusions on many inputs to the DCF model for all of the environmental management issues (section 11 above).

16.5.1 Applicant's Submissions

1. The Applicant observed (subs par 287) that "no critical issue emerged on the evidence as to how future operations (hence cash flows) would be hampered by on-going environmental management". In particular, the key differences in evidence related to the "scale of measures" required to meet the environmental management issues.
2. In comparing the different approaches to the hypothetical purchase, the Applicant observed (subs pars 289-290): 289. This advice tells a purchaser and vendor that experienced experts in the field of environmental management could predict from the [DOA] a set of management measures that could be put in place during the on-going use of the Site for continued landfilling and recycling purposes while also allowing for establishment of a longer-term recycling use on part of the Site with successive sales of surplus land; primarily focussed upon landfill gas and leachate disposal and on-going monitoring expenses. 290. That basic advice is not contested by the Respondent's experts [T13.926-963] - rather, those experts say there can be a similar outcome provided though there ought to be more factored into the expenses forecast for additional items of infrastructure: particularly for leachate management. As will be shown below, these additional items are unnecessary and expensive and so only an anxious purchaser or unwilling vendor would account for them.
3. On the issue of leachate management, the Applicant submitted that the existing system was fit for the purpose of completing landfilling. Further, the system could operate for long-term use with ongoing monitoring obligations and associated costs. The Applicant invited the Court to accept the evidence of Mr Fridell and Dr Swarbrick on two grounds.
4. The first ground was that the Applicant's experts had a precise and well developed opinion on the current state of the leachate management system. Both experts had provided a clear example of what would be expected of an adviser to parties to a transaction of this nature. They were diligent in analysing the site history, geology and hydrology of the site, the existing infrastructure and the requirements to address the leachate management issues within the Site.
5. Further, Mr Fridell is confident that the leachate management system works, for two reasons. Firstly, the Site has complied with the necessary controls, except for two minor events (CB 39, p9-10). Secondly, his chemical analysis shows that despite the sump and MW3 having a "strong hydraulic connection", there is no contamination of MW3, showing that the "inward hydraulic gradient has been maintained by the existing leachate management measures": CB 32, par 4.2.5.
6. The Applicant submitted, secondly, that the Respondent's experts had adopted a different approach to the hypothetical purchase, and had made inaccurate assumptions. The first criticism noted that the Respondent's experts had assumed that a lengthy due diligence period was required by the hypothetical parties. In particular, Mr Gamble confirms that the proper advice ought to be based upon a "desktop assessment of the existing information", and then "testing of samples of incoming leachate" (CB 36, p30, par 132) - a process followed by Mr Fridell. However, the Respondent's experts have not followed this approach. Instead, they developed their own water balance model: CB 34, p5, par 12.
7. The second criticism related to the assumptions made by the Respondent's experts. These are summarised as follows (subs par 305): 1. "Those parts of the model that turned up negative conclusions were based on scenarios in which leachate catchment areas have been arbitrarily increased [CB 38 at 5] - counterfactual to the way existing operations on the Site were carried out over many decades (confirmed by the two ICCG (sic) reports)". 2. "The modelling doesn't consider the different operations carried out on the Site. [CB 38 at 5 [13]-[14]]". 3. "The modelling doesn't take account of how the EPL's require ongoing management of water and separation of stormwater into clean channels and daily covering of the landfill site to minimise leachate generation. [CB 38 at 7 [22]]. Dr Swarbrick notes that this failure results in purported outcomes … [exceeding] the capacity of the treatment system in single occurrences whereas the historical records have consistently shown compliance [CB 39 at 9 [32]]". 4. "Dr Swarbrick concludes that the Respondent's model is flawed because contribution rates were increased but groundwater inflow calibrated from the ICCG (sic) models was not adjusted which 'degrades [the] model accuracy'. [CB 39 at 10-11] These increases are 'without justification'. [CB 39 at 13 [59(c)]] Had that factor been taken into account, Dr Swarbrick said that the 'net result would essentially be the same as that predicted by IGGC'. [CB 39 at 11 [41]]". 5. "The model was not verified by reference to the historical documents. [CB 38 at 8 [24]; note also T11.871.5-9 ...]".
8. In respect of landfill gas management, the Applicant made two key submissions, as to why Dr Swarbrick's evidence should be preferred.
9. The first related to Dr Swarbrick's "considerable experience in modelling, measuring and recommending mitigation strategies": Applicant subs par 309. In particular, the Applicant stated (par 310) that the experts had agreed that: … it was theoretically possible that either of an active or passive system of gas management could be designed to meet the principal objective of safety from off-site migration and for on-site occupiers [CB 42, at 16[2.6(5)]]. Similarly, as set out above, the Applicant's experts final recommendations are not criticised by the Respondent's experts.
10. The Applicant relied on the following recommendations, which included (subs par 309 - footnotes omitted): … These recommendations are: • Pumping trial to determine the need for other infrastructure with the principal objectives being to prevent off-site migration and on-site risk to occupiers • Passive trenching along the boundary 3000m length at Albert Street frontage • A management system is likely to involve a biofiltration system comprising passive biofilter and subsurface trenching however an integrated design that involves some active measures in the short term with passive biofiltration in the medium to longer term could also be effective at the concept stage • Additional perimeter wells • Monitoring program costing around $60,000 per year for LFG
11. In its second submission, the Applicant outlined why the Court should accept Mr Fridell's evidence on landfill gas generation (subs pars 312-314 - footnotes omitted): 312. …Mr Friddel's (sic) analysis of risk regarding landfill gas commences with acknowledgement that the historical materials landfilled on the Site means that landfill gas will be generated "at a lower generation rate and for longer compared to a putrescible site". He notes that any system imposed to deal with LFG should be based on the generation rate. Mr Fridell is clear that at the [DOA] there was no regulatory requirement to capture and treat LFG and no significant risks identified on or off-Site. However, Mr Fridell would nevertheless advise a purchaser that it is foreseeable that a system will be required "particularly if a purchaser intended to redevelop the [S]ite". Accordingly, in his first report, Mr Fridell then posed options for gas extraction systems based on an assessment of low risk of gas migration. 313. In his report in reply, Mr Fridell confirmed that he would act prudently in recommending measures that may be appropriate to a greater than expected rate of gas generation, including passive oxidation, low calorific flaring or high temperature flaring. In the joint report, Mr Fridell and Dr Swarbrick estimated rates at 200-400m(3)/h but Dr Swarbrick noted that the capacity to estimate was difficult because testing had been limited, flawed in method, and not flux based. 314. Nevertheless, the appropriate advice would be to undertake a pumping trial to first validate the assumptions being made as to generation rates as the need for infrastructure may not be as great as what has only been modelled. In the joint report, this trial became an agreed position.
12. The Applicant asserted (pars 315-317) that the primary differences between the evidence of Messrs Fridell and Welsh were as follows (some footnotes omitted): 315. The primary difference in the rates of generation modelled by Mr Fridell and Mr Welsh arise primarily because Mr Welsh relied on a higher composition of food and sludge in historical materials (Mr Welsh modelled up to 21.5% for food waste with Mr Fridell having 0%). 316. Mr Fridell notes that the model is itself conservative and likely results in an overestimate of landfill gas generation rates (which as a diagnostic tool likely is a result of the precautionary principle being applied). Mr Fridell criticises Mr Welsh's approach to the modelling as "compounding conservatism" by modelling waste streams that the Site was never authorised to receive in high quantities. Mr Fridell notes [CB 38, at 16 [46]-[47]]: Based on my experience, I consider the concept design prepared by Mr Welsh as conservative for a solid inert landfill and the quoted upper range of landfill gas generation rate included compounded conservatism resulted in an exaggerated over estimate in landfill gas generation rate. The higher end of the range is more typical of a municipal waste landfill rather than a solid inert landfill. I also consider Mr Welsh's recommendation of a 40m x 40m spaced LFG extraction grid to be an overly conservative recommendation considering the absence of a pumping trial verifying gas extraction… 317. Mr Fridell rejected Mr Gamble's suggestion that a passive trench extending around the perimeter of the Site was justified. It is significant that by the time of the Joint Report this position became accepted by Mr Welsh (indeed all experts viewed such a recommendation as "extremely expensive and not practicable"). Another example of that conservative approach is Mr Welsh's recommendation to provision for "potential landfill gas related clean up/mitigation works off site".

16.5.2 Respondent's Submissions

1. On the topic of leachate, the Respondent relevantly outlined (subs par 743) three reasons for accepting Mr Gamble's opinion, on the necessary upgrades to the leachate treatment plant: a. First, as analyzed by Mr Gamble, the required future capacity based on the review and modelling is 221 kl/day; b. Secondly, this is essentially similar to the work undertaken previously on Lot 2 and which would have been available in the due diligence process. The modelling by Ian Gray (200 kl/day) as reported in the document prepared historically and known as "IGGC 2011" [CB 36, at 54 [187]]; c. Thirdly, the information provided in a late served affidavit in the proceedings by Mr Biggs (prepared after the Gamble report) confirms that the SBR was operating at capacity and would require upgrading.
2. In responding to the Applicant's expert evidence, the Respondent noted (par 744) Mr Gamble's criticism of their opinion on the leachate treatment plant (footnotes omitted): In the joint report, the applicant's experts consider that sufficient capacity exists without the need for an upgrade and in this report, the Court has the benefit of the detailed evidence of Mr Gamble as to why he disagrees. He does so for a number of reasons including: a. According to design principles, existing plant does not have sufficient volumetric capacity; b. Independent sampling data has not been provided; c. The header tank is 12 years old, and the SBRs are at least 7 years old in 2014 and this means that the existing treatment plant may need to be replaced sooner than if it was 3 years old. There is uncertainty whether existing plant will last another 30 years; d. There are non-compliances (particularly, high ammonia going to sewer after treatment) post the [DOA]; e. Advice to the hypothetical purchaser would have been that independent assessment of plant capacity is needed, and should have been possible pre-acquisition, as well as a physical inspection of the plant (including checking against safety and current standards eg electrical wiring); f. That advice would also be that the opinions of the applicant's experts have a number of difficulties including: i. According to Mr Fridell, average flows over a 3 month period have been as high as 248 kL/day (this means some daily ones much higher); ii. US EPA and other references suggest that 8 hour contact time is not sufficient, so only one treatment cycle per day is possible; iii. This means that 8 hour contact time may or may not be sufficient to reduce ammonia from over 200 mg/l to below 100 mg/l, and there is no documentary evidence that this has been achieved (where results should be readily available); iv. If existing plant is run with 2 x 12 hour cycles per day, then 2 x 142 kl/day = 285 kl/day is possible. This is sufficient for the maximum 90th percentile year predicted by IGGC (285 kl/day), but both existing SBRs need to be fully functional during critical times (and rainfall is not predictable); v. This mode of operation does not allow for plant breakdowns, which can often occur at inconvenient times (such as when high flows are occurring more often, such as during wet weather); vii. It also does not allow for regular maintenance, which would involve taking one of the SBR units out of service - when one unit is not available, the system capacity reduces by 50-60%; viii. Hence the only prudent course for a hypothetical purchaser to take would be to allow for an extra 100 kl SBR, which provides capacity for increased wet weather flows, allows for one unit to be out of service at times for maintenance, without compromising the ability to treat normal flows.
3. Secondly, the Respondent briefly outlined (par 749) Mr Welsh's opinion (CB 35, p5, pars 9-12) on the existing landfill gas management system: 9. Following my review of those documents, Mr. Gamble asked me to provide formal review comments on the Landfill Gas Management Plan. At this time, Mr. Gamble also asked me to prepare sketches of my interpretation of the dimensions and design of the installed and proposed landfill gas management system (perimeter system) described in the Landfill Gas Management Plan. 10. I completed these works by preparing hand-sketches of the perimeter system and attaching them to an email to Mr. Gamble dated 3 February 2017 in which I presented my review comments (Appendix B). 11. Mr. Gamble subsequently verbally requested that I consolidate these items of work into a memorandum to him. I did this on 3 February 2017 (Appendix C). As set out in this memorandum, I concluded that: (a) No concept, detailed or as built drawings or specification of the installed systems were provided in the Landfill Gas Management Report (b) Incomplete and/or insufficient information was available in relation to the installed / proposed landfill gas mitigation system and associated monitoring data (c) That the absence of the information identified in (a) and (b) above made it very difficult to understand precisely what had been installed and its likely sufficiency for the purposes of managing landfill gas generated by the Site (d) That further monitoring and assessment of landfill gas at the site was required to determine the most appropriate management approach for landfill gas generated by the site 12. In addition to the above, I note that at the time I provided my specialist advice to Mr Gamble (and to date), I had not sighted any evidence that confirmed that an engineered landfill gas management system had been installed at the Site.
4. Taking into consideration the landfill gas generation rates, the Respondent (pars 750-752) "adopted the view that in order to manage landfill gas and potential gas migration (particularly on the 'unprotected' southern/eastern boundary) there would be a need for an active landfill gas system". In support of this conclusion, the Respondent relied on material from the EPA Vic BPEM and NSW EPA, regarding the preference of active systems, where landfill gas generation is "large". Accordingly, Mr Welsh would have advised the hypothetical purchaser regarding the requirements for "very significant underground infrastructure which would need to be integrated with the landfilling of the whole of Lot 2".
5. In response to the Applicant's suggested "hybrid" system, the Respondent noted the following difficulties (subs pars 753-754 - footnotes omitted): 753. The applicant's position, on what system is required, is Protean. At first, the applicant contended for a passive system. Then, through the joint report it contended for a hybrid active/passive system, which is unorthodox to say the least. The respondent contends that the difficulties with the applicant's approach include: a. Its advisors haven't designed a system it is contending for (see paper by Dr Swarbrick: "Longer Term Performance of a passive landfill gas bio filtration system in Australia" for the Kelso Landfill in Sydney); b. If a purchaser was going to develop the land and maximize the ability to have Lot 2 used for non landfill purposes, it would design around where the buildings are going to be. Having open trenches (including large sized ones like in Annexure C to the joint report) would not be feasible, whereas with an active system, this work can be done much quicker; c. If the system is not designed to go deep enough, gas will migrate sideways. In Part 2.6 at [24] in the Joint Report, Dr Swarbrick appears to concede that an active system will be needed, at least for a period of up to 5 years, but this hybrid design seems to be novel, a mish mash of different approaches and it is undetermined who is going to monitor it, who is going to maintain it and deal with something going wrong, such that a hypothetical purchaser would reject this advice and accept the orthodox advice given by the respondent's experts. 754. The second main issue relates to what information has been used in the costing of the different designed system. The information provided by the respondent's experts to the respondent's quantity surveyor and input in to the respondent's DCF model, has predictable costs from a predictable design, with some level of precision and detail and therefore certainty (see David Gamble chapter 8 in chief). The applicant's approach is novel, unorthodox and uncertain and, the respondent contends, would be rejected by a hypothetical purchaser.

