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[2005] TASSC 74
Supreme Court of Tasmania
2005-08-09
Blow JJ, Hill AJ, Slicer J
Original judgment source is linked above.
CITATION: Downie v Sorell Council [2005] TASSC 74
TITLE OF COURT: SUPREME COURT OF TASMANIA (FULL COURT)
Real Property - Resumption of land - Compensation - Assessment and related matters - Valuation of land - Generally - Market value - Methodology - Refuse disposal site - Discounted cash flow method rejected - Value as rural land plus premium.
Boland v Yates Property Corporation Pty Ltd [1999] HCA 64; (1999) 74 ALJR 209; Adelaide City Corporation v City of Port Adelaide Enfield [2001] SASC 207; (2001) 115 LGERA 137; Brewarrana Pty Ltd v Commissioner of Highways (No 1) (1973) 32 LGRA 170, referred to.
Real Property - Resumption or acquisition of land - Compensation - Proceedings for compensation - Action for compensation - Other States or Territories - Tasmania - Costs - Comparison of award and offer - Excessive claim - Unwillingness to participate in mediation.
Land Acquisition Act 1993 (Tas), s60(2).
Judgment Number: [2005] TASSC 74
1 The appellant's land was acquired by the respondent Council pursuant to powers granted by the Land Acquisition Act 1993 ("the Act"), for the purpose of waste disposal. The acquisition followed a long process of research, planning and consultation which followed the publication of a report of the Auditor-General in September 1993, culminating in a final report entitled "Southern Tasmanian Solid Waste Management Study" published in July 1995. Those reports, and ones more specific, provided a basis for some of the assumptions, calculations, opinions and evidence given at the hearing of these proceedings. Relevant to this appeal, the studies and reports included recommendations and predictions that the Sorell waste management site would be used by other councils near or adjacent to the Sorell Municipality. A report commissioned by the respondent had identified a number of prospective sites for waste disposal within the municipality of Sorell, which included the appellant's land.
2 In September 1996, three councils, including the respondent, entered into an agreement entitled the "South-East Regional Landfill Agreement" to establish a joint facility for the use of each. In furtherance of the agreement, a consultant was engaged to identify a suitable site to be developed in accordance with the Land Use Planning and Approvals Act 1993. Concurrent with those activities, the Department of Primary Industries, Water and Environment, as it is now called, conducted a number of similar studies which included the Regional Waste Disposal Strategy for Southern Tasmania, although it was not published until April 1997, after the date of acquisition.
3 On 14 October 1996 ("the assessment date") the respondent served notice to treat on the appellant and subsequently acquired portion of his land. Other land was similarly acquired from other landowners to facilitate development which included some 253 hectares belonging to Mr Robert Downie at an agreed sum of $220,000. In June 1996, aware of the project, the respondent and Mr Robert Downie met with representatives of Hazell Bros to discuss a joint venture involving the development of a refuse disposal operation on the appellant's land. Hazell Bros confirmed its interest in the proposal, stating it to have sufficient equipment, engineering, earthmoving and waste management skills and sufficient experience to manage the venture. On 12 August 1996, Mr Robert Downie lodged with the respondent an application for planning approval to establish and conduct a waste disposal operation on the appellant's land. On 23 August 1996, the respondent wrote to the appellant advising that it had identified the land as the preferred site and that the three councils had agreed to fund the development proposal and environmental management plan. That decision did not necessarily mean that the operation would be approved by other statutory bodies. The ensuing notice to treat on 14 October was a consequence of that decision.
4 The land acquired comprised 443.7 hectares, the components of which were 80 hectares of pine plantations, 97 hectares of eucalyptus bush run, 53 hectares of fair pasture and 213 hectares of partly cleared open pasture. Most of the land was zoned "rural", with the timbered area zoned "forestry". Concurrently, 253 hectares of less suitable land was acquired from Mr Robert Downie to serve as a buffer zone. Some other land was acquired from an adjoining area to enhance access.
5 The parties could not agree on compensation which, accordingly, required assessment pursuant to the Act, s44. The value of the timber was agreed in the sum of $310,000, a figure not the subject of this appeal. The judgment appealed from fixed the market value of the acquired land at $700,000.
6 The parties adopted competing methodologies in their respective approaches to the bases of assessment for compensation. They presented bases which were irreconcilable and the evidence adduced in support of the competing approaches left little, if any, room for compromise. The expert witnesses who gave evidence for the respondent used as their method of valuation, a discounted cash flow approach, whilst those of the appellant were more traditional and conservative.
7 The appellant advanced as the appropriate method a discounted cash flow approach which adopted as a commencing point the anticipated return from the operation of the site over a defined period, discounted for variable returns, usage and other contingencies. The calculations proffered by their expert witnesses resulted in valuations between $3.5m and $4m. The respondent advanced more traditional bases of valuation, namely land value plus unforeseen affection and/or expected royalty, based on volume of waste, capitalised at 12 per cent. Those approaches produced assessments of between $375,000 and $576,000.
8 There was little, if any, common ground between the respective parties and no compromise suggested in the conduct of the respective cases as advanced.
9 The learned primary judge considered both methodologies, but declined to give full effect to either. He attempted to reconcile the respective requirements of the parties by accepting that the site acquired had the best potential and stating that a hypothetical purchaser would have been prepared to pay up to about double the rural value for the land, notwithstanding the risks and the timber rights, saying "at a price beyond this I consider that a hypothetical purchaser would have turned to alternative sites". He assessed the value of the land acquired to be $700,000, a figure which did not include the value of the timber.
10 The grounds of appeal can be categorised as error in that the learned primary judge:
(1) used a methodology in his assessment of valuation which was not permitted by the evidence and which involved his assumption of the role of a third valuer:
(2) made a determination, absent supportive evidence, assessing a valuation which was twice that permitted by a rural land valuation approach:
(3) erred in his understanding and rejection of a discounted cash flow approach:
(4) specific error in his application of statements of principle stated by authority:
(5) specific error in his preference of one witness as against another:
11 In one respect, the grounds are akin to a claim that the finding was against the weight of the evidence in that the evidence of the "discounted cash flow" method required a finding in favour of the appellant.
12 Within the two primary grounds, namely adoption of an incorrect methodology and replacement with one not permitted by law or evidence, there are included a number of secondary critiques which, alone, might not afford success, but are said to show cumulative error. Whilst in a case of the nature subject to appeal, this Court is said to be in as good a position to evaluate the evidence as was the trial judge (State Rail Authority of New South Wales v Earthline Constructions Pty Limited [1999] HCA 3; (1999) 73 ALJR 306), these proceedings are not unfettered by the appellate process. The problem associated with an appeal of this nature in testing whether either of the extreme positions (or indeed any intermediate position) is correct, was considered by the Full Court of the Supreme Court of Western Australia in Mount Lawley Pty Ltd v Western Australian Planning Commission [2004] WASCA 149; (2004) 29 WAR 273, a case also involving a difference between the discounted cash flow analysis as against a zoned use basis. The court applied the statement made by Callinan and Heydon JJ in Pledge v Roads and Traffic Authority [2004] HCA 13; (2004) 78 ALJR 572, when they said, at par43:
"The 'rehearing' does not involve a completely fresh hearing by the appellate court of all the evidence. That court proceeds on the basis of the record and any fresh evidence that, exceptionally, it admits. No such fresh evidence was admitted in the present appeal.
The foregoing procedure shapes the requirements, and limitations, of such an appeal. On the one hand, the appellate court is obliged to 'give the judgment which in its opinion ought to have been given in the first instance' (Dearman v Dearman [1908] HCA 84; (1908) 7 CLR 549 at 561). The Court there was concerned with s 82 of the Matrimonial Causes Act 1899 (NSW) which provided that 'on appeal every decree or order may be reversed or varied as the Full Court thinks proper': see [1908] HCA 84; (1908) 7 CLR 549 at 558). On the other, it must, of necessity, observe the 'natural limitations' that exist in the case of any appellate court proceeding wholly or substantially on the record (Dearman v Dearman [1908] HCA 84; (1908) 7 CLR 549 at 561). See also Scott v Pauly [1917] HCA 60; (1917) 24 CLR 274 at 278-281). These limitations include the disadvantage that the appellate court has when compared with the trial judge in respect of the evaluation of witnesses' credibility and of the 'feeling' of a case which an appellate court, reading the transcript, cannot always fully share (Maynard v West Midlands Regional Health Authority [1984] 1 WLR 634 at 637; [1985] 1 All ER 635 at 637 per Lord Scarman with reference to Joyce v Yeomans [1981] 1 WLR 549 at 556; [1981] 2 All ER 21 at 26. See also Chambers v Jobling (1986) 7 NSWLR 1 at 25). Furthermore, the appellate court does not typically get taken to, or read, all of the evidence taken at the trial. Commonly, the trial judge therefore has advantages that derive from the obligation at trial to receive and consider the entirety of the evidence and the opportunity, normally over a longer interval, to reflect upon that evidence and to draw conclusions from it, viewed as a whole."
I will attempt to adopt that approach in consideration of this appeal.
13 The learned primary judge outlined the history of the acquisition and the various studies which had been conducted before the site was chosen. His commencing point in the assessment of compensation was the Act, s27, which required determination "on the basis that the highest and best use of the land [was] for waste disposal" (Boland v Yates Property Corporation Pty Ltd [1999] HCA 64; (1999) 74 ALJR 209) absent any "claims for compensation for any special value, severance, injurious affection or disturbance", factors not pursued by the appellant. He applied the test of the "hypothetical parties" (Spencer v The Commonwealth of Australia [1907] HCA 82; (1907) 5 CLR 418) conducting a voluntary bargain not overlooking ordinary business considerations (The Commonwealth of Australia v Arklay [1952] HCA 76; (1952) 87 CLR 159; Commissioner of Succession Duties (South Australia) v Executor Trustee and Agency Company of South Australia Limited and Others [1947] HCA 10; (1947) 74 CLR 358) absent personal attributes such as generosity, parsimony or indifference. He acknowledged the differing approach to valuation advanced by the parties and adopted an approach consistent with statements of principle made in a series of South Australian cases (Doherty v Commissioner of Highways (1974) 7 SASR 57, Zelling J at 83; Brewarrana Pty Ltd v Commissioner of Highways (No 2) (1973) 6 SASR 541, Wells J at 559 - 560 and Minister for the Environment v Florence (1979) 21 SASR 108, Wells J at 116 - 117). He adopted the statement of Callinan J in Boland v Yates (supra) at 280 that:
"There is no legal principle that purports to, or could close for all times the categories of methods of valuation which might be acceptable in a particular case."
14 His Honour found that evidence of matters occurring since acquisition to be of little assistance (Housing Commission of New South Wales v Falconer [1981] 1 NSWLR 547) although evidence of subsequent events was admissible (Arklay (supra)), at least to confirm foresight (Housing Commission of New South Wales v Falconer (supra)), but did not consider "that the Court is entitled to attribute to either of the hypothetical parties ... exact knowledge of any of the subsequent events", although some evidence reinforces(d) "the conclusion that matters in question were contingencies that the parties would have foreseen".
15 The general approach taken by the learned trial judge, with the exception of his reasoning derived from Brewarrana (supra) was not assailed on the hearing of the appeal.
