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[1999] HCA 64
High Court of Australia
1998-08-05
Gleeson CJ, Callinan JJ, Branson J, Davies J, Finkelstein JJ
Original judgment source is linked above.
This matter was listed before me today for the purpose of determining whether or not I should allow additional evidence to be adduced prior to hearing further submissions concerning what compensation I would award following the majority decision of the Court of Appeal in this matter.
I have determined that I will not receive further evidence in the proceedings. Mr Webster on behalf of Yates has asked me to - he has outlined the nature of that evidence which is included in his submission. He has asked me to defer determining this matter until some affidavit or some document could be put on further, identifying or enlarging upon that matter. As he has made plain, the additional evidence he wishes to call arises out of what might be a claim for special value, if I can use those terms still, under the doctrine annunciated and adopted by the Court of Appeal in Kennedy Street.
The reason why I am not permitting further evidence to be given in this matter concerns the important need to terminate litigation if that can be done fairly and as quickly as possible. This litigation has been wallowing through the judicial system now since about 1985. As Mr Justice [Handley] pointed out in his judgment that the appeal that was allowed on an issue of special value and associated issue of aborted expenditure which I am told now has been resolved, although the details of that may be relevant to the question of what is special value, these were relatively minor issues in the context of the whole proceedings and the totality of issues that were litigated before the trial judge.
What emerges from Mr Webster's submissions is this. It is clear when one looks at the way the matter proceeded before me and what took almost all of the time in the Court of Appeal or at least a great part of the time in the Court of Appeal was whether or not one of the three I think or at least two valuations of Yates' valuers should be adopted. And in those circumstances, as Mr Webster has conceded, the sort of material that he would now be concerned with on the issue of special value would not loom large and perhaps not a lot of attention was paid to it. Nonetheless, that was the way the trial was conducted and it was conducted upon a basis that even if that were wrong, there was still a special value component within the meaning of Kennedy Street. So I am not persuaded that Yates has not had all the opportunity it needs to put all evidence before the court. Nothing in the Court of Appeal decision persuades me that the Court of Appeal is of the opinion I cannot determine this matter without further evidence. On the contrary, the suggestion being made by Mr Justice [Handley] is that nothing that has been stated in this requires me as he said to, I think the words are, reopen the case or have further evidence adduced. It does not necessarily reopen the trial and entitle the parties to lead further evidence. Obviously of course the trial will be reopened because I heard further submissions by the parties as to what I ought to do. But I do not think a case has been made out as to why I should allow further evidence. This litigation will never finish - well perhaps that is wrong, but in all the circumstances I think it is desirable that this matter proceed to a conclusion as expeditiously as possible and I am not persuaded that fairness to the Yates Corporation requires that the case be reopened, because everything that has been put before the court on the previous - on the previous occasion it had the opportunity to put everything before the court that was relevant to determination. That is my decision.
His Honour subsequently heard argument in relation to "abortive expenditure" and gave reasons on 1 April 1992 why he would not increase his award on the basis of a claim under this head. It had been argued that the respondent was entitled to an amount of money to compensate it for the cost and delay of putting itself into the position "in respect of an alternative site as it was in respect of the resumed site", a claim, as some of the cases and texts put it, on a reinstatement basis [235] .
After argument his Honour said that he would indicate that he had already fixed a special value component of the compensation in the sum of approximately $500,000 being the amount of money over and above the "market value" a person in the position of the respondent would have paid sooner than not obtain the land because of the special value the land had to the respondent by reason of the work done and expenditure incurred by Yates and referred to in the decision of Handley JA. The compensation fixed as a result of the addition then of the sum of $217,443.78 (which it was agreed had been overlooked) became $22,551,944.
The respondent settles a second appeal commenced in the Court of Appeal
The respondent was not satisfied with this result and again appealed to the Court of Appeal. The retainers of all of the appellants and Mr Simos QC were then withdrawn.
However the respondent still succeeded in obtaining an advantageous settlement of the appeal. The resuming authority for its own reasons was prepared to pay a further $1.25 million to the respondent. It is important to notice that this amount was not paid, as seems to have been assumed by the Full Federal Court, to the respondent as compensation for the work done and expenditure incurred in bringing the site "to a state where it was capable of immediate implementation". The circumstances in which the payment was negotiated and the items making it up are set out in the affidavits of Mr Simos QC whose evidence Branson J at first instance unreservedly accepted. The sum of $1.25 million (the settlement sum) was a sum paid on account of legal expenses, interest and stamp duty that the respondent would have incurred in relation to the acquisition of an alternative site. That was in substance a payment by way of reinstatement and was in no way calculated by reference to the value of any so-called "head start".
The claim in professional negligence in the Federal Court
The respondent next commenced proceedings in the Federal Court against the appellants and Mr Simos QC. The claim against each of them was framed in negligence, deceptive conduct contrary to s 52 of the Trade Practices Act 1974 Cth and breaches of the analogue of that provision in the Fair Trading Act 1987 NSW. Neither deceptive conduct nor breach of the Fair Trading Act was pursued in the Full Federal Court and it is not entirely clear how vigorously the former was ultimately litigated at the trial in the Federal Court at first instance.
At the outset of the trial in the Federal Court questions were raised as to the jurisdiction of the Court. The questions were what was the jurisdictional basis of the federal claim for breach of s 52 of the Trade Practices Act as none of the appellants were corporations, and whether as solicitors and barristers they were engaged in trade and commerce. The bases pointed to in this case having regard to the facts identified by the respondent to establish them, appear at best slight. So far as the solicitors were concerned it was said that the Trade Practices Act applied because they had posted or sent by facsimile transmission [236] two letters of advice, in September 1985 and July 1986, which contained advice that was deceptive because, among other things, they contained no reference to some advice which had been given by Mr Hemmings QC and Mr Tobias QC, and they sent letters weekly to Yates which similarly were silent as to relevant advice. All that could be pointed to in respect of the appellant barrister was that he settled one letter, in July 1986, which he provided to the solicitors who in turn sent it either by post or facsimile transmission. As to the other matter, whether the appellants were engaged in conduct in trade or commerce, counsel for the respondent quite properly conceded in this Court that that question was an even more controversial one [237] . No doubt the respondent was anxious to find and pursue if possible statutory claims to which any immunity of lawyers in negligence suits might not provide an answer. These matters need not however be explored now because no ground of appeal either to the Full Federal Court or this Court raises any jurisdictional point.
In addition to the effect that this Act, other than Parts IIIA and X, has as provided by subsection (2), the provisions of Part IVA and of Divisions 1, 1A and 1AA of Part V have, by force of this subsection, the effect they would have if:
those provisions (other than section 55) were, by express provision, confined in their operation to engaging in conduct to the extent to which the conduct involves the use of postal, telegraphic or telephonic services or takes place in a radio or television broadcast; and
a reference in those provisions to a corporation included a reference to a person not being a corporation.
[I]t is plain that s 52 was not intended to extend to all conduct, regardless of its nature, in which a corporation might engage in the course of, or for the purposes of, its overall trading or commercial business. Put differently, the section was not intended to impose, by a side-wind, an overlay of Commonwealth law upon every field of legislative control into which a corporation might stray for the purposes of, or in connection with, carrying on its trading or commercial activities. What the section is concerned with is the conduct of a corporation towards persons, be they consumers or not, with whom it (or those whose interests it represents or is seeking to promote) has or may have dealings in the course of those activities or transactions which, of their nature, bear a trading or commercial character.
It is necessary to refer to some of the matters which were alleged against the appellants in the pleadings in the Federal Court. After setting out a number of factual matters, including that the respondent would have been able to borrow sufficient money to undertake the development of the proposed market on the land, it alleged that by reason of this and other matters it was in a superior position at the resumption date to any other prospective purchaser of the land wishing to build markets on it. Particulars of this allegation were given, which, in substance were that it would be necessary for any other person, including a prospective purchaser, to repeat all of the steps taken by the respondent, such as the obtaining of the planning and building approvals, the securing of finance and the ascertainment of potential stall holders. The particulars also alleged that, unlike any other owner, the respondent would not have to pay or outlay on the market value of the land, as at the resumption date, holding costs during the period of placing itself in a position to establish the markets, and was also relieved of any uncertainty arising from any future changes to building regulations and conditions of consent. Other matters were alleged in the particulars such as possible increases in building costs and changes in car parking requirements which would not apply to Yates.