16.5.3 Consideration

1. Mr Eastman succinctly summarised the main issues, which the Court would need to consider, when attributing values to the relevant DCF inputs (Tp2647, LL1-12): … There are really three main issues that arise out of this evidence … [firstly] what are the costs for the leachate infrastructure that a purchaser would project and therefore put into the DCF, that's one; the second is what is the necessary landfill gas infrastructure, and what's it going to cost; and then the third, or I probably should say the first, is it affects the viability of this proposal for a subdivision and, more critically, the staged timing that has been valued by the applicants. …
2. The third issue was resolved (in section 15 above), as a part of determining "highest and best use". Therefore, the Court will consider only the evidence, outlined at section 11, where it relates to the DCF inputs for the relevant line item disputes.
3. On the first issue, regarding an upgrade to the leachate management system, the Court prefers the evidence of Messrs Gamble and Dixon, and, in respect of landfill gas, the Court prefers the evidence of Mr Welsh.
4. My views in this regard have been formed on reconsideration of their respective qualifications and experience, their relative conservatism (in the Applicant's favour), their reliance on modelling (e.g. Welsh's extensive modelling cf., Fridell's very limited modelling), and the transcript of their performance under cross-examination.
5. In this respect, I accept the summary submissions of the Respondent (pars 770 to 775), which include (at 770, 772, and 773) these comments: 770. ... the proper advice to a purchaser, in order to act prudently in relation to LFG generation and associated management, would be as has been set out in Mr Welsh's modelling [which] ... [772] is based on proper assumptions and is an important and critical piece of the jigsaw for a hypothetical purchaser, because landfill gas management was undeniably necessary, potentially costly, would involve works across the entirety of Lot 2 and even (perhaps absurdly) on the applicant's case, works offsite including in the middle of public roads. 773. Mr Welsh's design is based on this modelling. This is the approach the hypothetical purchaser would take, not the guesswork that the applicant's experts have engaged in. ... (See also Respondent's subs pars 778 to 812, and Section N.)

16.6 Waste Operations

1. The Court is required to assess the appropriate gate fees, which would be accrued from receiving waste soils for disposal on the site. The parties rely on the expertise of their respective waste operations experts to inform the appropriate figures for the DCF model. In addition, the Respondent relies on Exhibit R16, and the lay evidence of Messrs Vella and Le Provost. (See section 9 of this judgment.)

16.6.1 Applicant's Submissions

1. The Applicant relied on Mr Webster's proposed gate fee, $195 per tonne, and suggested (subs par 374) that its expert evidence relied on three key factors (footnotes omitted): … First, as at the [DOA], material of the type the hypothetical purchaser could expect to receive was "going to landfill at a rate in the order of $185-$200/tonne for large scale projects." Accordingly, a rate of $195/tonne was appropriate. Secondly, the operator of the ALF site could expect to achieve higher gate rates than many competitors given its locational advantage with respect to the Sydney CBD. Thirdly, as void space at landfills around Sydney decrease, and yet the volume of waste produced remains steady or increases, supply and demand dictates that landfill space will be increasingly in demand and gate fees will increase. Accordingly, the hypothetical purchaser ought to expect to achieve higher gate rates than are sometimes seen in the market at present.
2. The Applicant criticised Mr Haywood's gate fee because he was unable to offer documentary evidence, beyond stating his experience, to support it. Further, the Applicant criticised Mr Vella's evidence on gate fees because he had merely averaged revenue against tonnages which arrived at the gate. The Applicant was critical of this method, as it had potential to disguise the actual site operations. In response to Mr Le Provost's evidence, the Applicant noted that Erskine Park had a lower gate fee because it had less of a locational advantage, than the operation at St Peters.

16.6.2 Respondent's Submissions

1. The Respondent characterised the basis of Mr Webster's gate fee as "scant" information: subs par 878. The Respondent relied on Mr Webster's rejection, in cross-examination, of two sources of objective evidence (Tp1336, LL37-41, and subs par 881 - footnotes omitted): 881. The two pieces of objective evidence put to Mr Webster were: a. The affidavit of Mr Le Provost dated 14 November 2017 which annexed a copy of Transpacific's internal price list for FY 2013/14 and showed a range of gate fees for asbestos soils between $136/tonne (ex GST) to $167/tonne (ex GST) and for solid waste soils/low level contaminated soils between $135.20/tonne (ex GST) to $167/tonne (ex GST); and b. An invoice for the actual removal of stockpile 21 from the site by Ward Civil to the Enviroguard facility at Erskine Park which showed a charge of $156/tonne.
2. The Respondent relevantly highlighted Mr Eastman's cross-examination of Mr Webster (Tp1340, LL6-12): EASTMAN: No, I'm asking you that you would tell a purchaser on a potential $23 million question to go with your advice, despite the fact that there is no objective market evidence that you advance to support it. That is correct, isn't it? WITNESS WEBSTER: Yes.
3. The Respondent submitted (subs par 888) that the Court should accept the Haywood/Berkefeld position, because (footnotes omitted): a. The objective information available from people in the industry is that $165/tonne is the rate most applicable for this material; b. There is no objective support for the Applicant's rate of $195/tonne, suggesting that no one in the industry was charging this rate; c. Competition in the Sydney Metropolitan Area would keep the price able to be charged by the HP in line with surrounding businesses, noting that large landfill facilities exist in the Eastern Creek precinct and in other surrounding areas such as Kurnell, Belrose, Lucas Heights, Horsley Park and Kemps Creek; and d. As a result of these market factors, a facility operating out of the Alexandria site would be forced to 'meet the market' in terms of pricing and would not be successful in attracting tonnes as an outlier to the industry accepted price range.

16.6.3 Consideration

1. The Court recognises that the evidence given by Messrs Webster and Haywood relies upon their experience and expertise, which would suitably assist the hypothetical purchaser. However, the Court also has the benefit of the affidavit evidence of Messrs Vella and Le Provost, and of Exhibit R16. In line with this evidence, the Court prefers the prevailing waste gate fee suggested by Mr Haywood, as it is within a more suitable range from the accompanying lay evidence and tendered materials.

16.7 Land Valuation

1. The parties rely on the land valuers' evidence (section 13 above) to derive the terminal value of Lot 2, on a rate per square metre basis.

16.7.1 Applicant's Submissions

1. The Applicant made its submissions on land value on the basis of its five nominated areas of land within Lot 2, namely Areas A to E.
2. In respect of Area A, the Applicant propounded (subs pars 398-399 - footnotes omitted) that: 398. Area A is most suitable to designation as surplus land. Accordingly, it could be quickly capped, filled to the appropriate level, and made ready for sale to the market for industrial uses. 399. Area A comprises a land parcel of approximately 2.8ha. It is zoned to permit a wide range of industrial uses. Access to it would be from Holland Street, at least at first, with other access available from the internal road in due course providing links to Campbell Street and Canal Road. In the hands of the s 56 purchaser at the [DOA], some minor works are required to then make the Area saleable within approximately 12 months to a specific market that can make use of the Area for in-demand industrial uses like good[s] transfer or storage.
3. In support of Mr Dyson's calculations, the Applicant suggested (par 404 - footnotes omitted) that: 404. The differences between Mr Dyson and Mr Lunney are deeper than simple differences in professional judgment. As identified above, Mr Lunney has assumed a concept for the Site, even if this involves subdivision, that is substantively less economically viable than Mr Dyson. This is why Mr Lunney has a "geotech" adjustment that is "the biggest difference between [them as experts]". This is why Mr Lunney has such a pessimistic view of the Site and its value (representing only $550psm as a total or en-globo sale and only $900psm for severable parcels at Area A and B). The only explanation Mr Lunney gives is that this "geotech constraint" apparently affecting Areas A and B is "less" than that affecting Areas D and E. Mr Dyson explained that the adjustment for a "geotech" constraint was wrong in principle because the Areas would each be made suitable for future industrial uses by the time of their separation. In addition, the adjustment was double-counting because the costs of making the Areas suitable was included in the DCF method.
4. In particular, the Applicant criticised Mr Lunney's adjustments to sales for location or frontage, stigma, geotechnical constraints, etc. Accordingly, the Applicant supported the use of the Euston Road and Pacific Highway sales, in valuing Area A. The Applicant submitted that the land sale of Area A should occur in year 1 after the DOA.
5. For Area B, the Applicant ascribed similar features to the land, and suggested that the same rate of $1,300 per square metre should be applied. The Applicant submitted that the land sale of Area B should occur in years 1 or 3 after the DOA.
6. For Areas C and D, the Applicant described the difference in valuation process between Messrs Lunney and Dyson, as follows (subs pars 429-432 - footnotes omitted): 429. Areas C and D are in a different position to Areas A and B but exemplify well how the use of the DCF method means that it is inappropriate to double count the geotechnical costs and time involved in making those Areas saleable and then including subjective adjustments to the underlying land value rate to reflect a "geotech" concern. 430. The rate represents a value (fixed from sales around the [DOA]) for industrial land available for a variety of uses for parcels of similar size (whether this be $1300psm as derived by Mr Dyson or $900psm as derived by Mr Lunney). Mr Lunney would nevertheless adjust this rate for Areas C and D to represent time and cost "penalties" involved for these Areas. 431. However, three things need to occur for that rate to be useful in the DCF method: a. The appropriate rate needs to be escalated to take account of the increase in real estate values (over inflation) likely to occur between the [DOA] and the date of a future sale of those Areas (likely in Year 8). b. Costs involved in bringing those Areas into a state to be saleable need to be quantified and taken into account. c. An appropriate discount is applied to bring any cash flows involved in this process to a net present value. 432. Having done this, it would be wrong to adjust the initial rate to account for "time" or "costs" as these have been accounted for in that process.
7. The Applicant did not seek to nominate a value for Area E, as it would be used in perpetuity for the RRWTF.

16.7.2 Respondent's Submissions

1. The Respondent has identified four main issues in dispute in the valuation evidence: 1. The approach taken to the putative staged subdivision, and the sale of surplus land; 2. The rate to be put on the sale of surplus land (in order to calculate its terminal value); 3. The land discount rate, appropriate in the circumstances; and 4. The effect of the Boiling lease.
2. The first step for the valuers in determining the terminal value of Lot 2 at the DOA was to establish its highest and best use - the value of Lot 2 is actually an entry into the income components of the DCF analysis.
3. At the end of the hearing, the Respondent was still relying upon Mr Lunney's original approach, i.e. not assuming subdivision, but allowing the rental/licence of the surplus land (PDA1), as a component of income generation.
4. The Respondent's final position of the valuation of Lot 2 reflects that the highest and best use was as landfilling, with no ongoing recycling business (as it is not viable), no 29 year RRWTF, and no subdivision. It noted that Mr Lunney had agreed to a higher rate per square metre, namely $550psm.
5. However, the costs of constructing an internal road would be relevant, because that would add value before the hypothetical purchaser would on-sell the lots. Otherwise, RMS adopts all the changes that have now been brought forward by the valuers, in their March 2018 joint supplementary valuation report, and in the spread-sheet at CB tab 128A.

16.7.3 Consideration

1. The difference in market value between the subdivision scenario, and the "no subdivision" scenario, is stated to be $1.1M. The joint supplementary valuation report of March 2018 reached a figure of $46,535,246, now to be compared with the figure $45,742,467 for which RMS contends in its submissions.
2. In determining the appropriate terminal value for Lot 2, the Court must consider the two principal differences, being the geotechnical constraints of Lot 2, and the adjustments for comparable sales. On both issues, the Court accepts the evidence of Mr Lunney.
3. In relation to geotechnical constraints, Mr Lunney has preferably taken into account the compelling geotechnical expert evidence of Dr Thomas, in applying adjustments for Areas A to E. The geotechnical evidence would correctly affect the market perception in developing the land. Accordingly, adjustments are necessary for all five areas, in order to take into account the significant timing, development, and settlement issues.
4. In relation to the adjustment of comparable sales, the Court accepts Mr Lunney's adjustments for the "stigma" of the environmental constraints on, and contamination of, Lot 2. Mr Lunney's approach, as set out above (in section 13.2, and in CB 69, p52, par 11.2(e)), correctly addresses the future purchaser's consideration of the environmental liabilities, which affect Lot 2's terminal value.

16.8 Business Valuation

1. The Court is required to determine the appropriate discount rate to apply to the business related cash flows and the initial stockpile remediation cash flows, in light of the business valuers' evidence (see section 14 above).

16.8.1 Applicant's Submissions

1. The Applicant submitted that Mr Samuel's evidence should be preferred for five reasons.
2. Firstly, the Applicant criticises Dr Ferrier for "separating" ongoing cash flows into categories, and discusses (subs pars 436-437) the views of Wayne Lonergan, author of "The Valuation of Business, Shares and other Equity": 436. First, he has "separated" on-going "cashflows" into categories. No text on the method supports that approach. Lonergan states, simply, that the DCF method [T26.2008.12-13]: takes the cash flow (note that it is cash flow, not profit) generated by the company or business each year and discounts it back to a current value [footnote cites "Lonergan at 63"]. 437. Similarly, this assumes different assets being acquired. As Mr Samuel states: I see it very much as an acquisition of one asset, which is the land [T26.2017.27-29].
3. Secondly, the Applicant suggests that Dr Ferrier's differential rates are based on "subjective considerations". In particular, the Applicant criticised Dr Ferrier's increase of the discount rate for the year 1 to 9 model by 50% (subs pars 438-441).
4. Thirdly, the Applicant alleges that Dr Ferrier has "not adopted a common method of deriving a discount". Rather, the Applicant suggests "Dr Ferrier has, on his own account, used a method of valuation of a business - discerning the relationship between a price and an earnings figure". The Applicant relies upon Mr Samuel's opinion that the EBITDA is "appropriate for small companies, typically owner-manager operations or when a WACC cannot be derived" (subs par 442).
5. Fourthly, the Applicant characterises Dr Ferrier's evidence as erroneous, because "he has assumed he did not need to understand the post-tax consequences adopted by any particular business analysed" (subs par 443).
6. Fifthly, Dr Ferrier relied on transactions, which were distant from the point-in-time valuation task. The Applicant suggested that it is more appropriate to rely on transactions at the DOA (subs par 444).

16.8.2 Respondent's Submissions

1. The Respondent considers that the land valuation and business valuation experts must work in tandem, and that each has an appropriate role to play within the valuation process. Mr Lunney, therefore, obtained the assistance of Dr Ferrier in "quantifying the business-related cash flows which could reasonably be assumed by a potential purchaser of the land, and the discount rate which a prospective purchaser would reasonably apply in order to determine the net present value of those business-related cash flows ...": CB 69, p4-5, par 2.7(b).
2. The Respondent's valuation experts have valued the land, with the input of relevant business cash flows, in line with the advice of the Respondent's experts, and in particular, the waste operations experts. The Respondent submits that the highest and best use which would be adopted by a hypothetical purchaser would be a landfilling operation for years 1 to 8. The Respondent's experts consider that, thereafter, the land would be sold on the basis of a conventional real estate approach.
3. Dr Ferrier advises that the appropriate discount rate to use on the cash flows for that business is 13.9%, a discount rate derived after thorough analysis of waste operations transactions in the market. Dr Ferrier considers that this is the appropriate methodology to adopt, as it is preferable to identify the required rate of return reasonably adopted by a willing, but not anxious, purchaser or seller, "by reference to the market for the particular asset being valued": CB 69, p26, par 6.49(d).
4. The Respondent considers that this is the advice that would have been provided to the hypothetical purchaser on the basis of the risk profile of the site.