16 His Honour then set out the history and contents of various studies conducted in Tasmania (especially in the south of the State) concerning waste management. Those reports indicated that most, if not all, waste disposal was conducted by municipal councils, either alone or in conjunction with other statutory authorities. The financial returns and costs associated with those studies formed the basis of the assumptions made by the appellant's expert witnesses in their calculation of valuation. However some of those financial projections depended on whether the municipalities of Hobart, Glenorchy and Brighton were to use the Sorell site for hazardous industrial waste and in that regard the learned primary judge, preferring the opinion of an environmental scientist, Dr John McCambridge, concluded such to be unlikely and that "on the information available at the relevant time, [date of acquisition] the hypothetical parties to the sale and purchase would have done likewise".
17 The analysis of the evidence advanced by the respective witnesses accurately reflects the substance of these assumptions, projections, calculations and conclusions. The observations made by his Honour in that analysis, namely that some of the assumptions depended on information not available at the assessment date and some projections were erroneous because of acceptance of an anticipated life span of the project, were open to him on the evidence provided at the hearing. Following the analysis and observations, the learned trial judge concluded that the hypothetical parties:
"... would have taken into account matters that included:
* That the average value of the acquired land as rural land was $800 per hectare.
* That the land had a significantly higher value if used for waste disposal than as rural land, as considerably more income could be generated by its use for the former than the latter.
* That the information available on sales of land suited for waste disposal demonstrated that a premium was ordinarily paid for it above its value had it not been suitable for that purpose, but the information did not provide any consistent guidance on the amount of that premium.
* That there was a high probability that planning and related approvals would be given for the use of the land for waste disposal.
* That if the land was to be used as a waste disposal site, it would be necessary to reach an accommodation with Mr and Mrs Thompson in relation to the access to the land so as to ensure that there were no disputes about using the access for that purpose or about the maintenance of the access.
* That the land was the best potential site for a large regional waste disposal on the eastern shore, but that there were a number of other potential sites.
* That the only site likely to obtain a premium sale price because of its suitability for waste disposal was the first site utilised for that purpose. In these circumstances a purchaser intent on developing the first substantial waste disposal operation on the eastern shore was likely to generate considerable competition to sell amongst the owners of potential sites.
* That if the site became the major regional landfill site on the eastern shore and the speculative projections of experts proved to be correct, its value assessed on a discounted cash flow basis was in the view of one expert $3.5m and another expert $4m. However, this means of calculating its value was highly speculative and unreliable until the site was operational and such matters as waste streams could be established with some certainty. More importantly, as the site was not the sole site available, this means of calculating its value was misleading. To illustrate this point, assume that an entity was entitled to an exclusive business venture that when up and running was guaranteed a return valued at $10m using the discounted cash flow method. Assume also that there were a number of sites from which the business venture could operate. Each of those sites would not by reason of its suitability for the business venture assume a value of $10m. The value of any one of the sites would be its market value unrelated to the potential business, plus such premium as the entity entitled to the exclusive business venture was prepared to pay and an owner was willing to accept in order to achieve a sale and purchase. Plainly, in this negotiation, each party would be influenced by the price at which alternative sites could be purchased.
* That the purchaser would derive no benefit from timber on the acquired land that was subject to timber rights until those rights expired and that during the duration of those rights, they governed the use that could be made of the land to which they extended."
18 It was on the basis of the hypothetical transaction that the learned primary judge made the assessment. He rejected the respondent's valuation since it did not reflect the increased price which the respondent would have paid for a special site which met the needs of the statutory authority and which the appellant could extract because of knowledge of that need and the relative rarity of a suitable area location. Likewise he rejected the appellant's claim and calculations because they depended on tenuous assumptions and did not reflect the commercial reality of the position of the respondent.
(b) by introducing his own approach to the determination of market value, being an approach not adopted or canvassed by any of the expert witnesses called on behalf of either party;
(c) by adopting his own valuation rather than acting upon the expert evidence before him."
20 The learned trial judge adopted, as a basic principle, the test of the hypothetical vendor and purchaser. It is not correct, as ground 2 claims, that he thereby assumed the role of an expert land valuer. He had rejected the alternative methods and calculations advanced by the respective parties because, if accepted, each would have produced a result whereby a vendor would not have sold or the purchaser would have looked elsewhere. There was evidence that there existed within the municipality other sites suitable for the purpose of the respondent. A free and willing purchaser would have taken into account an initial capital outlay of $3.5m to $4m in assessing the long term viability of the project and decided, despite the advantages of the Copping site, that a less expensive option would better meet its financial imperatives. The respondent, assuming the mantle of a free and willing purchaser, could not be confident that it would receive the additional revenue from the Hobart, Glenorchy and Brighton municipalities. The respondent was interested in the purchase of land suitable for its future operations, not of an existing waste disposal business. Conversely the appellant was aware that his land accommodated the future imperatives of a statutory authority and was entitled to assume that his land ought attract a higher price than what might have formerly been regarded as "waste" land. The calculations of the respective parties, even if accepted in full, did not accommodate the primary test required by legislation and authority of a free exchange of land for money.
21 The appellant suggests that its methodology accords with modern commercial reality and that the discounted cash flow is but an accurate reflection of that reality. It relies on the approach approved by Callinan J in Boland v Yates (supra) when he stated, at pars280 - 287:
"There is no legal principle that purports to, or could close for all times the categories of methods of valuation which might be acceptable in a particular case. Rodbertus From 'Untersuchungen auf dem Gebiete der Nationalökonomie des klassischen Alterthums', in Hildebrand's Jahrbücher für Nationalökonomie und Statistik, iv, p 343 et seq, quoted in Seligman, Essays in Taxation, 10th ed (rev) (1931) at 11 observed that in its early stage almost every civilization was marked by two factors, agriculture and slavery. These, Seligman wrote, lead to a fundamental distinction between ancient and modern economic theory Essays in Taxation, 10th ed (rev) (1931) at 11. The former was a simple one, and, taken with a general community knowledge of the productivity of land and the fact that valuations were usually required only for the purpose of levying taxation, meant that early valuations were simple and relatively unsophisticated exercises. Valuation practice is, however, like legal practice an evolving discipline.
As time has passed different types of businesses, different uses to which property may be put, changing financial markets, and more sophisticated and different methods of obtaining financial information and applying financial criteria call for flexibility, resourcefulness and different methods of making valuations. Two typical examples should suffice. Large 'drive-in' shopping malls containing discount department stores, speciality shops, municipal libraries, restaurants, cafés, department stores, large supermarkets and numerous picture theatres were unknown when Spencer's case was decided. To value one, either when fully developed or in prospect, requires that the closest consideration be given to the income stream that such an establishment could be expected to generate and for how long it might do so. Similarly sophisticated techniques may be involved in the valuation of large city buildings or sites approved for their erection taking account of incentives offered to tenants and the incidence of tax payable by both parties. Often the owner of land which has been approved for a development will not undertake the development but will sell it to an investor or developer. The point is that the land with the approval attached to it becomes the prize and it would be unthinkable that the price for the prize would not be fixed in such a way as to reflect the return that the development when completed would yield. There is no reason to suppose that the price for the site of an approved but as yet undeveloped market should be very differently calculated.
It is not as if the valuation of a notional capital asset by reference to its expected income generating capacity is by any means a novel concept in the courts. Daily, courts in this country and elsewhere value what has been described as something in the nature of a capital asset, a person's capacity to earn income, by reference to his or her likely earnings over a period in the future taking account, subject to discount for contingencies, of that person's as yet unrealised but realisable prospects in life Parker v The Commonwealth [1965] HCA 12; (1965) 112 CLR 295 at 308-311 per Windeyer J; Husher v Husher [1999] HCA 47; (1999) 73 ALJR 1414; 165 ALR 384.
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 (1976) 12 ALR 201 at 207.
If a court is prepared to entertain, as this Court did in Eastaway v The Commonwealth [1951] HCA 80; (1951) 84 CLR 328 at 340-341, 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 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 Australia (1937) 4 The Valuer 403 at 406 per McTiernan J. The method was described by Starke J in Australian Provincial Assurance Association Ltd v Commissioner of Land Tax [1942] ALR 156 at 158:
'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.'
The method is neither novel nor especially difficult, and, as with all methods requires the making of value judgments."
22 That approach was taken by the Full Court of the Supreme Court of South Australia in Adelaide City Corporation v City of Port Adelaide Enfield [2001] SASC 207; (2001) 115 LGERA 137. In his reasons for judgment, with whom the other members of the court agreed, Debelle J said, at 147:
"The discounted cash flow method is useful for valuing shares and other assets: see generally, S J Brown, Investment Decisions: Discounted Cash Flow and Other Valuation Methods in Litigation, Journal of Banking and Finance - Law and Practice (1991) Vol 2, p 4. It is also useful when valuing land to be used either as a quarry or as land to be used for waste disposal and, in particular, the latter. As already mentioned, land used for waste disposal usually has little intrinsic value, particularly if already used for that purpose. As the value of the land lies in the ability to earn income from the land, the price of the land is essentially determined not by any intrinsic value of the land but by the use to which the land can be put and the income derived by the owner of the land from that use, be that income royalties or, in the case of the owner-operator, profit."
23 In that case the primary judge had determined that the "hypothetical purchaser" would have been a passive investor "who would allow another to operate the waste fill business in return for payment of royalties". In relation to that finding, Debelle J observed, at 143:
"That conclusion appears to overlook the fact that, although the purchaser is buying the land only, the value of the land will reflect its capacity to produce income. It does not necessarily mean that the royalty method adopted by Mr Maloney is correct or that it is necessary to reject the discounted cash flow method. The judge therefore rejected the discounted cash flow method and, instead, decided that the correct approach is to value the royalties likely to be received by the passive investor and to apply an appropriate capitalisation rate to that revenue."
"However, the question is not whether there are more owner-operators than passive investors who will be likely to purchase land for waste disposal. Instead, it is whether both owner-operators and passive investors will be potential purchasers. The evidence quite clearly established the latter. The evidence as to the position in both this State and Victoria was objective and uncontroverted evidence. The judge should have relied on it and found that the persons likely to purchase the land included both owner-operators and passive investors."
24 However, it does not necessarily follow that a hypothetical purchaser, possessing the needs and attributes of either an investor or developer, would be prepared to pay the whole of the amount, even if discounted for future risk, for the particular land if other land suitable for the purpose was available. In that case other market forces, especially those of supply and demand, would be relevant factors. The adoption of a particular methodology which enhances the position of one party to the hypothetical transaction only, is subject to economic constraints. The caveat expressed by Wells J in the earlier case of Bronzel v State Planning Authority (1979) 44 LGRA 34 at 38 (cited with approval by Callinan J in Boland v Yates (supra), at par283):
"... 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"
25 Here the hypothetical purchaser was accepted by the learned primary judge as one who would have been interested in the future development of the site for the purpose of waste management. However the learned primary judge was not required on the evidence to accept that there was an internal competitor for the purchase and development of such land for that, or a more productive purchase. The development application by Mr Robert Downie, not the appellant, did not require the primary judge to accept that other real competitive purchasers were actually in the market for the type of land acquired. The evidence before him suggested that, consistent with the studies and development proposal, a public authority would have been the most likely equivalent to a "hypothetical purchaser". Comparable roles were not available as a guide to market forces. Neither were the Victorian examples an appropriate guide.
