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[2014] VSCA 30
Court of Appeal (Vic)
2014-03-06
Mr J, Maxwell P, Whelan JA, Santamaria JA
Original judgment source is linked above.
LAND VALUATION AND COMPENSATION - Compulsory acquisition - Proposal for bypass road - Land used for agricultural purposes - Valuation according to highest and best use of land - Whether market value of land decreased because of bypass proposal - Whether land would otherwise have been used for quarrying and landfill - Planning panel recommended permit restrictions - Whether restrictions arose from bypass proposal - Pointe Gourde principle discussed - Land Acquisition and Compensation Act 1986 (Vic) s 43(1)(a).
APPEAL - Appeal limited to questions of law - Grounds of appeal in substance challenged findings of fact - Whether open to trial judge to make findings in question - Whether judge bound to make different findings - No error of law - Appeal dismissed - Land Acquisition and Compensation Act 1986 (Vic) s 89(2).
PRACTICE AND PROCEDURE - Trial - Final addresses - Directions to parties to file submissions in form of draft judgment - Plaintiff unrepresented - Whether procedurally unfair - No breach of natural justice - Procedure undesirable and not to be followed.
EVIDENCE - Opinion - Planning panel - What recommendations likely to have been made by panel if circumstances different - Proposed evidence from Planning Minister about likely outcome - No specialised knowledge - Opinion evidence inadmissible - Evidence Act 2008 (Vic) ss 76, 79.
1 The appellant, Mr Love, owns land in Cooper Street, Epping. On 11 February 2002 part of that land was compulsorily acquired by the respondent, the Roads Corporation. The purpose of the acquisition was the construction of a new section of the Hume freeway, referred to as the Craigieburn Bypass. As a consequence of the acquisition Mr Love became entitled to compensation under s 30 of the Land Acquisition Compensation Act 1986 (Vic) ('the LAC Act').
2 Section 41 of the LAC Act provides that in assessing the amount of compensation payable regard must be had to the 'market value' of the claimant's interest 'on the date of acquisition'. 'Market value' is defined by s 40 as 'the amount of money that would have been paid for that interest if it had been sold on that date by a willing but not anxious seller to a willing but not anxious purchaser'.
3 Because the acquired land was less than the whole of the land owned by Mr Love, pursuant to s 41(3) of the LAC Act the market value of the acquired interest is the difference between the market value of the claimant's interest before the acquisition and the market value of the claimant's interest after the acquisition. In other words, a comparison is made between the market value of the entire interest including the acquired land before the acquisition on the one hand, and the market value of the entire interest without the acquired land after the acquisition on the other.
4 The prospect of compulsory acquisition in the area of Mr Love's land for the purpose of constructing the Craigieburn Bypass had existed for some years prior to 2002. Section 43(1)(a) of the LAC Act provides that in assessing compensation any increase or decrease in the market value 'arising from the ... proposal to carry out, the purpose for which the interest was acquired ... ' must be disregarded.
5 At the time of the acquisition the acquired land was being used by Mr Love for the purpose of grazing cattle, but it had potential for use as a quarry for the extraction of basalt. Before it could be developed as a quarry, among other things, it was necessary to obtain a planning permit. Mr Love applied for a permit in October 1997. The Acting Minister for Planning and Local Government 'called in' that application and referred it to a panel appointed under the Planning and Environment Act 1987 (Vic) ('the P&E Act'). That panel reported on 18 October 1998. It recommended approval of the application subject to restrictions on the quarrying both in relation to area and depth. The panel rejected submissions which had been made by the local council, the City of Whittlesea, and by others that consideration of the application should be deferred until the final position in relation to the then proposed Craigieburn Bypass was known.
6 The relevant Minister did not accept the panel's recommendation. He did not grant any permit. In this proceeding the Roads Corporation admits that, absent the Bypass proposal, within a reasonable time after the panel's October 1998 report and as at 11 February 2002, Mr Love would have had a planning permit in existence to conduct a quarry operation on the acquired land on terms in accordance with those recommended in the panel report.[1]
7 The Roads Corporation and Mr Love were not able to agree on the amount of compensation to which Mr Love was entitled, and the Roads Corporation referred the dispute to the Court pursuant to s 80 of the LAC Act for the Court to determine the amount of the compensation under s 89 of the LAC Act.
8 Vickery J heard the dispute throughout May, June, July and August 2010. The case was factually complex and raised difficult questions of law, all of which his Honour analysed in a long and careful judgment delivered on 26 November 2010.[2]
9 Mr Love's case, in very brief substance, was that the market value of the acquired land was to be assessed on the hypothesis that on the date of acquisition, 11 February 2002, there was in existence an established quarry on the land operating without the restrictions as to area and depth recommended by the panel. This hypothesis was said to be necessary because the absence of that quarry was a consequence of the Bypass proposal and therefore had to be disregarded under s 43(1)(a). Compensation calculated in this way, after assessing market value on the 'before and after' basis previously referred to, was said to exceed $30 million.
10 The Roads Corporation's case, again in very brief substance, was that the market value (on a 'before and after' comparison) was to be assessed on the basis that the highest and best use of the acquired land was as industrial land. On this basis the compensation was said to be $2,500,000.
11 The judge at first instance substantially found in favour of the Roads Corporation. After adding some additional items of compensation, he awarded Mr Love $2,822,042.32, together with interest.
12 Under s 89(2) of the LAC Act there is a right of appeal to this Court, but only on a question of law. Mr Love appeals on what he contends are nine questions of law. We will set each of them out in full subsequently, but in brief it is contended that the trial judge erred in law by:
2. excluding certain evidence of Robert Maclellan, the Minister for Planning and Local Government between April 1996 and October 1999;
3. holding that Mr Love could not rely on events that would have happened but did not in fact happen;
4. finding that there was no relevant nexus between the panel's recommendations and the Bypass proposal;
5. rejecting the methodology of one of the experts relied upon by Mr Love, a land valuer and minerals surveyor named Darren Herdman;
6. holding that there was no basis upon the evidence to find that a quarry would have been in operation as at February 2002;
7. holding that any hypothetical quarry would at best have been developed for use only as to its upper flow and only then by a small to middling independent operator;
8. failing to assess the market value of the land on the basis that the hypothetical purchaser and vendor were each aware of the actual hydro-geological condition of the land; and
9. failing to take into account, and disregarding, evidence given that quarrying below the groundwater level was feasible.
13 For reasons which follow, we would dismiss the appeal. In our respectful opinion, his Honour's analysis and application of the law was correct in all material respects and his findings of fact are unimpeachable.
14 As will appear, many of the grounds of appeal are in substance, if not in form, challenges to findings of fact. This being an appeal limited to questions of law, a ground which attacks a factual finding could only succeed if it were demonstrated that it was not open to the trial judge, on the evidence before him, to make the finding in question.[3] Where it is contended that some other finding of fact should have been made, the ground will only succeed if it can be shown that the judge was bound, on the evidence, to make that (different) finding.[4]
Question 1 - failing to accord Mr Love procedural fairness
15 In the amended notice of appeal, Mr Love expresses the first question of law said to arise in the following terms:
Did the trial judge err in law and act in contravention of the requirements to accord to the Appellant a fair trial, procedural fairness and natural justice when he directed the parties by orders dated 11 August 2010 to prepare and submit draft judgments either at all or having regard to the fact that the Appellant was unrepresented and a litigant in person and the Respondent was represented by Senior Counsel and two Junior Counsel?
In the amended notice of appeal, under the heading 'Grounds of Appeal', the relevant ground is expressed in substantially the same terms.
16 The evidence at trial concluded on 31 July 2010. On 10 August 2010, the parties were again before the trial judge, for the giving of directions about final submissions. His Honour proposed that each side present its submission in the form of a draft judgment, a procedure which his Honour acknowledged was 'experimental' and 'rarely used'.
17 The following day, his Honour gave directions requiring each party to submit a draft judgment 'written in an appropriately tempered and even-handed "judicial" style'. The directions prescribed the content of the draft judgment in the following terms:
18 The directions also provided that the parties could, at their option, make supplementary oral submissions. Such submissions might advance 'relevant alternative submissions' to those advanced in the draft judgment. There was also provision for each party to amend its draft judgment in order to address matters raised in the other party's draft judgment.
19 Mr Love had been represented in these proceedings until early 2010 but was not represented during the trial, nor during the period when he was required to comply with these directions. As a result, it was submitted, he was in a position of 'grave disadvantage', because he lacked two critical qualities possessed by competent lawyers - professional skill and ability, and objectivity.[5] It followed, according to the submission, that Mr Love 'was likely to be not capable' of undertaking the work required to produce an appropriate draft judgment, particularly in a case which involved 33 days of evidence and legal and factual matters of some complexity. Moreover, it was said, observations made by the judge in the course of discussion with the parties about the content of the proposed draft judgments 'could only be complied with by a trained lawyer of relevant experience'.
20 It was contended for Mr Love that the adoption of this procedure for final addresses was a breach of the requirements of procedural fairness. Put simply, the requirement to submit a draft judgment denied Mr Love a reasonable opportunity to present his case and to respond to the arguments against him. It was a breach of his right to a fair hearing.
21 The submission was supported by reference to the well-established obligations of a trial judge, when dealing with a self-represented litigant, to give such assistance on matters of procedure and law as is necessary to ensure a fair trial. As Bell J explained in Tomasevic, the 'touchstones' in determining the proper scope of such assistance are fairness and balance.[6] Mr Love's submission on appeal acknowledged that:
the assistance must be proportionate in the circumstances - it must ensure a fair trial, but not afford an advantage to the self-represented litigant. Assistance which should not be given to the extent where the impartiality of the judge would be affected, or where a positive advantage would be given to the unrepresented litigant ...[7]
22 In this case, it was said, the Court's obligation to Mr Love as an unrepresented litigant meant either that the draft judgment process should not have been used at all or, if it was, that the judge should have given him:
such assistance as was necessary to ensure that [his] draft judgment dealt adequately with the issues and alternatives, and with matters both in his favour and against, which the Trial Judge considered were relevant and which fairly arose in the proceeding.[8]
23 In oral argument on the appeal, senior counsel for Mr Love laid particular emphasis on what was said to have been the judge's obligation to point out to Mr Love that his final submission could advance one or more alternative positions. His Honour had invited Mr Love to put forward his best case but, it was said, he should have made sure that Mr Love fully understood that he could put forward a second-best or third-best case as well. Once the draft judgment had been received, it should have been apparent that Mr Love was putting forward one position only, and at that point his Honour should have said, quite specifically, that it was open to him to put forward alternatives.
24 The respondent's submission pointed out that, in any consideration of the fairness of the trial of a self-represented litigant, the characteristics and abilities of the particular litigant are an important consideration.[9] In this case, the judge found Mr Love to be an educated man and -
an intelligent man with an excellent grasp of the factual and technical details relating to the issues canvassed at trial [who] conducted himself admirably as a litigant in person during the proceeding.[10]
25 It was further pointed out that, in the draft judgment which he submitted, Mr Love responded to the issues dealt with during the trial, and included a schedule which analysed relevant authorities and made submissions on the applicability of particular decisions. Moreover, Mr Love had been given the opportunity during the course of the trial to obtain legal advice on particular matters when he indicated the need to do so.[11]
26 As to the absence of alternative cases in Mr Love's draft judgment, the respondent contends that this was not a reflection of the procedure adopted, nor of anything which his Honour had said. Rather, the respondent contended that:
... the die had been cast much earlier - in July 2008, when Mr Love, legally represented at that point and for a further year and a half, filed the last of his valuation evidence. There was simply no basis for Mr Love to have advanced any "lesser alternative" argument. That is so because there was no evidence led in support of or relating to such a case. If the valuation conclusion of Mr Herdman was not accepted, it was not possible for another lower figure to be derived from his evidence and there was no other valuation evidence upon which the Court could have acted to find for Mr Love.[12]
27 In our opinion, the procedure adopted in this case - of requiring final submissions to be provided in the form of a draft judgment from each side - is undesirable, for a range of reasons, and should not be followed in the future. It is undesirable not because of any intrinsic unfairness but because it creates the appearance, if not the reality, of transferring to the litigants the burden of judgment writing which, axiomatically, it is the function of the Court to perform.