16.8.3 Consideration

1. I have several reasons for rejecting Mr Samuel's DCF discount rate, and accepting Dr Ferrier's: 1. Dr Ferrier's superior qualifications and experience in the assessment of compensation under the JTC Act, in cases involving extinguishment of a business, and his clear understanding and articulation of relevant provisions of the Act, DCF, and related methodology. 2. Mr Samuel's use of comparable businesses and transactions in this case was flawed, and Dr Ferrier's was correct. Mr Samuel excluded from his list of comparable stock exchange listed corporations the only two which involved Australian (NSW) businesses. Mr Samuel persisted in relying upon business statistics of large to very large US corporations, and large to very large European (French, Finnish, and UK) corporations. These are listed in Mr Samuel's Appendix F to CB 65. For each company, the relevant currency is given, as well as the market capitalisation (as at 19 December 2014), net debt, enterprise value (EV), EBITDA and the ratio EV/EBITDA. 3. In Dr Ferrier's opinion, which I accept, the information obtained from these corporations is not comparable to the potentialities of carrying on business on Lot 2. Nor does it provide information of the kind required by the international valuation standard in Australian Accounting Standards Board 136 (Exhibit R26), paragraph 5.1 of which, entitled "Guidance" in the International Valuation Standard ("IVS") (6th ed. reproduced in Exhibit R30), states that "the discount rate should be selected from comparable properties or businesses in the market. In order for these properties to be comparable, the revenue, expenses, risks, inflation, real rates of return, and income projections ... must be similar to the subject properties". Also the IVS requires the valuer to list all assumptions underlying the analysis, showing that "sufficient research has been carried out to show that the assumptions used as the basis of the DCF model are appropriate and reasonable for the subject market". 4. Mr Samuel accepted, in cross-examination, that having excluded the Transpacific company, all the large overseas US and European listed companies in Appendix F had market capitalisations in the hundreds of millions, if not billions, of dollars. Mr Samuels had noted that the Betas of Transpacific (1.5) and the Tox Free company (0.18), both of which are Australian, were deliberately excluded by Mr Samuel from his basket of so-called comparable businesses. He agreed that these two Betas were "wildly different" from each other, and from those of the other (overseas) companies he was considering. 5. When asked whether this could relate to some fundamental difference in the Australian market in this sector, he said it was "possible", and when it was suggested that he was "simply at a loss to explain why it is that there is such a divergence in respect to the Australian companies", he replied "I'd have to investigate, that's correct", and that he would "have to investigate at some depth to try and work out what happened to both of them" (Tp2150, LL35-43). 6. Dr Ferrier noted that, although Mr Samuel "considers the discount rate determination methodology adopted by Dr Ferrier 'is a valid methodology for estimating a discount rate'" (CB 69, par 6.48.), Mr Samuel had rejected three of the transactions because they post-dated the DOA: see CB 65. However, Dr Ferrier was entitled to use and analyse them, subject to any necessary adjustment: see John Bridge Ltd (in liq) v Commonwealth (1951) 11 The Valuer 375, at 377: Evidence of prices paid for comparable lands, not only before but after the critical date is admissible, the weight of the evidence varying with the distance in time of the comparable sale from the critical date. Prices or future sales not to remote in time might well be within the range of forecast at the critical date, not being prices obtained during a period of unexpected prosperity or depression. NOTE: In dealing with John Bridge (in his 5th ed.), Hyam refers to Kelly v Western Australian Planning Commission [2006] WASC 208, where Simmons J said at [393]: It is indeed the case that sales subsequent to the valuation date may be used as comparable sales (citing John Bridge (supra)); Commonwealth v Arklay (1952) 87 CLR [159] at 170 per Dixon CJ, Williams and Kitto JJ. This is subject to allowance, as a matter of weight to be given to such sales, for any indications that their prices have been affected by events which at the valuation date were matters as to which there was uncertainty: see Housing Commissioner of NSW v Falconer [1981] 1 NSWLR 547 at 576, per Mahoney JA. 1. In cross-examination, Mr Lancaster put to Mr Samuel: "you really just pushed through with the WACC methodology, notwithstanding that you accept that there was an undesirable absence of Australian companies to which you could compare?"; and Mr Samuel replied "That's correct ... the Beta is ultimately a matter of judgment for the valuer" (Tp2152, LL13-19). 2. Dr Ferrier's discount rate is consistent with what was referred to as the "standard industry rate", which both parties' waste operations experts independently asserted was, in their experience, 13% (CB 60, par 147). 3. Dr Ferrier's opinion was that the difficulties in applying the CAPM to determine the cost of equity, and the discount rate, in the circumstances of this case, were such that "it is preferable to assess the discount rate by reference to the anticipated EBITDA capitalisation rates evident in comparable transactions occurring in Australia, after appropriate adjustment for time" (CB 69, par 6.69.). Nevertheless, Dr Ferrier's opinion was that, if it were considered necessary and appropriate by the Court to adopt the approach taken by Mr Samuel, including his assessment of Beta and gearing based on overseas listed companies, Dr Ferrier would do so using the long-term Australian market data published by IPART, and would adopt size and specific risk factors as follows (CB 69, par 6.70.): Risk free rate (IPART long-term) 4.9% Market risk premium (IPART long-term) 6.0% Beta 0.83% Size premium 3.0% Illiquidity and specific risk premium 3.0% Debt margin (IPART long term) 2.9% Debt / EV 33% Calculated WACC 12.4%

1. The result in (ix) is to be compared with Dr Ferrier's discount rate of 13.9% (CB 69, par 6.59.). 2. Dr Ferrier summed up his opinion of Mr Samuel's methodology and conclusions, as follows (CB 69, pars 6.67. to 6.68.): 1. On the basis of Australian market data reported by IPART, Mr Samuel has inconsistently adopted the short-term (single day) risk-free rate, and the long-term (ten-year average) market risk premium; 2. The international listed companies referred to by Mr Samuel are not reasonably comparable to the business which is proposed to be operated from the subject property by a prospective purchaser, and are, therefore, not a reliable basis upon which to assess the Beta, or the level of gearing, appropriate to a prospective purchaser of the property; 3. Using the available market evidence, in relation to actual transactions for Australian businesses in the waste disposal industry as a test of reasonableness (as suggested by Mr Samuel), indicates that Mr Samuel's specific (and subjective) equity risk premium is too low to adequately reflect all of the differences in risk between the identified international companies listed, and the cash flows expected to be derived from the business to be operated on the subject property; 4. ALF's actual cost of debt (adopted by Mr Samuel) is not a reliable guide to the cost of debt which could reasonably be expected to be incurred by a prospective purchaser of the subject property. The IPART report indicates that the debt margin (above the risk-free rate) was 2.2% (short-term average), and 2.9% (long-term average), or total cost of debt of 4.9% short-term, and 7.8% long-term. This long-term average rate is higher than Mr Samuel's assumed pre-tax cost of debt of 6.4% (or 4.5% after tax); 5. Mr Samuel has placed excessive reliance on information regarding non-comparable foreign-listed companies, for an assessment of an appropriate Beta; 6. Mr Samuel has relied on studies of the effects of size on the cost of equity of US-listed companies, without taking into account either the increased risk attributable to illiquidity, or the fact that there is considerable disagreement about the quantum of an appropriate adjustment for size. Mr Samuel's 1% adjustment appears to be wholly inadequate, in Dr Ferrier's opinion; 7. Mr Samuel has inconsistently, and incorrectly, adopted a mixture of short-term average and long-term average variables, in his assessment of the risk-adjusted WACC; 8. Mr Samuel has derived a discount rate which is inconsistent with available and relevant market evidence; and 9. Mr Samuel has provided no evidence as to why he considered Dr Ferrier's chosen transactions evidence did not represent market value.

16.8.4 Discount rate to apply to initial land remediation cash flows

1. In Mr Samuel's opinion, the discount rate to be applied to the initial land remediation cash flows should be the same as the discount applied to the business cash flows.
2. In Dr Ferrier's opinion, Mr Samuel is wrong when he states that the initial land remediation cash flows are subject to estimation and business risks, in the same manner as all other cash flows.
3. In Dr Ferrier's opinion, these costs are subject to significantly lower estimation risks, and to no business risk. There is no "estimation risk", as described by Mr Samuel, and the cash flows associated with the initial land remediation costs are not subject to any other estimation or business risk, arising from market or commercial factors, or disagreements about the costs of implementing the identified remediation processes.
4. After the method of dealing with the necessary land remediation is established, and the costs quantified, there is essentially no risk that the identified costs will be incurred. This is especially so where the method of dealing with the contaminated stockpiles is to place them in the void (as proposed by the RMS's experts).
5. For all of the above reasons, I do not accept the reasoning of Mr Samuel, and, where his evidence is inconsistent with that of Dr Ferrier, I prefer Dr Ferrier's. That conclusion links up with my conclusion (in [553] above) about the highest and best use of Lot 2, and takes me to the DCF valuation of it in the appendices to the Respondent's submissions, namely $45,742,467, which is the amount to which I conclude the Applicant is entitled.

17.1 Introduction

1. As earlier noted (at [127]), the parties agreed that the most appropriate valuation methodology for determining the market value for Lot 1 is the direct comparison approach.
2. On this basis, the Applicant's valuer, Mr Dyson, determined the amount to be $5,500,000, while the Respondent's valuer, Mr Lunney, determined it to be $3,920,000.
3. Accordingly, the Court has reviewed the comparable sales evidence, in order to determine which valuer's opinion to accept in respect of Lot 1.

17.2 Evidence

1. Lot 1, known as 4-16 Campbell Street, St Peters, has an area of 2,410m². Its only improvements at the DOA were a carport, some hardstand areas and fencing, none of which was regarded by the valuers as contributing to its market value.
2. It was zoned IN2 - Light Industrial. The maximum floor space ratio ("FSR") would have been 0.95:1, and the maximum height control would have limited buildings to 14m, in the absence of the public purpose. The town planners agreed that no "spot rezoning" of the land in isolation was likely to occur.
3. Mr Lunney relied on three comparable sale properties: 1. 90 Burrows Road, St Peters ("90 Burrows"); 2. 84-88 Burrows Road, St Peters ("84-88 Burrows"); and 3. 32 Burrows Road, St Peters ("32 Burrows").
4. Mr Dyson relied on four comparable sale properties being: 1. 90 Burrows; 2. 71 Burrows Road, Alexandria ("71 Burrows"); 3. 32 Burrows; and 4. 16 Huntley Street, Alexandria ("16 Huntley").
5. The two common sales, between the valuers, were, therefore: 1. 90 Burrows; and 2. 32 Burrows.
6. Mr Lunney disagreed with the adoption of 71 Burrows, which has an area of 923m², and 16 Huntley, which has an area of 777.8m². They are said to be too small, and would likely appeal to a different market, compared to Lot 1 of the acquired land, which has an area of 2,410m². As a general rule small parcels of land attract higher rates per square metre than larger, and I agree with Mr Lunney on this point.
7. Mr Lunney conceded that his sale at 84-88 Burrows Road was too large to be a reliable comparable sale, as its area is 7,823m², and it too would likely appeal to a different market. The comparability of this sale was also complicated by the need to deduct the estimated added value of its existing structural improvements.
8. In the valuers' joint report on Lot 1 (CB 68), a schedule of explicit adjustments to the remaining comparable sales is set out, indicating each adjustment and its quantum.
9. Mr Dyson arrived at a rate per square metre, at the DOA, of $2,300/m², which yields a market value of $5,543,000, which he rounded to $5,550,000.
10. Mr Lunney arrived at a rate of $1,627/m², which leads to a market value, on the DOA, of $3,921,070, rounded to $3,920,000.
11. Mr Lunney's analysis and adjustment of the sales at both 90 Burrows and 32 Burrows are set out in the schedule to the valuers' joint report.
12. 90 Burrows sold in November 2014, about 1 month prior to the DOA, for $3,860,000. It had a land area of 1,678m². Nominal adjustment was required for market movement, according to Mr Lunney. No adjustment was made by Mr Dyson.
13. Mr Lunney made negative adjustments of 10%, 15%, and 5%, a total of -30%, on account of size, zoning/development potential, and a location/frontage respectively, and valued Lot 1 at $1,627/m².
14. Mr Dyson made no adjustments at all to 90 Burrows, which resulted in his land value for Lot 1 of $2,300/m².
15. 32 Burrows was adjusted by both Mr Dyson and Mr Lunney. It sold in September 2013 for $5,300,000, with a land area of 3,914m². Messrs Lunney and Dyson both added 22.5% for market movement in the 15 month period from the date of sale of 32 Burrows to the DOA of Lot 1, and added 10% for size.
16. Mr Lunney deducted 15% for zoning/development potential, and added 5% for location/frontage, yielding total adjustments of -10%, to derive the value rate for the subject Lot 1 of $1,573/m². Mr Dyson made no adjustment for zoning/development potential, nor for location/frontage.
17. Hence, the valuation dispute between the parties, regarding Lot 1, principally focused on the differences in their experts' adjustments.

17.3 Consideration

1. The Respondent submitted that Mr Dyson's approach to the Lot 1 valuation was generally unsound, because it proceeded on the basis of a number of assumptions not supported by particular analysis or market data.
2. The first assumption by Mr Dyson was that the ability to develop a particular site to an FSR greater than 0.95:1 (which was the FSR of the subject Lot 1) was not an advantage or a value benefit. It was submitted that part of Mr Dyson's reasoning on this point was that, in one of the cases where an FSR of greater than 0.95:1 was sought and achieved (the 90 Burrows sale), the purchaser did not act on the DC for the site, and on-sold the property. The inference apparently sought to be drawn was that the approved FSR obtained by the purchaser must have been viewed by the purchaser as of no added value, but such reasoning would appear to me to be flawed.
3. Mr Lunney stated, in his oral evidence, that the purchaser of 90 Burrows still owns the property, and had completed the approved development: Tp1931, LL8 and 12. This militates against Mr Dyson's inference.
4. The second assumption made by Mr Dyson was that there is a land size "band width" of approximately 1,000m² to approximately 2,500m², within which the properties appeal to the same market, and, therefore, no adjustment for size is warranted. Mr Dyson said, in oral evidence (Tp1929, L41ff), that he did not adjust 90 Burrows for size, because he considered that a lot of 2,400m² (actually 2,410m²) and one of 1,600m² (actually 1,678m²) were in the same "bracket" of properties, and appealed to same group of purchasers. He did not adjust 90 Burrows for size because he considered that, having regard to the size of the subject site, as compared to 90 Burrows, the difference in area was only 732m².
5. On the other hand, Mr Lunney said (Tp1930, LL25-34): [T]he subject property is 50 per cent larger than the sale property. Whilst a 2,400 square metre site and a 1,600 square metre site could, broadly speaking, appeal to the same market, I don't think that that obviates the requirement for an adjustment for size. Indeed, if I look at 32 Burrows the difference there is about 50 per cent larger than the subject property. We've agreed on an adjustment of 10 per cent. I think 10 per cent is internally consistent there.
6. Mr Lunney then said that the issue that separates the valuers in respect of Lot 1 is the adjustment for zoning and development potential.
7. He referred to the fact that the planners agree that the underlying zoning (IN2 - Light Industrial) permits a fairly broad range of uses. The planners also agree that it would have been subject to an FSR control of 0.95:1. Mr Lunney then stated that, in many cases, the sale properties enjoyed a much greater FSR. In some cases 1.5 to 1; in other cases 2 to 1.
8. He agreed with Mr Dyson that "unlike some other markets where FSR potential and value are directly linked - there's a direct lineal relationship between FSR and value - this is not one of those markets".
9. He added (Tp1930, LL2-6): "If the subject property had FSR potential of 1 to 1, and a comparable sale had 2 to 1, you would not make an adjustment of 50 per cent. That would be wrong. Where we disagree is whether any adjustment ought to be made".
10. Mr Lunney was unshaken in his opinion that 90 Burrows "is the subject of a DA approval by the purchaser after sale that achieved 1.63 to 1, that the purchaser has since proceeded with [the sale]" (Tp1931, LL10-12). Mr Lunney conceded that there "is not a perfect data set of sales where we can compare them all and forensically quantify these adjustments. They are, to some degree, subjective in nature" (Tp1931, LL15-18).
11. Mr Lunney was cross-examined closely, and at length, on his adjustments, by Mr Hemmings (commencing Tp1948, L13). He clearly explained his process of reasoning, and his exercise of judgment, and I accept his evidence concerning the difficult matter of making adjustments, in the absence of sales evidence of transactions, which prove unequivocally the quantum of the adjustment.
12. As indicated by Caruso ([555] above), ultimately the question can be resolved only by examination of the reasoning of the valuer, and his experience and expertise in the basis of the adjustment.
13. While both Messrs Lunney and Dyson are experienced valuers, well-known to this Court, I believe that the hypothetical vendor and purchaser of Lot 1, acting prudently, and being fully informed, would reach the conclusions which Mr Lunney has reached, and accept his advice.
14. Accepting Mr Lunney's evidence, therefore, I conclude that Lot 1 should be valued at $3,920,000, and that the Applicant is entitled to compensation in that amount.