26 Significant was the availability of other land. The learned primary judge accepted that the acquirer "was in the market for the land" and that "the likely hypothetical purchasers are any entities interested in operating a waste disposal site on the eastern shore and include municipal councils and private operators". The land acquired had not been approved by other statutory authorities for the intended use. The respondent might have anticipated approval but such was not certain. Given the material before the learned primary judge it was likely that approval would be given to the respondent for an appropriate site. His Honour was conscious of the accepted need for the development of a waste disposal operation within the municipality and the history of governmental requirements when he said, at par25:
"A great deal of evidence was put before the Court in relation to waste disposal in Tasmania, primarily in southern Tasmania, and the interest of local government bodies in obtaining suitable waste disposal sites. It is not necessary for me to canvass this evidence in detail. I will however touch on the evidence that would have influenced the hypothetical parties to the negotiation of the sale of the acquired land on 14 October 1996. Since at least the early 1970s there has been increasing concern and activity at all levels of government in Tasmania in relation to solid waste disposal. Many investigations have been undertaken and many reports have been prepared. In January 1994, the Tasmanian Solid Waste Management Policy was published. The policy was endorsed by the Minister for Environment and Land Management. It had been evolved over a number of years and had been the subject of several prior publications. Amongst many things, the policy proposed the rationalisation of municipal refuse disposal sites, the introduction of waste transfer stations, and in some instances, a regional, rather than a municipal, approach to waste management that would allow the disposal of waste from beyond municipal boundaries. On 27 November 1995, the Minister for Environment and Land Management issued a directive that no licences for refuse disposal sites in the southern region of the State should be issued prior to 30 September 1996 unless a strategic plan for solid waste management in the region was in place and such licence applications were found to be consistent with the strategic plan. The duration of this direction was subsequently extended and it was in operation at the assessment date. No strategic plan for solid waste management in the southern region was in place as at the assessment date."
27 The Southern Tasmanian Solid Waste Management Study commissioned by the State Government and published in mid-1995 recommended the establishment of a regional council and envisaged two major refuse disposal sites in the southern region, one to be located on the eastern shore of the Derwent River. That study had followed, and was consistent with, a special report by the Auditor-General (Municipal Solid Waste Management - Special Report No 5) presented to Parliament in September 1993. Concurrent with the 1995 study, the respondent commissioned a consultant to "locate and assess potential refuse disposal sites in the Sorell Municipality". The consultant identified 15 such sites, 13 of which were considered to be worthy of further evaluation. The report provided to the respondent concluded:
"Copping and White Hill are considered to be the most favourable sites for the future location of a refuse disposal complex. Copping is a good potential site because, although it is located 25 km from Sorell, it is large, well screened, appears to have good geological and hydrogeological conditions and is contained within two properties. White Hill is located closer to Sorell (13.9 km) and is also a relatively large site and is contained within one property boundary. This site should have good geological and hydrogeological conditions, but lengthy access along an un-made public road is a disadvantage.
The site Sugarloaf Rd (Front and Rear) was considered unsuitable potential RDS [the acronym used for refuse disposal site] due to their relatively small size, and their high degree of visual exposure. The sites Fulham and Lovely Bottom are considered less suitable due to transport route issues.
After consideration of the information currently available, there are six sites which offer the most potential as landfills within the Sorell municipality. In order of preference the sites are:
28 The learned primary judge was required to assess "the market value of the estate of the claimant in the subject land" (the Act, s27(1)(a)). Absent comparable sales he was required to consider the test of the hypothetical vendor and purchaser as of the date of acquisition. As of that date there were a number of sites available for purchase with a limited number of prospective purchasers wishing to develop the land. The land was zoned rural and the evidence established that it was not conducive to high intensity farming. The land to be purchased required additional sites, namely those owned by Mr Robert Downie and Mr and Mrs Thompson, to make development feasible or at least to complement the appellant's land. It was by no means certain that purchase (hypothetical) or acquisition would result in approved development. It was open to an intended purchaser to seek other land. Copping may have been a preferable site but the "cost economics" equation remained a significant factor.
29 Conversely, the learned primary judge was not required, in law or evidence, to accept the methodology advanced on behalf of the respondent. The land was zoned "rural" under the provisions of the Sorell Planning Scheme 1993. Adjoining land owned by Mr Robert Downie which was "unattractive agricultural land" had been sold to the respondent for an average price of $876 per hectare, whilst that of the Thompson's at $800. The learned primary judge accepted those figures would have been accepted as relevant in any approach to negotiation. But he was not required to accept the resulting calculation of $354,000 as a market price which a willing, but cognisant, vendor would have accepted. Whilst the land itself, absent its surrounds, would not have had greater value for the purpose of agriculture, it had been identified as suitable for what is now regarded for a necessary utilitarian purpose; one increasingly valuable in a modern world. As Callinan J observed in Boland v Yates (supra), this was not 1907. Rural land is no longer regarded as necessarily suitable only for pasture, grazing, crops or intensive farming. Modern expectations of environmental management, density of population, dangers of hazardous waste, and the like, have made the safe disposal of waste a valuable and necessary part of society. In turn, this requires access to land near to, but separate from, high density housing, capable of safe waste retention and which impacts as little as possible on its surrounds. As Debelle J recognised in Adelaide City Corporation (supra), at 147:
"... land used for waste disposal usually has little intrinsic value".
30 Whilst the appellant advanced that proposition in support of his contention in favour of a "discounted cash flow" methodology, it can equally be used against the respondent's approach. A knowledgeable vendor would know, especially as here, such to be the case and that the very nature of the land, its size, location, topography and geology would warrant an enhanced value on the market. It was open for the learned primary judge to conclude that as of the relevant date a hypothetical vendor, mindful of matters such as the above, would not have accepted a price based on the average value of rural land in his locality. His Honour was also entitled to reject, on the evidence, alternative but comparable valuations advanced by the respondent, based on a royalty or the Jews Hill comparison.
31 The parties were entitled to present their respective cases diametrically opposed. It was not incumbent on the fact finder to simply accept either. The learned primary judge did not assume special expertise. He returned to the guiding principles of "hypothetical" transactions, stating, at par62:
"I turn to the hypothetical negotiation of the sale and purchase on the assessment date. As should be apparent from what I have written, I consider that the valuation information available to the parties provides no clear or reliable basis for assessing the value of the acquired land. In these circumstances my determination of the amount on which the parties would have settled is more conjectural than is normally the case. In approaching this task, I am conscious that: 'In a case of compensation doubts are resolved in favour of a more liberal estimate ...', Commission of Succession Duties (SA) v Executor Trustee and Agency Co of South Australia Ltd [1947] HCA 10; (1947) 74 CLR 358, Dixon J at 379."
32 Whether he was entitled to reject, on the evidence, the "discounted cash flow" methodology will be considered separately in relation to grounds 1 - 3 of the notice of appeal, but accepting entitlement, he was required to form his own assessment based on a judgment of the central governing principle. In his reasons for judgment at par62, he stated the factors relevant to that exercise of judgment to include those stated in par17 above.
33 The learned primary judge paid regard to competing valuation principles (Port Stephens Council v Fidler [1999] NSWCA 281; (1999) 103 LGERA 335) but in rejecting methodology (by itself not a principle) returned to legal principle. He was not required to adopt either method of valuation as advanced by the respective parties (Doherty v Commissioner of Highways (1974) 7 SASR 57). His "broad brush" approach might itself be susceptible to criticism, as might also be said of the percentage discount figures applied by expert valuers for both parties, but remained an exercise of judgment. As Walsh J observed in Anthony v The Commonwealth (1973) 47 ALJR 83 at 94:
"It may be said, I think, that there is really no particular reason why the parties to the hypothetical bargaining should be regarded as being disposed, prima facie, to split the difference between nil and the top figure sought by the seller. But I acknowledge that I know of no preferable formula, if any such formula is capable of being of assistance in solving the problem."
34 A subsidiary claim of error internal to the reasoning is made in ground 2(e) of the notice of appeal which states:
"(e) when having referred to the decision in Brewarrana Pty Ltd v Commissioner of Highways (No 2) (1973) 6 SASR 541 the trial judge did not act in accordance with and acted contrary to the manner in which Wells J said at 544-545 a judge in like circumstances should act."
35 Ground 5(b) of the notice of appeal claims error in that:
"5 Having identified the volume and type of waste as a critical factor in any valuation of the land based upon anticipated earning capacity the learned trial Judge erred:
(b) in his application of the observations of the Court of Appeal in Housing Commission of NSW v Falconer [1981] 1 NSWLR 547 to the evidence before him."
36 The learned primary judge was able to identify "the volume and type of waste" referred to by the appellant's witnesses. But he was not required to accept the projections as being applicable as of October 1996. Identification did not require application. In Housing Commission of New South Wales v Falconer (supra), the court was required to consider a valuation which included as a factor "special value" to the owner which included determination of actual cost increases after valuation. In his reasons for judgment, Mahoney JA distinguished between special, as distinct from market, value in his examination of subsequent events in any examination of actual and projected cost increases, including inflation in any quantification. In his reasons for judgment, the learned primary judge, at par21, cited the following passage of Mahoney JA at 576:
"In determining the effect which may be given to events occurring subsequently to the date of resumption, it is necessary to draw certain distinctions.
There are some cases in which the theory or principle on which the compensation is to be assessed prevents regard being had to subsequent events. Thus, where the compensation which is to be given is measured by the ordinary market price of the property taken, the principle on which that market price is to be determined prevents (or at least restricts) reference to subsequent events. That market price is the price acceptable to a willing but not anxious vendor and purchaser on the relevant date. Such persons are to be taken to know what an appropriately informed person would know on that date. That being the principle, it follows that such persons (and the court, as determining what they would have done) cannot be seen as knowing more. The price which such persons would accept at that date will be affected by the uncertainties as at that date, as to, for example, the future demand for land at the relevant time, future decisions of zoning authorities, and the like. Those uncertainties and the effect of them on the postulated vendor and purchaser help to determine what price will be found acceptable. In that regard, therefore, evidence of what subsequently has occurred in relation to such matters may not ordinarily be referred to. This does not operate so as necessarily to exclude evidence of subsequent sales: Melwood Units Pty Ltd v Commissioner of Main Roads (1975) 52 ALJR 593, at pp 597, 598; [1978] 3 WLR 520, at pp 527, 529, 530; [1979] 1 All ER 161, at pp 166, 167, 168; McCathie v Federal Commissioner of Taxation [1944] HCA 9; (1944) 69 CLR 1, at p 16."
and further passages from the reasons for judgment of Hope JA at 557 - 559 and Glass JA at 563, in which the latter said [par22]:
"3 The ascertainment of the market value involves the determination of the hypothetical sum which would have been accepted by the owner had he sold at the date of resumption: Commonwealth v Reeve [1949] HCA 22; (1949) 78 CLR 410, at p 418.
4 Special value is that additional sum over and above the market price which the owner would give for the land sooner than fail to obtain it at the time of the hypothetical sale assumed to have occurred at the date of resumption: Pastoral Finance Association v The Minister [1914] UKPC 77; [1914] AC 1083, at p 1088; Dangerfield v Town of St Peters [1972] HCA 15; (1972) 129 CLR 586, at p 590.
5 In relation to both market and special value, events subsequent to the resumption are of no relevance (McSweeney v Commissioner for Railways (1941) 14 SR (NSW) 18; 31 WN 14) except to the extent that they provide some evidence of what was foreseeable by the owner in calculating what he would have accepted or offered at the time of resumption: Minister for Army v Parbury Henty & Co Pty Ltd [1945] HCA 52; (1945) 70 CLR 459, at p 514."