The pleading also took up a claim by the respondent that it had intended to create a public unit trust to purchase 50 per cent of the equity in the markets on their completion, and that the respondent should have been compensated for the financial disadvantages flowing from its inability to realise its scheme for the creation of such a trust. This, together with other claims said to relate to the "head start" were asserted to have been lost to the respondent by reason of the conduct of the appellants. The pleading, among other things, contended that the barristers failed to have regard to, or were unaware of, two decisions in New South Wales, Kennedy Street Pty Ltd v The Minister [238] and Baringa Enterprises Pty Ltd v Manly Municipal Council [239] whose application, it was said, was called for, so as to entitle the respondent to a "special value" not accounted for in the awards made by Cripps J.
Evidence called by the respondent in the Federal Court included evidence from Mr Hart, a property consultant, who said that the respondent would have had an advantage of 20 months over any other owner of the land in deriving income from a market on the site. However none of the matters said to give rise to this temporal advantage which he claimed could be translated into financial advantage (as well they might be if they really existed) were in truth likely to be unavailable to a purchaser of the land or unable to be exploited by such a purchaser in any development of it. There would be every reason why a prudent vendor would transmit all relevant materials to the purchaser in order not only to induce a purchaser to buy but also to induce him or her to pay a price which had regard to them. It is not difficult to see why her Honour obviously did not consider this evidence to be persuasive.
Branson J in the Federal Court made important findings of fact only one of which (relating to the respondent's financial capacity) was inconsistent with the findings of Cripps J in the Land and Environment Court.
Her Honour repeated in detail the steps which were taken by the respondent to investigate the feasibility of, and to obtain a planning approval for a retail market with numerous stall holders on the subject land. Before her Honour, the respondent's financial capacity at the material times to undertake the development was an issue which assumed much more significance than it did before Cripps J, and this probably explains why on this issue her Honour's conclusion differed from that of Cripps J who had found that on the balance of probabilities funds would have been available to the respondent in 1984 and 1985 for the markets [240] . Her Honour expressly held that the respondent did not at that date have the financial capacity to erect the markets immediately. As she pointed out, Cripps J had not been concerned with the issue of the so-called "head start" when his Honour discussed the respondent's financial capacity to undertake the development.
Branson J did not think it possible on the evidence before her to reach a conclusion as to precisely how long a period might have been involved in the securing of finance but she was satisfied that it would have been a period of some months at least.
Another issue, of either no, or limited significance in the proceedings before Cripps J had to be determined by Branson J and that was whether the respondent would in fact have been likely to realise a plan that it was developing for the establishment of a public unit trust to hold either wholly or in part Yates' investment in the market, and the additional financial benefits (if any) that might flow to the respondent if such a trust had been created. On this issue the respondent again failed for reasons which are explained by her Honour and which do not need repetition here although it is relevant to note that she formed an adverse view of the reliability of the evidence of Mr Yates.
Notwithstanding that the respondent company was in liquidation for many years and whilst the proceedings in the Land and Environment Court were conducted, the liquidator allowed Mr Yates to play a role in the preparation of the case and the giving of instructions for its conduct. Branson J found that Mr Yates attended a major proportion of the conferences with counsel concerning the matter and received copies of their written advices. He was a contributory of the company. The company in fact came out of liquidation as a result of an order of Brownie J in the Supreme Court of New South Wales on 24 April 1992.
In her discussion of the case as it had been conducted in the Land and Environment Court, Branson J said that Mr Yates was meticulous in ensuring that each of the valuers was familiar with the work that had been done by or on behalf of the respondent to advance its proposal for a market on the land. After outlining the contents of the valuations of the valuers called by the respondent in the proceedings before the Land and Environment Court her Honour drew attention to the fact that one of them, Mr Parkinson "indicated that his calculations allowed six months to get the building up and the markets running" [241] , and in consequence his valuation contemplated the deferral of the receipt of rents from the development for that period. On the other hand, as her Honour pointed out, another of the valuers, Mr Woodley had expressed his opinion that it was appropriate for the purpose of assessing compensation to assume that the approved first stage of development would have been in operation at the date of resumption had it not been for prior action taken by the resuming authority.
The valuation approaches were novel and/or involved the risk of rejection on the grounds of being contrary to accepted legal principle in that they -
(i) involved or were based on an impermissible use of the reinstatement principle;
(ii) involved or were based on capitalisation of income streams in circumstances where such approach was inappropriate;
(iv) involved or were based on assessment of value of the land in its developed state and not in the state in which it was at the date of resumption.
The valuation approaches involved difficulties of proof and/or involved the further risk of rejection by reason of the fact that they:
(i) involved or were based on estimates of income which would have been derived had the markets been constructed and there had been no resumption;
(ii) involved or were based on inadequate allowance for risk and/or profit.
(i) The negligence of the respondents in failing to advise and pursue a claim for special value based on the head start concept.
In each case the issue was a matter of law for the Court.
After broadly sketching some of the facts and referring to the earlier proceedings their Honours stated that it was not necessary to express any opinion whether the Court of Appeal was correct in its finding that the approach taken by the valuers was contrary to law. They noted that Mr Hemmings QC had advised on the risks associated with the approaches which were adopted by the respondent's valuers and said that it appeared that his advice was not passed on to the solicitors or junior counsel. Their Honours made no reference to the fact that, as the notes of the various conferences with Mr Hemmings QC show, Mr Yates was present at them and must have been fully conversant with the advices tendered from time to time by Mr Hemmings QC. Nor did they refer to what Mr Hemmings QC had said regarding the possible use of projected earnings for valuation purposes of a site ripe for redevelopment as this one was. Their Honours did however refer to two Canadian decisions, The City of Halifax v S Cunard & Co Ltd [245] and Municipality of Metropolitan Toronto v Loblaw Groceterias Co Ltd [246] , which they thought provided support for the approach taken by the valuers in arriving at their value of the resumed land as a vacant site. They discussed a number of other cases and then referred to the advice of the Privy Council delivered by Lord Moulton in Pastoral Finance Association Ltd v The Minister [247] :
The appellants were clearly entitled to receive compensation based on the value of the land to them. This proposition could not be contested. The land was their property and, on being dispossessed of it, the appellants were entitled to receive as compensation the value of the land to them whatever that might be. 1. [1975] 1 SCR 458. 2. [1972] SCR 600. 3. [1914] AC 1083 at 1087.
The Full Federal Court said that the measure of compensation must take account of the peculiar value to the owner of the property compulsorily acquired and that the peculiar value to the owner is commonly referred to by the shorthand expression "special value". The Full Federal Court acknowledged that, as Dixon CJ had said in Turner v Minister of Public Instruction [248] , the value of land is necessarily affected by all the advantages it possessed which might be a matter of future, or even contingent enjoyment. Their Honours then discussed the concept of special value further. They said this [249] :
Land will have special value if it has some special suitability for a business or an activity carried on or to be carried on by the owner. That special suitability need not arise from any physical or legal attribute of the land [250] . While it may arise from some physical or legal attribute it can also arise from some use made or to be made of the land. However, the special suitability must be peculiar to the dispossessed owner [251] . The reason why the special suitability must be peculiar to the dispossessed owner is that if it is not peculiar to him then the advantage should be reflected in the market price of the land, it being a requirement that the market price be ascertained by reference to its highest and best use. (emphasis added) 1. (1956) 95 CLR 245 at 268. 2. (1998) 85 FCR 84 at 95. 3. Housing Commission of New South Wales v Falconer [1981] 1 NSWLR 547 at 573. 4. Arkaba Holdings Ltd v Commissioner of Highways [1970] SASR 94 at 100.
A little later the Full Court said this [252] :
There will be many cases where the dispossessed owner is well advanced in the planning of and preparation for the realisation of the potentiality of the resumed land to the point where that potential use is imminent. Further, the dispossessed owner may have incurred considerable expenditure in reaching that point. In principle there is no reason why the dispossessed owner should not be compensated for the planning and preparation that has resulted in the imminent realisation of the potentiality of the resumed land. Prima facie it should be assumed that this planning and preparation is of economic value to the dispossessed owner and should be the subject of compensation as a consequence of the compulsory acquisition of his land.