18.1 The Principles

1. The Applicant claims an entitlement to disturbance losses under s 59(1)(f) of the JTC Act, on three apparently alternative bases: subs par 465.
2. It is the disturbance component of ALF's claim which falls to be dealt with in the light of some post-hearing authority (see [15]-[22] above), to which I will shortly return, but I begin with the statutory principles.
3. The right to claim compensation is given by s 37 of the JTC Act: 37 Right to compensation if land compulsorily acquired An owner of an interest in land which is divested, extinguished or diminished by an acquisition notice is entitled to be paid compensation in accordance with this Part [3] by the authority of the State which acquired the land.
4. Only a dispossessed owner is entitled to claim compensation, pursuant to s 37.
5. It is common ground that, as at the DOA, DADI was not an "owner of an interest" in Lot 2, and so is not entitled to be paid compensation in accordance with Part 3 of the Act by the Respondent: see DADI CA (cited in [42] above).
6. Section 54 of the Act deals with the quantification of the amount of compensation to which a person described in s 37 is entitled. It provides: 54 Entitlement to just compensation (1) The amount of compensation to which a person is entitled under this Part is such amount as, having regard to all relevant matters under this Part [3], will justly compensate the person for the acquisition of the land.
7. Section 55 lists the only matters to which regard may be had in determining the amount of compensation to which "a person" is entitled. Section 55(d) lists "any loss attributable to disturbance" as one such matter to which regard must be had in determining the amount of compensation.
8. Section 59(1) provides (some emphasis now added, cf., [34] above): loss attributable to disturbance of land means any of the following: (a) legal costs reasonably incurred by the persons entitled to compensation in connection with the compulsory acquisition of the land, (b) valuation fees of a qualified valuer reasonably incurred by those persons in connection with the compulsory acquisition of the land (but not fees calculated by reference to the value, as assessed by the valuer, of the land), (c) financial costs reasonably incurred in connection with the relocation of those persons (including legal costs but not including stamp duty or mortgage costs), (d) stamp duty costs reasonably incurred (or that might reasonably be incurred) by those persons in connection with the purchase of land for relocation (but not exceeding the amount that would be incurred for the purchase of land of equivalent value to the land compulsorily acquired), (e) financial costs reasonably incurred (or that might reasonably be incurred) by those persons in connection with the discharge of a mortgage and the execution of a new mortgage resulting from the relocation (but not exceeding the amount that would be incurred if the new mortgage secured the repayment of the balance owing in respect of the discharged mortgage), (f) any other financial costs reasonably incurred (or that might reasonably be incurred), relating to the actual use of the land, as a direct and natural consequence of the acquisition.
9. The word "means" in the chapeau (cf., "includes") indicates that the list is, and was meant to be, exhaustive.
10. Central to the present argument is s 59(1)(f).
11. The first five items in s 59(1), namely subsections 59(1)(a) to (e), refer to the incurring of costs by the person(s) entitled to compensation, but the 59(1)(f) does not.
12. Having regard to s 37, the words "any other financial costs reasonably incurred (or that might reasonably be incurred)", in s 59(1)(f), must refer to the incurring of costs "by the person entitled to compensation".
13. The requirements of s 59(1)(f) are cumulative: "financial cost", "reasonably incurred", "relating to the actual use of the land", and "a direct and natural consequence of the acquisition". Any claimant must satisfy all of those requirements.
14. The terms "relating to the actual use of the land", and "as a direct and natural consequence of the acquisition", are important qualifications on the right to claim compensation for loss attributable to disturbance.
15. There may be multiple claimants for compensation under s 59(1)(f), provided each claimant is entitled to compensation within s 37, and a financial cost has been (or might be) reasonably incurred, by such a person, and the cost claimed relates to the actual use of the land, prior to its acquisition, by that claimant.
16. It is common ground that ALF was the owner of the acquired land at the relevant time, but it did not occupy, or "actually use", Lot 2. DADI occupied and used that land, but was held by the C of A not to have an interest in it.
17. On this basis, RMS submits: 1. ALF could not have relocated; and 2. ALF could not have suffered any loss related to the actual use of the land as a direct and natural consequence of the acquisition.
18. RMS submits, therefore, that the appropriate conclusion is that ALF's disturbance claims are outside the ambit of "loss attributable to disturbance" under the Act.
19. The three arguments relied on by ALF in an attempt to avoid this conclusion are: 1. There was an actual use of the land (by DADI), and s 59(1)(f) does not require that the actual use be that of the person entitled to compensation (ALF); 2. DADI was a wholly owned subsidiary of ALF, so, if DADI has suffered a loss, ALF has suffered the same loss, or an equivalent loss; and (in the alternative) 3. DADI used the land as an agent for ALF.
20. ALF also submits (subs pars 467-469) that, to be claimable, losses need only be consequent on an actual use by anyone, not that it need be consequential upon actual use by ALF.
21. The Respondent's position is that : 1. ALF's first argument relies on a novel approach to the construction of s 59, which is clearly wrong in light of the authorities; 2. the second approach does not seem to pay any regard at all to the statute (or is simply another way of putting the first argument); 3. the third argument is not made out on the facts; and 4. the "use by anyone" argument is an "odd and unprincipled submission, which is not supported by any decided case".

18.2 The Claims

1. In its schedule of disturbance losses dated 11 April 2018, other than GST and legal and valuation fees, ALF claimed: Disturbance claim Sub-Category Source Amount Lost profits Third Joint Report CB 145 (2/4/18) includes a Table at p9 $173,753,000 Loss to 19 December 2014 Third Joint Report CB 145 (2/4/18) includes a Table at p9; Samuel Report CB 130 at [20] and [142]-[143] $2,620,000 Business disruption Bradshaw Hill Third Joint Report CB 145 (2/4/18) includes a Table at p9; Samuel Report CB 130 at [21] and [277] $1,486,000 Relocation costs Third Joint Report CB 145 (2/4/18) includes a Table at p9; Samuel Report CB 130 at [22] and Table 28 at [263]] 76 Burrows Road - set up costs by landlord Carlewie for relocation Samuel Report CB 130 at para [257-263]; Marks September affidavit CB 82 at [75-89] $1,101,475 76 Burrows - DADI relocation cost Samuel Report CB 130 at para [261-263]; Marks September affidavit CB 82 at [87-89] and Tab 22 $187,082 33 Burrows Road - aborted set up costs Samuel Report CB 130 at para [263]; Marks September affidavit CB 82 at [72]. $19,650 Total $1,308,000 TOTAL Disturbance (excluding GST and legal and valuation fees) $179,167,000

1. On 8 April 2019, following a series of C of A decisions (see [23]-[24] above), ALF amended its disturbance claim in its APOC (pars 38 to 49), to read as follows: 38. ALF has incurred legal and valuation costs. A claim is made for those costs pursuant to s 59(1)(a) and 59(1)(b). The amount is $426,710.68. Relocation Costs 39. After the Acquisition Date, and to the extent it was able, ALF relocated the waste transfer and waste collections operations, some workshops and some aspects of administration of the Corporate Group to premises at 76 Burrows Road, St Peters as well as 84-88 Burrows Road, St Peters. 40. In relocating to 76 Burrows Road and rehousing some plant and equipment to Eastern Creek, ALF reasonably incurred financial costs in the amount of approximately $1,288,557. 41. In the relocation of plant and equipment, and the preparation of 33 Burrows Road for operation of the waste transfer operations, ALF reasonably incurred financial costs in the amount of approximately $19,650. 42. ALF claims those financial costs pursuant to s 55(d) by way of s 59(1)(c). Relocation Losses 43. The operation of the waste transfer and waste collections facility and workshop and administration at 76 Burrows Road and 84-88 Burrows Road has not been, and is reasonably anticipated not to be, as profitable as would have been on Lot 2 but for the Resumption. 44. ALF's landfill operations on Lot 2 were extinguished as a direct and natural consequence of the Resumption and an inability to relocate. 45. ALF has suffered and will continue to suffer losses as a consequence of the partial relocation and extinguishment of its landfill operations on Lot 2. 46. ALF claims: (a) The losses it incurred by reason of not being able to relocate all aspects of it (sic) business of $173,753,000; (b) The losses incurred leading up to the relocation of $2,620,000; (c) 76 Burrows establishment and 33 Burrows aborted costs of $1,308,207; (d) The losses incurred in being unable to pursue Bradshaw Hill upon the relocation in $1,486,000, pursuant to section 55(d) by way of section 59(1)(c) or in the alternative 59(1)(f). Purchase of replacement property 47. As at the acquisition date Lot 1 and Lot 2 were being used for commercial and/or industrial purposes. 48. ALF was using Lot 1 and Lot 2 as part of an extensive landholding, or landbank, in the Alexandria region. 49. ALF intends to purchase replacement property and will incur costs associated with that purchase. Those financial costs are claimed pursuant to s 55(d) by way of s 59(1)(d). The amount is (sic) depends on the market value determination.
2. The parties subsequently agreed that compensation is payable, pursuant to s 59(1)(a) and (b), for legal and valuation fees, in the total sum of $424,910.68, leaving in dispute the claims for relocation expenses/losses, Bradshaw Hill, and the purchase of replacement land.
3. I now turn to the parties' competing submissions in regard to these disputed claims.

18.3 Applicant's submissions in more detail

1. The Applicant submits that a disturbance claim is to be assessed in accordance with the specific statutory entitlement in s 59(1)(f) of the Act. It is open to the Applicant to claim compensation for the loss of the market value of the site as well as those costs and those losses involved in relocating (in part), and extinguishing (in part), aspects of the business carried out on Lot 2. It submits that the only factual investigation to be made by the Court is directed to the question of whether there has been a cost or loss that was "reasonably incurred", citing Robson J in United No 1, at [235].
2. ALF submits that s 59 focuses on the actual use which gives rise to the cost paid or the loss suffered, and does not focus upon the "user" of "land", and "in some instances" market value may be determined by reference to a use that is different from the "actual use" of the land. Further, costs or losses may be incurred that do not relate to any actual use of the land, but to some other consequential effect of the acquisition. All that is required is a connection between a cost/loss and an actual use.
3. The second ALF argument identifies DADI as a wholly owned subsidiary of ALF, and part of the consolidated tax group for taxation, accounting, and recording purposes, and submits that there is "little doubt" that ALF has suffered a loss.
4. The third argument relies upon DADI acting as an agent of ALF, noting that every corporate claimant would rely upon agency to establish a claim in disturbance. In the present case, ALF submits that the notion of agency "can apply to anyone merely performing a service for another". It emphasises that "the service performed consists of standing in the place of the principal and not in an independent capacity". DADI operated the business on Lot 2 "for and on behalf of the ALF group", with the present Applicant being the head of that group. The "service" provided by DADI is the carrying out of the EPA-licensed activities, even though those licences were held by ALF and Boiling.
5. Reliance was placed on the judgment of Beazley P in the C of A in DADI CA, where RMS submitted, but DADI denied, that the trial Judge had made a finding of agency in respect of DADI's use/occupation of the land. Her Honour said (at [57]): Accepting, or at least assuming for [DADI's] benefit that his Honour did not make a positive finding of agency, I am nonetheless of the opinion that no other conclusion is tenable on the facts found by his Honour. As G E Dal Pont explains in Law of Agency, (3rd ed, 2014, LexisNexis) at 6 [1.4], the relationship of agency necessarily involves: "… acting in a representative capacity for the principal, whether for the purpose of creating contractual relations for a principal or to represent the principal in a more restricted ambit." (emphasis in original)
6. Her Honour also said (at [132]): In oral submissions, [DADI] resisted the proposition that it was carrying on its activities on behalf of a group rather than operating on its own behalf. [DADI] submitted there was not a 'group' in the "legal entity sense" and it could not have been said to have been acting as an agent of an unidentified entity without a legal personality. [DADI] submitted that no agency relationship between ALF and/or Boiling and itself should be imposed or imputed. This submission was consistent with its earlier submission that no finding of "agency" had been made by the primary judge. [DADI] also contended that there was, in fact, no agency relationship between it and ALF or Boiling. It submitted that the primary judge approached the fact-finding exercise by asking the wrong question: ...
7. The "costs" claimed by ALF were detailed in its final submissions (see [52] above); they were "updated" in the 2019 APOC ([57] above), and then again in the "supplementary material" of 6 May 2019 ([60] above), always in addition to agreed legal and valuation fees ($424,910.68).
8. In addition, also, there were three items for which the monetary claim has not (yet) been specified: grossing up for income tax, stamp duty for replacement land, and grossing up of relocation costs.
9. ALF also claims compensation for lost opportunities, namely a lost business opportunity on "Bradshaw Hill", land adjoining Albert Street, St Peters, which does not form part of the acquired land the subject of the present proceedings (see [63] above). The lost opportunity alleged is the opportunity to win saleable material (sandstone), on the basis that, on 15 May 2014, a sublease was executed between Concrete Recyclers (Group) Pty Ltd and ALF, for the term of five years, with an option for renewal. ALF's financial officer discerned a potential benefit to ALF from "Bradshaw Hill", using ALF's cost of processing.
10. Mr Samuel calculated the value post-tax of the opportunity lost, at $1.486M.