37 In relation to the last citation, the learned primary judge stated, at par23:
"I agree with the approach taken by Hope JA and do not consider that the Court is entitled to attribute to either of the hypothetical parties to the negotiation under consideration exact knowledge of any of the subsequent events about which evidence has been given. In some instances, however, that evidence reinforces the conclusion that matters in question were contingencies that the parties would have foreseen."
38 There was no misapplication of principle in the passages cited by the learned primary judge. He was not dealing with "special value". Evidence of what transpired in relation to the Copping site after the date of acquisition could not be used as "exact knowledge" possessed by the hypothetical vendor in the sale of the land. The learned primary judge did attribute to the hypothetical vendor the knowledge actually possessed by the appellant as of October 1996. That general knowledge could not be translated into exact knowledge by reason of subsequent events. It would be open for any party to say at a compensation hearing that he or she could have paid more or less for the land in question because of what had transpired. That is one of the reasons for the adoption of a "hypothetical" transaction.
39 Factors such as inflation and concurrent developments elsewhere which enhance value, changes in the economic imperatives of supply and demand or public policy, might impact on subsequent value. His Honour was entitled to show the subsequent events reinforced foresight not that they displaced estimates of value reasonably reached at the relevant time. There was no error in principle.
41 In Brewarrana Pty Ltd v Commissioner of Highways (No 1) (1973) 32 LGRA 170, Wells J was required to consider legislation (Compulsory Acquisition of Land Act 1925 - 1966 (SA), s12) which required, for the purpose of acquisition, compensation that:
"The value of the land shall ... be taken to be its value ... at the beginning of the period of twelve months prior to the giving ... of the notice to treat."
42 After the service of the notice, the owner, who had previously unsuccessfully sought approval for a subdivision development, succeeded in his appeal. At issue was whether the compensation should be awarded as if he was the owner of already subdivided land. Competing approaches were taken to the issue of valuation by witnesses called by the respective parties. Wells J concluded that it would be incorrect to use an averaging process upon the differing figures arrived at by the respective experts or to piece together from those valuations a paramount figure. In identifying at least seven basic differences between the experts which relevantly included:
"(f) The hypothetical subdivision method leads to the computation of two cardinal figures, namely, expected gross realization and expected costs and expenses, and, for the purpose of reckoning the latter, should one adhere to traditional methods and percentages, however apparently unrealistic (having regard to changes in the money market and in modern business methods), or should the figures employed in the reckoning remain sensitive to, and reflect, those changes?"
"The differences of method, doctrine and axiom just alluded to present me with the first problem in this case: What is the true function and duty of a Land and Valuation Court when it is confronted with irreconcilable differences between the opinions of expert valuers - not only in result, but in reasoning and precept, too - for the resolution of which the evidence as a whole provides little or no assistance?
The question just formulated rests on the assumption that it is to the evidence that, at all events in the first instance, the Court ought, and is entitled, to have recourse, in order to resolve the differences of opinion. I have always taken the view, and shall continue to do so unless directed by a superior court to do otherwise, that the creation of a special division in a court to deal with a particular class of case is not intended to turn the presiding judge into an independent expert in the very field in which testimony will be tendered to him that he will be called on to evaluate. It would never occur to a trial judge who, for example, had heard many cases in which expert medical evidence had been tendered, to choose between the conflicting testimony of two medical witnesses by applying to it his own medical knowledge. That knowledge would, no doubt, have been of inestimable value in understanding the testimony; in suggesting questions; in comparing one set of opinions with another. But it would be quite contrary to principle, I apprehend, for the judge to bring a third set of opinions into the arena, and to supplement or condemn testimony properly adduced before him in reliance on his own theoretical grasp of principles and precepts of medicine. The judge may have proper and rational grounds for preferring one expert to another; such grounds are well-known and accepted. He may, by a consideration of the whole of the evidence, expert and non-expert, be able to conclude that one opinion is more likely to be sound than another or others, even though both or all opinions are given by men of integrity, learning and skill, and are supported, within self-ordained limits, by impeccable reasoning. He may, because he has been persuaded by the evidence of one expert, find that there is a fatal flaw in the reasoning of another. It may appear that, having regard to the whole of the evidence, certain factual assumptions, and hence the opinions based on those assumptions, are not well founded. But the judge cannot arrogate to himself the role of an expert who is, in any respect, primus inter pares. In the Land and Valuation Court I seek to be informed and, as best I can, to evaluate; I do not sit to use such acquired knowledge of valuation principles as I have acquired in order to confirm or to condemn. I must act on the evidence, and if any of it is, in any way, defective, incomplete or irreconcilable then I must make such use as I can of whatever other evidentiary material is available to correct, complete or reconcile."
43 His Honour adopted the "orthodox" method because, as he stated at 201:
"A consideration of all the difficulties of valuing by the method of the hypothetical subdivision has persuaded me that I should find that, until a wholly new method is presented, embodying figures that are, or claim to be, characterized as realistic, I should incline towards the approach that has hitherto been accepted in theory and, I infer, used in practice - the conventional or orthodox approach. The principal reason for arriving at that conclusion is the pragmatic one that the use of the orthodox approach, for a substantial period in the past, would be likely to have brought to the notice of the experts who were called at the hearing, and to those with whom they daily confer, cases where manifest inconsistency or absurdity in result had been traced to the adoption of the established, and the rejection of the realistic, approach, but no such case was reported to me. If a trial judge is permitted to have an intuition in such matters, I may permit myself the observation that the orthodox approach may have continued to yield acceptable results on the whole because it has embodied inherent safeguards that might be omitted, or inadequately provided, in the realistic approach."
44 It is in that context that his words, earlier stated at 187:
"A figure reached by the adoption of any given valuation method can only be regarded as an aid to fixing compensation: it is not the compensation, or even a pretence to be the compensation. As I understand the evidence and the authorities cited, such a figure can have relevance to this Court's task only because it represents, to use the words of Isaacs J in the same case [Spencer's case at 441] one of the 'ordinary business considerations', to be weighed along with all other circumstances of which the hypothetical buyer and seller are deemed cognizant, that 'might affect its value' in the hands of the owner. A reasonably prudent owner would ordinarily, for example, pay attention to comparable sales and the opinions of reliable valuers founded on them; would, no doubt, subject them and the land sold to careful analyses. But, in the last resort, they would not furnish him, as though they represented the material for a working formula, with a definitive figure to claim. He would pay close attention to the results of operating every method whose use he investigated but he would not regard any particular one as conclusive. What I have just said applies especially where the ingredients with which it is concerned are to a greater or less extent debateable"
used here by the learned primary judge and subject to the ground of appeal, must be considered. The learned primary judge did not act contrary to the approach cited by him in his reasons for judgment.
"1 The learned trial Judge erred in holding or finding that the market value of the land acquired from the Respondent by the Applicant ('the acquired land') was $700,000.00 (excluding timber agreed at $310,000):
(a) when there was no evidence which could support such a finding;
(b) when there was no warrant on the evidence for the trial judge to take a 'pragmatic and broad brush approach'; and
(i) it was common ground, as the trial judge found, that the
highest and best use of the land is for waste disposal;
(ii) the land was eminently suited for use as a regional landfill site;
(iii) the trial judge found that having regard to the evidence
a hypothetical purchaser would have ranked the subject
property first of possible sites as a site for a regional land
(iv) the trial judge found there was a high probability that
planning and related approvals would be given for the use
(v) the trial judge found that the information available on sales
of land suited for waste disposal demonstrated that a premium was ordinarily paid but did not provide any
(vi) there was considerable evidence as to the derived price
which a hypothetical purchaser would be prepared to pay for such land including expert evidence from Mr Maltby,
(b) by introducing his own approach to the determination of market value, being an approach not adopted or canvassed by any of the expert witnesses called on behalf of either party;
(c) by adopting his own valuation rather than acting upon the expert evidence before him;
(d) by rejecting the assessment of value on a discounted cash flow basis until the site was operational;
(e) when having referred to the decision in Brewarrana Pty Ltd v Commissioner of Highways (No 2) (1973) 6 SASR 541 the trial judge did not act in accordance with and acted contrary to the manner in which Wells J said at 544-545 a judge in like circumstances should act.
3 The learned trial Judge's finding as to the market value of the subject land was not reasonably open having regard to the evidence and was not supported by the evidence."
46 The learned primary judge did not reject the method on the basis that it was wrong in principle or not permitted in a case involving assessment of compensation. Rather, he found that the evidence, both factual and opinion, was insufficient to warrant a positive finding.
47 Central to the appellant's case was the evidence of Mr James Wood, an environmental scientist who had been the principal author of the Tasmanian Solid Waste Management Policy already referred to. As is necessary for much opinion evidence, he made certain assumptions, particularly that there would be two regional waste disposal sites and that the respondent's site would become the recipient of much of the waste from adjoining municipalities and significantly from Hobart and Glenorchy. On that assumption he was able to calculate the estimated value of waste which would be deposited at the Copping site. On the basis of his projections, another witness, Mr Maltby, a geological engineer and environmental professional, was able to calculate the expected return on the operation. He calculated that over a period of 25 years, the return, together with the eventual sale of equipment, would amount to $57,963,520 at a cost of $15,898,730. Applying a discount rate of 12 per cent, he estimated the net cash flow to the respondent to be $9,390,654 in 1997. His estimates were summarised in a table which took into account variable discount rates in the following calculations:
His evidence was complemented by Mr Robin Hocking, a registered valuer based in Victoria who provided evidence of valuations for land fill sites in Victoria, New South Wales and South Australia. In turn, Mr Douglas Dickenson, a Tasmanian valuer, used the calculations of Mr Maltby and a cash flow methodology discounted at a rate of 22.5 per cent to arrive at a land value figure of $3,516,203.
48 The projections and assumptions were challenged through evidence from Dr John McCambridge, a person with credentials equal to those possessed by Mr Wood. There was no question but that each witness was competent and the opinions expressed held with integrity. The evidence of Dr McCambridge was supported by Mr David Richardson. Dr McCambridge stated, from his own knowledge and his review of various studies, reports, and other documentation, that as of 1996 no specific arrangements had been made as to land fill closure and redirection of waste concerning the relevant adjoining or nearby councils, in particular those of Glenorchy and Hobart. He challenged assumptions made concerning the future of the latter sites and the necessity for expansion to accommodate "hazardous wastes".
49 The learned primary judge preferred the evidence of Dr McCambridge. He was entitled to so do. The reasons for judgment did not involve a rejection of the methodology, the competence of the appellant's witnesses, or the internal computations. The learned primary judge was involved in the assessment of the market value of the land as at a particular date, not the sale of an existing business or the acquisition of land currently receiving or available for a high rate of return for a different use. Further, he was not required to accept for the purpose of evaluating market value that the return on the land itself would generate on the figures provided by Mr Maltby a gross profit approaching 70 per cent over some 26 years. Nor was he required to accept the "discount rate" applied by the respective witnesses. Some "discounting" was arithmetic in that it translated future returns into a capital sum as of a notional date. But further discounting was said to take into account contingencies which, in turn, depended on assumptions or projections. Learned counsel said on the hearing of the appeal that the learned primary judge, and this Court on reassessment, could accommodate the "discounted cash flow" method and give weight to the other factors by adjusting the rate provided by the appellant's witnesses. That exercise, however, involves the making of further assumptions or assessments of probability. The evidence relied upon depended on assumptions which included:
(2) a number of other municipalities would join in the venture;
(3) the volume of waste would be at a rate predicated by the witnesses;
(4) the gross profit or net return would be as predicated;
(6) the life expectancy of the site, coupled with the closure of other sites within the projected time frame;
50 The assumptions did not take into account the return which might be expected by the developer for the conduct of the operation, as distinct from the original owner of the land. Accepting that the respondent was able to proceed with development, it did not follow that its return would approach the projections relied upon by the appellant. Nor did it follow that a hypothetical purchaser would have been prepared to pay $3.5m to $4m as an initial capital cost before any development was approved or commenced. It was the uncertainty of the assumptions permitted by the evidence which led the learned primary judge to conclude that the value of the land could not be assessed by the suggested method.