28 Moreover, for a party to prepare a draft judgment properly so-called will, in all likelihood, involve considerably greater time and expense than would be involved in the preparation of a written submission. This must be so, since a judgment must deal comprehensively with all of the issues and all of the arguments and all of the evidence, whereas a partisan submission can, quite properly, be limited to those matters of fact and law on which that party relies. The present case illustrates the point. The draft judgment filed on behalf of the respondent ran to some 501 pages. There will also, inevitably, be unnecessary duplication, since both drafts will be expected to be equally comprehensive.
29 As the present case demonstrates, it is in any case a peculiarly unsuitable procedure to adopt in a case involving an unrepresented litigant, even one as capable and resourceful as Mr Love. The form, content and purpose of a draft judgment is well understood by litigation lawyers but it is not something that a non-lawyer would be expected to be familiar with. Imposing this obligation on an unrepresented person is calculated to exacerbate, rather than mitigate, the disadvantages which inevitably flow from the lack of legal representation, and to highlight the inequality of resources between the two sides. Mr Love's draft judgment ran to only 50 pages.
30 It is quite another thing, however, to contend - as Mr Love does - that the adoption of this procedure denied him the right to a fair hearing. That submission confuses form with substance, in our view. It was undesirable, for the reasons given, for Mr Love to be required to use the form of a draft judgment as the means of making his final submissions. Having read his draft, however, and the judge's judgment, we are not persuaded that Mr Love was in any way inhibited in putting before the Court the substance of the case which he wished to put forward, or the answers to the Roads Corporation's case which he wished to make.
31 Nor are we persuaded that he was denied the opportunity to advance an alternative case. On the contrary, Mr Love's conduct of the proceeding makes clear that he was at all times in a position to make his own judgment as to the best way in which to advance his case. As the respondent pointed out, the expert evidence Mr Love chose to lead was used by him as the basis for his final submission. Even assuming that there was an alternative which might have been advanced on the basis of that evidence, Mr Love's decision not to advance such an alternative must be seen to have been a fully informed decision made by him. As counsel for the respondent pointed out, the trial judge made clear in the course of discussion with Mr Love that it was open to him to make alternative submissions.
32 For that reason, the Court on the hearing of the appeal refused Mr Love leave to file a supplementary submission which purported to articulate an alternative case. It was common ground that no such case was advanced at trial. For the reasons given, Mr Love must be taken to have elected to advance his case in the way in which he did.
Question 2 - excluding certain evidence of Robert Maclellan
33 In the amended notice of appeal, the second question of law is expressed as follows:
Did the trial judge err in law in rejecting as inadmissible the evidence contained in paragraphs 3(a), the substantive part of 3(b) (with sub-paragraphs (i)-(iv) being admissible), 4(a), (c), (d) and (e) and 5 of the affidavit of Robert Roy Cameron Maclellan sworn 7 May 2010 ("the excluded evidence") as:
Again, under the heading 'Grounds of Appeal', the relevant ground is expressed in substantially the same terms.
34 We will defer consideration of this question until after we have addressed questions 3 and 4.
Question 3 - holding that Mr Love could not rely on events that would have happened but did not in fact happen
35 In the amended notice of appeal the question of law is expressed as follows:
Did the trial judge err in law when he held that the Appellant was not entitled to:
Under the heading 'Grounds of Appeal', the relevant ground is expressed in substantially the same terms.
36 Mr Love's case was that, but for the Bypass project, he would have obtained a planning permit without restrictions before February 2002, and an operating quarry would have been established before the acquisition date on 11 February 2002. On the appeal it was submitted on behalf of Mr Love that the Roads Corporation had submitted to the trial judge that 'these matters were not to be had regard to'. It was submitted that the trial judge 'appears to have accepted' the Roads Corporation submissions in this respect at paras [159]-[162] of the judgment as he then dealt with planning permit issues (at para [206] and following) on the basis that the case raised issues in respect of the prospects as at the date of acquisition of planning permission being obtained in the future by a hypothetical purchaser. It was submitted that, on the proper construction of s 41(1)(e), 41(3) and 43(1)(a) of the LAC Act, and the proper application of the principles in Melwood Units Pty Ltd v Commissioner of Main Roads,[13] McCann v Roads Corporation[14] and Streetworks Pty Ltd v Linking Melbourne Authority:[15]
... if the evidence establishes that the sequence of circumstances relied on by the appellant would have existed but for the Bypass proposal and would have enhanced the value of the land, then the diminution in value consequent on the absence of those circumstances is to be disregarded in assessing the market value of the land as at the date of acquisition, or the compensation payable for that acquisition.[16]
37 In other words, Mr Love's case on appeal is that the proper construction of the relevant legislative provisions, and proper application of the principles in the authorities referred to, required the judge to have regard to the sequence of events which Mr Love says would have happened absent the Bypass proposal, namely, that he would have obtained unrestricted planning permission for a quarry and that that quarry would have been established by February 2002. It is submitted that the judge did not do that.
38 On the appeal, counsel for the Roads Corporation submitted that question 3, upon proper analysis, raised factual issues and not a question of law, and submitted that, in any event, there had been no misapplication by the trial judge of the relevant legislative provisions or the principles in the authorities. In its written submission the Roads Corporation did state that 'if' the evidence had established the sequence of circumstances relied upon, 'the position may have been different'.[17]
39 It is neither necessary nor desirable to reproduce the full detail of the parts of the judgment below which address these issues, but it is necessary to review the trial judge's treatment of the issues relevant to this question to some extent.
40 The trial judge set out by way of introduction the nature of the claims made, the relevant history of the proceeding, and a description of the background to some of the central issues, before turning to a consideration of the legal concepts. He set out the principal provisions of the LAC Act, to which we have already referred, and also the provisions of s 5A of the Valuation of Land Act 1960 (Vic) ('the VL Act') which he said provided an underlying statutory framework for the valuation of land. He referred to relevant authorities in relation to valuation, in particular Spencer v The Commonwealth[18] and Kenny & Good Pty Ltd v MGICA (1992) Ltd.[19] He referred to the authorities concerning the concept of 'highest and best use', and then turned to s 43(1)(a) of the LAC Act. Relevantly, s 43(1)(a) provides that in assessing compensation the following matter must be disregarded:
... any ... decrease in the market value of the interest in land which is acquired arising from the carrying out, or the proposal to carry out, the purpose for which the interest was acquired.
41 The trial judge described the manner in which Mr Love relied upon s 43(1)(a) in terms which are entirely consistent with the way in which that reliance was put on the appeal.[20] There can be no doubt that the trial judge understood the way Mr Love put his case. The trial judge set out that Mr Love contended that s 43(1)(a) not only required the court to disregard the restrictions which were recommended by the panel, and the Minister's refusal to grant a permit in 1999, but also to assume, in place of those disregarded events, the granting of a permit without restrictions by the Minister and the development of an operating quarry on the acquired land producing and selling 700,000 tonnes of basalt per annum as at the date of acquisition.
42 The trial judge recorded the Roads Corporation as having submitted that s 43(1)(a):
... does not require, or enable, the Court to proceed on the basis that events that did not in fact happen are to be treated as having happened, and that physical alterations to the land that were not in fact made are to be treated as having been made, because, but for the purpose for which the compulsory acquisition took place, they would have occurred or been made.[21]
43 Section 43(1)(a) embodies or reflects a principle often referred to as the Pointe Gourde principle, a name derived from the judgment of the Judicial Committee of the Privy Council in Pointe Gourde Quarrying and Transport Co Ltd v Sub-Intendent of Crown Lands.[22] In that case, the Privy Council determined that compensation for the compulsory acquisition of land could not include an increase in value which was due to the scheme underlying the acquisition. The Privy Council articulated the converse of that proposition in Melwood Units, holding that compensation was to be assessed without reference to any diminution in the value of the land caused by the scheme of which the resumption formed an integral part.
44 The trial judge reviewed some of the authorities on the Pointe Gourde principle, and the legislative provisions which reflect or embody it, including Housing Commission of New South Wales v San Sebastian Pty Ltd,[23] Emerald Quarry Industries Pty Ltd v Commissioner of Highways (South Australia),[24] Haig v The Minister Administering the National Parks and Wildlife Act 1974,[25] and Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority.[26]
45 In relation to planning restrictions, the trial judge's conclusion as to the state of the law was the following (omitting citations):
Thus, planning restrictions on land use must be ignored in any case in which there is a direct relationship between the restriction and the proposed public work which results in the eventual land resumption. The relationship will exist where it is found that there is a direct connection between a restriction on land use imposed by planning and land use legislation and the proposed establishment of the public works for which the land might be resumed. Evidence that the restriction was imposed with the intent or in anticipation that the land in question would be acquired for a public purpose, may be sufficient in the appropriate case to establish the necessary nexus. If the nexus can be established as a matter of fact, the Court will ignore the relevant planning control over the land and assume that which would have applied had there been no intervention by the resuming authority. Conversely, where the Court cannot be satisfied on the evidence that there existed a direct connection between a restriction imposed under a planning scheme or like instrument and the proposed establishment of the public works for which the land might be resumed, the restriction cannot be ignored and will be taken into account in valuing the land in the "before" situation.[27]
46 In Walker Corporation, the High Court considered the equivalent provision to s 43(1)(a) in New South Wales, which is s 56(1)(a) of the Land Acquisition (Just Terms Compensation) Act 1991 (Vic). The High Court held that that provision required that only increases or decreases in value for which the resuming authority itself (as opposed to some other authority) was responsible were to be disregarded.
47 The trial judge here distinguished Walker Corporation and held that the High Court's conclusion - that only increases or decreases in the value caused by the resuming authority itself were to be disregarded - did not apply to s 43(1)(a). Observations which the High Court made in Walker Corporation, as to the importance of giving effect to the ordinary and natural meaning of the words of the applicable statute, were referred to and adopted by the trial judge.[28]
48 As we understood Mr Love's case on appeal, it was not contended that his Honour fell into error in any of the analysis which we have described thus far.
49 It was at this point in the judgment where Mr Love's counsel on the appeal submitted that the trial judge 'appears to have accepted' the respondent's contention that s 43(1)(a) did not require or enable the Court to proceed on the basis that events that did not in fact happen were to be treated as having happened and that physical alterations to the land that were not in fact made were to be treated as having been made. Reliance was placed on the following passage, which follows immediately after his Honour's analysis and conclusions in relation to the High Court decision in Walker Corporation (citations omitted):
[159] At the same time, s 43(1)(a) of the LAC does not, in my opinion, permit a claimant to go back in time and select a potential which the land may then have had, and claim compensation simply because the public proposal was later introduced and as a result the potential was never realised. The mere fact that, as a matter of chronology, a public purpose proposal is later advanced and the potential was never attained, is not sufficient in itself to establish the necessary nexus, namely the loss of the attribute which "arose out of" or "arose in connection with" the proposal. As a matter of proof, more would be needed.
[160] Further, as Osborn J observed in Murdesk Investments Pty Ltd v Roads Corporation, the application of the Pointe Gourde principle may give rise to the question whether land is to be deemed to be subject to planning controls which would have applied but for the proposal to carry out the public purpose giving rise to the acquisition. His Honour cited McClellan CJ in Smith v Roads and Traffic Authority of New South Wales, where the Chief Justice at Common Law said:
In simple terms (it is possible to express the problem in more complex and possibly less helpful ways) the approach which has been traditionally adopted involves the following steps:
(1) identify the zoning of the land at the date of acquisition;
(2) determine whether that zoning was imposed or retained in order to facilitate the implementation of the public purpose for which the land was acquired.