Next the Full Federal Court accepted that if the planning and preparation could be of advantage to an hypothetical purchaser of the land using it in the same general way as the owner then it should be included in the market value of the land [253] .
[S]o long as double recovery is avoided it will usually be of no practical consequence whether the dispossessed owner recovers his compensation as market value or as special value provided he does in fact receive compensation for the advantage resulting from bringing a proposal to a state of imminent development. 1. (1998) 85 FCR 84 at 95. 2. (1998) 85 FCR 84 at 95.
The Full Court thought it necessary to make some observations about the manner in which the parties had conducted their case before Branson J. Their Honours said that it seemed to them that the parties lost sight of the real issue that required determination. Further to this observation the Full Federal Court said that it was apparent that both sides proceeded on the assumption that if the respondent were in a position to develop the market immediately by reason of the work undertaken before resumption, that resulted in an advantage that was of economic value and for which it was entitled to receive compensation. It was said that the difference between the parties was that the respondent submitted that the economic value of the advantageous position formed part of the special value of the land and the appellants asserted that it should form part of the market value of the land. The Full Federal Court thought that the unfounded assumption made by the respondent was that if its advantageous position was not compensable as special value it was not otherwise compensable; the unfounded assumption of the appellants was that the Land and Environment Court was in a position to assess that advantageous position as part of the market value of the land. The Full Federal Court held that this latter assumption was unfounded because no evidence "had been led to properly identify or quantify the economic value of being in a position to immediately commence the development of a market" [254] .
It is relevant to refer to another passage in the judgment of the Full Federal Court. Their Honours said that the work undertaken and knowledge acquired here would be taken into account in determining the market value of the land if they could be of advantage to any hypothetical purchaser, but that if the hypothetical purchaser were willing to pay a higher price for the land in order to obtain, for example, plans and the services of a builder engaged by the hypothetical vendor the purchaser would be paying a price for the plans (and the introduction of the builder) in addition to paying for the land [255] .
Their Honours thought that both Kennedy Street and Baringa were applicable, correctly decided and that their application here would have meant that the respondent would have been entitled to recover in the Land and Environment Court a component for special value based upon the so-called "head start" principle. They did not think that they could quantify the value of this and ordered that the case be remitted to a judge of the Federal Court for assessment of damages. In discussing Kennedy Street and Baringa as they did at some length, their Honours omitted any reference to the fact that the barristers had made detailed submissions in respect of the former at least and Cripps J had considered its possible application and that of Pastoral Finance upon which, to some extent it depended, in his reasons for judgment following the first hearing. They also reached a different conclusion on the application of Giannarelli v Wraith from that of the primary judge and held that the appellants were not entitled to any immunity from suit for their negligence, which, the Court said, lay in the lawyers' failure to advise in respect of and present a case claiming compensation by way of special value for the "head start".
I also mention that the Full Federal Court decided without hearing him, indeed without any notice to him, and notwithstanding that he was not party to the appeal (and contrary to the order in his favour by Branson J) that Mr Simos QC should be held to be disentitled to his costs of the trial [256] . As justification for this their Honours cited Ritter v Godfrey [257] . That order is the subject of a separate appeal by Mr Simos QC to this Court.
(a) in the view which it took of the entitlement to compensation contemplated by the decisions such as Kennedy Street Pty Limited v The Minister [258] ;
(a) in finding that Yates was in a position where it could commence its development of the market almost immediately, in circumstances where the trial Judge had found that Yates did not have the financial capacity then to do so; and
(d) in holding that loss resulted from not advancing such a case.
(a) in not taking into account the absence of any advice or opinion expressed by any of the senior counsel or expert valuers retained on behalf of Yates as to the existence of any entitlement to compensation of the kind held by the Full Court not to have been awarded to Yates by the Land and Environment Court;
(c) in failing to pay any or any sufficient regard to the expert testimony adduced at the trial to the effect that the views adopted by the appellant for the purposes of his engagement in the preparation and presentation of Yates' claim for compensation could reasonably have been held by junior counsel who practised in valuation law at that time, and that Yates adduced no expert testimony to the contrary;
(d) in finding that at one stage Mr Yates enquired of the appellant whether any special value might be attributed to the resumed land on the basis that Yates had an advantage over a hypothetical purchaser because of the advanced state of the proposed development when no evidence to such effect was before the trial judge.
(e) in finding that the appellant had not considered Kennedy Street Pty Limited v The Minister [259] and Baringa Enterprises Pty Limited v Manly Municipal Council [260] when assisting with the preparation and presentation of the compensation proceedings before Cripps CJ.
(a) the complex nature of claims in law for special value and the relationship with such claims with market value, particularly those involved in the proceedings before the Land and Environment Court;
(b) the practice in resumption compensation cases as to the preparation and presentation of valuations of expert valuation witnesses, and the role of counsel thereto, particularly in the circumstances of the subject proceedings for compensation.
In Australia it has long been accepted that the various statements made by Justices of this Court in Spencer's case [262] correctly formulated the principles to be applied in compensation courts. The most frequently quoted statement is that of Griffith CJ [263] .
In my judgment the test of value of land is to be determined, not by inquiring what price a man desiring to sell could actually have obtained for it on a given day, ie, whether there was in fact on that day a willing buyer, but by inquiring "What would a man desiring to buy the land have had to pay for it on that day to a vendor willing to sell it for a fair price but not desirous to sell?" The necessary mental process is to put yourself as far as possible in the position of persons conversant with the subject at the relevant time, and from that point of view to ascertain what, according to the then current opinion of land values, a purchaser would have had to offer for the land to induce such a willing vendor to sell it, or, in other words, to inquire at what point a desirous purchaser and a not unwilling vendor would come together. 1. Spencer v The Commonwealth (1907) 5 CLR 418. 2. Spencer v The Commonwealth (1907) 5 CLR 418 at 432.
I would emphasise the important phrase in his Honour's judgment "persons conversant with the subject". The formula suggested by Griffith CJ contemplates a prudent purchaser and one who would make a point of informing himself or herself of all of the relevant attributes and advantages that the property enjoyed so as to make that purchaser "conversant" with the subject, meaning thereby not just the land in its existing state but also any profitable uses to which it might be put.
Isaacs J put the matter even more strongly. His Honour said that the hypothetical parties should be regarded as not anxious to trade and as being [264] :
perfectly acquainted with the land, and cognizant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property. 1. Spencer v The Commonwealth (1907) 5 CLR 418 at 441.
The comprehensive language used by Isaacs J is clearly capable of embracing matters with which perhaps courts of today have become more familiar, such as the value of highly restrictive or very advantageous planning approvals, the changing value of money over time and opportunity cost. So too computerisation has in modern times enabled the testing of financial projections to different sensitivities, of time, interest rates, changing values of money, different occupancy rates and other contingencies both favourable and unfavourable relatively easily and inexpensively.
Engrafted upon the propositions in Spencer's case are several other principles which are frequently applied and which I take to be sound in law. Each deserves some separate consideration.
It is now settled, and for good reason, that a dispossessed landowner should be compensated for the value of his or her land on the basis of its highest and best use. In current times, except in the case of non-controversial uses such as perhaps a single dwelling in a residential zone or a corner shop on a site zoned for that purpose, many uses, and most commercial ones require the prior approval of vigilant planning authorities, compliance with often stringent planning controls and the need to meet and refute objections by objectors, including commercial, competitive objectors in political, administrative and legal forums. These may not be the only hurdles that a developer has to leap. It is now a well established planning principle that a planning authority may take into account the likelihood that a particular development will cause blight to other existing developments [265] and the related consideration that before an approval may be granted an applicant for it demonstrate a need for the proposed development. Many other considerations may be relevant. A developer may also need to show for example that the development can be undertaken without intrusion upon, or nuisance to, or indeed in some cases even inconvenience to adjoining owners and others.
An intending prudent developer of a project such as the respondent here had in mind would inevitably require investigations, studies, plans and information of the kind to which I have referred and which would necessarily involve the services of professionals such as town planners, engineers and others, not only perhaps to obtain, or enhance the chances of obtaining, planning approval but also to place itself in a position to satisfy financiers if it has to borrow to complete the development, and prospective tenants or licensees that a tenancy or a licence in it would be an obligation worth incurring.