18.4 Submissions in reply by RMS

1. With respect to the claims pursuant to s 59(1)(a) and (b), RMS accepts that the Applicant is entitled to compensation by way of loss attributable to disturbance. It accepts that the Applicant is entitled to the amount claimed in the (amended) total sum of $424,910.68.
2. As to the relocation costs and other losses under s 59(1)(c) and (f), the RMS denies that the Applicant is entitled to compensation, on the grounds that ALF was not in occupation of Lot 2 at the DOA.
3. Lot 2 was leased to Boiling, which had, as found by the C of A, in DADI CA, granted, in turn, a "bare permission" to DADI, to operate its business on Lot 2. Consequently, RMS submits that relocation was not possible, and that s 59(1)(c) is not engaged.
4. As to the claim under s 59(1)(f), RMS submitted that the Applicant had no entitlement to claim disturbance losses, because the Act requires that the use be by "the person entitled to compensation", and there has been no relevant actual use of Lot 2 by the Applicant. Jagot J held in Almona Pty Ltd v Roads and Traffic Authority of NSW ("Almona") [2008] NSWLEC 112 (at [60]) that "the actual use of the acquired land in [s 59(1)(f)] is the use by the dispossessed owner".
5. On the proper construction of s 59(1)(f), the "financial costs reasonably incurred" are the costs incurred (or losses suffered) by the person entitled to compensation, relating to the actual use of the land, by the person entitled to compensation, namely ALF. ALF did not make any actual use of Lot 2, and so did not suffer the losses.
6. In George D Angus Pty Limited v Health Administration Corporation ("Angus") (2013) 205 LGERA 357; [2013] NSWLEC 212, Preston J held, at first instance (at [100]-[101]), that: ... the natural and ordinary meanings of the words "financial costs" and "reasonably incurred" in s 59(1)(f) permit a construction that allows compensation for not only financial expenses which the person entitled to compensation by their actions incurs, but also financial losses which the person suffers as a consequence of the acquisition.
7. On appeal, the C of A endorsed that finding of Preston J: Health Administration Corporation v George D Angus Pty Limited ("Angus CA") (2014) 88 NSWLR 752; [2014] NSWCA 352.
8. Hence, the incurring of the financial costs referred to in s 59(1)(f) must be the act of the "person" entitled to compensation, and the "actual use" referred to must be used by that same person, namely the dispossessed owner of an interest in the land. (ALF contends that, in this submission, RMS is wrongly seeking to read into the provision an additional limitation - namely, that it must be shown to be the actual use of the land by ALF).
9. ALF also submitted (subs fn 819) that corporate land owners act through "physical or abstract agents", and that "it has never before been held that a corporate land owner cannot claim disturbance to the extent that it is in fact that company's employees who are exercising the physical use". However, there is no evidence that employees of ALF actually used the land, as at the DOA, and the example is, therefore, not apt, on the evidence in this case.
10. RMS submitted that ALF had cited no case in support of its construction of s 59(1)(f), and that absurd results could flow from ALF's contention. RMS, on the other hand, cited a long line of cases in which passive investors were excluded from claiming alleged "disturbance costs", such as stamp duty on a replacement property, where the actual use of the land was by a tenant: see Speter v Roads and Maritime Services [2016] NSWLEC 128, at [84] per Robson J; Blacktown City Council v Fitzpatrick Investments Pty Ltd [2001] NSWCA 259; Hatzivasiliou v Roads and Maritime Services [2017] NSWLEC 9 at [144]; Konduru T/as Warringah Road Family Medical Centre v Roads and Maritime Services [2017] NSWLEC 36.
11. RMS submits that ALF cannot recover compensation for loss attributable to disturbance, in respect of DADI's losses, because any such loss is, at best, an indirect loss to ALF, and, therefore, outside the scope of s 59(1)(f). Losses must be a direct and natural consequence of the acquisition. It is to be noted that the relevant financial accounts of DADI exist as at the DOA, and that Mr Samuel accepted that they could be used for the purpose of the claim.
12. RMS submits also, in my view correctly, that ALF has failed to establish any causal relationship between the acquisition and the lost business opportunity at "Bradshaw Hill".

18.5 ALF's claim based on Agency

1. The third argument relied on by ALF is that it is entitled to claim DADI's losses, as principal under an agency relationship.
2. I accept the submissions of RMS (pars 1279 to 1304) in this regard: The asserted agency relationship between ALF and DADI has not been established, so as to show that the income and the expenditure of DADI, relied upon as the foundation of ALF's disturbance claim, was, either in fact or as a matter of law, the income and expenditure of ALF, or ought to be treated as the income and expenditure of ALF. That conclusion makes it impossible to award compensation to ALF for the alleged lost profits, and any other losses or expenses incurred by DADI in respect of Lot 2.
3. The essence of the submissions of RMS is that the proposition of agency is starkly different from the Applicant's pleading. Paragraph 3(b) in the POC (as at 28 November 2017) said that DADI was, prior to the DOA, using Lot 2 "as the agent of ALF and Boiling", for various purposes. However, Boiling is not a company in the ALF group of companies, nor is it either the parent or subsidiary of either ALF or DADI. The legal and financial incidents of joint occupancy are not dealt with, and the financial consequences of the asserted agency with Boiling were not dealt with, by ALF.
4. Further, ALF bears the onus of establishing its claims of agency, and the material brought forward by ALF, or otherwise before me, does not establish the pleaded agency relationship.
5. The observations and findings made in the DADI litigation, in respect of DADI's activities "on behalf of" the Alexandria Landfill Group, or ALF and/or Boiling, were observations and findings made in the context of the issues in that litigation, which dealt with the question whether DADI had an "interest in land" (Lot 2), and on the basis of the evidence adduced in those proceedings.
6. Those observations and findings do not, however, preclude RMS from contesting the issue of alleged agency in the present case, and are not determinative of the matters that ALF must establish to succeed on this point. RMS relies on the submissions on which it succeeded in my ALF judgment No 4, and the parties are also not precluded by that fact or outcome from contesting the issue of alleged agency in this present matter.
7. The observations and findings in the DADI proceedings were addressed to a different topic, and shed little or no light on the nature of any agency relationship, the terms and conditions of that relationship, and/or the nature of the fiduciary obligations and duties in the alleged agency relationship between ALF and DADI. Significantly, the observations and findings in the DADI litigation were not required to, and did not, address, or include findings about, the extent to which (if at all) the income and expenditure of DADI is to be treated as the income and expenditure of ALF.
8. In the present case "the person" entitled to compensation is ALF, it being the only entity held to be entitled to compensation within the meaning of s 37. ALF must be inferred to concede, or accept, this, as it alone seeks compensation for lost profits and other amounts, which are said to relate to the activities of DADI, as the alleged agent of ALF, or, alternatively, as a subsidiary of ALF.
9. Section 59(1) does not cover any present or future cost incurred by anyone other than the "person" entitled to compensation under s 37.

18.6 Recent decisions

1. In Section 1.3 above (from [10]), I mentioned a number of recent decisions which have informed my thinking on this matter, notably on the Applicant's contested disturbance claims.
2. I turn now to discuss those authorities in important detail (cf., [20]-[23] above), but with some emphasis added to make my point.

Melino

1. In Melino, the C of A bench comprised Beazley P, and Basten and Payne JJA, and the primary concern in the appeal was Moore J's rejection of some disturbance claims made pursuant to s 55(d) (by way of s 59(1)(c) or (f)).
2. Payne JA gave the longest judgment, and allowed the appeal, remitting the matter to this Court on a specific issue. Basten JA wrote separately, but at modest length, in slightly different terms, allowing the appeal only in part, and also remitting the matter to this Court, in the same terms as Payne JA. (Their Honours also agreed that there should be no order as to costs.)
3. The learned President agreed with Payne JA, including with His Honour's reservations about the line of authority in the C of A regarding s 59(1), dealt with below (from [778]), but she added (at [1]): ... in the absence of full argument and where there has been no challenge to those decisions, I am of the view that those authorities should be applied insofar as they are relevant to the case in hand.
4. Payne JA deprecated (at [59]) the tendency in the authorities to employ "non statutory language", such as the terms "just terms override" and "double dipping", and noted (at [60]): ... The potential for overlap between compensation for the market value of the acquired land and compensation for disturbance is a key question in the present case, as it has been in a number of cases in this Court. In addressing this question it is necessary to refer to these earlier decisions, which are not always easy to reconcile.
5. His Honour then examined Roads and Traffic Authority (NSW) v Peak ("Peak") [2007] NSWCA 66; Roads and Traffic Authority (NSW) v McDonald ("McDonald") (2010) 79 NSWLR 155; [2010] NSWCA 236; Tolson v Roads and Maritime Services [2014] NSWCA 161; (2014) 201 LGERA 367; Angus CA ([757] above); and Roads and Maritime Services v Allandale Blue Metal Pty Ltd ("Allandale") [2016] NSWCA 7.
6. His Honour said (at [77]): ... It is true that while the precise point of construction was not apparently raised in these earlier cases, Peak, McDonald and Allandale all proceeded on the basis that what is now s 59(1)(f) was an available basis to order that compensation be paid for the costs of purchasing or rebuilding (in whole or in part) structures. It may be that those earlier cases are able to be distinguished. It may be, however, that to decide this issue this Court would need to give consideration to whether those cases were correctly decided. For this reason, the question of whether s 59(1)(f), like other parts of s 59(1) was restricted to ancillary costs, and does not extend to purchasing or rebuilding structures should be determined in a case where the point has been squarely addressed by the parties. and then (at [81]-[82]): 81 As I have said, on the assumption that s 59(1)(f) was capable of applying in this case, the correct approach to the section was to apply the words of the section, without putting any gloss on those words. The focus of s 59(1)(f) is the costs incurred or which might be incurred by the landholder relating to the actual use of the land, being the acquired land: Mir Bros [Unit Constructions Pty Ltd v Roads & Traffic Authority of New South Wales ("Mir Bros") [2006] NSWCA 314] at [88] per Spigelman CJ. Those costs must be reasonably incurred (either now or in the future) as a direct and natural consequence of the acquisition. 82 The [JTC] Act does not expressly or implicitly provide that the value paid for land compulsorily acquired necessarily includes "the full compensatory value for all fixtures included in the acquisition". It was an error on a question of law for the primary judge so to conclude.
7. His Honour later remarked (at [111]) that, contrary to a submission made, s 59(1)(f) was not to be regarded as a "catch all provision", but must be read "in its context as part of s 59 and in its place part of the tightly drawn constraints imposed by the section" (emphasis mine).

Moloney

1. The same bench (Beazley P, Basten and Payne JJA), on the very same day as Melino (2 November 2018), handed down the C of A's decision dismissing the appeal against Pain J's decision, in Moloney, declining to award compensation under ss 55(d) and (f) for the costs of building a new home on the dispossessed owners' remaining land.
2. Again, Payne JA gave the main judgment, but, on this occasion, Beazley P agreed with both him and Basten JA. Basten JA agreed with Payne JA's reasons, but added some "observations" of his own (at [2]-[24]).
3. Basten JA expressed (at [5]) his own concern that what he called "shorthand" terms (cf., Payne JA in Melino, at [777] above), such as "just compensation override" and "double dipping", can "distract attention from the statutory scheme and can lead to errors in approach", although not to any error by Pain J at first instance in Moloney. His Honour then cautioned (at [6]) that: Other glosses upon the statute have been approved in earlier cases, some of which appear to have arisen as a result of too ready an acceptance of the proposition that different heads of claim may "overlap", and a failure to read the statutory provisions as a whole.
4. His Honour said (at [8]-[9]) in respect of the so-called "override": 8 The second limb of s 54(1) identifies the amount payable as "such amount as, having regard to all relevant matters under this Part, will justly compensate the person for the acquisition of the land." That is not language permitting a departure from the terms of Pt 3. For example, one matter to which regard must be had is the market value of the land on the date of its acquisition: s 55(a). The term "market value" is defined to mean "the amount that would have been paid for the land if it had been sold at that time by a willing but not anxious seller to a willing but not anxious buyer …": s 56. Nothing in s 54(1) allows some different basis for assessing the market value of the land. 9 Further, s 55 sets out six factors to which regard must be had and which are the "only" matters to which regard may be had. Five of the six factors are defined in the ensuing sections, being ss 56-60. Section 55(f) is not further defined, although it may be affected by s 61. Each of these provisions is to be applied in its terms; s 54(1) gives an overview by reference to the purpose underlying the provisions which follow.
5. On "double dipping", His Honour said (at [10]-[11]): 10 The mandatory factors set out in the exclusive list in s 55 appear on their face to be discrete and independent sources of compensation which, if possible, should be construed so as to avoid overlap. That is to avoid a risk of their being assessed in different ways under different heads, or allowed more than once when the Act does not permit that. 11 A practical problem facing courts dealing with claims for compensation is that valuers do not always assess value by reference to the statutory concepts. There is no doubt that the common form of "before and after" valuation wraps up a number of elements in one exercise. Often that is the best approach. Nevertheless, it may be necessary to dissect the reports to ensure they address all relevant heads of compensation, do so on a basis consistent with the Act, and do so only once.
6. His Honour commented on s 59(f), now s 59(1)(f) (at pars [13], and [19]-23]), in these terms (emphasis mine): 13 ... By comparison with s 55(f), which deals with "other land", s 59(f) [6] deals with certain costs "relating to the actual use of the land", meaning the acquired land. Case law has suggested that "if the actual use of the residue land is so intimately connected with the actual use of the acquired land so that use of the one is [dependent] on use of the other, then that is sufficient to bring it within s 59(f)." [See Peak, at [71].] ... 19 Section 59 defines the scope of the phrase "loss attributable to disturbance", which appears in s 55(d). Section 59 had six paragraphs. [9] Paragraph (a) addresses legal costs "reasonably incurred by the persons entitled to compensation in connection with the compulsory acquisition of the land", and par (b) deals with valuation fees reasonably incurred by "those persons". Paragraph (c) addresses various financial costs "reasonably incurred in connection with the relocation of those persons", being the persons entitled to compensation in connection with the compulsory acquisition of the land. Paragraphs (d) and (e) address limited stamp duty and mortgage expenses incurred by "those persons", limited to those requiring relocation. There is a question as to whether pars (c), (d) and (e) are limited to relocation of persons as a result of the land on which their home stood being acquired, or whether they include relocation of persons whose home was on adjoining land. There is also a question as to whether, if they extend to the latter category, they are limited to the specified financial costs of relocation caused by the acquisition (that is the loss of ownership of the acquired land) or by the carrying out of the public purpose for which the land was acquired, or both. These questions do not arise in the present case because the focus is on the sixth paragraph in s 59, which is partly in different terms. 20 Paragraph (f) commences with the phrase "any other financial costs". The word "other" indicates financial costs other than those referred to in pars (a)-(e); however, the use of the phrase "financial costs" indicates that they are costs of a similar kind. 21 Secondly, the other financial costs must relate to "the actual use of the land", namely the acquired land. The reference to "actual use" is to the use to which the land was put at the date of acquisition. 22 Thirdly, the other financial costs must be reasonably incurred "as a direct and natural consequence of the acquisition." That language requires a direct and natural causal connection between the use of the land and the fact that the use is no longer possible because of the change in ownership. If the acquired land was actually used at the date of acquisition for the purpose of access to other land, including, in this case, land on which the owners' house stood, the cost of rerouting the access road would be covered by this provision. That was not the issue in the present case: such costs, legitimately falling within the scope of par (f), had been accepted and agreed. The disputed claims related to the relocation of the dwelling house further from the highway. The claims included the cost of a replacement dwelling and numerous ancillary costs, such as the design of the dwelling and its connection with electrical services, town water supply and a new septic system. 23 None of these costs fall within the scope of s 59(f). The removal of the house to a place further from the new highway was not caused by the loss of ownership of the acquired land, but by the loss of amenity caused by the proposed use of the acquired land for the public purpose for which it was acquired. Such a claim fell comfortably within the concept of a "decrease in the value of any other land of the person at the date of acquisition which adjoins … the acquired land by reason of the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired." That is the language of s 55(f). In the jargon used in this area of the law, this diminution in value is described as "injurious affectation". The appellants had a strong claim for injurious effects on amenity under s 55(f). So much was not in dispute and was expressly incorporated within the "before and after" calculations of value accepted by the primary judge. The disputed claims under s 59(f) were correctly disallowed.
7. Payne JA introduced the main part of his judgment, in Moloney, with a note of caution (in [67], [68], and [74] - emphasis mine): 67 The relationship between the grounds in s 55 of the [JTC] Act and the operation of s 59, in particular s 59(f), has been the subject of consideration in this Court on a number of occasions. 68 The question of what has been determined about the construction of these provisions in the earlier cases must be approached with a little care. The precise factual background in each case has provided the occasion for some apparently broad statements of principle made by the Court, which on one view are difficult to reconcile. It is thus necessary to examine whether a number of those statements are expressions of principle relevant to the central construction questions posed here or are better understood as expressions relevant to the operation of the [JTC] Act in the particular case being considered. ... 74 ... The potential for overlap between compensation for the market value of the acquired land and compensation for disturbance is a key question in the present case, as it has been in a number of cases in this Court. In addressing this question it is necessary to refer to these earlier decisions, which are not always easy to reconcile. ...
8. His Honour then noted some relevant earlier decisions, before arriving at what Jagot J had decided in Almona ([754] above). His Honour commented (at [77]-[78] - emphasis mine): 77 Jagot J explained, correctly, that each of the sub-paragraphs in s 59 involves a causal relationship between the fact of the acquisition (that is, the taking of the land as effected by publication of the acquisition notice, referred to in s 20 of the [JTC] Act) and some cost. The focus of s 59 is financial costs connected in some way to the acquisition of the land itself. Her Honour, correctly, regarded Peak and the other decisions analysed in Peak as supporting an approach to s 59(f) focusing on a relationship between the acquisition (that is, the taking of the land) and the claimed costs. The relevant costs are limited to costs "relating to the actual use of the land, as a direct and natural consequence of the acquisition". The "actual use" of the acquired land in s 59(f) refers to the use by the dispossessed owner, not the use by the acquiring authority for the public purpose. The words "the acquisition" direct attention to the fact of the taking of the land. 78 Critically, for present purposes, the words "direct and natural consequence of the acquisition" direct attention to the nature or degree of the required causal relationship. Only costs incurred or that might be incurred as a direct and natural consequence of the acquisition are captured. The carrying out of the public purpose is possible because of the acquisition, but that does not mean that costs incurred because of the carrying out of the public purpose are themselves a direct and natural consequence of the acquisition. They are a result of the public authority, in pursuit of its statutory powers, deciding to carry out the public purpose for which it acquired the land.
9. Payne JA continued (at [83]-[85] - emphasis mine): 83 The carrying out of the public purpose was possible because of the acquisition. That does not mean that the costs to be incurred by the appellants because of the carrying out of the public purpose, being those that would be incurred in rebuilding the dwelling at another location, are themselves a direct and natural consequence of the acquisition. 84 On the facts found by the primary judge, the claimed costs here are clearly the result of the public authority, in pursuit of its statutory powers, deciding to carry out the public purpose for which it acquired the land. ... [T]he existing dwelling was still able to be used, albeit with a diminution in amenity. Critically, however, that diminution in amenity was due to the public purpose being carried out; the proposed upgrade to the Pacific Highway, not the acquisition of the land. It follows that the proposed costs of rebuilding the dwelling on another part of the residue land were not a direct and natural consequence of the acquisition. 85 It is true, as the appellants submitted, that the primary judge did not reason in the way I have described immediately above. That is, the finding at paragraph [272] that "[t]he application of the 'before and after' method in this case takes into account the loss of value of the main dwelling. The cost of building a replacement dwelling cannot be separately claimed as a disbursement by the [appellants] as that has already been taken into account in the 'before and after method' was an error on a question of law in the interpretation, and application, of s 59(f) of the [JTC] Act. An error on a question of law permits the Court to set aside the judgment of the primary judge, if it is a material error: Peak at [152] per Basten JA.
10. Later, His Honour noted and responded to submissions of some relevance to the present case (at [95]-[100] - emphasis mine): 95 The respondent submitted that the ability of land to produce profit is inherently a feature of the market value of the land, for which the appellants had already been compensated in the market value claim. There was no error in the primary judge's approach to the loss of profits claim because where sugarcane is an inherent component of what adds value to the land and the land has a specific valuation rate per hectare, as it did here, compensation for market value on a rate per hectare basis fully compensated the appellants for their loss. 96 ... [The Respondent further submitted that] any loss from the acquisition arose from how the appellants decided to invest the compensation received for market value rather than from the acquisition itself. ... 97 As I have said, the provisions of the [JTC] Act must be applied according to their terms and without preconceptions based on limitations which do not appear in the statute. 98 I reject the appellants' contention that whatever be the content of a claim made and addressed under ss 55(a), (b) and (f), the Court must separately determine entitlement to compensation for disturbance under s 55(d) as reflected by s 59(f) of the [JTC] Act, without regard to the fact that the same amount, in whole or in part, has already been the subject of a claim for compensation under s 55(a), (b) or (f) of the [JTC] Act. This approach is inconsistent with the overlapping nature of the heads of compensation in s 55 and with prior authority in this Court, including McDonald which was otherwise heavily relied upon by the appellants. 99 The loss of profits claim illustrates the potentially overlapping nature of the heads of compensation in ss 55(a), (b) and (f) of the [JTC] Act and s 55(d) as reflected by s 59(f) of the [JTC] Act. The finding of the primary judge that "the right to potential profits from growing sugarcane after the date of the acquisition is encapsulated in the market value of the land" was plainly correct. The market value of the acquired land included the capacity of that land to generate a profit in the future, whether by growing sugar cane or doing anything else. 100 It is not a gloss on the legislation to recognise the overlapping nature of the heads of compensation in s 55. Section s 55 requires that "regard must be had" to the identified matters, without specifying how they should be understood to interrelate. When compensation has been obtained, in full, for losses occasioned by the acquisition in the claim for market value under s 55(a), (b) or (f) of the [JTC] Act, a separate claim for the same amount as disturbance under s 55(d) is not maintainable.