If the answer to question (2) is yes, that zoning is notionally set aside, and the potential of the land and ultimately its market value is assessed by determining how the land would have been zoned, at the date of acquisition, but for the proposal to carry out the public purpose.
[161] Thus, if the relevant zoning or control was introduced in order to facilitate the implementation of the public purpose for which the land was acquired, thereby causing a decrease in the value of the acquired land, the planning restriction will be disregarded under s 43(1)(a) of the LAC.
[162] It is on the basis of these principles that Mr Love's case must be analysed.
50 It is suggested that these paragraphs reveal an acceptance of the submission put by the Roads Corporation about physical alterations, because of the fact that subsequently the trial judge dealt with planning permit matters on the basis that the case raised the issue of the prospects as at the date of acquisition of planning permission being obtained in the future.[29] In that connection the trial judge cited and relied upon Osborn J's judgment in Roads Corporation v Love.[30]
51 In our view the submissions made on Mr Love's behalf on the appeal misunderstand, or mischaracterise, the parts of the judgment to which we have referred. The paragraphs relied upon do not constitute a rejection of Mr Love's case, either expressly or by implication. After the passage relied upon, the trial judge set out Mr Love's contentions as to assumed facts,[31] repeated the Roads Corporation's contention as to s 43(1)(a) in that context, and then embarked upon a detailed factual analysis which culminated in the rejection of Mr Love's case because he found against him on the facts.
52 The first paragraph in the extract merely states the obviously correct proposition that a claimant cannot contend his land is to be valued by reference to a highest and best use which it once had but which was never realised, simply because as a matter of chronology the public purpose proposal was later advanced. It is necessary for the claimant to establish, where s 43(1)(a) applies, that the loss of the potential arose from the carrying out, or the proposal to carry out, the purpose for which the land was eventually acquired. What his Honour said closely reflects what Gobbo J had said in Equity Trustees Executors and Agency Co Ltd and Ors v Melbourne and Metropolitan Board of Works.[32] After referring to the principle that it was necessary to exclude the effect of the scheme of acquisition, Gobbo J said:
But this principle does not permit a claimant to go back in time and select a potential which the land may then have had, regardless of later events. Even though, as a matter of chronology, a public purpose proposal is then advanced, this does not mean that the proposal has caused other loss of an attribute.[33]
53 What his Honour said about Murdesk Investments Pty Ltd v Roads Corporation[34] and Smith v Roads and Traffic Authority of New South Wales[35] was not submitted to be incorrect by either party on the appeal, save that the appellant submitted in the context of question 4 (by reference to a different passage in the judgment) that the use of the term 'facilitate' was narrower than s 43(1)(a) provided for. The use of the term 'facilitate' might be more apt to the New South Wales legislation, but there could be no doubt that the trial judge was fully cognisant of the differences between the New South Wales and Victorian legislation. His Honour held that, in Victoria, it was necessary to disregard any relevant zoning or planning control having the effect of decreasing the market value of the land which arose from the carrying out, or the proposal to carry out, the purpose for which the land was eventually acquired.
54 In the context of Mr Love's case, the trial judge's adoption of the approach of Osborn J in Murdesk Investment and McClellan CJ in CL in Smith was uncontroversial. A different approach had been taken by Basten JA (with whom Beazley JA and Stein AJA agreed) in one of the two New South Wales Court of Appeal judgments in Walker Corporation.[36] He held that the issue of what the planning position would have been should be approached 'in most cases' as loss of a chance rather than as an assumed fact. Because of the construction placed on the New South Wales legislation by the High Court, it did not address that issue. In this case, both sides treated Murdesk Investments and Smith as correctly setting out the law.
55 What the trial judge later stated[37] - that the case raised planning issues concerning the prospects of obtaining planning permission to extract stone without the restrictions which had been imposed by the panel - was correct. The case did raise those issues. In that context the trial judge's adoption of the approach taken by Osborn J in Roads Corporation v Love[38] was also uncontroversial. As to the future, the relevant task was to determine how a hypothetical purchaser would have taken the prospects of obtaining approval into account as affecting the value of the land.[39]
56 Given the way the case was put, two hypothetical planning issues arose. One was whether a permit to conduct unrestricted quarrying should be an assumed fact. On the principles set out in Murdesk Investments and in Smith, if the land was subject to planning restrictions which arose from the Bypass proposal, then those restrictions were to be disregarded and a determination was to be made of what, if any, restrictions there would have been absent the Bypass proposal.
57 In this connection, the Roads Corporation conceded that an assumption should be made that Mr Love would have had a planning permit subject to the restrictions recommended by the panel. This concession involved disregarding the Minister's actual refusal of any permit and proceeding instead on the assumption that a permit would have been granted with the panel's recommended restrictions. Mr Love's case was that those panel restrictions themselves also arose out of the Bypass proposal and also had to be disregarded. Acceptance of that proposition was a necessary first step or, as the judge described it, the 'starting point'[40] in Mr Love's case, which then proceeded to contend that the absence of the physical development of the unrestricted quarry was also to be disregarded. Thus, as a first step, the trial judge had to determine whether the panel's recommended restrictions arose from the Bypass proposal.
58 The second hypothetical planning issue was, regardless of the first issue, what was the highest and best use of the land as at the acquisition date and, in that connection, what were the prospects, absent the Bypass proposal, for planning approval of a quarry without restrictions (a permit with the panel's restrictions being assumed).
59 The trial judge correctly identified and addressed both these issues. Factually, they are necessarily intertwined. The assumed fact which the Roads Corporation conceded - being a permit in accordance with the panel's recommendations - was referred to by the trial judge and the parties as the 'notional permit'.
60 After reviewing the evidence in considerable detail,[41] the trial judge said that he was not persuaded that a planning permit for a quarry on the acquired land on terms more favourable than those that the panel had recommended (that is, the 'notional permit') would have resulted.[42] Further, he concluded that a hypothetical prospective purchaser as at the acquisition date would have discounted completely any prospect of obtaining an extension, variation or substitution of the notional permit so as to enable quarrying without the restrictions recommended by the panel.[43]
61 Thus, the first and most fundamental reason for the failure of Mr Love's case - that, but for the Bypass proposal, there would have been a quarry on the acquired land operating without restrictions in February 2002 - was the factual finding that a permit without the panel's recommended restrictions would not have been obtained. He failed to establish his 'starting point'.
62 The next step in Mr Love's case relying on s 43(1)(a) was as follows. Assuming that he had, or would have had, before February 2002 an unrestricted permit, by February 2002 a quarry producing 700,000 tonnes of rock per annum would have been established, which Mr Herdman then valued. The trial judge dealt with the factual issue of whether by February 2002 a quarry would have been established when dealing with Mr Herdman's methodology.
63 Mr Herdman's valuation was of a hypothetical quarry and landfill business on the acquired land as if both existed at the acquisition date. Relevantly, for present purposes, his Honour said:
[499] However, I find that there is no basis upon the evidence to find that, in spite of a notional planning permit and work approval being in place within a reasonable time after delivery of the quarry permit panel in October 1998, and absent the Bypass proposal, a quarry would have been in operation as at February 2002 at all, still less achieving levels of production and sales at the rate of 700,000 tonnes per annum.
[500] The evidence points to the absence of a productive quarry on the relevant date being caused, not by reason of any inhibition brought about or influenced by the Bypass proposal, but rather it arose as a result of commercial decisions made by Mr Love to proceed in the way he did, and when he did. Mr Love's quarry planning permit application 704078, which was the subject of the quarry permit panel report of October 1998, was for a proposed operating quarry with anticipated annual production of only 300,000 tonnes per annum. It was advanced on the basis that the likely operator would be Mr Kerr's company Conundrum (which operated the WA149 site), and not Mr Love as the owner or operator. It was never part of that proposal, nor of the later August 2000 WA658 work plan, that quarrying would commence immediately or, for that matter, prior to February 2002. What the contemporaneous documents disclose is a proposal that Conundrum would first work out the WA149 site, then the Miller WA445 site and then, finally, the WA658 land. The evidence of Mr Love given in an earlier proceeding (the "Writ Proceeding"), confirmed his anticipation, as it was at the time when he made submissions to the quarry permit panel in late 1998, that there would be no WA658 quarry in operation until between 2013 to 2014.
(The reference to 'the WA658 land' is a reference to the area of the acquired land.)
64 On this appeal there are other asserted questions of law which concern his Honour's rejection of Mr Herdman's methodology (question 5), and his Honour's statement that there was no basis upon the evidence to find that a quarry would have been in operation (question 6). In the context of question 3, the matter of importance is that these factual findings constitute the second reason why Mr Love's case based on the existence of a quarry on the acquired land on the day of acquisition failed on factual grounds. His Honour found as a matter of fact that no such quarry would have been established by that date.
65 As already noted, the Roads Corporation stated in its written appeal submission that 'if' the evidence had established the sequence of circumstances relied upon the position may have been different. Doubtless the submission was expressed in these terms because the Corporation's primary contention, which we consider to be correct, was that Mr Love's case on these issues failed on factual grounds.
66 His Honour went on to make observations to the effect that s 43(1)(a) could not operate in the way contended for by Mr Love. He began by emphasising, by reference to the judgment of Dixon CJ in Turner v Minister of Public Instruction,[44] that the value of the land must be assessed according to its condition as it stood at the time of resumption. His Honour then repeated that a causal link needed to be established between any alleged decrease in value and the relevant proposal. His Honour referred to the notional permit and to the factual findings which he had already made, and then said:
Further, there is nothing in the language of s 43(1)(a) or otherwise in the LAC Act that permits the making of a positive assumption that such an enterprise would have existed on the relevant date, absent the Bypass proposal. [45]
67 His Honour referred to the provisions of the VL Act, in particular those concerning natural resources and the capacity of land to yield a monetary return, and stated that there was no direct authority supporting the assumption of positive facts of the kind which Mr Love advanced in this case. His Honour then referred to Gobbo J's judgment in Equity Trustees, an extract of which we quoted previously. The correctness of the proposition there set out could hardly be doubted. Gobbo J went on to give an example which the trial judge also quoted, as follows:
To take a mundane example, a landowner may seek to explain the poor condition of his land by reference to the fact that it was not worth his while improving his land when it was about to be acquired, but he cannot sustain an argument that his land would otherwise have been considerably improved if there had not been any acquisition proposal and that his land should be so valued for purposes of assessment of compensation.[46]
68 The trial judge referred to the fundamental principle that an owner is not entitled to receive more than fair compensation unless the legislation otherwise provides and then said:
Clear and explicit language would be required in a statute which conferred upon a court the task of assuming hypothetical improvements to exist, required the Court then to value them, all for the purposes of compensating the dispossessed owner for something he or she never owned.[47]
69 There is a line of authority which suggests that hypothetical improvements can be taken into account. It is founded on the decision of the New South Wales Land and Valuation Court in Woollams v The Minister.[48] Relevant subsequent cases include Chalmers v The Minister,[49] Griffith City Council v Polegato,[50] Roads and Traffic Authority of New South Wales v Mosca,[51] Serbian Cultural Club 'St Sava' Inc and Serbian Cultural Club Limited v Roads and Traffic Authority of New South Wales[52] and Halley v Minister Administering the Environmental Planning and Assessment Act 1979.[53] This line of authority was not referred to in the submissions, either at trial or on appeal. None of these cases addresses a claim that regard must be had to hypothetical improvements of the kind, or on a scale, equivalent to that postulated in Mr Love' case.