I mention these matters simply to show that there was nothing remarkable, or indeed, to use the word which I think has been variously used in these proceedings so far, "special" about what the respondent did before the resumption. What it did it would have had to have done to gain planning and building approvals, and to attract licensees. In short what was done was necessarily done to demonstrate that the highest and best use of the resumed land was its development as a market. If what the respondent did had not been done, then it would be unlikely that any purchaser would pay a price which included a component for the by now demonstrable, realisable, potential of the property for its highest and best use as a market. And a purchaser would have been in as good a position to take advantage of the site in its cleared state as the respondent. None of this is in disparagement of the respondent's efforts. But their site-specific nature meant that Yates would have no interest in withholding their fruits from a purchaser and every reason to provide them to "talk up" the price of the land.
Any vendor who failed to capitalise on this work by not extolling to a purchaser its consequential, demonstrable, realisable potential would be highly imprudent. And any reasonable purchaser would expect, and know that the price would reflect this potential. It is not a case of the purchaser's buying, as it were, the plans and the work done in respect of proving up the potential as one of the examples given by the Full Federal Court would suggest. It is merely that, to use the language of Griffith CJ in Spencer's case, each party to the transaction should be regarded as being fully conversant, or as Isaacs J said, perfectly acquainted with the subject, that is to say the subject land with all of its potential. It follows that the more work, the more proving up that is done by the vendor before the sale, the more any uncertainty as to the realisation of the potential will be reduced, and the higher the price will be. This fundamental concept the Full Federal Court touched upon in the passages I have quoted but failed to apply. What was described as special value by the Full Federal Court and by Handley JA in the Court of Appeal of New South Wales as the "head start" advantage was no more than an element of the highest and best use of the land and a factor to be taken into account in assessing its value on that basis. A purchaser who made himself or herself conversant or perfectly acquainted with the property in the way in which he or she should be taken to do so as contemplated by this Court in Spencer's case would have been in no inferior position to exploit the planning and building approvals, the clearing work that had been done and the investigation of the demand for licences than the respondent.
This is in essence how Mr Simos QC and Mr Webster both said they regarded the situation and which Branson J held to be a reasonable view of it. It was also consistent with much of what Mahoney JA said in his dissenting judgment in the Court of Appeal [266] . Branson J was right in this regard and the Full Federal Court therefore fell into error in taking the view that what the respondent had done gave rise to any special value. In short, in my opinion the approach adopted to the case by the lawyers was the appropriate one and such as to offer the best prospects to the respondent. And if I should be wrong about this, the approach on any view was an available one, and such that no lawyer exercising a professional judgment could be regarded as negligent in adopting.
Relationship between the valuers and the lawyers and their respective roles
The approach of the Full Federal Court was coloured by a misapprehension as to the relationship between the experts called in this case and the lawyers. Most professional experts do encounter and have to deal from time to time with matters of law, or mixed facts and law. Engineers and architects may be called upon to construe building codes and building and engineering standards. But apart perhaps from town planners who almost daily will be called upon to construe long and complex planning instruments there would be few non-legal disciplines requiring knowledge and consideration of legal principles to the extent that a valuer must in his or her ordinary practice. As I observed in The Commonwealth v Western Australia [267] , the Privy Council in Melwood Units Pty Ltd v Commissioner of Main Roads [268] referred to valuation principles and principles of law as if they were interchangeable. Questions of law, fact and opinion do not always readily and neatly divide themselves into discrete matters in valuation cases and practice.
[E]xpert evidence presented to the court should be, and should be seen to be, the independent product of the expert, uninfluenced as to form or content by the exigencies of litigation. 1. [1982] 2 All ER 842 at 851; [1982] 1 WLR 1055 at 1064-1065. 2. [1981] 1 All ER 267 at 276; [1981] 1 WLR 246 at 256-257.
Wells J recognised the availability of different methods of valuation in Bronzel v State Planning Authority [275] :
I am not disposed to reject any method of valuation adopted by either valuer on the ground that it is not worth considering; it seems to me that if Spencer's case is to keep its practical worth in this jurisdiction, this Court should be slow to reject any method that, in expert hands, is capable of yielding a result within bounds that are not unreasonable. The limitations of every method must, of course, always be kept clearly in mind. I am of the opinion that the approach likely to result in the most direct and reliable resolution of the outstanding differences between the valuations is to consider the particular features of each valuation that are capable of yielding to adverse criticism. 1. (1979) 44 LGRA 34 at 38.
It is unlikely that in 1907 courts would have encountered a discounted cash flow method of valuation, another method which looks to, among other things, nett proceeds receivable in the future from a development not as yet undertaken. Its availability was acknowledged by Jacobs J in this Court in Albany v The Commonwealth [276] .
If a court is prepared to entertain, as this Court did in Eastaway v The Commonwealth [277] , a claim for compensation on the basis of increased hypothetical profits from a proposed modernisation and enlargement of the claimant's business, there is no reason why a claim based upon the likely nett returns from a proposed but as yet unconstructed development should not similarly be entertained.
This Court itself has in any event clearly accepted what has been described as the hypothetical development method of valuation [278] . The method was described by Starke J in Australian Provincial Assurance Association Ltd v Commissioner of Land Tax [279] :
In the present case the valuation has been made on what has been variously described as the hypothetical building or development basis. The parties agree that the building upon the land does not return the rental that might reasonably be expected from it. So the rental from that building is discarded, and it is assumed that the land is vacant. The erection of a new building on the land is envisaged, providing office accommodation, which is the best method of obtaining the advantages that the land possesses. Accordingly a building is planned to obtain the full benefit of those advantages. Its cost is estimated, the gross annual rentals or receipts from it are estimated, and from these rentals or receipts are deducted various annual outgoings and interest charges which are also estimated to obtain the net receipts. The capital value of the land is then ascertained by capitalising the net receipts at some given rate of interest, and in this case, I may add, the parties were content to work upon a 4½ per cent basis. The unimproved value of the land is then deduced by deducting from the capital value so obtained the cost of the erection of the building. Adopting this method of ascertaining the unimproved value of the assessed land, I find as a fact that its unimproved value on the 30th June, 1939, was the sum of £76,154. 1. Australian Provincial Assurance Association Ltd v Commissioner of Land Tax [1942] ALR 156; Dymock's Book Arcade v Federal Commissioner of Taxation of the Commonwealth of AustraliaThe Valuer (1937) 4403 at 406 per McTiernan J. 2. [1942] ALR 156 at 158.
The method is neither novel nor especially difficult, and, as with all methods requires the making of value judgments.
In Turner v Minister of Public Instruction [280] all the members of the Court (Dixon CJ, Williams, Fullagar, Kitto and Taylor JJ) accepted the appropriateness of a like method in the case of resumed subdivisible, but as yet unsubdivided land.
It is therefore quite impossible to say that valuers and lawyers preparing a compensation case were negligent simply because they were in favour of advancing what was in fact an already well accepted method, the hypothetical development method of valuation. It is plainly an available method in an appropriate case and a familiar one to those who have practised in this area.
It was not necessary therefore to look for foreign authority on this point but it is right, as the Full Federal Court suggested, that there are Canadian cases which contemplate the method of valuation adopted by the respondent's valuers in this case. In Canada the method of valuation is apparently called the land residual method [281] .
[I]t must always be remembered that disturbance is not a separate subject of compensation. Its relevance to the assessment of the amount which will compensate the former owner for the loss of his land lies in the fact that the compensation must include not only the amount which any prudent purchaser would find it worth his while to give for the land, but also any additional amount which a prudent purchaser in the position of the owner, that is to say with a business such as the owner's already established on the land, would find it worth his while to pay sooner than fail to obtain the land. But a prudent purchaser in the position of the owner would not increase his price on account of the special advantage he would get by not having to move his business, unless the amount he would have been prepared to pay apart from that special advantage was the value of the land considered as a site for that kind of business. Disturbance, in other words, is relevant only to the assessment of the difference between, on the one hand, the value of the land to a hypothetical purchaser for the kind of use to which the owner was putting it at the date of resumption and, on the other hand, the value of the land to the actual owner himself for the precise use to which he was putting it at that date. [287]
By contrast the Australian Law Reform Commission report defines, correctly in my opinion, disturbance as "cover[ing] economic losses which result naturally, reasonably and directly from acquisition. It may include such items as removal expenses, costs of necessary replacement of furniture and fittings, legal and other costs of purchasing [an alternative site] and loss of local goodwill." [288] Some of these items may however also fall under the head of valuation previously referred to as reinstatement [289] .