Monti

1. In February 2019, Pepper J decided Monti.
2. The dispossessed owners claimed not only market value, but also special value and disturbance - they "anticipated permanent loss of profits ... from their inability to conduct a quarrying business on the acquired land" (at [4]).
3. In dealing with the "loss of profits" disturbance claim, Her Honour noted (at [118]): The fundamental error in the Montis' approach to their claim for lost profits was that it overlapped with the amount being claimed under ss 55(a) and (f) of the [JTC] Act, and therefore, amounted to impermissible double-counting upon the proper construction of the Act.
4. Her Honour observed that the C of A had "recently rejected" such an approach in Moloney, and quoted pars [98]-[100] of Payne JA's judgment (above at [790]), with which the other two Judges hearing the appeal had specifically agreed. Her Honour commented ([120]-[121]): 120 Pursuant to the reasoning in Moloney, it is now unarguable that the [JTC] Act does not permit a claim for disturbance under s 59(1)(f) for the loss of profits or income from the carrying on an activity on the acquired land where the capacity of the land to derive that income or profits is included in the assessment of the market value of that land. 121 As a consequence, the Montis' claim for loss of profits, which comprised a significant proportion of their claim for compensation, cannot succeed. In short, Moloney was entirely dispositive of this aspect of their compensation claim. ...