70 In Woollams Hardie J considered what compensation ought to be paid for certain farming land which was flooded in order to establish a storage dam. Because the proposal for the dam had been known for some years, services to the general area in which the land was situated had significantly deteriorated. Businesses had closed and a bus service had been discontinued. There had been prospects that electricity would be connected to the area but they had disappeared as a consequence of the dam proposal. Section 124 of the Public Works Act 1912-1952 (NSW) reflected or embodied the Pointe Gourde principle. Hardie J held:
Construing the material portion of s.124 along the lines indicated, I am of opinion that the value is to be determined on the assumption that the amenities and other economic and social conditions in the subject area did not deteriorate following upon and by reason of the decision of the Board to proceed with the Warragamba Dam project, and the acquisition by the Board of a number of properties in the Valley before the relevant date, and other events and circumstances associated with or consequential upon such acquisitions, and on the assumption that those amenities and conditions would have improved during the period under consideration, as they did in other primary producing and tourist areas during the post-war years, by reason of the increase in population, the improved prices being paid for primary products and the general economic development that occurred throughout the State.[54]
Hardie J observed that, at that time, there was no direct authority governing the question of whether one could assume improvements in amenities which would have happened absent the proposal.[55]
71 Hardie J's decision in Woollams was followed by White J, also in the Land and Valuation Court of New South Wales, in Chalmers. The land in question there was land forming part of an incomplete sub-division which was acquired for a national park. White J held that in order to assess the compensation it was necessary for him to determine 'what the state of the sub-division roads and of Violet Hill Road would have been, and whether electricity reticulation had reached the sub-division (and if it had not, the probabilities of its doing so in the near future)'.[56] Amongst other things he found the roads 'would have been kerbed and guttered, as well as tar sealed, prior to the resumption ... if the events that led to that resumption had not occurred'.[57]
72 In Polegato the New South Wales Court of Appeal considered a decision by Stein J in the Land and Environment Court awarding compensation on the basis that the subject property would have been developed by the owners but for the proposal which eventually led to its compulsory acquisition. The Court of Appeal held that Stein J had been in error in taking that course because, by the time of acquisition, the previous development potential of the property 'had already been lost due to the effect of economic and market forces'.[58] Notwithstanding this conclusion, which was founded on the importance of valuation at the date of acquisition, the Court made the following statement in relation to the relevance of timing to the valuation process:
Although it may appear at first glance that the decision in Housing Commission of New South Wales v San Sebastian authorises the assessment of compensation at a date prior to the date of acquisition this in fact is not the case. Compensation is still assessed at the date of the compulsory acquisition. However in order to determine the value of the land at that date, unaffected by the resumption process it will generally be necessary to take as a starting point the value of the land immediately before the resumption process began when the value could not and would not have been affected by the resumption. This value can then be brought down to the date of acquisition by making appropriate adjustments to reflect subsequent events but leaving out of account either the favourable or unfavourable effect of the resumption process on the value of the land. It is clear that such an approach cannot assist the owners in the present case because the development potential which existed at what they claim was the start of the resumption process had disappeared for reasons other than the proposed resumption by the date of the acquisition. The principles applied in Housing Commission of New South Wales v San Sebastian require the land to be valued at the relevant date on the artificial, but just, assumption that such value has not been affected by the resumption process. It does not require or authorise the court to disregard facts themselves independent of the resumption process such as costs of building and general market values at the date of resumption.[59]
73 In Mosca the New South Wales Court of Appeal dealt with an appeal from Bignold J in the Land and Environment Court, in a case concerning land which it was said had lost its development potential as a consequence of proposals for the construction of a motorway. The judge had valued those 'lost opportunities'. The Court of Appeal held that he had been in error to do so, as two of the 'opportunities' were still there as at the date of acquisition and the third 'opportunity' had been lost because of the adoption of a more stringent policy by one of the regulating authorities which was held to be unrelated to the relevant proposal. The Court of Appeal did not reject the theoretical possibility of valuation on the basis that redevelopment would have occurred, but they adopted what might be described as a cautious approach to such claims. Handley JA (with whom Mason P and Bryson JA agreed) said:
The statutory test does not permit the market value to be determined by calculating the present value to the owner of the proceeds of a hypothetical sub-division (Turner (above) at 268-9) let alone the proceeds of a hypothetical joint venture. There is a proper place for a valuation based on a hypothetical sub-division, but as is clear from Turner (above) per Dixon CJ at 267-8 allowances must also be made for a number of other factors.[60]
74 In Serbian Cultural Club Jagot J in the New South Wales Land and Environment Court relied upon Woollams and Mosca in taking account of developments in the surrounding precinct. But for the proposal these developments would have occurred. In that case, the assumption operated to the detriment of the claimant.
75 In Halley the New South Wales Court of Appeal (Tobias JA with whom Giles and Hodgson JJA agreed) accepted Woollams but warned:
Of course, the significance of this proposition to the assessment of compensation is dependent upon the extent to which the evidence establishes as a matter of probability the particular development in the area of the acquired land that would have occurred but for the public purpose for which the appellant's land was acquired. In the present case, the evidence was non-specific and, as I have observed, descended into the realm of speculation and conjecture.[61]
76 Mr Love's case failed because he did not establish the factual basis for it. If he had done so, it would have been necessary to determine whether his case stretched the notion of a 'decrease' in value which must be disregarded beyond the limits that the words of the provision may properly bear. Further, if the words of s 43(1)(a) could properly encompass such a case, it would then have been necessary to consider whether such circumstances should be addressed as loss of an opportunity or loss of a chance, as Basten JA has suggested in relation to zoning and planning, and as is perhaps also suggested in Mosca. This approach has the attraction of consistency with the approach to hypothetical events in the context of damages, as explained by the High Court in Malec v J C Hutton Propriety Limited.[62] No occasion arises on this appeal, however, to determine those issues.
77 Even if (contrary to our view) his Honour's observations revealed any error of law, it is clear that the error was not material. Mr Love's case failed on the facts.
Question 4 - finding that there was no relevant nexus between the panel's recommendations and the Bypass proposal
78 In the amended notice of appeal the question of law is expressed as follows:
Did the trial judge err in law when he found that there was no relevant nexus between the Planning Permit Panel's recommended limitations on the permit and the freeway proposal because the Panel Report did refer expressly to the proposal for the Craigieburn Bypass as being a reason for the area limitation it recommended be imposed on the permit and thus:
a. there was a mistake of fact by the trial judge; or
b. a finding made contrary to the evidence; or
c. a finding for which there was no evidence; or
d. a finding without consideration of the relevant evidence.
Under the heading 'Grounds of Appeal', the relevant ground is expressed in substantially the same terms.
79 The acquired land was encumbered by a gas pipeline easement running in a north-south direction. A gas pipeline was buried within the gas easement. Part of the acquired land was to the west of the easement, adjoining land already being used as landfill and for quarrying. One section of the land to the east of the easement adjoined 360 Cooper Street, a property owned by interests associated with a person named Scanlon.
80 The panel report recommended that Mr Love's application for the development and use of the acquired land for the purpose of a rock quarry should be approved subject to a number of conditions. Among those conditions were the following:
• only land to the west of the gas transmission line should be utilised for quarrying operations.
• quarrying should only be permitted above the existing groundwater level.
In his written submission Mr Love described these restrictions respectively as the 'area restriction' and the 'groundwater level restriction'. Mr Herdman's valuation adopted a work plan prepared by a geologist named Basil Natoli. The valuation proceeded on the assumption that these restrictions did not exist. The 'notional permit' which the Roads Corporation admitted included these restrictions. One of the issues in the case was whether these restrictions had to be disregarded under s 43(1)(a) on the basis that they arose from the proposal to carry out the purpose for which Mr Love's interest was acquired, namely, the construction of the Bypass.
81 The trial judge found that the restrictions did not arise from the Bypass proposal. In his written submission, Mr Love contended that this finding was not open on the evidence, or was plainly wrong or unreasonable in the Wednesbury[63] sense, or was founded on a mistake as to what the evidence was. It was submitted that there were seven matters in the panel report which showed that the Bypass proposal was the reason, or a reason, for the area restriction.
82 Further, it was submitted that the trial judge had erroneously proceeded on the basis that the relevant operation of s 43(1)(a) depended upon whether the limitations were introduced in order to 'facilitate' the implementation of the Bypass proposal.[64] The respondent submitted that this question was a complaint as to a finding of fact which was open.
83 In written submissions in reply, and in oral submissions, it was contended on behalf of Mr Love that the judge's misreading or 'misconstruction' of the panel report was an error of law. Reliance was placed on County Securities Pty Ltd v Challenger Group Holdings Pty Ltd.[65] That is a case about the construction of contracts. It does not relevantly assist.
84 The trial judge set out the requirements of the P&E Act in relation to obtaining planning permission, and the provisions of the Extractive Industries Development Act 1995 (Vic) in relation to work authorities. His Honour then referred to the fact that both Mr Natoli and Mr Herdman had proceeded on the basis that quarrying would be permitted below the water table, in the area of the gas easement, and to the east of that easement; in other words, as if the area restriction and the groundwater level restriction did not apply. His Honour explained that, for Mr Love's case to be established, he needed to prove that absent the Bypass proposal he would have had an unrestricted permit, as this was his 'starting point'.[66]
85 His Honour first described the various planning documents which formed the background to the panel report. These were the Whittlesea Planning Scheme, the Epping Bulge Position Statement, the Cooper Street Precinct Strategy and the Amendment L143 Planning Panel Report.[67] His Honour then gave separate consideration to each of these documents, emphasising in particular the importance of the Cooper Street Precinct Strategy.[68]
86 His Honour then turned to a detailed review of the panel report.[69] He concluded that the area restriction and the groundwater level restriction did not 'arise from' the freeway proposal. His Honour then said:
Accordingly, I am not satisfied that by reason of the introduction of those limitations, there was any decrease in the value of the Mr Love's land [sic] arising from the proposal to carry out the freeway project. [70]
87 The complaint made as to the use of the word 'facilitate', which appears in one paragraph of his Honour's treatment of this issue, is without substance. We have referred to that matter earlier in the context of question 3. As his Honour's eventual conclusion reveals, his Honour was aware what the provisions of s 43(1)(a) were and he applied them in reaching his conclusion.
88 His Honour later concluded that the position taken by the Council before the panel would have provided a strong indication to prospective purchasers as to how it would have approached any future application to extend, vary or substitute the notional permit.[71]
89 Quoting extensively from the panel report, His Honour set out in some detail why the two restrictions did not arise from the Bypass proposal. In substance, the Council and some of the objectors had relied upon the proposal, not in support of a contention either for or against the two relevant restrictions, but rather in support of a contention that the panel should not consider the matter at that time at all. The panel rejected that contention. It did consider the matter, and it imposed the restrictions for reasons which did not arise out of the Bypass proposal.
90 Amongst other things, the panel considered that the two relevant restrictions would operate as a de facto time limit upon quarrying which would then be consistent with the projections as to future development in the area as set out, in particular, in the Cooper Street Precinct Strategy. His Honour said:
In the end, the panel's position on the life of any quarry on Mr Love's land was driven by the importance it placed upon the Cooper Street Precinct Strategy and the timeframe for the cessation of extractive industry in the neighbouring area being limited to 2026 or thereabouts. For these reasons, the panel took the view that a consistent timeframe could be achieved for the life of any quarry on the WA658 land by limiting the operation to the stone resource situated above the water table and to the west of the gas pipeline easement.[72]
91 In our view, his Honour's conclusion in relation to the panel report was well open on the evidence.
92 The Bypass proposal was clearly relevant to the issue of whether the panel's consideration of Mr Love's permit application should be deferred. That is the context in which the issue was put to the panel and that is the context in which it was dealt with by the panel. Most of the seven aspects of the panel report relied upon by the appellant in the appeal concern the issue of deferral. As we have said, the panel determined not to defer consideration of the application. We will separately address each of those seven aspects below.
93 In relation to his Honour's conclusion as to why the panel did impose the two relevant restrictions, his Honour quoted the following passages from the panel report:
Life of the quarry and future use
The panel noted that concept of quarrying below groundwater level (which was not part of the proposal before the panel but which was an ultimate aspiration of the applicant) more than doubled the proposed operation time span for the quarry and would result in quarry operations continuing until the year 2058.