51 In addition, the learned primary judge had evidence that:
(1) it was likely that only a public authority would be the permitted operator;
(2) the development application was made by Mr Robert Downie, not the appellant;
(4) the site itself required the purchase or acquisition of other land for access and as a buffer zone, costs not taken into account by the witnesses;
(5) the purchase price paid for a waste disposal site at Dulverton and two other sites in other parts of the State.
52 The learned primary judge was not required by the evidence to give effect to the calculations advanced by the appellant. Grounds 1 - 3 have not been made out.
53 The learned primary judge summarised the evidence of both Mr Wood and Dr McCambridge. Dr McCambridge gave evidence of matters within his direct knowledge as a former officer of the Department of Environment and Land Management and the then current manager of the environmental section of a commercial enterprise. In addition, he had reviewed the projections and assumptions made by Mr Wood. The evidence of both had been supported by others. Having compared the evidence of the two, the learned primary judge concluded, at par42:
"I favour Dr McCambridge's evidence of the prognostications that would have been made as of October 1996 on the likely diversion of waste from Hobart and Glenorchy to a regional waste disposal site on the eastern shore, and I conclude that on the information available at the relevant time, the hypothetical parties to the sale and purchase would have done likewise. More pertinently, I conclude that both parties would have formed the view that on the information then available, there could be no certainty about the projected waste stream, in particular that which might come from western shore, and that any predictions on the matter were no more than informed speculation. I should say that I favour Dr McCambridge's projections in this regard over those of Mr Wood, notwithstanding that Mr Wood put his mind to reviewing what was known in October 1996 at a much earlier date than Dr McCambridge did."
54 His reasoning was exposed and he was not required to state further details of that reasoning (Whisprun Pty Ltd v Dixon [2003] HCA 48; (2003) 77 ALJR 1598; Fox v Percy [2003] HCA 22; (2003) 214 CLR 118) and entitled to prefer the opinion advanced by the witness (Abalos v Australian Postal Commission [1990] HCA 47; (1990) 171 CLR 167) especially since, independent of that witness, there were other reasons to question the assumptions on which those opinions depended (State Rail Authority of New South Wales v Earthline Constructions Pty Limited (supra)).
"4 The learned trial Judge erred in holding or finding that at a price beyond $700,000.00 a hypothetical purchaser would have turned to alternative sites when:
(a) The probability that any alternative site would have been approved for use as a regional land fill was low;
(a) There was no, or no reliable, evidence of the value which a hypothetical purchaser would be prepared to pay for an alternative site or sites having regard to different environmental and similar considerations applicable to such sites relative to the subject site;
(c) To seek to analyse value of other sites in the manner suggested in the absence of comparable sales evidence, of which there was none found to be directly comparable, would have required a series of hypothetical valuations of other sites supposedly suited to use as a land fill, albeit such sites were regarded as inferior to the subject for use for such purpose."
57 Examination of this ground has been subsumed into the matters already considered and will be dealt with but briefly.
58 There was evidence that the Copping site was preferred. However the reports identified a number of alternative sites which were ranked in preference in the report commissioned by the respondent. There was no evidence that they would not have been approved for development. The "hypothetical purchaser" was afforded the same knowledge as that possessed by the respondent. That knowledge included the fact that it was not certain that the Copping site would receive approval. The assessment made reflected the fact that the respective parties recognised the qualities of the relevant land. The parties conducted their respective cases on the basis that there were no "comparable sites". But that is not to say that the price paid for the Dulverton or other sites for land fill did not afford a basis for the approach to the method of valuation used in those cases by the respective parties. The prices paid with respect to the Robert Downie and Thompson properties likewise provided some guide to method.
60 The essence of the appeal is that the evidence was neither sufficient to enable it to establish a valuation of $700,000 and instead required a positive finding in favour of the discounted cash flow method. It is comparable to one based on a claim of "contrary to" or against the "weight of" the evidence. If there was error in the computation of a figure of $700,000 (ground 3), then it favoured the appellant. That finding might have been a product of a "broad brush" approach and a different figure preferred. But the finding was a consequence of the application of legal principle and permitted by the evidence.
62 Following his assessment of compensation in the substantive proceedings ([2005] TASSC 2), the learned primary judge was required to determine competing applications concerning costs and, following argument, ordered that the respondent pay the appellant's costs of the proceedings ([2005] TASSC 9).
63 The respondent claims error "in fact and in law and in the reasonable exercise of his discretion" in that the learned primary judge:
"(i) Failed to take or to take sufficiently into account a relevant consideration, namely that although the respondent was generally successful, he failed altogether in respect of the most important and time consuming aspect of the litigation, being the issue of the validity of the application to the respondent's claim for compensation of the discounted cash flow method of valuation.
(ii) Took into account an irrelevant and erroneous consideration, namely that it was the value produced by the discounted cash flow method of valuation that had affected the proceedings and not the method itself.
(iii) Failed to take or to take sufficiently into account a relevant consideration, namely that s60 (2) (a) of the Land Acquisition Act 1993 mandates a comparison of the amount of compensation awarded and the amount offered by the acquiring authority and not just the posing of the question of whether the former exceeded the latter.
(iv) Failed to take or to take sufficiently into account a relevant consideration, namely that mandated by s60 (2) (b) (iii) of the Land Acquisition Act 1993, being the question of whether the proceedings were affected by an excessive claim by the claimant.
(v) Found, contrary to the evidence that the applicant's solicitor had deflected on several occasions, suggestions by the respondent's solicitor to attend and had ultimately refused to attend a formal settlement conference.
(vi) Failed to take or to take sufficiently into account a relevant consideration, namely that the respondent did not pursue an application for an order for mediation which had been adjourned or stood over as premature by Cox CJ when made or foreshadowed at a directions hearing on 15 November 2002.
(vii) Failed to take or to take sufficiently into account a relevant consideration, namely, that having found that not infrequently apparently intransigent parties achieved a settlement through mediation, it had always remained open for the respondent to obtain an order for mediation pursuant to r 518 of the Supreme Court Rules 2000, even if there was unilateral reluctance on the part of the applicant to attend."
64 The Supreme Court Civil Procedure Act 1932, ("the Act"), s44, provides:
"44 Appeals as to costs only, and appeals by a person admitted to sue or defend as a poor person
(1) No appeal shall lie to a Full Court from any judgment or order given or made by a judge, whether sitting in court or in chambers, as to costs only, which are by any statute or any Order or Rule of Court left to the discretion of the judge, except -
(a) by leave of the judge giving such judgment or making such order;
(b) in cases in which the judge has declined or failed to exercise the discretion; or
(c) in cases in which the judge has proceeded on a wrong principle or otherwise contrary to law, or on irrelevant or insufficient materials, or has failed to consider any material fact.
(2) No person who has been admitted to institute or defend or be a party to any proceeding in the Court as a poor person, shall be permitted to appeal to a Full Court or to apply to a Full Court for a new trial as a poor person, except with the leave of the judge by or before whom the cause or matter was heard or tried, or of a Full Court."
65 The cross-appeal here is limited to the issue of costs only. Leave has not been granted by the presiding judge and it cannot be said that he "declined or failed to exercise" his discretion. He identified and articulated the competing factors advanced by the parties and exposed his reasoning process in reaching a discretionary conclusion. Legislation required any exercise of discretion to take into account consideration of disparity of award with any offer made by the acquiring authority and the reasonableness or otherwise of the conduct of the parties in the course of the proceedings. The Land Acquisition Act 1993, s60, provides:
"(1) The costs of, and incidental to, any arbitration or proceedings before the Court under this Act are in the discretion of the arbitrator or the Court.
(2) In exercising a discretion to award costs under subsection (1), the Court or arbitrator must take into consideration -
(a) where the subject matter of the proceedings or arbitration relates to the amount of compensation payable, the amount of compensation awarded as compared with the amount (if any) offered by the acquiring authority; and
(b) the extent to which the proceedings or arbitration has arisen from, or been affected by -
(i) unreasonable conduct on the part of the claimant or the acquiring authority; or
(ii) the failure of the claimant to give adequate particulars of the claim or supply supporting material when required to do so; or
(iv) an unduly depressed offer by the acquiring authority."
66 Subject to those specified considerations, the general principles governing costs remained ones of wide discretion (Rukavina and Robertson v Wagga Wagga City Council (1993) 80 LGERA 8; Maloney v Cowra Shire Council [2000] NSWLEC 107).
(2) proceeded on irrelevant or insufficient evidence;
68 The grounds of appeal effectively are complaints of outcome formulated as a critique of the weight afforded to particular identified factors. The amount of compensation awarded far exceeded the value placed on the acquired land by the respondent. The respondent, on the hearing, strongly defended its assessment based on the advice provided by its own experts where varying approaches were tested at trial. The respondent had adopted a methodology which enhanced its position and which failed to take into account the special nature and intended purpose of the land. It strongly maintained that position at trial. Whilst it successfully contested the methodology and consequent calculations for assessment contended for by the appellant, it nevertheless failed to limit that compensation to its desired amount. The award of compensation was, in the terms of the statute, significantly different when "compared with the amount (if any) offered ...". The issue was not, as claimed by ground 1(iii) of the cross-appeal, one of simply "posing of the question of whether the former exceeded the latter". The respondent had, through its conduct of the proceedings, placed a figure on its price for acquisition and the appellant had little choice but to either accept the proffered figure or take the matter to trial. The outcome was significantly different from that advocated by the respondent. The assessment was not one associated with ordinary litigation in that the issue arose from a unilateral decision by an acquiring authority to exercise statutory power to deprive the appellant of property (Ashfield Municipal Council v Roads and Traffic Authority of NSW (2001) 112 LGER 389; North Albury Shopping Centre Pty Ltd v Albury Municipal Council (1983) 49 LGRA 215; Banno v Commonwealth (1993) 45 FCR 32; Minister for the Environment v Florence (supra)). Absent grounds for contesting acquisition, the appellant had little chance but to pursue his claim for monetary return and the figure suggested by the respondent did not approach the sum awarded. The nature of the litigation and the exercise of statutory power was also an additional factor in consideration of a costs order (Pastrello v Roads and Traffic Authority of New South Wales [2000] NSWLEC 209).
69 It is partially correct as ground 1(i) of the cross-appeal claims, that the appellant "... failed altogether in respect of the most important and time consuming aspect of the litigation, being the issue of the validity of the application to the respondent's claim for compensation of the discounted cash flow method of valuation". But the respondent was required to counter that methodology in order to advance or enhance its own position. Much of the hearing was taken up with that contesting. Whilst the "discounted cash flow method" as advanced required consideration of a particular issue within the proceedings, it was subsumed into the wider question of assessment of an amount (Adamson v The Pharmacy Board of Tasmania (No 4) [2004] TASSC 112). The respondent had advanced, as a figure, the sum of $510,000 which, compared with the awarded figure of $700,000, represented failure in the defence of its own offer.