United CA

1. Finally, in this sequence of cases, on 6 March 2019 a five-Judge bench in the C of A delivered its judgments, allowing the United appeal.
2. Only Macfarlan JA refrained from any individual commentary, agreeing with the principal judgment, delivered by Basten JA.
3. Payne JA wrote briefly ([73]-[78]), expressing only "one possible qualification" regarding Basten JA's reasons, in relation to possible "overlapping claims".
4. Payne JA adhered to what he had decided in Melino, and also agreed with Sackville AJA's judgment (in United CA), which he found "not inconsistent" with that of Basten JA. He agreed with Sackville AJA, specifically, that the C of A ought to review, in an appropriate case, its decision in El Boustani v The Minister administering the Environmental Planning and Assessment Act 1979 ("El Boustani CA") (2014) 199 LGERA 198; [2014] NSWCA 33. In this respect, Payne JA said (at [77] - emphasis mine): It may be that the approach to s 59 in earlier cases, especially El Boustani (CA), was the result of inadequate attention being paid to identifying the market value of the acquired land in that case. What was relevantly in issue in El Boustani was a claim by the landowners for lost profits for four years into the future from the operation of an existing market garden on the acquired land, styled as a "disturbance" claim. It will be recalled that the highest and best use of the acquired land in that case was "its existing use of intensive horticulture": at [12]. Assuming that what was being valued was the highest and best use of the acquired land, I fail to see as a matter of principle why the market value of the acquired land, correctly identified, would not include the capacity of that land to generate a profit in the future, including by conducting a market garden. That is, the right to potential profits from market gardening after the date of the acquisition would be encapsulated in the market value of the acquired land. As I explained in [Moloney] at [97]-[100], in those circumstances there is no room for any separate "disturbance" claim.
5. The fifth judgment in United CA was that delivered by the learned Chief Judge of this Court, Preston J.
6. The respondent to the United appeal had operated a service station and restaurant on land it held under an oral lease, terminable on one month's notice, and, after acquisition, it was unable to relocate its business.
7. The key issues in the appeal concerned possible entitlement, under the then s 59(f), to compensation for (i) its loss of ongoing business profits, and (ii) the increased rental it paid to the acquiring authority.
8. The headnote records that, in United CA, El Boustani CA was "doubted", McDonald was distinguished, and Angus CA "not followed", with the result that: 1. four Judges in the C of A have now expressed doubt about whether the term "any other financial costs" in the now s 59(1)(f) "extends to the loss of future income or profits from a business" (contrary to the view taken by Preston J, at [138], [142] and [163]); and 2. at least three of the Judges (Basten, Macfarlan and Payne JJA) found that "the claim for loss of business in circumstances where United's interest in the land was of no value was an attempt to re-characterise loss that was previously recognised in the assessment of the market value of the land", and paid to the owner of it. (See Elmon Pty Ltd v Roads and Maritime Services [2016] NSWLEC 168, at [11].)
9. The Court also held that no compensation for the rental increase should be awarded, because such "loss" was not a "direct and natural consequence of the acquisition".
10. I turn now to consider the individual judgments, extracting, where relevant to the present case, passages of reasoning of sufficient length to make clear the development of the relevant legal principles.
11. Basten JA noted the similarities and differences among the various provisions within what is now s 59(1), and then said (at [9]): ... par (f) differs from each of the preceding paragraphs. Thus, each of pars (a)-(e) refers to specifically identified costs or fees; by contrast, par (f) involves no such element of precision, referring rather to "any other financial costs". As will be seen shortly, there has been a tendency in the discussion of the scope of this paragraph to read that phrase in isolation and give it the broadest possible interpretation consistent with dictionary definitions of the individual words. That approach disregards four different forms of constraint imposed by the context and structure of the section.
12. He identified the four constraints (at [10]-[13]) - a temporal element; the need for "actual use"; the cost having to flow as a "direct and natural consequence"; and the construction of the phrase "any other", in respect of which His Honour said (at [13] - emphasis mine): ... It would be erroneous to construe par (f) as including any financial cost not specified in pars (a)-(e); to adopt that approach would be to disregard the careful limitations imposed by the specific provisions. ... It would subvert the purpose of those carefully crafted provisions to allow additional amounts to be paid by way of stamp duty or mortgage fees simply because they fell within the language of par (f), read in isolation from the earlier paragraphs.
13. Basten JA held (at [14]-[18] - emphasis mine): 14 In order to be sure that a construction of par (f) does not subvert the limitations contained within the earlier paragraphs, it may be necessary to identify those limitations with a degree of precision. For example, par (f) should not be understood as permitting recovery of financial costs of relocating persons beyond those recoverable pursuant to par (c). The costs of relocating persons may, for example, in the case of residential premises, include the costs of furniture removal and storage whilst alternative premises are acquired, and other incidental costs of relocation. There is no apparent reason for limiting "the relocation of those persons" to the relocation of the individuals concerned, or their immediate belongings; the phrase is apt to include the relocation of business operations conducted on the acquired land. A question then arises as to whether the interruption to the operation of the business, resulting in reduced revenue, whether temporarily or permanently, constitutes a financial cost reasonably incurred in connection with the relocation of the business operated on the acquired land by the person entitled to compensation. However, such amounts as may be recovered under par (c), would not be recoverable under par (f). Compensation for continuing operation of business 15 The primary judge found that the compulsory acquisition terminated the business operation conducted by United on the land acquired. There was no relocation. Accordingly, the question for determination was whether United could be compensated under s 59(f) for the loss of an opportunity to continue to operate its business on the land which had been acquired. There are three reasons why that question should not be answered favourably to United. 16 First, the ordinary meaning of "financial costs reasonably incurred … relating to the actual use of the land", is not apt to describe the loss of an opportunity to continue to use the land. While there may be financial costs incurred in terminating a business operation, the loss of the opportunity to continue the business operation is not aptly described as a "financial cost" relating to the actual use of the land at the date of acquisition. 17 Secondly, the direct and natural consequence of the acquisition of the interest in the land was to prevent the continuation of the business on that land; the acquisition did not cause the owner to "reasonably incur" the termination of the business; rather, in ordinary parlance, the acquisition caused the owner to suffer a loss of revenue. The loss of revenue may have caused the business owner to take other steps, but the loss of revenue itself was not aptly described as a "financial cost"; however, the cost of taking other steps, such as the cost of relocating the business, readily fell within the language of par (f). 18 Thirdly, and by way of expansion of the last point, the kinds of financial costs covered by pars (a)-(e) are all costs incidental to the loss of the land; they assume the loss of the land for which market value will have been paid pursuant to other provisions in s 55, assuming that the owner's interest in the land had a compensable value.
14. Also relevant to the present matter are His Honour's remarks, at [22] and [27] (emphasis mine): 22 United did not seek to deny the proposition that its leasehold, terminable at will by the lessor, had no market value. Rather, it sought to avoid the conclusion that the land had no commercial value for it by claiming the full commercial value of the business operation undertaken by it on the land. However, as a matter of principle that which may be described as the basis of calculation of market value of an interest in land cannot be recharacterised as a form of consequential loss, known as disturbance, so as to be fully recoverable, in circumstances where the interest in land is so attenuated as not to enjoy any relevant market value. ... 27 Furthermore, there would be an inconsistency between an assessment of the market value of the land based on capitalisation of earnings and the separate capitalisation of those earnings as an element of disturbance. Whilst disturbance is a separate head of compensation from compensation for the market value of the land acquired, it is a form of compensation for a distinct loss, not for the same loss recharacterised.
15. His Honour later said (at [49]-[50] - emphasis mine): 49 ... In most, if not all, cases of compulsory acquisition of interests in land, the compulsory acquisition will terminate the actual use of the land by the prior owner. ... If ... the prior use was commercial, the prior owner's interest is again compensated by receiving the market value of its interest in the land. There is no additional compensation for termination of the cash flow from the prior use. Rather, the best available financial return for the commercial use of the land will form the basis of its market value. It will be compensable as such. As explained in [Moloney] ... "[t]he market value of the acquired land included the capacity of that land to generate a profit in the future, whether by growing sugar cane or doing anything else." 50 There is a danger in treating the different matters identified in s 55 as capable of giving rise to "overlapping claims". This is not a necessary construction of the legislation. The better view may be that each provision provides an independent basis for a relevant award of compensation, but should be read as exclusive in its terms and not as overlapping with other bases of claim. This may be important in order to avoid misapplication of limitations on compensation. Thus, it would be inconsistent with the statutory scheme if a particular head of loss could be recoverable as market value of the land or under another head in s 55. If that were possible, the limitation on the compensation payable for market value set out in s 56(2) might be capable of avoidance by manipulation of the heads of claim.
16. Sackville AJA analysed (at [87]) the concepts brought together in s 59(f) (see [728] above), and then said (at [88] - emphasis mine): Some of the matters which the [JTC] Act specifies must be taken into account in assessing the amount of compensation payable to a person whose land has been compulsorily acquired have nothing to do with the market value of the land. This reflects the legislative purpose of providing compensation in accordance with specific statutory criteria that do not depend on the value of the interest in land compulsorily acquired (although in particular cases there can be some overlap). In the present case, for example, there is no dispute that the market value of United Petroleum's tenancy at will at the date of acquisition was nil. But the fact that United Petroleum's interest in the land was valueless did not prevent it claiming compensation for "loss attributable to disturbance" (s 55(d)), provided that it could satisfy one of the categories of loss identified in s 59. For example, United Petroleum was not precluded from claiming legal costs pursuant to ss 55(d) and 59(a) of the [JTC] Act if it could show that it had reasonably incurred legal costs in connection with the compulsory acquisition of the land. Similarly, it is common ground that United Petroleum was not precluded by the limited nature of its interest in the land from claiming "other financial costs" pursuant to s 59(f) provided that it could satisfy the requirements set out in that paragraph. and (at [91] - emphasis and "NOTE" added by me): As Payne JA observed in Melino [at [56]]: "The [JTC] Act should be approached on the basis that the [claimant's] right to compensation should not be subject to limitations or qualifications not found in the terms of the statute". To determine whether a claimant is entitled to a particular form of compensation requires close attention to the "natural and ordinary meaning of the words of the legislation". (NOTE: See also [96], re the use of the phrase "any other" in s 59(f), and [97] re the interaction of s 59(f) and s 61, of which His Honour said (i) it "is designed to prevent overcompensation where the value of the land reflects a potential for redevelopment or a higher and better use, but realisation of the potential would require the owner to incur 'financial loss'", and (ii) it "does not control the interpretation of s 59(c) or (f)". See also [98].)
17. Despite the threat it poses to keeping this judgment, and this section of it, as concise as possible, I wish to set out now two further passages from Sackville AJA's reasons in United CA.
18. Under the heading "A difficulty", His Honour said (at [99]-105]: 99 Although there is a strong textual basis for limiting s 59(f) of the [JTC] Act to losses in the nature of liabilities or outgoings, this construction encounters a difficulty that was not fully addressed in argument in the present case. It has long been accepted that the compensation payable to a person whose land has been compulsorily acquired may include compensation for loss of an income stream or profits resulting from the relocation of a business conducted on the acquired land. Prior to the enactment of the [JTC] Act, loss attributable to disturbance was not a separate head of compensation in New South Wales. But a long line of authority interpreted "value" for the purposes of the law of compulsory acquisition to mean "value to the owner". This formulation was a "unifying concept" that encompassed, among other things, loss attributable to disturbance. By this means the "loss of trade or production" occasioned by a relocation or termination of a business came within the concept of special value to the owner and thus could be compensable. 100 It appears to have been accepted after the enactment of the [JTC] Act that loss of income or profits due to the relocation of a business continues to be compensable. In [El Boustani at first instance [2012] NSWLEC 266] the trial Judge awarded the claimant compensation for loss attributable to disturbance calculated by reference to the profits lost over the three year period required to relocate and re-establish a market garden previously conducted on the acquired land. The trial Judge made the award pursuant to s 59(c) of the [JTC] Act but held that if, contrary to her view, s 59(c) was not applicable, s 59(f) would support the award. On the appeal this Court recorded that it was not controversial that compensation for loss of profits was payable and that the dispute was merely as to the period of time for which lost profits should be allowed. 101 In [Angus CA], Tobias AJA expressed the view that: "Given that it was the clear intent of the [JTC] Act that disturbance losses should be recoverable as a separate head of compensation … it cannot be the case that disturbance losses which under the prior law were recoverable as special value should no longer be recoverable because of a narrow construction of the expression "financial costs" in s 59(f)." His Honour considered that the decision in El Boustani (CA) mandated rejection of the proposition that loss of income or profits due to disturbance can be compensated as part of "special value", now separately defined in s 57 of the [JTC] Act. It followed, so his Honour held, that if lost income or profits are to be compensated in compulsory acquisition cases, this can only come about if the loss falls within s 59(f). 102 RMS did not submit that El Boustani (CA) and [Angus CA] were incorrect insofar as they held that loss of income or profits by reason of the forced relocation of a business cannot be claimed as an element of "special value of land to the person on the date of its acquisition" within the meaning of ss 55(b) and 57 of the [JTC] Act. Nor did RMS submit that this Court in El Boustani (CA) was incorrect to proceed on the assumption that s 59(c) of the [JTC] Act permits compensation to be claimed for loss of income or profits incurred in connection with relocation. 103 In the present case United Petroleum cannot rely on s 59(c) of the [JTC] Act because it does not seek compensation for loss of profits incurred in connection with relocation of its business. It therefore must rely on s 59(f) which is not confined to financial costs arising from relocation of a business. The language of s 59(f) is capable of covering financial costs incurred by reason of the closure of a business previously conducted on the acquired land, where the evidence shows that relocation of the business was not feasible. 104 In the absence of an attack by RMS on the reasoning in El Boustani (CA) and [Angus CA] referred to above, the construction of s 59(f) of the [JTC] Act should be approached on the basis that the expression "financial costs" in s 59(c) extends to the loss of income or profits resulting from the forced relocation of a business conducted on the acquired land. On that basis, there is nothing incongruous in construing the expression "other financial costs" in s 59(f) to extend to the loss of income or profits where a business conducted on the acquired land is forced to close and cannot be relocated. 105 In reaching this conclusion I do not foreclose the possibility that in a future case the construction of s 59(c) of the [JTC] Act assumed in El Boustani (CA) and of s 59(f) adopted in [Angus CA] might have to be reconsidered. That may involve reconsideration of the nature and source of the entitlement of a person whose land has been compulsorily acquired to compensation for lost income or profits resulting from the forced relocation or closure of a business conducted on the acquired land.
19. In the last section of his substantive judgment, before His Honour dealt with costs, Sackville AJA said (at [116]-[121] - emphasis mine): 116 United Petroleum's interest at the date of the acquisition was terminable on one month's notice. The lessor was entitled to give that notice at any time. In these circumstances, it cannot be said that United Petroleum's long-term loss of profits by reason of the closure of its business is a "direct and natural consequence" of the acquisition of its interest in the land on which the business was conducted. 117 It is one thing to say (as RMS conceded) that the closure of the business was a direct and natural consequence of the compulsory acquisition. It is quite another to say that United Petroleum's loss of profits from the business was a direct and natural consequence of the compulsory acquisition. The principal cause of United Petroleum's loss of profits was its decision to conduct a business intended to operate in the long term under a lease which could be terminated at any time on very short notice. No doubt United Petroleum took into account in conducting and investing in the business the likelihood that the lessor, a related company, would choose not to terminate the lease, at least in the short term. But that likelihood is irrelevant to the question of whether United Petroleum's loss was a direct and natural consequence of RMS' acquisition of the tenancy at will. 118 Since one month's notice was required to terminate the tenancy at will, it is only the loss of one month's profits can fairly be said to be the "direct and natural consequence of the acquisition". I do not consider that the loss of profits in respect of a longer period satisfies the requirements of s 59(f) of the [JTC] Act. 119 Mr Lancaster submitted that [Angus CA] is distinguishable insofar as it held that the tenant at will in that case could receive compensation for the loss of profits that would have been earned from the business conducted on the acquired land over a two year period. [65] In my view, however, the conclusion I have reached is inconsistent with the reasoning in [Angus CA]. The essential point of difference is that I consider that it is the "financial costs" that must be incurred as a direct and natural result of the acquisition of the tenancy at will. The fact that the tenant at will would not have incurred the losses had the acquisition not taken place does not establish that the claimed losses were a direct and natural consequence of the acquisition. The inquiry needs to go further. 120 In my respectful opinion this aspect of the reasoning in [Angus CA] is plainly wrong and should not be followed. The error lies in the assumption that because the closure of the business was triggered by the compulsory acquisition of the lessee's interest the loss of profits was the direct and natural consequence of the acquisition. Further analysis is required before that conclusion can be reached. 121 I note that the conclusion I have reached limits the opportunities for related companies to order their affairs so that each is entitled to claim compensation for what is essentially the same economic detriment. It may be accepted that a loss sustained by two different entities as a consequence of the acquisition of their respective interests in the land must be assessed separately for the purposes of determining compensation, even if the entities are related. But if United Petroleum's argument is correct, in a case such as the present the interest of a lessor may be valued taking into account its entitlement to terminate the tenancy at will on one month's notice (for example, by assessing the value of the fee simple estate by reference to the stream of profits from a business similar to that conducted by tenant at will). Yet the tenant at will's interest is to be valued without reference to the fragility of that interest.
20. I turn then, finally, to the reasons of Preston J, who took a minority view on some of the issues, but essentially joined in the Court's decision.
21. His Honour said (at [133]-[135] - emphasis added): 133 These categories of loss attributable to disturbance in s 59 exhaustively define the compensation to which a person is entitled for "loss attributable to disturbance". 134 Each of these categories of loss attributable to disturbance assume the acquisition of the land. The acquisition of the land is a necessary cause of the disturbance of the person's occupation and use of the land and of the person incurring any of the specified categories of loss attributable to disturbance. Although acquisition of the land is a necessary cause of incurring loss attributable to disturbance, it is insufficient by itself to establish entitlement to compensation for loss attributable to disturbance. This is because the specified categories of loss attributable to disturbance in s 59 require further matters to be established. For example, as I will explain further below, s 59(f) requires that the "other financial costs" incurred relate to "the actual use of the land", not a potential future use, and be a "direct and natural consequence of the acquisition", not that some state of affairs, such as a closure of a business conducted on the land, be a direct and natural consequence of the acquisition. 135 The concept of "financial costs" in s 59(f), read alone, is capable of bearing a wide meaning. Financial costs can include not only expenditures (outgoings) but also forgone benefits and advantages, such as a forgone stream of income or profit (forgone ingoings). However, the words "financial costs" in s 59(f) need to be read in context, both the specific context of s 59(f) as well as the general context of the other categories of loss attributable to disturbance in s 59. and later (at [156] and [161]): 156 Where the actual use of the acquired land by the person entitled to compensation is terminated by the acquisition, the loss of an opportunity to continue to use the land (and any concomitant financial loss) is not a financial cost reasonably incurred "relating to the actual use of the land", but rather financial costs not relating to the actual use of the land. The actual use has come to an end. Any financial costs incurred after the actual use has terminated, including the loss of the opportunity to continue operating a business on the land, cannot relate to the actual use of the land (as Basten JA observes at [16]). ... 161 This limitation imposed by the requirement that the financial costs be incurred as a direct and natural consequence of the acquisition operates to confine the compensation payable to United in this case. As Sackville AJA points out (at [117]-[120]), the loss of future profits from the business that had operated on the acquired land is not a "direct and natural consequence" of the acquisition. The closure of the business that had operated on the acquired land might be a direct and natural consequence of the acquisition, but the loss of a perpetual stream of profits from the business, by United not being able to operate the business on the land indefinitely, is not a direct and natural consequence of the acquisition. Rather, the forgoing of these profits is a consequence of United's decision to conduct its business under a tenancy at will terminable on one month's notice. As Sackville AJA finds at [118], since one month's notice was required to terminate the tenancy at will, at most only one month's profits could be said to be a "direct and natural consequence" of the acquisition. The loss of profits for an indefinite period after one month is not a "direct and natural consequence" of the acquisition, but of other causes, including United's arrangement of its business affairs. This interposition of a third variable or action between the acquisition and the incurring of the financial costs results in there being only an indirect relationship, rather than the required direct relationship, between the acquisition and the incurring of the financial costs.

18.7 Conclusions on Disturbance

1. The recent cases surveyed in the previous section speak for themselves, and clearly demonstrate: 1. that the C of A has recently tightened its interpretation and appreciation of s 59(1); 2. that the particular compensation provisions in the JTC Act have to be considered as a whole, with a close eye on their internal differences in terminology; 3. that, when looking for authority on a particular issue, one has to be aware that, in many instances, valuers in some of the earlier cases have not paid sufficient attention to the detail in the relevant provisions under which they have prepared their reports and evidence; and 4. that the precise terms of s 59(1)(f) must not be read in isolation.
2. Like Pepper J in Monti (see [794] above), I am obliged to follow the approach, which emerges from these more recent C of A authorities, but I should add that I find the judgments compelling, in any event.
3. I turn, therefore, to ALF's specific alternative claims.
4. The first alternative claim for entitlement under s 59(1)(f) depended on there being no requirement that actual use be that of the Applicant for compensation in a particular case. If this were correct, it would be contrary to binding recent authority, and the many cases in which passive owners of interests in land have been refused compensation under s 59(1)(f).
5. The second alternative, based on attribution of the occupant DADI's loss to the claimant ALF, would appear contrary to the object, scope and purpose of s 59, as explained by the authorities.
6. The third alternative, based on an agency relationship, has simply not been established.
7. Accordingly, I have concluded that ALF's disturbance claims, other than for legal and valuation costs, which are agreed, must fail.