Quarrying only to the west of the gas transmission easement, above the water table, would give a year of termination which would generally accord with the Council Cooper Street Precinct Strategy, namely 2026.
The estimated yield from the initial permit application proposal was 7 million tonnes of basalt. A western quarry operation would yield 4 million tonnes whilst a quarry operation which ultimately extended below groundwater would yield 15 million tonnes.
...
The panel formed the view that it was necessary to allow some portion of the basalt resource which still existed north of Cooper Street to be won, but by the year 2025 or thereabouts quarrying should cease. It was likely that by that time the demands for urban development in Epping would be significant in extent and could form a significant element of metropolitan strategy.
The panel believe that a balancing of strategic objectives would favour the need to ensure that metropolitan urban growth is not inhibited. The endorsement of a modified quarry operation to the west of the gas transmission line is viewed by the panel as providing a reasoned inter-relationship with strategic objectives and also ensuring that sound performance measures are in place to deal with not only the existing situations but also likely future strategic outcomes.
...
The panel further believes that in the interests of aiding both the rehabilitation program and also limiting the length of quarry operation that no quarrying should occur below groundwater level.
The implementation of such an approach results in the panel being prepared to endorse a quarry operation which enables quarrying to occur above the groundwater level and to the west of the gas transmission easement.[73]
94 We would add the following further passage from the panel's report:
On the basis of the above scenarios, the panel considers that in long term strategic deliberations a high degree of credibility should be given to the Cooper Street Precinct Strategy and some degree of recognition should be given to the Epping Bulge achieving residential status.
On this basis it is essential to ensure that performance standards derived for any quarrying operation on the land contained in the permit being considered by the panel must relate to such possibilities.
The panel considers that, if a proposed quarry operation can meet performance standards which relate to such scenarios, then it is appropriate to grant a permit for extractive operations with appropriate conditions. Whilst such conditions may constrain the extent to which an extractive operation can occur, the granting of a permit would ensure that a resource of community value is not lost and that the general policy principles as set out in s 3-13.1 to 3 are met.[74]
95 The Council and some of the objectors sought deferral of consideration of the application on the basis that the freeway alignment (and thus the Bypass) had not been determined. When summarising the objections received, the panel noted this factor as 13th in a list of 19. Asserted inconsistency with the Cooper Street Precinct Strategy was first in the list.[75] The panel report reveals that VicRoads did not itself seek deferral. It pointed out 'for information purposes' that the development could be affected by one of a number of alignments being considered for the freeway but indicated that it had no objection to the proposal subject to certain specified conditions, which for present purposes have no relevance.[76]
96 On the issue of deferral, the panel's conclusion was as follows:
The panel considers that it is not essential to await a final outcome on the location of the Hume freeway connection between the Metropolitan Ring Road and Craigieburn before deliberating upon the planning application before it. Ample planning information exists to explore the proposal and its planning interrelationships with not only the Council strategic objectives but also possible options for the Hume freeway connection.[77]
97 We turn then to the seven matters relied upon by the appellant as indicating that his Honour's conclusion was not open. In the written submission they are denoted (a) to (g).
(a) The route for the Bypass had not been selected at the time of the report.
(b) VicRoads advised the panel that 'the proposed development could be affected by a number of alignments being considered by a future freeway.'
As indicated, VicRoads advised of this 'for information purposes'. It did not object to the application. It did not seek or support, expressly or impliedly, either of the relevant restrictions.
(c) One of the reasons Whittlesea Council (as submitter to the panel) did not support the quarry was that '[t]he proposal is premature given that the alignment of the future Hume Highway (F2) has not been determined at this stage'.
It is correct that the Whittlesea Council made that submission. The panel rejected it. In the absence of deferral, the Council's position was based principally upon the Cooper Street Precinct Strategy which was, as his Honour said, the factor which 'drove' the imposition of the restrictions. The Strategy was not related to the freeway.
(d) The Merri Creek Management Committee (as submitter to the panel) wanted a decision on the quarry permit application deferred until the issue of the F2 freeway is resolved.
It is true that the Merri Creek Management Committee, one of the objectors, sought deferral, like the Council. The panel rejected that submission.
(e) At s 4.2 of the report, the panel specifically addressed the Bypass in the section entitled 'FUTURE OF THE HUME FREEWAY (F2) ALIGNMENT'.
The section referred to dealt with the submissions by the Council and some of the objectors that the panel should defer consideration of the application. The panel rejected those submissions. (The passage quoted earlier as the panel's conclusion on the issue of deferral appears near the end of s 4.2.)
(f) The panel stated at page 100 of the report that 'A requirement for no quarrying to occur to the east of the gas transmission line should overcome concerns to set aside decision making until the freeway option has been decided'.
The sentence quoted comes from the section of the panel report entitled 'Panel Overall Appraisal', which contains the lengthy quotes from the panel report which his Honour set out.[78] The passages quoted by his Honour support the conclusion his Honour had reached. Certainly, his Honour's conclusion was open. The full context of the sentence relied upon by the appellant is as follows:
The Panel considered that a final decision on the Hume freeway location was not essential prior to any decision making.
The main requirement was to ensure as decision making occurred that a constant awareness existed of likely freeway options and, in the instance of a direct interface, close scrutiny should be given to likely impacts, both visual and operational, from a quarry operation.
The Panel believed that such balance could be achieved. It also held the belief that decision making on the quarry application could provide valuable background information for the Advisory Committee which was to review the Hume freeway options.
A requirement for no quarrying to occur to the east of the gas transmission line should overcome concerns to set aside decision making until the freeway option had been decided.[79]
We do not interpret the panel as saying that the freeway proposal was the reason why quarrying was not to occur east of the gas transmission line. That was an incidental outcome of restrictions which were imposed upon the quarrying for other reasons.
(g) The Panel stated at page 101 of the report that 'It was also considered to be of value to have the revised boundary separation if a freeway option adjoining the eastern boundary of the subject land was ultimately selected. It would also provide some slight flexibility in freeway design if the 150 metre strip on the adjoining property required some minor extension to meet final freeway design requirements ...'
This passage appears in the section of the report to which we referred in relation to matter (f). The reference to adjoining land is a reference to the land owned by interests associated with Mr Scanlon. He was one of the objectors. As we read the report, this issue was, in the relevant context, inconsequential. It was irrelevant to both the area restriction and the groundwater level restriction.
98 There is no error of law on question 4. His Honour's conclusions on the panel report were factual conclusions which were open. There was no unreasonableness in the Wednesbury or any other sense. There was no relevant mistake.
Ground 2: Admissibility of evidence of Robert Maclellan
99 We return now to question 2, and the admissibility of the evidence of Robert Maclellan. It is necessary to begin by saying something further about Amendment L143 to the Whittlesea Planning Scheme, which involved the rezoning of part of 360 Cooper Street, Mr Scanlon's land adjoining Mr Love's land on the eastern side. The land had been zoned as General Farming B; as a result of the Amendment, it was rezoned as Reserved General Industrial, save for a 150 metre strip on the perimeter of that land immediately adjacent to Mr Love's land.
100 The trial judge described Amendment L143 to the Whittlesea Planning Scheme as follows:
[274] Amendment L143 to the Whittlesea Planning Scheme proposed the rezoning of the land at 360 Cooper Street from General Farming B to Reserved General Industrial. There were objections to the proposal, including an objection by Mr Love, and the matter proceeded to a panel hearing. The panel reported on 1 October 1997.
[275] The panel took the view that the strategic context for the proposal was set by the adopted strategic planning policies of the Council, being the City of Whittlesea General Plan, the Epping Bulge Position Statement and the Cooper Street Precinct Strategy, as well as the then recently exhibited draft Municipal Strategic Statement and new planning scheme.
[276] The panel concluded that the City of Whittlesea General Plan, the Epping Bulge Position Statement, the Cooper Street Precinct Strategy and the draft Municipal Strategic Statement all supported the development of land in Cooper Street for industrial purposes at sometime in the future. The panel recognised that industrial development would ultimately occur on the subject site, being 360 Cooper Street, Epping, and surrounding areas. The panel concluded, however, that the proposal was premature prior to resolution of a number of matters including resolution of the form of the new planning scheme; a finalised option for the F2 freeway alignment; and issues concerning the provision of services to the subject land and area. Accordingly, the panel recommended that the Amendment be abandoned.
[277] The Council of the Shire of Whittlesea did not adopt the recommendation of the panel and submitted Amendment L143 to the Minister for Planning. The Council advised the Minister that it desired the amendment to act as a "circuit breaker" and that the government needed to support the proposal to enable economic development and job creation. A ministerial briefing note dated 30 October 1997 stated that "The panel's main concerns are about the premature nature of the amendment in the absence of a range of services, drainage, road networks, the final F2 freeway alignment and the new format Planning Scheme". The Minister deferred consideration of the Amendment.
[278] I am satisfied that the issue of the F2 freeway alignment, which was one of the panel's concerns, was resolved by setting aside a 150 m strip within the 360 Cooper Street property, adjacent to its western boundary with Mr Love's land. At the time there were a number of new alignments being considered for the freeway. One of the proposed alignments would have passed through 360 Cooper Street. The predecessor to the Corporation, VicRoads, accepted that if that alignment was chosen, it could the sited within the 150 meter wide strip.
[279] The Council continued to press for Amendment L143 to be adopted. The Minister subsequently approved the rezoning of the land, with the 150 m strip retained in a General Farming zone. Otherwise the land comprised in Mr Scanlon's land at 360 Cooper Street was rezoned for urban use as industrial land. Amendment L143 was gazetted on 9 February 1998.
101 As is plain, the F2 freeway alignment played a part in the resolution of the Amendment L143 to the Whittlesea Planning Scheme. Mr Love's application for a planning permit for a quarry, to which extensive reference has already been made, was made in October 1997. Amendment L143 was gazetted on 9 February 1998.
102 The Acting Minister for Planning and Local Government 'called in' Mr Love's application in July 1998 and it was referred to the panel in that same month. The panel reported on 18 October 1998, in terms which we have already canvassed in some detail.
103 At that time, Robert Maclellan was the Minister. As the trial judge recorded, Mr Maclellan[80] is a former Member of the Legislative Assembly of the Parliament of Victoria. From March 1976 to April 1982, and again from approximately October 1992 to approximately October 1999, he was a Minister of the Crown for the State of Victoria. In that capacity, he was Minister for Planning from 6 October 1992 to 3 April 1996; and Minister for Planning and Local Government from 3 April 1996 to 20 October 1999. Mr Maclellan said in his evidence that he was the longest serving Minister for Planning in the State of Victoria.
104 Mr Love wished to rely upon two affidavits sworn by Mr Maclellan: the first was sworn 28 May 2008 and the second was sworn 7 May 2010.
[313] Mr Maclellan swore the following in his affidavit dated 7 May 2010:
a. I am certain I would have made a different decision about Amendment L143 if a proposal to realign the proposed Hume Freeway between Craigieburn and the Western Ring Road ("proposed Craigieburn Bypass") had not been under consideration in February 1998. In particular, in the absence of the proposed Craigieburn Bypass, I would not have approved a rezoning of the entire area of the land the subject of Amendment L143 from a farming zoning to an industrial zoning. Instead, it is most likely I would have refused to rezone any part of the land the subject of Amendment L143. [T]hat is because, in the absence of any proposed Craigieburn Bypass, I can see no persuasive grounds upon which I might have declined to accept the recommendation of the panel that Amendment L143 be abandoned. The panel made that recommendation on the basis (as is set out in the Ministerial Briefing which forms part of exhibit "RRCM-4" to my previous affidavit) that it would have been premature to consider rezoning the land the subject of Amendment L143 until the following infrastructure issues, amongst others, had been resolved:
i Preparation of a floodway management plan for the site and surrounding area;
ii Preparation of a sewer reticulation strategy for the area;
iii Preparation of a road network plan for the area; and
iv Provision of a plan for the duplication of Cooper Street.