70 It is not correct, as ground 1(ii) of the cross-appeal claims, that "it was the value produced by the discounted cash flow method of valuation that had affected the proceedings and not the method itself". The competing figures contended for by the respective parties were a long way apart, but the respondent chose to defend its own valuation and in doing so was required to contest the higher. That it succeeded in so doing did not alter its failure to successfully defend its own valuation. The complementary ground 1(iv) does not advance the contention. It is wrong to assume that the learned primary judge was unaware of the disparity or that there was little common ground. Doubtless the amount claimed by the appellant caused strong and detailed contest. That is often the case in litigation of this nature. The respondent had options open to it through an open, but higher, offer. The learned primary judge considered the claim that the appellant, by his making of an excessive claim, caused the prolongation of the proceedings in the following terms:
"I am not persuaded that the proceedings arose from or were affected by unreasonable conduct on the part of Mr Downie. I infer from the expert evidence called on behalf of Mr Downie that the amount of his claim was consistent with expert advice he had received to the effect that the appropriate means of valuing the acquired land was a discounted cash flow method, which valued it at between $3,500,000 and $4,000,000. It was not unreasonable for Mr Downie to advance a claim consistent with that advice. In the absence of any clear guide to the valuation method that should be adopted by a valuer in the circumstances of this case, it was inevitable that there would be a substantial divergence between the views of experts on the value of the acquired land. No legal principle purports to, or could, close the methods of valuing that might be acceptable to the Court, Boland v Yates Property Corporation Pty Ltd [1999] HCA 64; (1999) 74 ALJR 209 [280]. Whilst a significant portion of the evidence put before the Court was irrelevant because it related to matters that occurred subsequent to the assessment date, both parties were responsible for allowing this to occur. It is not a basis for a finding of unreasonable conduct on the part of Mr Downie."
71 Grounds 1(i) to 1(iv) of the cross-appeal are not sustained.
72 The learned primary judge was made aware of the failure of the appellant to take part in mediation, stating it to be:
"... pertinent that on several occasions prior to the hearing of the proceedings, the solicitor for Mr Downie suggested that the parties attend mediation and the Council, by its solicitor, deflected those suggestions and ultimately refused to attend a formal settlement conference because the parties were 'miles apart'."
73 The Act, s60, requires consideration of "unreasonable conduct" and "excessive claim" as matters relevant to an award of costs. The finding that the appellant had not been unreasonable in pursuing a claim based on the "discounted cash flow" methodology was permitted on the evidence. It was a valid methodology, but given the evidence, one not adopted by the learned primary judge. That differs from the pursuing of an unreasonable claim. The competing approaches taken by the parties suggest that there was little basis for compromise and that mediation was unlikely to be productive. The written submissions of the respondent claim that:
"The only material before his Honour was an affidavit sworn by Aron Robert Perkins dated 18 February 2005 which did not disclose that the solicitor for the Council had deflected suggestions for mediation on several occasions but rather, disclosed that he had expressed no particular opposition to mediation and had agreed to arrange a settlement conference, only expressing the view ultimately that 'he could not see any point in a formal settlement conference'."
74 Those written submissions reinforce the conclusion reached by the learned primary judge that the approach was "deflected". His Honour was entitled to act on the unchallenged evidence of the appellant's solicitor provided in an affidavit. If he erroneously interpreted that evidence as constituting a "refusal", then it was not material to his conclusion. The respondent was entitled to seek mediation without the appellant's consent (Supreme Court Rules 2000, r518) and did not so do. It was entitled to make a higher offer based on its view of what might have been achieved through mediation or make a decision that further pursuit of the option of mediation would be pointless. If the appellant did not pursue his application for an order for mediation, as claimed by ground 1(vi), neither did the respondent. Ground 1(vii) is a construct. The learned primary judge relevantly concluded that:
"The Council attributes its refusal to participate in a mediation or a formal settlement conference on the amount of Mr Downie's claim and, in effect, contends that had his claim not been excessive, the matter would have settled. On this basis it is contended that the excessive claim affected the proceedings. In my view, I should only give weight to this contention if satisfied that but for the excessive claim it is likely the proceedings would have settled for no less than the amount awarded. However, as the Council refused to participate in a mediation, I am in no position to reach any conclusion about whether, or for what amount, the claim was likely to have settled. I consider that the stance taken by the Council to mediation was unreasonable and ignores the reality that not infrequently apparently intransigent parties whose positions are wide apart are able to achieve a settlement through mediation. Mr Downie's willingness to participate in a mediation was an indication of some flexibility on his part. I am not satisfied that had Mr Downie's claim been for an amount that was not excessive when compared with the amount awarded, the proceedings are likely to have settled for not less than that amount."
75 He could do no more than observe that in some cases mediation can sometimes produce an outcome and that the appellant had shown some flexibility in his approach. It was impossible for the learned primary judge to "guess" any outcome. It is wrong now for the respondent Council to complain of that conclusion. It could have actively pursued mediation through an order of the Court. It was entitled to increase its offer or make a notional "payment into Court". It did neither. The learned primary judge did take into account the relevant consideration. The word "sufficiently" appearing in the cross-appeal is a complaint of outcome, not of failure to apply principles.
77 In my opinion, the cross-appeal ought be dismissed.
78 I agree that both the appeal and the cross-appeal should be dismissed. In substance I agree with the reasons of Slicer J. I see no reason to refer in much detail to the facts, nor to the authorities, since both have been dealt with at length by Slicer J.
79 The appellant contends that the learned trial judge erred in preferring the evidence of Dr McCambridge to that of Mr Wood. Their evidence concerned the volume and types of waste likely to be processed on the acquired land. The learned trial judge was required to take into account the expectations of a hypothetical purchaser as to the volume and type of waste according to the information available to the hypothetical purchaser as at the date of the service of the notice to treat, namely 14 October 1996. As to these matters, the learned trial judge preferred the evidence of Dr McCambridge, who gave evidence for the respondent, to that of Mr Wood, who gave evidence for the appellant. Mr Wood had advantages over Dr McCambridge since Dr McCambridge was not engaged in relation to this matter until 2002, whereas Mr Wood was engaged in relation to this matter in 1996, and familiar with waste disposal planning for southern Tasmania in 1996. Despite Mr Wood having those advantages, the learned trial judge was entitled to consider the expert opinion evidence of each of the two witnesses on its merits, and to prefer that of Dr McCambridge if he thought fit. That is what he did. Mr Wood's stated opinion was that a refuse disposal site on the acquired land would have been expected to receive (inter alia) the whole of the solid industrial waste generated in the southern region from 1 July 1998, and some 35 per cent of all municipal waste from Hobart and Glenorchy from 2004. However he conceded in cross-examination that it was predictable in October 1996 that both the Hobart and Glenorchy councils would fight tooth and nail to maintain their tip sites for all manner of wastes as long as they possibly could. Dr McCambridge gave evidence as to a number of facts and circumstances that led him to conclude that in October 1996 there was no expectation that waste from Hobart or Glenorchy would be diverted to a landfill site on the eastern shore or anywhere else by 2004. The learned trial judge was entitled to take the view that, as at October 1996, a hypothetical purchaser would not have anticipated the throughput of waste at the site to have been along the lines that would have been predicted according to Mr Wood.
80 The circumstances in which an appellate court will disturb a finding of fact have been made clear by the High Court in a number of recent cases: Abalos v Australian Postal Commission [1990] HCA 47; (1990) 171 CLR 167; Devries v Australian National Railways Commission (1993) 177 CLR 472; State Rail Authority (NSW) v Earthline Constructions Pty Ltd [1999] HCA 3; (1999) 73 ALJR 306; Fox v Percy [2003] HCA 22; (2003) 214 CLR 118; Whisprun Pty Ltd v Dixon [2003] HCA 48; (2003) 77 ALJR 1598. The evidence of Dr McCambridge was not contradicted by incontrovertible facts or uncontested testimony. It was properly admitted. The learned trial judge, in accepting it, did not indicate a consideration of irrelevant matters, or fail to weigh all relevant issues. There was nothing inherently unreliable about Dr McCambridge's evidence. The learned trial judge did not make it clear that credibility considerations or impressions were unimportant in reaching his conclusion. Dr McCambridge's evidence was not glaringly improbable. There was nothing about the evidence of Dr McCambridge and Mr Wood that warrants this Court reversing the conclusion of the learned trial judge that that of Dr McCambridge was to be preferred.
Rejection of the "discounted cash flow" method of valuation
81 Having accepted Dr McCambridge's evidence, it was open to the learned trial judge to take the view that the discounted cash flow basis of valuation was "highly speculative and unreliable until the site was operational and such matters as waste streams could be established with some certainty". That was the conclusion that he reached.
82 In reaching it, he made a mistake as to the basis upon which the appellant's two expert valuers had reached their conclusions as to the value of the land. Mr Dickinson's evidence was that it was appropriate to adopt a discounted cash flow approach with a 22.5 per cent discount rate, resulting in a valuation of $3.5 million. Mr Hocking's evidence was that it was appropriate to use such an approach with a discount rate of 22 per cent, resulting in a valuation of $4 million. In listing the matters that hypothetical parties to the negotiations would have taken into account, the learned trial judge included the following:
"That if the site became the major regional landfill site on the eastern shore and the speculative projections of experts proved to be correct, its value assessed on a discounted cash flow basis was in the view of one expert $3.5m and another expert $4m."
However the figures in question, and the discount rates of 22.5 per cent and 22 per cent that gave rise to them, were not said by the witnesses to be appropriate if the projections proved to be correct. The discount rates were selected on the basis that the projections were no more than projections, and that speculation was involved. Their evidence was that the site would have been worth far more if and when the projections proved to be correct. Mr Dickinson's evidence was that a discount rate of 12 per cent would have been appropriate for a going concern. Applying that discount rate would have resulted in the value of the land being about $9.39 million.
83 However I do not think that this error makes the learned trial judge's rejection of the discounted cash flow method impeachable. The learned trial judge rejected that approach because he considered that factors relevant to the cash flow were too hard to predict in October 1996, and because of the availability of other refuse disposal sites. If he had realised that the figures of $3.5 million and $4 million represented a "going concern" figure of about $9.39 million, discounted to allow for uncertainty, I do not think that would have made a difference to his conclusion that the discounted cash flow approach should be rejected. In fact he might well have regarded the figure of $9.39 million as quite far fetched.
84 The learned trial judge was obliged to assess the compensation payable for the acquisition of the land, had evidence as to the value of the land from four experts, was entitled to reject the conclusions of each of them, and did so. He had evidence, which he considered reliable, that the land would have been worth about $800 per hectare if bought and sold as rural land. The market value of the land was obviously greater than its value as rural land because of its potential as a waste disposal site. The learned trial judge was entitled to infer that a hypothetical purchaser would have been willing to pay more than the value of the land as rural land. It was appropriate to refer to the additional amount that the hypothetical purchaser would have been willing to pay, over and above the rural land value, as a "premium". There was no expert evidence as to the premium that a hypothetical purchaser would have been willing to pay. The learned trial judge assessed compensation on the basis that the hypothetical purchaser would have been willing to pay a premium equal to the value of the land as rural land, ie, a premium of 100 per cent.