Section 19: Special Value

1. The relevant provisions of the JTC Act concerning Special Value are ss 55(b) and s 57, which provide: 55 Relevant matters to be considered in determining amount of compensation In determining the amount of compensation to which a person is entitled, regard must be had to the following matters only (as assessed in accordance with this Division): ... (b) any special value of the land to the person on the date of its acquisition, 57 Special value In this Act: special value of land means the financial value of any advantage, in addition to market value, to the person entitled to compensation which is incidental to the person's use of the land.
2. The final version of ALF's APOC includes a section entitled "Features of the Subject Land of special value to the Applicant", which includes the following: 10. Between 2002 and the Acquisition Date Lot 2 was an important base for the administrative, finance and maintenance functions of ALF and the Corporate Group. 11. In 2012 DADl commenced operations of a second and larger recycling and landfill facility at Eastern Creek. 12. Between 2012 and the Acquisition Date Lot 2 was operated so as to be a key supplement to the operations of, and efficient supplier of raw materials to the facility at Eastern Creek. 13. The location of Lot 2 being so close to the Sydney central business district provided a competitive advantage for the targeting of materials received at the site. 14. In 2013, the Corporate Group lodged a development application under the EPA Act to obtain development consent to construct a facility to generate energy from waste (Project) with Lot 2 intended as a significant source of materials for this Project. 15. The location of Lot 2 being so close to the Sydney central business district - particularly during several large public infrastructure projects involving demolition - gave ALF a strategically important site for waste disposal and to obtain recycling product to sell or to source for the efficient supply of materials to the Project or the Eastern Creek Site that were advantageous to it and incidental to the use of Lot 2. 16. As at the Acquisition Date, had all necessary plant and equipment in order to use the land pursuant to each of the development consents referred to above.
3. The particulars provided later in the APOC include the following: Special Value 34A. ALF is entitled to compensation. 34B. ALF was using Lot 2 through the actions of its agent DADI for the purposes set out in 3(b). 34C. ALF had advantages incidental to that use of Lot 2 due to the matters set out in 10 - 16. 34D. The financial value of such advantages is in addition to the market value of Lot 2. Methodology 34. The DCF methodology can be used to quantify the financial value of any advantage, in addition to market value, to which ALF is entitled which is incidental to ALF's use of Lot 2 (including through its agent, DADI). Special Value of Lot 2 35. The special value is determined by accounting for adjustments to the DCF methods for market value employed under Scenario 1 and Scenario 2 by: (a) eliminating what was otherwise imposed as an internal charge for the transferring of waste to other sites given that ALF could transfer to the Eastern Creek Site without such a charge; (b) eliminating what was otherwise imposed as overheads for workshop costs and administrative costs that are not incurred by ALF; and (c) accounting for the fact that ALF had all necessary plant and equipment. 36. The special value for ALF for Lot 2 under Scenario 1 or Scenario 2 Alternative 1 is $60,751,000. Particulars 36.1 Removal of the notional waste transfer charge is $24,194,000. 36.2 Not deducting for administrative costs is $35,153,000. 36.3 Not needing to purchase plant and equipment is $1,404,000. 37. The special value for ALF for Lot 2 under Scenario 2 Alternative 2 is $23,451,000.
4. In general terms, there are three components to ALF's Special Value claim - equipment needed for year 1, various overheads, and profits on waste transfers.
5. In Bronzel v State Planning Authority (1979) 21 SASR 513; (1979) 44 LGRA 34, Wells J, in the Supreme Court of South Australia, said of "Special Value" (at 525, 46), before s 57 was enacted: ... There is no exhaustive definition of what special value is. If it exists, its value must be assessed at what it is worth to the owner at the date of valuation, and not at what it may be worth to him in the future or after due development. It must be something objectively ascertainable derived from the land or some attribute or propery (sic) of it and cannot be recognized if it rests in mere subjective affection or emotional involvement. For the rest, whether it is present and capable of being evaluated depends on all the circumstances of the case. (Cited with approval by the C of A in Roads and Traffic Authority v Hurstville City Council (2001) 112 LGERA 223; [2001] NSWCA 11, at [46]. See also Mir Bros, at [65].)
6. As the Applicant's submissions say (par 515): ... The Court's task is to determine the claim by reference to that statutory definition and not by any gloss to be imposed upon the words of the provision from authorities that predate the [JTC] Act.
7. I gratefully adopt Pepper J's analysis of the current law on Special Value, in Monti (at [131]-[146]). I will not repeat it in full here, but in what follows, I will emphasize a few of Her Honour's points and authorities.
8. Her Honour also highlighted (at [126]-[130]) the practice of claimants basically identifying a cost or a loss, and seeking to have it accepted as either special value (i.e. as not being included in market value), or as disturbance, especially in the wake of the decisions in Melino and Moloney, surveyed above.
9. In Boland v Yates, Callinan J said (at [292]-[293]): 292 ... The special value of land is its value to the owner over and above its market value. It arises in circumstances in which there is a conjunction of some special factor relating to the land and a capacity on the part of the owner exclusively or perhaps almost exclusively to exploit it. ... There will in practice be few cases in which a property does have a special value for a particular owner. Obviously neither sentiment nor a long attachment to it will suffice. The special quality must be a quality that has an economic significance to the owner. A possible case would be one in which, for example, a blacksmith operates a forge in the vicinity of a racetrack on land zoned for residential purposes as a protected non-conforming use, the right to which might be lost on a transfer of ownership or an interruption of the protected use. Such a property will have a special value for its blacksmith owner, and perhaps another blacksmith who might be able to comply with the relevant requirements to enable him to continue the use but to no one else. 293 The Australian Law Reform Commission report Lands Acquisition and Compensation, with some slight adaptations goes some way towards correctly defining special value as "that additional economic advantage which the owner obtains, by reasons of his ownership … and which is not reflected in the market value". The example which I have given answers this description. ...
10. In Denshire ([21] above), Pain J said (at [86]-[93]), regarding the criteria to be satisfied for a finding of Special Value: 86 Steven Denshire submitted that his claim for special value falls within the definition in s 57 as the benefits to him under the [Put and Call] Option are in addition to market value. It is necessary to construe ss 54(1), 55(b) and 57. Firstly, "to the person" refers to the person entitled to compensation which in this case is Steven, not Warwick, Denshire. Secondly, the "financial value of any advantage" must be to the person entitled to compensation, namely Steven Denshire. Thirdly, that value and that advantage must be in addition to market value. Fourthly, the advantage must be incidental to the person's use of the land at the date of acquisition. ... 88 The essence of the claim for special value is that Warwick Denshire will act in Steven Denshire's best interests as his father and attorney and will not let the P&C Option expire. That was submitted to satisfy the requirement in s 57 of any financial advantage. In addition to market value 89 Fundamental to a successful claim for special value is that the advantage must be additional to market value. Development consent for a residential subdivision was granted in relation to the parent parcel in 2004. The residue land can be subdivided under a modified development consent which the town planners agree is able to be obtained under s 96 of the EPA Act. At the date of acquisition the valuers agreed that use of the land as a rural lifestyle property was a more valuable use than subdivision. Nevertheless, the ability to subdivide land is inherently part of market value. 90 Steven Denshire's claim does not rely on any attribute of the land. There is nothing "special" about the acquired or residue land. It remains capable of subdivision after acquisition assuming that market conditions are favourable regardless of who is the owner. 91 Boland v Yates a professional negligence claim concerning valuation advice was considering s 124 of the Public Works Act 1912 which did not refer to special value. The special value the subject of the professional negligence claim was recognised as arising at common law. ... 92 In Mir Bros ... the size of the land was rejected as the basis for a special value claim under the [JTC] Act because that was part of its market value. The observations of Spigelman CJ (Handley and Tobias JJA agreeing) in Mir Bros at [84] and [85] are pertinent: 84 …The land was vacant industrial land. The allegedly special position related only to the size of the land. Size is a matter that does affect the market value of the land. Where there is no difference between the value of the land in general, and its value to the owner, there is no special value: Turner v Minister for Public [Instruction] (1956) 95 CLR 245. That principle is now enshrined in the statutory definition of "special value"… 85 In Service Design Pty Limited v Commissioner of Highways (No 2) (1986) 59 LGRA 176 Matheson J held that the potential of land for subdivision is not a matter capable of attracting special value in the hands of the resumed owner, as the potential for subdivisions is one of the inherent characteristics of the land. Similarly, the potential development, or the potential for development of the then holding (which is said to be the special business of the Appellant), is an inherent characteristic of the land. The value created by that potential is included within the market value. The Appellant is not the only developer/investor in the fictional market exchange under s 56(i). 93 Particular reference was made by Handley JA, and the Full Court of the Federal Court, to the case of Baringa Enterprises [Pty Limited] v Manly Municipal Council [(1965) 15 LGRA 201]. That case turned upon its own special facts. By reason of established council policy, the owner of the resumed land in question was the only person who could have expected to be allowed to develop the land to its maximum potential. The highest and best use available to anybody else was of a more restricted nature. Whether or not Hardie J was factually right to conclude that the case was a proper one for allowing special value, that conclusion involved no inconsistency with the assumptions on which market value had been assessed, and there was a reason why it could have been regarded as necessary to assume that any hypothetical purchaser would be able to put the land to a use less profitable than that to which the dispossessed owner might have expected to put it. The case had never been regarded by commentators or judges as a case of head start. It was a case in which there was a difference between the use to which the dispossessed owner might have put the land and the use to which anyone else would have been able to put it. That is the basis upon which the decision has been explained subsequently.
11. Pepper J summarized, in Monti, Pain J's decision in Denshire, in these terms (at [146]): ... In other words, the financial advantage claimed was not related to any special quality of the land. Put another way, the alleged financial advantage was not incidental to the use of the land as at the date of acquisition. Second, even accepting that the concept of "advantage" contained in s 57 of the [JTC] Act is broad, her Honour nevertheless found that the applicant had no unique capacity to exploit the land given that he possessed no enforceable contractual right at the relevant time. Accordingly, no financial advantage existed (at [100]). Third, the special value claim was "in the nature of an impermissible 'double dip' of compensation" insofar as no deduction had been made for the value of the developed residue land (at [105]).
12. Her Honour dismissed the Montis' claim for special value (at [154]-[160]) for "at least six reasons".
13. The Applicant in the present case relies heavily on Mr Samuel's evidence, and is very critical of Dr Ferrier's approach: DADI already has the equipment needed for year 1 (estimated purchase price $1.4M), and ALF has quantified relevant overheads. The third component (subs par 521) is "the profits that would have been made upon transfer of waste from Lot 2 to Eastern Creek from resource recovery". The claim is that the use of Lot 2, as part of integrated operations with Eastern Creek, has a "special" economic value to ALF, not covered by market value.
14. The Respondent rejects those three elements of ALF's claim "out of hand" (subs 1170-1178).
15. The Applicant conceded that the effect in this case of s 57 (especially its express reference to "the person's use of the land") is that ALF is entitled to compensation for special value, only if DADI were using the land in Lot 2 as ALF's agent.
16. This indicated to the Court that ALF accepts that it did not itself "use" the land, and that its claim depends on the use of the land by DADI being attributed to ALF for the purposes of s 57: Applicant subs par 511; Tp2535, LL34-45. On the concept of "actual use", see discussion by Pain J in GCapital (at [35]-[55]).
17. I have already rejected ALF's agency claim (see [763] to [771] above).
18. At the DOA, ALF was not itself using the land, and DADI was not using it as ALF's agent, so ALF cannot establish "any advantage" within the meaning of s 57, nor any element of value, in addition to market value, arising from any special feature of the land, of unique or particular benefit to ALF. None of the "advantages" asserted by ALF are incidental to its "use" of the land, within s 57.
19. The Respondent's submissions argue that none of the three Special Value claims made by ALF can identify (subs par 1188): ... any special feature of the land, or "something objectively determined from the land or some attribute or property of it" that provides an advantage to ALF in addition to market value. The claim is a speculative and unreasonable assertion of an entitlement to compensation of more than $60 million.
20. The submissions go on to argue, in detail, against each of the three claims, in turn (subs 1189-1203), and I will now summarize those submissions briefly.
21. In respect of plant and equipment, the key submission by RMS (subs par 1192) is that: ALF cannot claim compensation (as special value of land, or at all) for the value of plant and equipment that DADI or ALF owned and used on Lot 2 and which it continues to own and (presumably) use. It is absurd to suggest that compensation be paid to a person for the value of something they have not lost by virtue of the acquisition (or at all).
22. In respect of overheads (said to be necessary for the hypothetical purchaser to incur), the Respondent submits (pars 1195-1199): 1195. Again, the respondent submits that the value of saved overheads in the hands of DADI or ALF is not an advantage that is incidental to the use of the land by ALF. It is not an advantage that is "something objectively determined from the land or some attribute or property of it" that provides value to ALF in addition to market value. This claim fundamentally fails to identify any special characteristic of the land, which is a necessary element of the claim. ... [and would] [1196] be better characterised as an assessment of a loss of profit suffered by DADI (i.e. a disturbance cost) rather than an assessment of the special value of land to ALF. ... 1197. If the Court were to allow this cost as part of the disturbance claim by ALF, it would be an impermissible double recovery (or "double-dip") [Denshire at [105]] to allow it also to be claimed as compensation for special value. ... 1199. ... ALF's claim for compensation in respect of its "overheads" claim ... is a feature of DADI's business operations, not special value of Lot 2.
23. In respect of the claim for lost profits, the Respondent argues at length that the evidence before the Court (subs 1202): ... provides a clearly inadequate and insufficient basis on which to conclude that owning Lot 2 increased the profitability of DADI's operations at Eastern Creek - let alone support for the very different proposition that Lot 2 provided a special value to ALF that was in addition to its market value. On the contrary, in 2017 the business operated by DADI was able to generate greater revenue and profit than before the [DOA]. The ownership of Lot 2 is thus demonstrably not critical to the profitable operations of DADI and the applicant. To the extent that the gross profit margin in 2015 and 2016 was somewhat less than 2014, the applicant has not proven that the cause of that lessened profit was connected to the acquisition of Lot 2, as opposed to some other reason like a general downturn in DADI's business operations.
24. I accept the Respondent's submissions on the three claims, but, in case they are wrong, I also indicate my clear preference for the very persuasive evidence, and compelling analysis, of Dr Ferrier (see subs 1204-1211), over the work of Mr Samuel.
25. The outcome is, therefore, that I reject the Applicant's claim(s) for Special Value.

Section 20: Costs

1. In all the material before the Court, the question of the costs of the proceedings was raised only in the suggestion, by the Respondent (par 1742), that costs be reserved.
2. The test to be applied when costs are considered was articulated by the C of A in Dillon v Gosford City Council (2011) 184 LGERA 179; [2011] NSWCA 328, and restated in United CA (at [67] by Basten JA, with whom Preston J agreed (at [167]); see also Sackville AJA, at [122]): ... as a general principle, "a claimant for compensation in respect of a compulsory acquisition should usually be entitled to recover the costs of the proceedings, having acted reasonably in pursuing the proceedings and not having conducted them in a manner which gives rise to unnecessary delay or expense." Nevertheless, the final outcome remains a relevant consideration, particularly where a claimant has raised a number of issues capable of substantially affecting the compensation awarded, but has failed on all the major points.
3. As I have neither read nor heard any argument on costs - and/or on any question of the reasonableness of the parties' conduct of the matter - all questions of costs will be reserved, in the hope that the parties can reach agreement.

Section 21: Conclusion

1. Despite some movement in the Respondent's submissions over the passage of the hearing, they are clearly to be preferred, on the evidence, over those of the Applicants, as I have attempted to explain above.
2. In their supplementary closing submissions, filed on 12 April 2019, counsel for the Respondent correctly relied on United CA as supporting the Respondent's "hard line" on such of ALF's claims as were touched by s 59(1)(f), ALF being the holder of only the reversionary interest in the land it leased entirely to Boiling.
3. The Applicant's submissions to the contrary, filed on 15 April 2019, are rejected.
4. In the Boiling proceedings, there will be an order for payment of $11,000 ([124] above).
5. In ALF's proceedings there should be orders in its favour for the market value of each of Lot 1 and Lot 2 (see [715] and [681] respectively), and for the legal and valuation fees which the Court was told had been agreed at $424,910.68 (as per replacement page 9 of the Applicant's closing subs, rather than $426,710.68, as per par 30 of the Respondent's closing submissions).
6. The figure of $3,920,000 for the market value of Lot 1 is not in doubt ([715]).
7. There are, however, some inconsistencies and/or disparities in some of the "final" figures put before the Court for the market value of Lot 2.
8. The market value of Lot 2 is shown in par 1741 of the Respondent's closing submissions as $45,762,270, a figure said to have been drawn from the DCF at Appendix A. However, the correct figure is shown as $45,742,467 in par 30 of, and Appendix A to, those submissions, and that figure was repeated in par 27(b) of the FAPOD of 11 April 2019, and accepted by the Court (at [681] above).
9. In deciding on this (slightly lower) figure, which was determined on a DCF basis, I am fortified by the valuation evidence given primarily by Mr Lunney on a direct comparison basis, in Appendix A to the Respondent's joint report at CB 60, dated 14 November 2017.

Section 22: Determinations and Orders

1. The Determinations and Orders of the Court in the matter of Boiling Pty Limited v Roads and Maritime Services (No 2016/155930) are that the Court: 1. determines total compensation under Part 3 Division 4 of the Land Acquisition (Just Terms Compensation) Act 1991 in the total sum of $11,000; and 2. the costs of the proceedings are reserved.
2. The Determinations and Orders of the Court in the matter of Alexandria Landfill Pty Limited v Roads and Maritime Services (No 2016/155678), are that the Court: 1. determines total compensation for market value under Part 3 Division 4 of the Land Acquisition (Just Terms Compensation) Act 1991 for the acquisition by the Respondent of Lot 1 DP1010128 being the whole of the land in folio identifier 1/1010128 (Lot 1) in the total sum of $3,920,000.00; 2. determines total compensation for market value under Part 3 Division 4 of the Land Acquisition (Just Terms Compensation) Act 1991 for the acquisition by the Respondent of Lot 2 DP1168612 being the whole of the land in folio identifier 2/1168612 (Lot 2) in the total sum of $45,742,270.00; 3. determines compensation for disturbance by way of legal costs and valuation fees under sub-sections 59(1)(a) and (b) of the Land Acquisition (Just Terms Compensation) Act 1991 in the sum of $424,910.68; 4. determines that the Applicant is entitled to no other compensation under the Land Acquisition (Just Terms Compensation) Act 1991 for the acquisition of the land in Lot 1 and Lot 2; 5. Orders the Respondent to pay the compensation determined in Orders [1], [2] and [3] of this paragraph, being a total sum of $50,087,180.68, less any advance payment of compensation made by the Respondent to the Applicant prior to the date of these orders; 6. The costs of these proceedings are reserved; and 7. The exhibits and all USB sticks submitted by the parties may be returned.

​ DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 18 July 2019