Alternatively, even though I was not aware at the relevant time of any need for industrial land in the area in which the land the subject of Amendment L143 was located, I accept that it is possible that I might have approved a rezoning of some smaller portion or portions of the land the subject of Amendment L143 for industrial development in order to enable the Council and the proponent to "test the market" for industrial land in that area;
b. I am certain that I would not have approved any rezoning or development of the land the subject of Amendment L143 that I thought might detrimentally affect the potential to extract basalt from land owned by the Respondent, Mr Love ("Love land"). I am certain of that because:
i As I stated in paragraph 7 of my previous affidavit, I have been aware from around August 1997 that Mr Love had applied for planning approval for an extended area of basalt quarry of the Love land;
ii At that time, Victoria was in short supply of available quarry sites and, following the recession which Victoria had experienced in the early 1990s, I then considered that quarries which could produce materials for use in road construction and concrete manufacturing were essential to the economic recovery of the State;
iii At that time, on the basis of my experience as Minister it appeared to me that there was an oversupply of industrial sites immediately following the recession. I had formed that view because much of my time was then taken up making decisions as Minister to rezone industrial land for residential use. Consequently, at that time, I considered that there was no pressing urgency for new industrial land to be made available around Melbourne. By contrast, I then considered that quarry land was extremely precious and that it was my obligation to the community, pursuant to Government policy at the time, to ensure competition in the quarry industry and the protection of stone resources from potentially inconsistent nearby land use changes;
iv In my opinion at all relevant times, Mr Love's proposal for a basalt quarry on the Love land was a particularly good one because the general area around the Love land had been quarried for many years and extractive industry was still operating in that area. In addition, I considered that Mr Love's proposal for a basalt quarry was merely an extension of quarrying operations that had been ongoing and successful on his family's land over many years.
a. Whether or not there had been a proposed Craigieburn Bypass that might have affected the Love land, I would have "called in" Mr Love's quarry permit application because, in my opinion at all relevant times, determination of that application was:
i A matter of State importance; and
ii Beyond the scope and competence of local government authority;
b. The fact that Mr Love's quarry permit application was "called in" by an Acting Minster is indicative of the importance placed upon that application by the Government at that time, as it was then uncommon, in my experience, for an Acting Minister to "call in" any permit application;
c. Even in the absence of a proposed Craigieburn Bypass that might have affected the Love land, I am certain that a panel would have been appointed to consider, and report to me about, Mr Love's quarry permit application. I am certain [of] that because, to my knowledge at that time, such an application raised many technical issues for consideration. Those issues typically included, among other things, noise, quarry size, hydrology and surrounding land uses;
d. Based on my experience, as Minister dealing with such applications, had there not been a proposed Craigieburn Bypass that might have affected the Love land, I would then have expected that the planning process for this permit would have been completed much sooner than proved to be the case, because the issues concerning my decision whether or not to approve the application would have been much less complex, the Bypass issues being absent from the panel's consideration of the matter. In addition:
i I am certain that Mr Love's quarry permit application would still have been "called in" very close to the time at which the application was received;
ii I am very confident that a panel would have been promptly appointed to consider the application;
iii Absent the matters relating to the freeway and Amendment L 143, I expect that the panel would have been able to consider and report on the application within a shorter space of time than proved to be the case; and
e. If at that time there had not been a proposed Craigieburn Bypass that might have affected the Love land, then I expect that I would have made a decision within 30 days of having received the panel's report. Consequently, even assuming that I would not have received the panel report until the end of October 1998, it is highly likely that I would have decided to grant Mr Love's quarry permit application by late 1998 or in January or February 1999, at the latest.
a. If no proposal for the Craigieburn Bypass had then had the potential to affect the Love land, I would certainly have approved Mr Love's quarry permit application. In doing so, I would have been likely to do so in a manner consistent with any recommendation made by a panel appointed by me to consider Mr Love's quarry permit application.
b. If there had not been an option for the Craigieburn Bypass in the vicinity of the Love land or the land the subject of Amendment L143, I would have expected to receive a very different report from that report and very different recommendations from the recommendations contained in that report concerning the conditions to which any permit granted in respect of the Love land should be subject. That is because, amongst other things:
i For the reasons I have stated in paragraph 3 of this affidavit, my decision in relation to the land the subject of Amendment L143 would have been different. Consequently, Amendment L143 would almost certainly have been irrelevant to my decision; and
ii The possible impact of any alignment of the Craigieburn Bypass would have been irrelevant to my decision; and
c. In the event that such a panel considered these issues without regard to the proposed Craigieburn Bypass, or to Amendment L143, the only limitations on the area of any quarry I approved on the Love land would at that time, as I understand, have been those required by the presence of the gas pipeline on the Love land and the need (if any) for buffers within the Love land. I am unable to comment on whether there was or was not a need for any such buffers as I would have determined that based on the recommendation of the panel.[83]
[319] As to paragraph 3(a) and the substantive part of 3(b) (with sub-paragraphs (i)-(iv) being admissible), these paragraphs are predicated on the basis of "if a proposal to realign the proposed Hume highway ... had not been under consideration in February 1998". As such, the opinions which follow venture into the field of speculation upon a factual basis which has not been established and did not accord with reality. Planning decisions are subject to a range of competing interests and political pressures. A change of circumstances may redefine the landscape of these interests and pressures. For these reasons, paragraph 3(a) and the substantive part of 3(b) are ruled inadmissible, with sub-paragraphs 3(b)(i)-(iv) remaining admissible.
[320] As to paragraph 4(a), (c), (d) and (e), and paragraph 5, these paragraphs are predicated on the basis of "whether or not there had been a proposal for the Craigieburn Bypass" (paragraph 4); and "if no proposal for the Craigieburn Bypass then had the potential to affect the Love land" and "if there had not been an option for the Craigieburn Bypass in the vicinity of the Love land or the land the subject of Amendment L143"(paragraph 5). As such, the opinions which follow also venture into the field of speculation upon a factual basis which has not been established and did not accord with reality. As earlier stated, planning decisions are subject to a range of competing interests and political pressures. A change of circumstances may redefine the landscape of these interests and pressures. For these reasons, paragraph 4(a), (c), (d) and (e), and paragraph 5 of Mr Maclellan's affidavit are ruled inadmissible.
107 On the appeal it was submitted on behalf of Mr Love that the evidence of Mr Maclellan was made relevant by s 41(1)(e) and s 43(1)(a) of the LAC Act. It was submitted that 'the relevant substance of Maclellan's ... evidence was that if it had not been for the Bypass project he would have expected a different recommendation from the Panel, and that he would have granted the application without the area limitation which the panel had actually recommended'.[84]
108 Mr Love's written submissions included the following:
The excluded evidence was wrongly held to be opinion evidence. It was however not opinion evidence but was evidence by Mr Maclellan as to what he would have done if particular circumstances had not occurred, particularly if there had been no proposal for the Bypass. Evidence by a person as to what he or she would have done if something had or had not occurred is not opinion evidence. It is commonly given as direct evidence of a condition of mind, or as a matter going to the probability of an event occurring or otherwise see, Fabcot Pty Ltd v Port Macquarie-Hastings Council [2011] NSWCA 167, Seltsam Pty Ltd v McNeill [2006] NSWCA 158, Rosenberg v Percival [2001] HCA 18; (2001) 205 CLR 434 at [24]- [32]; Bennett v Minister of Community Welfare [1992] HCA 27; (1992) 176 CLR 408 at 420, Allied Maples [1995] EWCA Civ 17; [1995] 1 WLR 1602, Heenan v Di Sisto (2008) NSWCA 25 at [28]- [34], Attard v Aberwood Pty Ltd (2003) NSWSC 984 at [45]- [45], Lockhart v GM Holden (2008) 21 FLR 368 at [31]-[34] and Hoyts v Burns [2003] HCA 61; (2003) 201 ALR 470 at [54].
To the extent that the excluded evidence was opinion evidence, it was opinion evidence of the probable contents of the Panel Report given in the absence of a proposal for the Craigieburn Bypass. This opinion evidence was based on Mr Maclellan's considerable and unique experience based on the position he had held in the State Government, and he was qualified to give it.[85]
109 According to the written submission, the relevance of Mr Maclellan's evidence was said to be as to the 'different recommendation' he would have expected from the panel, and the 'probable contents' of the panel report, in the absence of the Bypass proposal, and what he would have then done. In oral argument, however, what was stressed was that Mr Maclellan's evidence was what he personally would have done, and that it was not opinion evidence for a person to say what he would have done.
110 In its written submissions,[86] the Roads Corporation said that the excluded evidence, both in respect of Amendment L143 and the planning permit was nothing more than 'mere speculation'. In its supplementary submissions, the Corporation said:
Mr Maclellan's evidence as to the quarry permit application was, in effect, he would have followed the recommendations of his expert panel. What the panel recommendations would have been, absent the bypass, was a matter either for the panel members, who were not called to give evidence, or for the expert planners who were called to give evidence.[87]
111 In our view, Mr Maclellan's evidence was properly excluded, but not for the reasons which the trial judge gave. The starting point is that, when addressing the effect of provisions like s 43(1)(a) of the LAC Act embodying or reflecting the Pointe Gourde principle, it is necessary to notionally set aside the position actually obtaining and to determine what the position would have been but for the proposal to carry out the relevant public purpose. The exercise is hypothetical, and assumes facts different from what actually occurred. Accordingly, the trial judge should not have excluded the evidence because it addressed 'a factual basis which has not been established and did not accord with reality'.
112 Properly understood, the significant part of the excluded evidence was that Mr Maclellan swore that he was 'likely' to have, or 'would have', determined Mr Love's permit application in accordance with the panel's recommendations, and that he 'would have expected to receive a very different report' ... 'and very different recommendations' from the panel had there been no Bypass proposal.
113 Mr Maclellan did not specify the content of the 'very different report' and 'very different recommendations' he would have expected to receive. It may readily be inferred, however, from the affidavit as a whole that Mr Maclellan assumed (and would have had the Court accept) that the content of the report and the recommendations would have been more favourable to Mr Love's application, presumably by the exclusion of one or both of the restrictions we have previously addressed.
114 The affidavit does not suggest that, absent a proposed Craigieburn Bypass, a panel would not have been involved. On the contrary, Mr Maclellan was 'very confident' a panel would have been involved, and would have reported and made recommendations. Crucially, anything said by Mr Maclellan about what the panel would have reported and recommended in those hypothetical circumstances could only have been an expression of his own opinion.
115 Section 76 of the Evidence Act 2008 (Vic) is the 'opinion rule'. It provides:
Evidence of an opinion is not admissible to prove the existence of a fact about the existence of which the opinion was expressed.
Section 79 is an exception to the opinion rule.[88] It provides:
If a person has specialised knowledge based on the person's training, study or experience, the opinion rule does not apply to evidence of an opinion of that person that is wholly or substantially based on that knowledge.
116 Mr Maclellan did not suggest, however, nor was any other evidence adduced to show, that he was qualified to give opinion evidence about what the contents of the panel report or recommendations would have been had there been no Bypass proposal.
To be admissible under s 79(1) the evidence that is tendered must satisfy two criteria. The first is that the witness who gives the evidence "has specialised knowledge based on the person's training, study or experience"; the second is that the opinion expressed in evidence by the witness "is wholly or substantially based on that knowledge".[92]
...