85 The appellant contends that the learned trial judge thereby erred in law. It was submitted that the learned trial judge had proceeded as if he were another expert witness. The respondent contends that the learned trial judge, having rejected the conclusions of each valuer, and having an obligation to assess compensation, was entitled to proceed as he did. I think that must be right. The evidence as to the value of the site as rural land was the one piece of valuation evidence that remained afloat amongst the wreckage of the expert opinions. It was therefore appropriate to use it as the basis of assessing compensation. That could only be done by making some allowance for the premium likely to be paid because of the land's suitability as a refuse disposal site. It was necessary to quantify the premium. In the circumstances, that could only done by resorting to intuition and guesswork, as well as reliance on the proposition that doubts should be "resolved in favour of a more liberal estimate", as Dixon J said in Commissioner of Succession Duties (SA) v Executor Trustee and Agency Co of South Australia Ltd [1947] HCA 10; (1947) 74 CLR 358 at 374.
86 I do not think the learned trial judge should be criticised for resorting to intuition and guesswork in the circumstances. In Secretary of State for Foreign Affairs v Charlesworth, Pilling & Co [1901] AC 373 at 391, Lord Hobhouse, delivering the judgment of the Privy Council, said the following:
"It is quite true that in all valuations, judicial or other, there must be room for inferences and inclinations of opinion which, being more or less conjectural, are difficult to reduce to exact reasoning or to explain to others. Everyone who has gone through the process is aware of this lack of demonstrative proof in his own mind, and knows that every expert witness called before him has had his own set of conjectures, of more or less weight according to his experience and personal sagacity. In such an inquiry as the present, relating to subjects abounding with uncertainties and on which there is little experience, there is more than ordinary room for such guesswork; and it would be very unfair to require an exact exposition of reasons for the conclusions arrived at."
87 One of the respondent's experts, Mr Dudakov, gave evidence that a vendor of rural land, selling it for use as a refuse disposal site, would want to be paid a premium, in the sense of wanting to be compensated for severance and injurious affection. He used the word "premium" to refer to the payment that a rural land owner would want, when selling part of his land, to compensate him for the effect of the sale on his remaining land. However there is nothing in the reasons of the learned trial judge to suggest that he confused that sort of premium with the premium that a hypothetical vendor would want, and that a hypothetical purchaser would pay, over and above the value that a property would have as rural land, to take account of its potential as a site for some more lucrative activity.
88 It would have been quite wrong for the learned trial judge, having rejected the conclusion of each valuer, to have taken on the role of an independent expert and brought an additional set of opinions - his own - into the case: Brewarrana Pty Ltd v Commissioner of Highways (No 1) (1973) 32 LGRA 170 at 174. But that is not what he did. He relied, as best he could, on such of the expert valuation evidence as he concluded to be reliable. He did not err in his approach.
89 The learned trial judge ordered the respondent to pay the appellant's costs of and incidental to the proceedings. The respondent is aggrieved by that order. It contends that that order should be set aside, and that each party should bear its own costs of the proceedings at first instance.
90 The cross-appeal is an appeal from an order as to costs only. The right of appeal from a discretionary costs order is limited by the Supreme Court Civil Procedure Act 1932, s44. That section is set out in the judgment of Slicer J, as are the grounds of the cross-appeal.
91 The respondent's principal grievance is that, even though the learned trial judge rejected the discounted cash flow method of valuation advanced by the appellant, he still ordered the respondent to pay the appellant's costs. That was a factor that weighed in favour of the learned trial judge taking a different course, but which did not oblige him to take a different course. He referred to that factor in his reasons for his decision as to costs. Ground (i) of the cross-appeal asserts that he failed to take that consideration into account, but he did take it into account. It also asserts that he failed to take that consideration into account sufficiently, but s44(1) does not permit an appeal from a costs order on such a basis.
92 Ground (ii) involves a contention that the learned trial judge erroneously considered that "the value produced by the discounted cash flow method ... affected the proceedings". That is not correct. His Honour made it clear that "Had that method of valuation produced a higher figure than the Council's offer that was not excessive, its effect on the proceedings would have been just the same".
93 Ground (iii) asserts that the learned trial judge erred in the way he applied the Land Acquisition Act 1993, s60(2)(a). That provision required him to take into consideration "the amount of compensation awarded as compared with the amount (if any) offered by the acquiring authority". The amount awarded was $700,000. The highest amount offered by the respondent was $521,000. The respondent contends that s60(2)(a) requires a judge not just to have regard to which figure is bigger, but also to take into account the magnitude of the difference between the two figures. His Honour set out the two figures in consecutive sentences. He was no doubt well aware how far apart they were, and that the assessed figure of $700,000 was much lower than the appellant's lowest offer of settlement, which was $3 million. There is nothing in his reasons to suggest that he limited his comparison to a consideration of the fact that $700,000 was a bigger figure than $521,000. He said that the "predominant consideration mandated by s60(2)" was whether the compensation awarded exceeded that offered by the acquiring authority. He did not say that was the only consideration. Once again, it is significant that s44 does not permit an appeal to succeed on the basis of undue weight having been attached to a particular consideration. Ground (iii) must therefore fail.
94 Ground (iv) asserts that the learned trial judge failed to take into account, or to take sufficiently into account, the question whether the proceedings were affected by an excessive claim by the appellant. His Honour expressly referred to the fact that the appellant's claim was "excessive when measured against the amount of compensation he was awarded". Obviously he did take this factor into account. Section 44 precludes the appellant from arguing that too little weight was attached to this factor.
95 Ground (v) asserts that the learned trial judge made a finding that was contrary to the evidence. Such a ground of appeal is not permitted by s44.
96 Grounds (vi) and (vii) assert that the learned trial judge failed to take into account relevant considerations in relation to the respondent's unwillingness to participate in a mediation. Apparently an application for an order for compulsory mediation had been made, but adjourned sine die. The respondent contends that the learned trial judge was obliged to take into account the existence of that adjourned application, and the possibility that an order for mediation could have been made under the Supreme Court Rules 2000, r518, despite the respondent's unwillingness. I do not think these grounds fall within the scope of s44(1)(c). They do not assert that the learned trial judge proceeded on a wrong principle. They do not assert that he proceeded contrary to law. They do not assert that he proceeded on irrelevant or insufficient materials. I do not think the making and adjournment of a mediation application was a material fact, given that mediation could have been ordered under r518 whether such an order had been previously sought or not. When the learned trial judge took into account the respondent's unwillingness to participate in mediation, I do not think he was obliged to spell out the well known fact that unwilling parties can be ordered to participate in mediation. These grounds, like all the others, must fail.
97 Even if s44 had not been enacted, I do not think there is any basis upon which the cross-appeal could succeed. The decision as to costs was a discretionary one. His Honour took into account the various relevant factors, gave them such weight as he thought fit, and exercised his discretion. I do not think it can be said that the costs order was unreasonable or plainly unjust, nor that any specific error has been identified in the making of that order. See House v R [1936] HCA 40; (1936) 55 CLR 499.
98 For these reasons, I would dismiss both the appeal and the cross-appeal.
99 I have had the opportunity to read in draft the reasons of Slicer J and I agree with his reasons and his conclusion that the appeal should be dismissed.
100 I only wish to add a few brief comments of my own.
101 The learned primary Judge's task was to determine:
"What is the point at which the parties would meet and what is the sum that one would be willing to give and the other to take?" (Spencer v The Commonwealth of Australia [1907] HCA 82; (1907) 5 CLR 418.)
102 In reaching this point, the evidence of all the expert valuers was a guide for him to accomplish that task. (Anthony v The Commonwealth of Australia (1973) 47 ALJR 83 and Doherty v Commissioner of Highways (1974) 7 SASR 57.) He was not obliged to accept completely the approach urged by either side. It seemed to me that the appellant relied heavily on Adelaide City Corporation v City of Port Adelaide Enfield [2001] SASC 207; (2001) 115 LGERA 137 in its urging of the acceptance of the discounted cash flow method ("DCF") of valuation. That decision was of relevance as it dealt with a rating valuation dispute of an existing waste disposal site. However, in my view, the following observations of Debelle J at 147 did not assist the appellant:
"If purchased by the owner-operator, the discounted cash flow method has a particular utility. It is, however, generally recognised that care should be taken when using the discounted cash flow method and the resulting valuation should be checked against other methods of land valuation: see, for example, the comments of Wells J in Emerald Quarry Industries Pty Ltd v Commissioner of Highways (No 2) (1976) 18 SASR 438 at 445. A judgment must be made as to value and the result checked against other available evidence of value."
103 In Adelaide City Corporation, the DCF method was checked against sales, which were considered comparable. In this case, as the learned primary judge observed in his reasons for judgment at par49, there were no such sales. Accordingly no such check was able to be carried out. In my view that was another reason for the rejection of the application of that method in the particular circumstances of this case.
104 Other relevant factual differences in Adelaide City Corporation and the present case, as they appear to me, were:
(1) The use of the land (ie, waste disposal) was an existing lawful use of the land and the hypothetical purchaser would not have to obtain planning approval.
(2) The hypothetical purchaser would be aware that the site was the largest landfill site in the Adelaide Metropolitan area and that the waste supply was assured.
(3) As the site was close to the Adelaide CBD, a local, as distinct from personal, goodwill attached to the land.
105 In allowing the appeal in Adelaide City Corporation, Debelle J adopted, at 151, a conservative approach when coming to consider the evidence of comparable sales, suggesting, in my view, such an approach was appropriate, and the learned primary judge ultimately took the same view.
106 In attacking the learned primary judge for preferring the evidence of Dr McCambridge to Dr Wood, in my view, the appellant also failed to overcome the hurdle outlined in Whisprun Pty Ltd v Dixon [2003] HCA 48; (2003) 77 ALJR 1598 per Kirby J (dissenting but not on this point) at par67, namely that:
"... it is necessary for the challenger to demonstrate that such conclusions are flawed by reference to incontrovertible facts or uncontested testimony: showing that the primary judge's decision was erroneous, notwithstanding that it appears to be (or is stated to be) based on credibility findings."
107 I agree with Slicer J's assessment of that argument (preference of witnesses) and have nothing further to add.
108 This is an appeal against orders made by Evans J that the Sorell Council (the appellant in this cross-appeal) pay the costs of Mr William Bruce Downie (the respondent to this cross-appeal), costs of and incidental to the proceedings determined in Sorell Council v Downie [2005] TASSC 2.
109 The Council acknowledges that this appeal is one from the judgment given in the exercise of a discretionary jurisdiction within the meaning of the Supreme Court Civil Procedure Act 1932, s44. In that regard Mr Downie submits that s44(1)(a) and (b) are not relied upon and that the Council, to establish jurisdiction, must show that the learned trial judge either (a) proceeded on a wrong principle or otherwise contrary to law, (b) proceeded on irrelevant or insufficient materials, or (c) failed to consider some material fact.
110 I accept those submissions for the purposes of this appeal. The power to make orders as to costs in respect to proceedings under the Land Acquisition Act 1993 ("the Act"), is found in s60:
"(1) The costs of, and incidental to, any arbitration or proceedings before the Court under this Act are in the discretion of the arbitrator or the Court.