In particular, there was no justification for adverse findings, or comments (if that they be), concerning Mr Walsh's sisters. Powell JA misdirected himself, in our respectful opinion, in stating that the sisters "were prepared so to act as to obtain an improper advantage for themselves" and in criticising the sisters on the basis that they were not revealed "in any favourable light" for their action in dividing the personal assets of their mother with Mr Walsh. They were not parties and were not before the Court. The Court was not called upon by any of the issues before it on any of the complaints to hear and determine the propriety of their conduct. (footnotes omitted) 1. (1999) 73 ALJR 306 at [93] per Kirby J, [153] per Callinan J; 160 ALR 588. 2. (1999) 73 ALJR 1138 at [68]; 164 ALR 405.
Basis for payment of the settlement sum of $1.25 million
There is this further matter of importance to which reference should be made.
The respondent bought the site in August 1981 for $5.1 million. Thereafter it expended $217,443.78 and a further questionable amount of $2.7 million making a total of $8,017,443.78 over a period of about 45 months. Nonetheless Yates and its advisors were ultimately able to achieve total compensation payments to the respondent in the sum of approximately $24 million made up of $22,334,500 compensation originally assessed by Cripps J, $217,443.78 initially overlooked and added by his Honour by consent, and the settlement sum of $1.25 million paid on the settlement of the second appeal to the Court of Appeal. No one would suggest that expenditure is necessarily equivalent to value. It will often be more, and sometimes it will be less, but it may on occasions be a guide to value when the expenditure has been made in the relatively recent past. Such an outlay here of approximately $8 million for a total return of approximately $24 million does not immediately strike one as the product of glaringly negligent conduct. I use the word "glaringly" because the Full Federal Court took the view that what the appellants had done or failed to do was obviously negligent.
The result that was achieved would have been unlikely to have been achieved by an exclusive method of comparing sales of like pieces of land, a summation method or any of the other simpler methods of valuation which are sometimes used. To achieve it must have called for a degree of ingenuity on the part of the respondent's advisors and that ingenuity is reflected in the methods of valuation actually adopted, fraught as they may have been with the difficulties to which Mr Hemmings QC alluded in his early advices. Heavily discounted as any numbers based upon hypothetical cash streams which might be generated by the development when completed may have been, the total amount awarded must nonetheless in part at least have been derived from the valuations presented on the generally uniform basis that they were by the three valuers called on the behalf of the respondent. And it is difficult to see how any other methods could have been nearly as productive as the one adopted.
Litigants will frequently be disappointed by the outcome of litigation. The legal process cannot guarantee perfect outcomes. People's expectations will often exceed their entitlements. Whether a duty of care has been duly fulfilled cannot be decided just by looking at the outcome of the efforts of a professional person. Cases will be lost, and regrettably patients will not be cured notwithstanding that their lawyers and doctors have been diligent and careful.
The nature and scope of the duty of lawyers to exercise reasonable care, particularly when litigation is in prospect or being, must be assessed in the knowledge that litigation always involves some uncertainties. Matters for judgment, for example, whether to examine or cross-examine in a certain way, how precisely to respond to a question from the Bench, whether to object or not to object to a question, and how to frame a particular submission, in practice arise momentarily. No matter how comprehensive a judge's reasons may be, it will practically never be possible for him or her to set out all of the matters that have impressed or failed to impress the court.
This was a difficult and complex case. How it was conducted depended upon many factors. The first was the obvious and inherent difficulty of establishing compensation in anything like the amount for which the respondent was hoping and contending, more than $70 million if one of its valuers were to be accepted. A nice judgment had to be exercised upon the question whether the claim should be presented on a single basis or upon an alternative, and if any, what alternative basis. A decision had to be made whether, as somewhat unusually occurred here, three or some fewer number of valuers should be called: was there a risk that other valuers or indeed other bases of valuation put in the alternative might contradict or weaken the force of valuations derived from the method adopted? These are the sorts of decisions which had to be made in this case and Mr Yates' involvement in them seems to have been considerable. As Branson J correctly found, there is no reason to suppose however, that any of them were made negligently by the lawyers here.
In determining whether, in giving an opinion or advice on the conduct of a case, lawyers have been negligent it will not necessarily be a proper basis for criticism that they have recommended or acquiesced in an approach which might have seemed to some to be novel in law or one upon which minds might differ. So too, as counsel for the respondent submitted, regard has to be had to what the law might reasonably be perceived to be at the time that the conduct in question occurred.
In the last 20 years it is possible to point to many changes in legal thinking in and as a result of decisions of this Court [299] . There are also a number of decisions of this Court on important matters in which different Justices have taken diametrically opposed views [300] . All of this is to highlight the increased difficulty which lawyers face in making decisions as to the way in which to conduct some complex cases and to advise their clients.
First, whether or not imposing a duty in favour of third parties will deter auditors from being careless, extending liability will probably reduce the supply of their services. Courts often assume [302] that insurance against extended tort liability is readily obtainable and that the increased cost of an extension of liability can be spread among clients by the payment of additional premiums for insurance. But insurance in this field may not be as readily obtainable as courts assume. Insurers are reluctant to insure against risks which are difficult to quantify, as they usually are when the number and amount of the claims arising from the risk are difficult to estimate.
Extending the liability of auditors for negligent misstatements may also reduce the demand for their services. Even when insurance is obtainable, increasing fees to pay for the cost of additional insurance may result in a reduction of demand for audit services in cases where the law does not require regular audits. Experience in the United States suggests that some of the smaller accounting firms may be forced out of business [303] .
Second, no examination of the public interest should overlook the effect of an extension of auditor's liability on the administration of the court system.
The Full Federal Court held that the respondent was in a position by 20 July 1984 to enable it to commence its development of the market almost immediately [306] . That finding overlooks that it would take some time for the respondent to find and obtain binding commitments from its other 800 or so licence holders, and for the development to yield income when it was completed, and it also overlooks explicit findings made by Branson J, on a consideration of all of the evidence, including that of Mr Yates whom she thought an unsatisfactory witness that finance would not be available for a number of months to enable the respondent to commence the work.
It was also held by the Full Federal Court that the respondent had carried out work which would enable it to construct a market on the land more quickly than any hypothetical purchaser [307] . I have already explained why this was not so.
The Full Federal Court said that the appellants had accepted that it was obvious that the respondent was entitled to be compensated for the advantageous position it was in at the date of the resumption [308] . A related finding was that Mr Simos QC had given evidence that it was obvious that the respondent was entitled to be compensated for the work done in bringing the proposed development to a stage at which it could proceed immediately. These findings misstate the effect of the evidence of the appellants and Mr Simos QC. As the evidence of Mr Simos QC shows, what he and the appellants were saying was that that compensation should be, and was reflected in an hypothetical price based upon the potential that the land had, and the time within which that potential could be realised by an (that is, any) owner of the land.
Another finding of the Full Federal Court was that the advanced state of the development should be reflected in the value of the land but that the case was not being prepared on that basis [309] . Because the Full Federal Court misunderstood the nature of the exercise being carried out by the valuers and the proper application of Spencer's case this was simply not so. Furthermore, the development could not be regarded as being in an advanced state. Much had no doubt been done to enable the potential to be realised but much more needed to be done including the attraction of and commitment by a further 800 or more stall holders, and the actual construction of the works.
All of these are factual errors going to important matters and would of themselves require that the appeals be upheld.
But they do not stand alone. Important factual findings of Branson J which her Honour was entitled to make were inexplicably either ignored or put aside. Some of them overlap matters to which I have already referred. It is unnecessary to repeat all of these but some of the more important ones are the following.