It should be unnecessary, but it is nonetheless important, to emphasise that what was said by Gleeson CJ in HG (and later by Heydon JA in the Court of Appeal in Makita (Australia) Pty Ltd v Sprowles) is to be read with one basic proposition at the forefront of consideration. The admissibility of opinion evidence is to be determined by application of the requirements of the Evidence Act rather than by any attempt to parse and analyse particular statements in decided cases divorced from the context in which those statements were made. Accepting that to be so, it remains useful to record that it is ordinarily the case, as Heydon JA said in Makita, that "the expert's evidence must explain how the field of 'specialised knowledge' in which the witness is expert by reason of 'training, study or experience', and on which the opinion is 'wholly or substantially based', applies to the facts assumed or observed so as to produce the opinion propounded". The way in which s 79(1) is drafted necessarily makes the description of these requirements very long. But that is not to say that the requirements cannot be met in many, perhaps most, cases very quickly and easily. That a specialist medical practitioner expressing a diagnostic opinion in his or her relevant field of specialisation is applying "specialised knowledge" based on his or her "training, study or experience", being an opinion "wholly or substantially based" on that "specialised knowledge", will require little explicit articulation or amplification once the witness has described his or her qualifications and experience, and has identified the subject matter about which the opinion is proffered.[93]
118 There was nothing before the judge to show that Mr Maclellan had any 'specialised knowledge' that would have brought his proposed evidence within the exception in s 79. He was, clearly, an experienced planning Minister, but he did not profess any expertise as a town planner. Unsurprisingly, he made clear in his oral evidence that, having appointed a panel, he would treat any recommendation made by it very seriously. He said:
... Now, can I say I don't think you and maybe possibly His Honour Cavanough understand how seriously I regarded the work of a panel.
...
... if you entrusted the panel to deal with the matter, then you gave enormous weight to the recommendation of the panel.
119 The following exchange then took place between the trial judge and Mr Maclellan :
120 As was confirmed in Mr Maclellan's oral evidence, the relevant issue was what would the panel have recommended absent the Bypass proposal. The trial judge addressed that issue by reference to the materials which were before the panel and a detailed analysis of the panel's report. He rightly excluded Mr Maclellan's opinion as to what the panel would have done. There was no material error of law in the trial judge's exclusion of Mr Maclellan's evidence.
Question 5 - rejecting the methodology of Mr Herdman
121 In the amended notice of appeal the question of law is expressed as follows:
Did the trial judge err in law in rejecting Mr Herdman's methodology because:
Under the heading 'Grounds of Appeal', the relevant ground is expressed in substantially the same terms.
122 This question raises matters dealt with under other grounds. In relation to sub-paragraphs (a), (b) and (c), complaint was made as to the rejection by the trial judge of Mr Herdman's methodology on the basis that:
123 Sub-paragraph (a) of the question characterises the complaint as a failure to apply 'the correct test'. The submissions made amounted to a repetition of what was put in relation to questions 3 and 4. We have already dealt with them.
124 Sub-paragraphs (d) and (e) concern an issue also specifically raised by question 8. What is put on behalf of the appellant is that the trial judge was not justified in rejecting Mr Herdman's evidence because Mr Herdman had assumed that there were no geological or hydro-geological conditions that would impact on the viability of the resource and because Mr Herdman's calculations had not reflected the risk as to the quality of the resource. On behalf of the appellant it was submitted that this approach is inconsistent with the High Court in Spencer. The passage from Spencer which is relied upon is the oft-quoted passage from the judgment of Isaacs J where he said, referring to the hypothetical willing purchaser and not unwilling vendor:
We must further suppose both to be perfectly acquainted with the land, and cognisant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features ...[94]
The appellant places reliance on the phrase 'perfectly acquainted' to submit that it is an error of law to proceed on the basis that anything is unknown, or less than fully known, to the hypothetical vendor and purchaser.
125 The relevant principle was, according to the High Court in Walker Corporation,[95] accurately summarised by McHugh J in Kenny & Good where he said (citations omitted):
Value is determined by forming an opinion as to what a willing purchaser will pay and a not unwilling vendor will receive for the property. In determining that value, there must be attributed to the parties a knowledge of all matters that affect its value. Those matters will include the predicted impact of future events as well as the experience of the past and the rates of return on other investments. As Isaacs J pointed out in Spencer v The Commonwealth: 'We must further suppose both to be perfectly acquainted with the land, and cognisant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property (Emphasis added).'
The market for the property is, therefore, assumed to be an efficient market in which buyers and sellers have access to all currently available information that affects the property.[96]
126 It is a mischaracterisation of Spencer to interpret Isaacs J's observation as requiring that valuation is to proceed on the basis that matters which were not known, and which could not be known or fully known, were to be treated as being certain. As McHugh J said, what is to be assumed is that the hypothetical purchaser and vendor have access to 'all currently available information that affects the property'.
127 In oral submissions on behalf of the appellant, it was submitted that the trial judge could, and should, have made findings as to the matters said to be uncertain and then assessed the valuation evidence by reference to those findings. This is a different argument, which concedes that there are issues as to which the parties cannot be 'perfectly acquainted'. The Court was not told what these findings should have been, or upon what evidence they would have been based.
128 There is no legal error in a trial judge observing that particular valuation evidence had not taken uncertainties into account or in his reliance on that fact in assessing the evidence.
129 The complaints made in relation to sub-paragraphs (d) and (e) are unfounded. For the reasons given in relation to other questions, our conclusion is that the complaints made in the other sub-paragraphs of this question are also unfounded.
Question 6 - holding there was no basis upon the evidence to find that a quarry would have been in operation as at February 2002
130 In the amended notice of appeal the question of law is expressed as follows:
Did the trial judge err in law in holding (at [499] and [506]) that there was no basis upon the evidence to find that a quarry would have been in operation as at February 2002, and that the evidence points to the absence of a productive quarry on the relevant date having been caused by commercial decisions of the Appellant that quarrying would not commence immediately or prior to February 2002 (at [500]), when the Appellant had given evidence to that effect at transcript pages 1429-1430?
Under the heading 'Grounds of Appeal' the relevant ground is expressed in substantially the same terms.
131 We have previously quoted the judgment at paras [499] and [500] when dealing with question 3. At [506] the trial judge said:
There is no basis upon the evidence to find that, absent the Bypass proposal, a quarry would have been in operation as at February 2002 at all, still less achieving levels of production and sales at the rate of 700,000 tonnes per annum.
132 The basis for the conclusion his Honour expressed at paras [499] and [506] is what is said at [500]. In substance, his Honour found that the evidence 'pointed to' the absence of a quarry on the relevant date, that evidence being the contemporaneous documents, and in particular Mr Love's quarry permit application, and evidence which Mr Love had given in an earlier proceeding.
133 The submission on behalf of the appellant was that there was a basis in the evidence to find that a quarry would have been in operation as at February 2002, that basis being Mr Love's evidence on his own re-examination at T 1419 and 1427-1433 and his application for the planning permit which had stated:
It is proposed that initial works for the quarry will commence on the receipt of the planning approval sought in this application. These works include the creation of visual screening around the site perimeter including urban bunding and planting of native vegetation. The operations of the quarry will commence upon receipt of the work authority from the Department of Natural Resources and Environment.[97]
134 On behalf of the respondent it was submitted that no question of law is raised by this ground and that a judge is not required to refer to every piece of evidence, but rather is required to set out his material conclusions and findings, which the trial judge did.
135 There is no doubt that the trial judge was fully aware that Mr Love contended that a quarry would have been established by February 2002. He referred to that on a number of occasions in his judgment.[98]
136 Particularly in oral submissions, counsel for the appellant characterised what the trial judge said at [499] and [506] as amounting to a statement that there was no evidence a quarry would have been in operation by February 2002. That is not quite what the judge said. He said there was 'no basis upon the evidence to find that' a quarry would have been in operation as at February 2002. He made it clear that he reached this conclusion because of previous statements of intention made by Mr Love himself, including in his quarry permit application.
137 The evidence relied upon by the appellant, as set out in the question and in the appellant's written submissions, comes from Mr Love's re-examination. That evidence was substantially, if not entirely, a commentary upon certain of the contemporaneous documentation, and in particular the permit application. In the first passage (T 1419), Mr Love said:
As we foreshadowed in our original application, within a year of operations starting, further application would be made to quarry below ground water level.
138 At the commencement of the second passage (T 1427-1433), Mr Love made it clear that he was assuming that, as at November/December 1998, he would have had, absent the Bypass proposal, a permit permitting extraction above the water table but for the full area applied for - in other words, with the groundwater level restriction but without the area restriction. That was the ambit of the permit which he had applied for. The foundation of the evidence Mr Love then gave was the assumption that such a permit would have been obtained. The trial judge found that such a permit would not have been obtained, absent the freeway proposal.
139 Mr Love then went on in his evidence to address a letter he had received from his planning consultants dated 28 October 1997.[99] There were two features of that letter which he wished to highlight. The first was that the proposed quarry was interrelated with another then-current proposal for the land, which was the establishment of a sale yard. The second was that Mr Kraan, the author of the letter, had set out in the letter estimates of timing in relation to a contested planning permit application, including an appeal. Mr Love suggested that this passage set out the kind of timing which was involved in contested permit applications.
140 Mr Love then moved to the hypothesised application to amend the hypothesised permit so as to permit extraction below groundwater level. He said that he would have envisaged that being finalised by the end of 2001 or the beginning of 2002. In that respect he said:
This was foreshadowed in the original 1997 application to be done one year after the start of extraction.
That was another reference to the planning permit application.
141 Mr Love then went to the application itself, and quoted the passage relied upon in his written outline on the appeal. In his evidence, he also quoted an additional sentence, not quoted in the written outline, which read:
The commencement of commercial extraction operations is intended to commence within approximately five to seven years.
As I have said on a number of occasions in this trial before, we deliberately left ourselves open or gave ourselves as much flexibility as we possibly could by way of making sure that we weren't caught with a very short term start up requirement if it became difficult to attract the appropriate level of interest.
In this passage Mr Love was offering an explanation for the statement in his application that commercial extraction operations were not intended to commence for approximately five to seven years.
142 According to the panel report, Mr Love accepted in the course of the panel hearing that the commencement of commercial quarrying would be delayed much longer than the five to seven years referred to in his application. Mr Love's application expressly stated that the likely operator of the proposed quarry would be Conundrum Holdings Pty Ltd, which then operated an existing quarry on another part of Mr Love's land.
143 The panel sought information from Conundrum Holdings Pty Ltd, which revealed that:[100]
The likely time frame for commencement suggested by Conundrum Holdings is closer to 15 years or more and was based on the following:
144 Under the heading 'Applicant Commentary', the panel recorded the following:
The applicant generally accepted that a likely time span could be as those shown on the diagram on page 39 of the Panel report, namely 16 to 19 years prior to significant extraction on the subject land (some preliminary extraction could commence as the Miller property was nearing exhaustion). The actual timeframe of extraction on the subject land could be in the order of 40 to 50 years after commencement of extraction.
The applicant did not any manner [sic] resile from these estimates and was firm in taking the stance that every endeavour was being made to provide a realistic time span over which extraction would occur. It was stressed that great emphasis was placed on this 'up front' approach. It did not wish to be seen as endeavouring to obscure the time span over which quarrying would occur by any attempt to 'blur' the time span to make it more acceptable to the Cooper Street Strategy time limits.[101]
145 The last sentence of his Honour's judgment at para [500] records the fact that:
The evidence of Mr Love given in an earlier proceeding (the "Writ Proceeding"), confirmed his anticipation, as it was at the time when he made submissions to the quarry permit panel in late 1998, that there would be no WA658 quarry in operation until between 2013 to 2014.
146 We do not interpret what his Honour said as revealing that he had overlooked, or paid no regard to, the parts of Mr Love's evidence relied upon on this ground. In large measure, what Mr Love had said was said by reference to the contemporaneous documents, particularly his own planning application. His Honour's finding was that the contemporaneous documents required a different conclusion. That conclusion was open. Indeed, it seems to us to be well-founded. There was no error of law.
147 Reliance was also placed on certain passages in Mr Love's cross-examination. Although the passages relied upon were not included in the Appeal Book, we have obtained them and reviewed them. In those passages Mr Love, responding to questions directed at what his 'case' was rather than at what he would have done, said that he would have sold or attempted to sell the land once he had obtained an unrestricted permit and that the land should be valued as if it had an operating quarry because that was how a prospective purchaser would have used it or valued it. None of this affects our conclusion that no error of law has been demonstrated. This compound of hypotheses stood in stark contrast to Mr Love's contemporaneously expressed and documented intentions. It was open to the trial judge to reach the conclusion he did.