(2) In exercising a discretion to award costs under subsection (1), the Court or arbitrator must take into consideration -
(a) where the subject matter of the proceedings or arbitration relates to the amount of compensation payable, the amount of compensation awarded as compared with the amount (if any) offered by the acquiring authority; and
(b) the extent to which the proceedings or arbitration has arisen from, or been affected by -
(i) unreasonable conduct on the part of the claimant or the acquiring authority; or
(ii) the failure of the claimant to give adequate particulars of the claim or supply supporting material when required to do so; or
(iv) an unduly depressed offer by the acquiring authority.
(3) In relation to the costs referred to in subsection (1), a solicitor is entitled to charge, and is allowed, the fees set forth in the scales of fees in either Table A or Table B of Appendix M to Part I of the 1965 Rules and the costs are taxable by the taxing officer of the Supreme Court in accordance with the provisions for the taxation of costs contained in those Rules.
(4) In awarding costs under this section, the Court or an arbitrator may, either of its, his or her own motion or on the application of any party, order that the costs be taxed on any of the scales of fees set forth in Table B of Appendix M to Part I of the 1965 Rules.
(5) A party who is dissatisfied with a certificate or allocatur of the taxing officer may, within 14 days after the date of the certificate or allocatur or such other time as may be allowed by the taxing officer at the time of signing the certificate or allocatur, apply to the Court for an order to review the taxation of any of the costs to which the certificate or allocatur relates."
I accept Mr Downie's submission that the Supreme Court Civil Procedure Act and the Supreme Court Rules 2000 have no application with respect to costs in this matter.
111 Section 60(1) provides that the costs of and incidental to the proceedings are in the discretion of the Court but the Court's attention is directed by s60(2) to take into account various matters, namely:
"(a) where the subject matter of the proceedings or arbitration relates to the amount of compensation payable, the amount of compensation awarded as compared with the amount (if any) offered by the acquiring authority; and
(b) the extent to which the proceedings or arbitration has arisen from, or been affected by -
(i) unreasonable conduct on the part of the claimant or the acquiring authority; or
(ii) the failure of the claimant to give adequate particulars of the claim or supply supporting material when required to do so; or
(iv) an unduly depressed offer by the acquiring authority."
112 I accept the submissions of Mr Downie that generally the approach to the question of costs in such matters includes a consideration by the Court of the following matters:
(1) Costs should be awarded to the claimant if the award of compensation is significantly higher than the amount offered by the authority.
(2) The determination of compensation is not ordinary litigation and arises out of a unilateral decision by the acquiring authority to compulsorily acquire the claimant's land.
(4) The extent to which an award of costs to the acquiring authority will erode the full benefit of the compensation awarded. In that regard, Talbot J said in Pastrello v Roads and Traffic Authority of New South Wales [2000] NSWLEC 209 at par17:
"It has been said many times that the compulsory acquisition of land from an unwilling owner is a serious interference with that persons entitlement to quiet enjoyment and generally wide discretion to do with their own land as they see fit. It is a power of the state which is exercised for the public benefit. Very seldom does the resumption work to the benefit of the dispossessed owner. There needs to be a strong justification for awarding costs against an applicant where the effect of making that order is to erode the benefit of the just compensation recovered as a consequence of the Court's determination. It is only in special cases that the Court will deprive the owner of the full benefit of the compensation which is determined as fair and just in the circumstances of the case."
(5) The extent to which the claim was frivolous or excessive as compared to the amount awarded. I note in that regard that the learned trial judge found that the claim was not frivolous.
113 In that case, his Honour distinguished such cases as Rukavina and Robertson v Wagga Wagga City Council (1993) 80 LGERA 8 and others where special orders as to costs had been made, as in that case Talbot J was dealing with an application where one of the parties sought an order that either each party pay their own costs or that a division of one-eighth and seven-eighths of the costs be made. I make the observation here that it seems to me that the discounted cash flow method (DCF) had to be considered with other evidence as to other methodologies and it seems that it would have been difficult, if not impossible, to split or differentiate between those issues.
"Failed to take or to take sufficiently into account a relevant consideration, namely that although the respondent was generally successful, he failed altogether in respect of the most important and time consuming aspect of the litigation, being the issue of the validity of the application to the respondent's claim for compensation of the discounted cash flow method of valuation."
115 The learned trial judge did not reject the DCF method of valuation in this case, but did not accept evidence of the premises upon which it was said to be based. He spent a great deal of his reasons in an examination of the evidence in relation to this method. His Honour said, when determining the question of costs [2005] TASSC 9, at par6, having set out the nature of the advice that Mr Downie was given: "It was not unreasonable for Mr Downie to advance a claim consistent with that advice." With respect, I agree. The learned trial judge did not find that the DCF method was of itself invalid and said that he paid regard to all the various methods of valuation advanced by the expert witnesses called for both sides.
116 The consideration of the DCF method was obviously a significant factor that his Honour had to consider. But in considering the question of costs in relation to this ground, he also had to consider s60(2)(b)(i) and (iii) in that regard.
117 It was open to find, as the trial judge did, that Mr Downie's conduct in presenting his claim in the way he did was not unreasonable. Having done so, it would be unlikely that Mr Downie would be penalised for doing that when the question of costs came to be considered. As Underwood J (as he then was) said in Burnie Port Corporation Pty Ltd v Bank of Western Australia Ltd (No 3) [2003] TASSC 132; (2003) 12 Tas R 325 at par27:
"Ordinarily the court awards the costs of proceedings to the successful party without attempting to differentiate between those issues on which it was successful and those on which it failed, unless a particular issue is clearly separate."
His Honour referred to J D M Investments Pty Ltd v Todbern Pty Ltd [2000] NSWSC 432; Burnie Port Corporation v Bank of Western Australia (supra); Sorell Council v State of Tasmania (No 2) [2004] TASSC 101, and continued, "The Court should be circumspect about acquiescing to an application for an order for costs that distinguishes between issues". See also Adamson v The Pharmacy Board of Tasmania [2004] TASSC 112.
118 The DCF method could not be considered in isolation and I can see no basis for criticism of the learned trial judge's approach to it. I would dismiss ground 1(i).
"Took into account an irrelevant and erroneous consideration, namely that it was the value produced by the discounted cash flow method of valuation that had affected the proceedings and not the method itself."
"The learned trial judge accepted the appellant's submission that a substantial portion of the proceedings concerned the discounted cash flow method of valuing the land, that the method was not adopted by the Court and it underpinned the excessive claim by the respondent. His Honour said that whilst the submission was sound, it was the method of valuation, not the value that had affected the proceedings. With respect to his Honour, that is an erroneous conclusion and an irrelevant consideration. It confuses the submission made by the appellant that the respondent failed on an issue which dominated the trial with the submission that the appellant's claim was excessive".
120 His Honour had said that if the DCF method had produced a higher valuation than the council's offer that was not excessive, its effect on the proceedings would have been the same. Once again the method was not being rejected and, as his Honour said, "it is the method of valuation, not the value that it produced, that affected the proceedings".
121 I fail to see any confusion in that statement and I accept the submission for Mr Downie that the trial judge did not confuse the issues of a "separate issue" and "excessive claim". This ground should be dismissed.
"Failed to take or to take sufficiently into account a relevant consideration, namely that s 60 (2) (a) of the Land Acquisition Act 1993 mandates a comparison of the amount of compensation awarded and the amount offered by the acquiring authority and not just the posing of the question of whether the former exceeded the latter."
122 Section 60(2)(a) directs the Court to consider the comparison between the amount received and the amount offered. The extent of the difference is not referred to. It seems that in cases of unfettered discretion as to costs, the fact that a claimant receives more than is offered is often a clear basis for a favourable order for costs. Generally speaking, a claimant in Mr Downie's position ought not be dissuaded from bringing a claim by the risk of costs. In particular, he ought not be dissuaded by the risk of costs "from canvassing all issues" (see Cretazzo v Lombardi (1975) 13 SASR 4 at 16).
123 Nowhere is the Court directed to the extent of the difference in the amount received and the amount offered. In some cases it may be decisive, in some others it may not. His Honour considered the difference between the two amounts as "the predominant consideration mandated by s60(2)" and, with respect, I would not disagree with that approach.
"Failed to take or to take sufficiently into account a relevant consideration, namely that mandated by s60 (2) (b) (iii) of the Land Acquisition Act 1993, being the question of whether the proceedings were affected by an excessive claim by the claimant."
125 I have touched on this ground in earlier comments, but it seems to me that in finding it reasonable for Mr Downie to act on the advice of his experts, his Honour was taking a very realistic view of the matter.
126 I also agree with Mr Downie's submissions that it would be speculative to consider whether the claim would have settled if his experts had produced a lower figure (but still in excess of the offer).
127 I find no substance in this ground and it is dismissed.
"Found, contrary to the evidence that the applicant's solicitor had deflected on several occasions, suggestions by the respondent's solicitor to attend and had ultimately refused to attend a formal settlement conference."
128 I accept the respondent's submissions that the only "evidence" the learned trial judge had in relation to this aspect was the affidavit of Mr Perkins, the solicitor for Mr Downie. His Honour's findings were plainly open, in my view, on the evidence. I find no substance in this ground and it is dismissed.
"Failed to take or to take sufficiently into account a relevant consideration, namely that the respondent did not pursue an application for an order for mediation which had been adjourned or stood over as premature by Cox CJ when made or foreshadowed at a directions hearing on 15 November 2002.
Failed to take or to take sufficiently into account a relevant consideration, namely, that having found that not infrequently apparently intransigent parties achieved a settlement through mediation, it had always remained open for the respondent to obtain an order for mediation pursuant to r 518 of the Supreme Court Rules 2000, even if there was unilateral reluctance on the part of the applicant to attend."
130 As I said above, the only evidence that the learned trial judge had as to the parties' views about mediation was, in effect, that at some stage Mr Downie was prepared to attempt it but the Council would not. That fact, and the difference in the valuations, left the learned trial judge with the view that he expressed that he was not "satisfied that but for the excessive claim it is likely the proceedings would have settled for no less than the amount awarded" (see par9 of his reasons). That view was plainly open and whilst Mr Downie could have compelled mediation, the learned trial judge had no evidence before him to suggest that resolution without trial was likely if he had taken such a course. I would dismiss each of these grounds.
# Downie
Sorell Council \[2005\] TASSC 74
(1999) 74 ALJR 209
(2001) 115 LGERA 137
(1999) 73 ALJR 306
(2004) 29 WAR 273
(2004) 78 ALJR 572
(1908) 7 CLR 549
(1917) 24 CLR 274
(1986) 7 NSWLR 1
(1907) 5 CLR 418
(1952) 87 CLR 159
(1947) 74 CLR 358
(1974) 7 SASR 57
(1973) 6 SASR 541
(1979) 21 SASR 108
(1965) 112 CLR 295
(1999) 73 ALJR 1414
(1976) 12 ALR 201
(1951) 84 CLR 328
(1999) 103 LGERA 335
(1973) 47 ALJR 83
(1975) 52 ALJR 593
(1944) 69 CLR 1
(1949) 78 CLR 410
(1972) 129 CLR 586
(1945) 70 CLR 459
(2003) 77 ALJR 1598
(2003) 214 CLR 118
(1990) 171 CLR 167
(1993) 80 LGERA 8
(1993) 45 FCR 32
(1993) 177 CLR 472
(1936) 55 CLR 499
(1976) 18 SASR 438
(2003) 12 Tas R 325
(1975) 13 SASR 4