Her Honour discussed Mr Yates' attitude to and capacity to influence the evidence to be called before Cripps J. She made this finding [310] :
[O]nce satisfied, as I find [the liquidator] was, that there was no reasonable likelihood of the creditors not being paid in full from the fruits of the compensation claim, he would, I find, have given considerable weight to the views of Mr Yates. I find that Mr Yates would have been strongly resistant to the idea of abandoning the approach to the valuation of the subject land adopted by Mr Parkinson. 1. (1997) 145 ALR 169 at 199.
Her Honour gave careful attention to Yates' financial capacity. Her finding was in these terms [311] :
I am not satisfied that as at the date of resumption of the subject land (ie 7 May 1985) [Yates] had confirmed finance available to it to allow it to proceed promptly with the erection of the markets. Indeed, I find positively that it did not as at that date have the financial capacity immediately to erect the markets. 1. (1997) 145 ALR 169 at 174.
The next finding to which I would refer was of great importance [312] :
In my view, it would be a rare case in which it could be said that a prudent purchaser who would not repeat the steps previously taken by the vendor could not reasonably be hypothesised. I do not regard the subject land in 1985 as such a case. 1. (1997) 145 ALR 169 at 201.
It is difficult to understand why the Full Court attached no weight to a finding in the following terms [313] :
The evidence before me shows that Mr Yates was meticulous in ensuring that each of the valuers was familiar with the work that had been done by or on behalf of [Yates] to advance its proposal. 1. (1997) 145 ALR 169 at 183.
This finding underlines again the role, indeed the effective control perhaps that Mr Yates was exercising over the valuation methods. It is also indicative of Mr Yates' likely understanding of the use to which the valuers were putting the work that Yates had done on the project. The last of the factual errors of the Full Court related to the critical issue of judgment. Her Honour had made a finding in these terms [314] :
The special value claims which [the valuers] respectively identified were based on premises inconsistent with such claims and, if accepted, had the apparent potential to lead to higher levels of compensation to [Yates] than the head start claim now identified by [Yates]. 1. (1997) 145 ALR 169 at 198.
In short a choice was made to pursue a particular, and it was thought, more promising line of attack than a claim for what Handley JA would come to describe as a "head start", a choice which, in view of her Honour's other findings was one to which the respondent in all likelihood assented. The Full Court was not entitled to ignore or make findings in contradiction of her Honour's finding on this matter.
The next matter is one of omission on the part of the Full Court. As I have said the Full Court took the view that the conduct of the appellants was obviously negligent, and that this was so because any competent practitioner in the field would have been aware of the "head start" principle giving rise to an item of separate compensable, special value. Even if it were to be accepted (contrary to what was the actual position) that this was part of the law of valuation at the time of the relevant conduct, the Court should have taken into account that its existence must have been very obscure for it was not apparent to the authors of the major texts and competent practitioners in the field.
No textbook as at 1990 had cited Kennedy Street or Baringa as examples of the application of a head start principle [315] . No judge before Handley JA in Yates had cited Kennedy Street or Baringa as authority for the proposition referred to by the Full Court.
Before the appellants' retainer, Queen's Counsel were retained by Yates to advise in relation to its entitlement to compensation and never advised that a claim for "head start" should be made. Mr Hemmings QC was briefed on 8 June 1984 to advise Yates in relation to the resumption proceedings and continued to do so from time to time until late 1987. Mr Tobias QC was briefed to advise and gave advice in conference on 7 November 1984. Mr Tamberlin QC gave advice in writing to Yates in or about early 1985. Mr O'Keefe QC was retained in January 1988 on behalf of Yates until about mid-1989. And none of Messrs Parkinson, Woodley and Egan who were regarded as foremost in their field as valuers purported to assert an entitlement to special value based on any notion of a head start.
The Full Court had no regard to these matters. They may or may not have been decisive but they were relevant and important as showing that the principle that was said to be obvious, the "head start" principle was not obvious to a body of well qualified and experienced text writers and practitioners. The Full Court should have considered them and dealt with them. The Court's failure to do so is another reason why the appeals must be upheld.
It was said by their Honours in the Full Federal Court that the work done and knowledge acquired by the dispossessed owner were not connected with the character or quality of the land and that it therefore had a special value to the respondent [316] . The knowledge acquired by the respondent was connected with the character and quality of the land. That knowledge (and the approvals to which it led) and its application to the land gave the land the character or quality of making it developable for a market which could be constructed upon it and in respect of which a number of licensees had made commitments.
Something should be said about the two cases upon which the Full Federal Court relied and which it thought applicable to the situation here. The first is Kennedy Street Pty Ltd v The Minister [317] a decision of Hardie J in the Land and Valuation Court of New South Wales.
The business of the plaintiff company there was the acquiring, subdividing and selling of land. After agreeing to purchase a parcel of land for £18,000, paying a deposit of £1,800 upon it, preparing a survey plan, applying to the local council for and obtaining an approval in principle upon conditions and undertaking some other work with a view to the implementation of the approval, the plaintiff was notified that the land would be resumed. The plaintiff claimed compensation in the sum of £18,638. The resuming authority served upon the plaintiff a notice valuing the claim at £18,000 "freehold value - including all interests". A similar notice was also issued to the unpaid vendor and no attempt was made at that stage to value the respective interests of the plaintiff and the vendor. Shortly before the hearing the defendant gave a formal notice of valuation to the plaintiff in the sum of £4,000 in respect of the plaintiff's interest as purchaser under the contract.
The plaintiff claimed at the hearing that compensation for its estate or interest should be assessed at between £10,000 and £12,000, or, alternatively, on the basis of a special value to the plaintiff of between £13,000 and £15,000.
Hardie J held that the market value of the land should be determined at £19,500 and that in the circumstances the land did have some special value for the plaintiff who, were it the purchaser, would have paid an additional sum of £2,500 over and above its market value.
Hardie J said that the matters that caused him to make a finding of special value in favour of the plaintiff were that the plaintiff had given close and careful consideration to the problems associated with the proposed subdivision; it had paid stamp duty to acquire it; it had also paid survey fees and engineering fees, and the council fee in relation to the subdivision application. His Honour went on to say [318] :
The knowledge and experience acquired [by one of the principals of the plaintiff] and the time spent by him in examining the land and taking the steps appropriate to ensure an expeditious approval of the subdivision were, in the event that happened, of no value to the company. 1. [1963] NSWR 1252 at 1256.
To regard these matters as ones entitling the plaintiff to an allowance for special value is to ignore or misunderstand the formulation in Spencer's case of the principles to be applied in assessing compensation. A vendor armed with the relevant materials, an approval and information which might enable a property to be profitably subdivided would be foolish not to seek and to insist upon obtaining full value for the land or any estate or interest in it having regard to those matters, from any purchaser. And a prudent purchaser would need to be prepared to pay a price accordingly as the utilization of those materials would enable that purchaser to realise the highest and best use of the property. Everything the plaintiff had in its possession in Kennedy Street was, as is the situation in this appeal, readily transmissible to, and of value to any purchaser coming into possession of the property.
In Kennedy Street Hardie J went on to say that the resumption deprived the plaintiff of a profitable venture and that the plaintiff's profit-earning potential was diminished. One factor, his Honour said, that was operating in diminution of the potential was the length of time that might be required by the plaintiff to re-equip itself for this type of business. He thought it relevant that the plaintiff, instead of taking steps to acquire other subdivisible land for sale took a position with another company which kept him fully occupied in the next few months. Only then was other property purchased by another private company of which he was the principal. His Honour said that on the somewhat meagre evidence before him he had formed the opinion that a period of some two or three months should be allowed and in some way compensated for in the assessment of compensation under the heading of special value.
This was to overlook that the plaintiff's business was to sell property. To be offset against any possible delay in finding a replacement property would have to be, but was not taken into account by the trial judge, the advantage of an early, accelerated (notional) sale by the plaintiff on the resumption date, the profit accruing on the small outlay of £1,800 and other expenses, and the elimination of the risks of actively undertaking the subdivision. What Hardie J did was to misunderstand Spencer's case. The land which was resumed was not acquired for subdivision and sale over an indefinite or infinite period. It was acquired for sale and its subdivision would be undertaken only to achieve that end. Its subdivision and sale would have constituted one project which would have required time for its completion. When that land was sold it would have been a matter for the plaintiff whether it wished to embark upon another such project. If it did it would have to find another parcel of land and undertake another separate project. The location and the acquisition of another piece of land would no doubt have taken some time, whether the subject land had been resumed, or sold in subdivision in the ordinary course, and were matters that were quite irrelevant to the resumption. This is an entirely different situation from the one that the Privy Council considered in Pastoral Finance [319] .