Question 7 - holding any hypothetical quarry would have been developed only as to upper flow and by a small to middling operator
148 In the amended notice of appeal the question of law is expressed as follows:
Did the trial judge err in law when he concluded that the hypothetical quarry on the subject land would at best be likely to be developed for quarry use only as to its upper flow and only then by a small to middling independent operator such as Conundrum Holdings Pty Ltd on the grounds that:
Under the heading 'Grounds of Appeal' the relevant ground is expressed in substantially the same terms.
149 The issue raised in sub-paragraph (a) has been dealt with in the context of question 2. As to the issue in sub-paragraph (b), two circumstances are important. First, at trial no submission was made that there was any significance in the fact that the north-west corner of the acquired land was within the special extractive zone. Mr Kraan himself, who is the source of this fact, did not place any significance upon it. Second, the trial judge did not overlook the fact that a part of the acquired land was in the special extractive zone. He expressly referred to it.[102]
150 The appellant's submission is confined to a complaint that the trial judge ignored the evidence about the special extractive zone. That is not so. He did not place any significance upon it, nor did Mr Kraan, the witness whose report referred to it, nor did any of the parties at the trial.
151 The appellant's submission did not indicate how this issue was said to be connected with the conclusion that any hypothetical quarry would, at best, have been likely to be developed for use only as to its upper flow and only then by a small to middling independent operator. There is no error of law in relation to this question.
Question 8 - failing to assess on the basis of awareness of actual hydro geological condition
152 In the amended notice of appeal the question of law is expressed as follows:
Did the trial judge err in law in not assessing the market value of the land on the basis that the hypothetical purchaser and the hypothetical vendor as at the date of acquisition were aware of the actual hydro-geological condition of the land, and thus the hypothetical purchaser would not have taken into account in agreeing on a price any factor based on those matters not being known?
Under the heading 'Grounds of Appeal', the relevant ground is expressed in substantially the same terms as are expressed in the question, although the ground appears to contain a typographical error.
153 We have dealt with the issue raised in this question when dealing with question 5.
Question 9 - failing to take into account and disregarding evidence as to quarrying below the ground water level
154 In the amended notice of appeal, the relevant ground of appeal is expressed as follows:
The trial judge erred in law when he did not take into account, in considering the matters which a hypothetical purchaser would be likely to have taken into account in determining a market price for the appellant's land (at [655] [657]), evidence given in the proceeding relevant to this matter, namely that quarrying below the groundwater level was feasible and had been undertaken in other quarries and that the water generated was beneficial for dust suppression, for on site uses and for storage.
[655] However, I am satisfied that a hypothetical purchaser on the relevant date would have been likely to have taken into account the following factors in determining a market price for Mr Love's land:
(a) There was no reliable data to ascertain the precise extent of the water inflows and any consequent operational impacts and costs;
(b) Such matters could only be reliably identified some years later when extraction to depth had occurred, at which point aquifer characteristics could be accurately assessed and a water management plan prepared;
(c) Until such time, the level of ground water inflows and their operational and economic impacts could not be accurately predicted;
(d) These matters would, in all likelihood, have given rise to an element of uncertainty and risk in the mind of a potential purchaser.
[656] I find further that such uncertainties and risks would have negatively impacted on the value of the acquired land and should have been reflected in any discount rate applied to Mr Herdman's calculations.
[657] However, I am not satisfied that Mr Herdman took into account in arriving at his valuation, adequately or at all, the uncertainties and risks which this component of the potential enterprise should have attracted.
156 According to the submission made on behalf of the appellant an error of law is revealed in these paragraphs because there was evidence given by Mr Natoli which 'supports groundwater as not having a detrimental effect on market value, and as being capable of being a positive factor'.[103] The evidence relied upon is as follows (drawn from a report of Mr Natoli's dated 28 August 2006):
To vary the Work Plan to extract basalt resources below the watertable would normally be an approval process through DPI once the aquifer characteristics had been reliably assessed and a water management plan prepared. This approach is also consistent with DPI's policy of ensuring efficient and full utilisation of the State's stone resources from established quarries. It was envisaged that this approval would have been sought once a quarry sump had been established which would be expected in the early years of extraction.
In the process of assessing the groundwater aquifer further drilling investigations would be undertaken which would be used to determine the ultimate quarry depth and prepare designs of a variation to the Work Plan for approval by DPI.
[Natoli's] experience at several nearby basalt quarries that were extracting from well below the water table was the quantities of water were easily managed and the groundwater extracted and surface water collected was used in the processing operations and dust suppression.
157 His Honour referred to the evidence about groundwater,[104] but he dealt with this issue, and with other related issues, only 'for completeness'. Given the findings he had made in relation to the planning issues and the valuation evidence, it was unnecessary to deal with those matters in any detail.[105]
158 Given that the grounds of appeal concerning the planning issues have failed, this ground is irrelevant for the same reason. Further, in our view, what his Honour said is not inconsistent with the passage from Mr Natoli's report which is relied upon. In any event, there is no error of law.
Notice of Contention and other matters relied upon by the respondent
159 A notice of contention was filed on behalf of the respondent. Given the conclusions we have reached, it is unnecessary to address it.
160 The respondent also relied upon conclusions reached by his Honour in relation to the valuation evidence[106] and in relation to the quality of the basalt resource.[107] These conclusions were said to be fatal to Mr Love's case, independently of the matters raised by the nine questions and grounds of appeal. It is unnecessary to address those submissions.
161 The appellant has failed to establish that any material error of law was made. The appeal should be dismissed.
[1] See Roads Corporation v Love [2010] VSC 238 (2 June 2010).
[2] [2010] VSC 537 (26 November 2010) ('Reasons for judgment'). The judgment is 215 pages long with Annexures of 28 pages, comprising approximately 84,000 words in total.
[3] Victorian WorkCover Authority v Richards (2009) 26 VR 88, 91-2 [8], [11].
[4] McVey v GJ & LJ Smith Pty Ltd [2012] VSCA 312 (17 December 2012) [4], [11], [24], [34].
[5] The submission cited Rajski v Scitec Corporation Pty Ltd (Unreported, NSWCA, 16 June 1986) [28]; and Tomasevic v Travaglini [2007] VSC 337; (2007) 17 VR 100 ('Tomasevic').
[7] Outline of Submissions of the Appellant, 21 August 2012 ('Appellant's Outline') [8].
[10] Reasons for judgment [30]-[31].
[12] Outline of Submissions of the Respondent 30 April 2013 ('Respondent's Outline') [21].
[13] [1979] AC 426 ('Melwood Units').
[14] [2011] VSC 96 (22 March 2011).
[15] [2011] VSC 264 (17 June 2011).
[18] [1907] HCA 82; (1907) 5 CLR 418 ('Spencer').
[19] [1999] HCA 25; (1999) 199 CLR 413 ('Kenny & Good').
[20] Reasons for judgment [130]-[133].
[26] [2008] HCA 5; (2008) 233 CLR 259 ('Walker Corporation').
[30] [2010] VSC 32. The case concerned a different part of Mr Love's land and a different road proposal.
[31] Reasons for judgment [240]-[247].
[32] [1994] VicRp 39; [1994] 1 VR 534 ('Equity Trustees').
[34] [2006] VSC 363 (5 October 2006) ('Murdesk Investments').
[35] [2005] NSWLEC 438 ('Smith').
[41] The trial judge foreshadowed his conclusions at Reasons for judgment [247]-[248] and then reviewed the evidence at [249]-[297] and [328]-[329].
[46] [1994] VicRp 39; [1994] 1 VR 534, 542.
[48] (1957) 2 LGRA 338 ('Woollams').
[49] (1978) 25 The Valuer 228 ('Chalmers').
[50] (1990) 20 NSWLR 696 ('Polegato').
[51] [2006] NSWCA 159; (2006) 146 LGERA 335 ('Mosca').
[52] [2007] NSWLEC 673 ('Serbian Cultural Club').
[53] [2010] NSWCA 361 ('Halley').
[54] (1957) 2 LGRA 338, 346 (emphasis added).
[56] (1978) 25 The Valuer 228, 231, and see also 316.
[58] (1990) 20 NSWLR 696, 700.
[60] [2006] NSWCA 159; (2006) 146 LGERA 335 [17]. Mosca was cited by Osborn J in Murdesk at [32], and that citation was in turn cited by Emerton J in Secretary of the Department of Business and Innovation v Murdesk Pty Ltd (2012) 191 LGERA 351 [23].
[61] [2010] NSWCA 361 [53].
[62] [1990] HCA 20; (1990) 169 CLR 638, 642-3 (Deane, Gaudron and McHugh JJ).
[63] A reference to a decision so unreasonable that no reasonable person or body could have reached it, as referred to by Lord Greene MR in Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1947] EWCA Civ 1; [1948] 1 KB 223, 230.
[64] The particular use of that term by the trial judge which is relied upon in relation to this ground is at [247].
[65] [2008] NSWCA 193 (14 August 2008).
[66] Reasons for judgment [208]-[220] and [234]-[246].
[68] His Honour dealt with the Epping Bulge Position Statement at Reasons for judgment [251]-[253], the Cooper Street Precinct Strategy at [254]-[272], and the L143 Amendment at [273]-[285].
[69] Reasons for judgment [286]-[297].
[70] Ibid [296] (emphasis in original).
[73] Ibid [293] quoting a passage from the Panel report on Planning Permit No. 704078-Whittlesea ('Panel report') at p 100 and [294] quoting a passage from the Panel report at p 102 and another passage at p 103.
[78] Reasons for judgment [293]-[294] quoting passages from the Panel report pages 100, 102 and 103.
[81] The extract of the evidence that follows is taken from the judge's reasons. In minor detail, it differs in text and formatting from the actual Maclellan affidavit.
[87] Respondent's submissions in Response to Appellant's Reply Submissions dated 16 July 2013 [14].
[88] Section 78 is another exception. It is entitled 'Exception: lay opinions'. It does not apply to the impugned evidence of Mr Maclellan.
[93] Ibid 604 [37]. ' ... the party tendering an expert report must demonstrate that the author has specialised knowledge based on training, study or experience that enables him or her to express an opinion on a matter that is relevant to an issue in the proceeding. The tendering party must also be able to demonstrate that the opinion was wholly or substantially based on that knowledge'; Nicholls v Michael Wilson & Partners Ltd [2012] NSWCA 383 [209] (Sackville AJA).
[94] [1907] HCA 82; (1906) 5 CLR 418, 441.
[95] [2008] HCA 5; (2008) 233 CLR 259, 276-7.
[96] [1999] HCA 25; (1999) 199 CLR 413, 436.
[98] See Reasons for judgment [5]-[13], [130]-[133] and [240]-[247].
[99] In the court book at BCC.02908 and following.
[102] Reasons for judgment [369(f)].
[104] Reasons for judgment [638], [650]-[654].
[106] Ibid [197], [581]-[586], [592]-[603], [611]-[637].
[107] Ibid [535], [541]-[544], [644]-[649].
# Love
Roads Corporation \[2014\] VSCA 30
(2001) 205 CLR 434
(1992) 176 CLR 408
(2009) 26 VR 88
(1979) 142 CLR 351
(2008) 233 CLR 259
(1990) 20 NSWLR 696
(1990) 169 CLR 638
(1999) 197 CLR 414
(1906) 5 CLR 418
(2008) 21 FLR 368
(2003) 201 ALR 470
(2007) 17 VR 100
(1907) 5 CLR 418
(1999) 199 CLR 413
(1978) 140 CLR 196
(1994) 85 LGERA 143
(2005) 63 NSWLR 407
(1956) 95 CLR 245
(2006) 146 LGERA 335
(2012) 191 LGERA 351
(2011) 243 CLR 588