Properly analysed Kennedy Street can be seen to be not a case to be applied or followed. On any view it states no principles of any relevance to this case.
Baringa Enterprises Pty Ltd v Manly Municipal Council [320] is another decision of Hardie J. In that case his Honour again assessed compensation by including a component for special value based upon what he thought to be a better chance that the plaintiff would have had of obtaining a renewed building approval and successfully undertaking a development than would a purchaser at the time of the resumption.
By the time of the resumption, worthless structures that had been on the land had been demolished and approval in principle had been obtained from the planning authority for the construction of a substantial building to contain shops and flats. Plans had been prepared by architects who had called and received tenders for the construction of the building. The plaintiff had also sought unsuccessfully to obtain finance to construct the building. At that stage it was contemplating the possibility of a less ambitious development because the approved one had proved to be beyond its financial capacity.
His Honour said [321] the test to be applied in determining special value is that laid down by the Privy Council in Pastoral Finance Association Ltd v The Minister [322] . Again his Honour thought that because of the information that the plaintiff had at the date of resumption it would have had a better chance of obtaining the fresh building approval which it would have been necessary for it to obtain because the earlier, more ample building approval could not be implemented. His Honour thought that the plaintiff's information and the approval it could not utilize were matters that should sound in special value. His Honour said [323] :
Looking at the matter from all aspects and bearing in mind the plaintiff's substantial expenditure on the project over and above the cost of the land, some of which gave the land an added value in its hands, and some of which was not reflected in added value, I am of the opinion that a prudent purchaser in the position of the plaintiff company would have been prepared to pay for the subject property a sum of £8,500 over and above its market value. 1. (1965) 15 LGRA 201 at 205. 2. [1914] AC 1083. 3. (1965) 15 LGRA 201 at 205.
On this occasion his Honour acknowledged in effect that some at least of what had been done by the plaintiff would be of utility and value to a purchaser. But his Honour made no attempt to explain what in fact would have been of utility and what would not have been of utility to a purchaser. His Honour's statement of the facts does not reveal why a fully conversant purchaser could not, and would not have been put in possession of all of the information and advantages that the plaintiff was said to have. And indeed there is much in the statement of the facts to suggest that the plaintiff had expended money that not only would a purchaser have been unable to recoup, but also the plaintiff should have been taken to have thrown away because of supervening events quite unrelated to the resumption, such as credit restrictions imposed by the government, changes in the policy of the planning authority, the plaintiff's inability to obtain finance and a consequential need to contemplate a significantly scaled-down project. Nor did his Honour explain why the highest and best use might not have been for the construction of a building that had been approved and was beyond the dispossessed landowner's means. If that were the highest and best use there would have been no need for a notional purchaser to seek an approval for a smaller building.
Baringa too is a highly questionable decision and on no view can have any valid application to this case.
The evidence that the appellants sought to lead on behalf of the respondent when the compensation case was remitted to Cripps J by the Court of Appeal for further consideration was designed in part to exploit the reasoning of Hardie J in Kennedy Street and Baringa . This was understandable because of the way in which the Court of Appeal had dealt with the appeal. Indeed the Court of Appeal had effectively forced this course upon the parties. The attempt to lead the evidence failed for the reason that Cripps J was satisfied that all allowance that could have been made for special value had been made. Additional reasons why it could not avail the respondent were that Kennedy Street and Baringa had no application and such of the claims as were embraced by the evidence and were not covered by value assessed by reference to highest and best use, were probably too remote.
Kennedy Street and Baringa received some passing reference by Mahoney JA in the Court of Appeal of New South Wales in Housing Commission of New South Wales v Falconer [324] . His Honour was the only member of that Court (Hope and Mahoney JJA; Glass JA dissenting) who referred to them and the case cannot be taken to be, as was submitted by the respondent, an endorsement of them.
Kennedy Street has been referred to in numerous other cases. Walsh J in Rosenbaum v Minister for Public Works [325] thought it might require reconsideration. It was applied in Chapman v The Minister [326] , but the reasoning in that decision is itself unconvincing, particularly that of Jacobs and Asprey JJA [327] where their Honours allowed some special value in respect of the incorporation of a company for the purposes of carrying through the proposed subdivision by the dispossessed landowner. Barber J in Altona Estate Pty Ltd v Shire of Altona [328] declined to follow it. Hardie J himself distinguished it in Parkes Development Pty Ltd v Burwood Municipal Council [329] . In Queensland Mr Dodds, a member of the Land Court in that State in Consolidated Development Pty Ltd v Commissioner of Main Roads [330] after referring to Pastoral Finance applied Kennedy Street [331] , and in Yarn Traders Pty Ltd v Melbourne and Metropolitan Board of Works [332] Starke J stated that whether special value existed was a question of fact, without expressing any disapproval of Kennedy Street to which he referred. In Arkaba Holdings Ltd v Commissioner of Highways Bray CJ [333] voiced doubt about its correctness whilst in Tasmania in Fisher v The Minister [334] Nettlefold J accepted its application there. Cripps J applied Kennedy Street in Wimpey Construction UK Ltd v The Minister [335] but the facts before his Honour may have justified the inclusion in the compensation of a component for special value without reference to Kennedy Street. In Polegato v Griffith City Council [336] Stein J referred to Kennedy Street with approval. The last case in the line appears to be Nahum v Roads and Traffic Authority of New South Wales [337] , in which, in my view, Bignold J correctly held that Kennedy Street did not establish any principle of valuation law.
It would appear that the evidence of prospective savings and additional profits given at the trial was put forward in support of a claim that the capitalized value of the increase in the profits of the business due to them should be added to the market value of the land. 1. [1914] AC 1083 at 1088.
It should also be pointed out that in Spencer itself, Isaacs J noted that the "claim for compensation was solely for the value of the land itself, and did not include any claim for damage otherwise" [345] . This was a reference to s 19 of the Property for Public Purposes Acquisition Act 1901 Cth which permitted the inclusion of claims for damage caused by severance from other land of the claimant, and by the exercise of any statutory powers otherwise injuriously affecting that other land.
I would respectfully agree with what Dixon J said in Commissioner of Succession Duties (SA) v Executor Trustee and Agency Co of South Australia Ltd [346] :
[T]here is some difference of purpose in valuing property for revenue cases and in compensation cases. In the second the purpose is to ensure that the person to be compensated is given a full money equivalent of his loss, while in the first it is to ascertain what money value is plainly contained in the asset so as to afford a proper measure of liability to tax. While this difference cannot change the test of value, it is not without effect upon a court's attitude in the application of the test. In a case of compensation doubts are resolved in favour of a more liberal estimate, in a revenue case, of a more conservative estimate. 1. (1947) 74 CLR 358 at 373-374.
There are two other respects in which the Full Federal Court fell into error. Let it be assumed for present purposes that there was such a principle as a head start principle and that it gave some special value to the respondent. When the matter came back before Cripps J on remitter from the Court of Appeal his Honour said this:
When I determined the case, I took into account expressions of interest etc referred to by Handley JA in his judgment Thus, I have done that which the Court of Appeal said I was entitled to do. I also had regard to the size of the land and its location. As I understand the Court of Appeal, those attributes go to "market value" and not to "special value". I took into account the size of the land and its location, amongst other matters, in determining what was the "value to the owner". That is, these matters were taken into account in deciding what a person in the position of Yates would have paid for the site sooner than not obtain it. I did not, however, take it into account twice. I accept that I did not adequately disclose my reasons in the judgment.
A little later his Honour went on to say that in an endeavour to put an end to the litigation, he would indicate that he would fix (and did fix) the sum of approximately $35 per square metre on the Harbour Street property as the:
"special value" component of the compensation. That amounted to approximately $500,000 being the amount of money over and above the "market value" a person in the position of Yates would have paid sooner than not obtain the land because of the special value the land had to Yates by reason of the work done and expenditure incurred and referred to in the decision of Handley JA.
As I have already said this was an item which appropriately in this case should have been treated as a component of a sale price on the basis of highest and best use of the land. However his Honour chose to treat it as a component of special value. He had therefore already done precisely what the majority in the Court of Appeal had held should be done. There was not the slightest reason to suppose that his Honour had not therefore allowed special value. The Full Court was not sitting on appeal from Cripps J. There was no appeal heard from Cripps J on this second occasion and the compromise which was effected of the appeal that was actually filed but not decided, was, as I have already explained, effected having regard to matters which had no connexion with special value properly so called. The Full Court effectively ignored what his Honour Cripps J had done and misunderstood the basis of the settlement of the second appeal to the Court of Appeal.
I have previously mentioned the passage in the reasons of the Full Court in which their Honours say that the parties lost sight of the real issue between them [347] . I do not think that they did. It is not for a court to invent, or find issues which the parties have not invited it to decide or which it is unnecessary for a court to decide. What Barwick CJ said in Ratten v The Queen [348] in the context of a criminal trial is no less true of a civil trial:
Each [of the protagonists] is free to decide the ground on which it or he will contest the issue, the evidence which it or he will call, and what questions whether in chief or in cross-examination shall be asked. 1. (1998) 85 FCR 84 at 97. 2. (1974) 131 CLR 510 at 517. See also Whitehorn v The Queen (1983) 152 CLR 657 at 682 per Dawson J.
It only remains to refer to the way in which the Full Court dealt with the appellants' submissions that they were in any event entitled to rely upon the decision of this Court in Giannarelli v Wraith [349] . That can be done briefly.
As Branson J held at first instance, that case was applicable. In doing so her Honour was impressed, as I am, by a statement of Gleeson CJ in Keefe v Marks [350] in which his Honour stated that:
action or inaction prior to the commencement of the hearing it concerns [is] a matter intimately connected with the work ultimately done in Court, that is to say, the presentation of [the case] and any consequential relief to which [a party] was also entitled [and] attracted the immunity of which Mason CJ in Giannarelli said [351] : [T]he common law has for a very long time recognized that the barrister is not subject to a general duty of care. The immunity is supported by powerful authority, ancient and modern, in England, Scotland and Ireland [352] . 1. (1989) 16 NSWLR 713 at 719. 2. (1988) 165 CLR 543 at 555. 3. Rondel v Worsley [1969] 1 AC 191; Saif Ali v Sydney Mitchell & Co [1980] AC 198.
As Mason CJ also pointed out [353] : "[T]he exception which the law creates is not to benefit counsel but to protect the administration of justice."
Giannarelli is a recent decision of this Court. It is based on sound policy and legal grounds. No occasion arises for its reconsideration now. It would be applicable here as Branson J held. The Full Court seems to have assumed that simply because the work the lawyers did was done over a long period of time, that in some way divorced it from work done closer in time to the hearing even though the former answered the description of work intimately connected with the forthcoming trial.
The respondent's case against the lawyers purported to be not only in negligence but also in deceptive conduct and breach of the Fair Trading Act. Subsequently a further claim for breach of fiduciary duty was somewhat unconvincingly articulated. All were rejected by Branson J. The last three as I have earlier suggested probably owed their assertion in this case to a perception that the immunity might only apply to a claim in negligence. Such a perception is not well founded.
In MacRae v Stevens [354] , Beazley JA, with whom Meagher JA and Priestley JA agreed, said that collateral challenges designed to circumvent Giannarelli must fail. Accordingly in this case had any of the causes of action other than negligence in fact been made out against the appellant barrister they too would not have succeeded because the immunity as a matter of public policy would extend to him, and a proper construction of the two statutes involved dictates no different a result.
Because the solicitors were not negligent or in breach of the Trade Practices Act (assuming it applied to them) or the Fair Trading Act it is unnecessary to consider whether they too were entitled to immunity in the circumstances; or the other point argued by the solicitor appellants, that in terms they limited their obligations under their retainer [355] .
Boland
Yates Property Corporation Pty Ltd
High Court of Australia Gleeson CJ Gaudron, Gummow, Kirby, Hayne and Callinan JJ Boland v Yates Property Corporation Pty Ltd (S28/1999S24/1999) [1999] HCA 64
I am of the opinion that conformably with the above-mentioned authorities, the subject land did have a "special value" to Yates. That is, a purchaser in the position of Yates would have regard to the potentiality of the subject site by reason of its size and location for use as a market and for that reason would be prepared to pay something above the land value rather than not obtain it. 1. [1981] 1 NSWLR 547. 2. [1963] NSWR 1252. 3. (1990) 70 LGRA 187 at 200. 4. (1990) 70 LGRA 187 at 201.
[T]he public interest in the administration of justice does not require that lawyers engaged in court work be immune from action at the suit of their clients for negligence in the conduct of a civil case in court. With respect to the duty of counsel to the court and the risk that, in the absence of immunity, counsel will be tempted to prefer the interests of the client and thereby prolong trials there is no empirical evidence that it is so serious to justify rendering the client remediless. 1. Rondel v Worsley [1969] 1 AC 191. 2. (1979) 95 DLR (3d) 385 followed in Hunter v Roe [1990] 6 WWR 85; Guardian Insurance Co v McCullogh (1988) 87 NBR (2d) 210. 3. Winrob v Street (1959) 19 DLR (2d) 172; Karpenko v Paroian, Courey, Cohen & Houston (1980) 117 DLR (3d) 383 at 397; Garrant v Moskal [1985] 2 WWR 80 at 82 (Affd [1985] 6 WWR 31); Linden, Canadian Tort Law, 6th ed (1997) at 151. 4. For example in World Wide Treasure Adventures Inc v Trivia Games Inc (1987) 16 BCLR (2d) 135; Location Panorama Inc v Gaucher [1991] RJQ 1237. 5. [1985] 2 WWR 80 at 82 citing Demarco v Ungaro (1979) 95 DLR (3d) 385.
(1997) 145 ALR 169
(1998) 85 FCR 84
(1991) 24 NSWLR 156
(1907) 5 CLR 418
(1994) 33 NSWLR 373
(1989) 19 NSWLR 57
(1985) 80 FLR 253
(1956) 95 CLR 245
(1953) 90 CLR 157
(1988) 165 CLR 543
(1989) 16 NSWLR 713
(1998) 73 ALJR 12
(1992) 175 CLR 514
(1999) 73 ALJR 901
(1996) 185 CLR 595
(1988) 164 CLR 539
(1993) 177 CLR 472
(1997) 191 CLR 439
(1999) 73 ALJR 306
(1985) 3 NSWLR 207
(1977) 137 CLR 293
(1988) 164 CLR 465
(1999) 166 ALR 330
(1999) 166 ALR 312
(1990) 21 NSWLR 335
(1987) 145 ALR 169
(1992) 175 CLR 479
(1998) 195 CLR 232
(1995) 36 NSWLR 344
(1968) 122 CLR 556
(1970) 122 CLR 628
(1940) 64 CLR 130
(1989) 165 CLR 543
(1998) 194 CLR 395
(1910) 11 CLR 311
(1975) 133 CLR 120
(1982) 149 CLR 191
(1993) 179 CLR 15
(1992) 24 NSWLR 156
(1947) 74 CLR 358
(1948) 77 CLR 253
(1949) 78 CLR 410
(1952) 87 CLR 159
(1962) 108 CLR 1
(1990) 169 CLR 594
(1979) 140 CLR 675
(1999) 73 ALJR 345
(1965) 112 CLR 295
(1999) 73 ALJR 1414
(1976) 12 ALR 201
(1951) 84 CLR 328
(1979) 142 CLR 351
(1980) 30 ALR 637
(1984) 156 CLR 41
(1999) 73 ALJR 1138
(1994) 179 CLR 520
(1994) 182 CLR 104
(1997) 189 CLR 520
(1996) 187 CLR 1
(1998) 193 CLR 346
(1999) 73 ALJR 839
(1997) 188 CLR 241
(1974) 131 CLR 510
(1983) 152 CLR 657
(1999) 73 ALJR 403