Perilya Broken Hill Limited v Valuer General

(h) The discount rate applied in the valuation is to be in the range of 18% to 20% after tax. 2. Further or in the alternative to paragraph 1, to the extent necessary, the Applicant have leave pursuant to paragraph 1 of the directions made on 20 September 2013 to rely on the following statements and reports as evidence in the proceedings: (a) statement of evidence of Edward Gleeson dated 19 May 2014; and (b) statement of evidence of Ken Pendergast dated 27 June 2014. 9It is that notice of motion with which I am now dealing. Paragraph 2 is not pressed. The only issue in respect of which the notice of motion is listed for determination today is whether it should be stood over to the final hearing or determined before the final hearing. However, the parties acquiesced in my determining today whether leave should be granted in respect of paragraph 1(e), 1(f), 1(g) and 1(h) of the notice of motion. 10The applicant submits that the matters in paragraph 1(a)-(d) of its notice of motion are responsive to expert evidence supporting a revised methodology adduced by the Valuer-General. As it was put in paragraph 3 of a letter of 8 July 2014 from the applicant's solicitors, Sparke Helmore, to the Valuer-General's solicitor: The facts set out in proposed order 1, paragraphs (a) to (d) of the Notice of Motion relate to the consideration of mining information in valuation of mining titles. Mr Gleeson and Mr Pendergast have addressed the value of the mining information and the cost to obtain or reconstruct that information in response to the revised methodology relied on by the Valuer-General in these proceedings. Perilya relies on that material in direct response to the case now pursued by the Valuer General in the proceedings. The revised methodology proposed by the Valuer-General's retained expert Mr Gemmell in his statement dated February 2014 involves determining the "total project value" and deducting certain cost components resulting in a value for "mining property", which includes mining titles an mining information. For example, in paragraph 7 of Mr Gemmell's statement he confirms that he has "assumed that all data relating to current land status, ore reserves and mining operations is known and readily available to both the current land owner and the potential acquirer". At paragraph 35 of Mr Gemmell's statement he confirms that he has calculated the value of the "mining property", which includes mine data or mining information, as confirmed by the following statement at paragraph 36: "...The resultant net present value is the sum value of those project components that have not been included in the inputs. In the models under consideration, this includes land, mine data, and entrepreneurial or managerial reward." In those circumstances, the applicant contends that it is appropriate for leave to be granted for it to rely on the facts set out in the statements prepared by Mr Gleeson and Mr Pendergast to address and respond to Mr Gemmell's methodology. 11The Valuer-General disputes that paragraph 1(a)-(d) of the notice of motion are responsive to the Valuer-General's evidence, and submits that it opens up a large new area of the case; that the Valuer-General will incur substantial time and costs estimated to far exceed $100,000 if it has to respond to it, and it is apprehensive that once it puts on its own evidence in reply it will all be admitted into evidence even if the applicant's evidence is not responsive. Therefore, the Valuer-General submits, the issue of whether it is responsive should be determined before the final hearing. 12The applicant submits that in order to determine whether its evidence is responsive there would have to be a substantial mini-trial before the final hearing; therefore, that it should be deferred to the final hearing when the trial judge will be best placed to rule on it; and that this would be even-handed given that the Valuer-General's notice of motion for leave was stood over by consent to the final hearing. 13There is weight in both parties' submissions. On balance, in my opinion, it is preferable to stand over paragraph 1(a)-(d) of the applicant's notice of motion to the final hearing subject to two terms. The first term is that if it is ultimately determined to be not responsive to the Valuer-General's evidence, then the Valuer-General's costs of replying to it should be paid by the applicant. Secondly, in the event it is found to be not responsive, it is not, without further order of the Court, to be admitted into evidence. 14As regards paragraph 1(e) of the applicant's notice of motion, the applicant clarifies that all it actually seeks to do is to tender evidence (with more detailed explanation) of the cost referred to at [13] of Lloyd AJ's reasons for judgment, being evidence tendered before his Honour but which was rejected because it was served too late. Since the respondent is no longer prejudiced by the lateness of the tender, I will give leave to tender such evidence, but will refuse leave in terms of paragraph 1(e) of the notice of motion. The applicant is content with that course. 15Paragraph 1(f) of the applicant's notice of motion was addressed at paragraph 5 of Sparke Helmore's letter as follows: The facts set out in proposed order 1(f) of the Notice of Motion relate to estimated rates of production, Mr Gemmell, at paragraphs 18 to 20 of his expert statement dated February 2014 addresses the question of metal production estimates and states that the Court has underestimated metal production. Mr Gemmell also produces revised models to account for his estimates of future metal production (different to those determined by Lloyd J). It is therefore appropriate for Mr Gleeson to respond by giving his opinion of the production rates and estimates. 16Before Lloyd AJ, the parties agreed that the forecast rate of production was 2.1 million tonnes per annum, indicating a mine life of 5.5 years, which his Honour adopted: at [11]. Paragraph 1(f) seeks to reopen this factual finding through new expert evidence that it is 1.88 million tonnes per annum, indicating a mine life of 5.96 years. In my view, no good reason has been put forward for permitting the applicant to depart from the parties' agreed factual position at the original hearing. Accordingly, I decline to grant leave in terms of paragraph 1(f) of the applicant's notice of motion. 17Paragraph 1(g) of the applicant's notice of motion was addressed at paragraph 6 of Sparke Helmore's letter as follows: The facts set out in proposed order 1(g) of the Notice of Motion relate to forecast mineral prices. Since the earlier Land and Environment Court Proceedings, the Applicant has engaged a new expert to provide valuation evidence, Mr Pendergast, who has significant experience in valuing mining property in potential acquisitions. Mr Pendergast's view is that potential purchasers will determine value based on the mineral prices "he or she believes to be most probable over the expected life of the mining project". Mr Pendergast considers that the method most widely applied for assessing forecast commodity prices is to compile a consensus estimate view, with reliance on historic or spot prices being limited. This is Mr Pendergast's expert opinion and it is appropriate for his opinion to be considered by the Court. Perilya contends that the Court should determine land value by reference to matters that are actually considered in current commercial practice in acquisitions of mining property. 18This seeks to reopen, through evidence from a new expert which is more favourable to the applicant, anticipated mineral prices determined by Lloyd AJ after considering each party's expert evidence, at [19] of his Honour's reasons for judgment. In my view, no good reason has been advanced as to why this should be permitted. Accordingly, I decline to grant leave in terms of paragraph 1(g) of the applicant's notice of motion. 19By consent, I will give leave in terms of paragraph 1(h) of the applicant's notice of motion. 20The orders of the Court are as follows:

1. By consent, in respect of the respondent's notice of motion filed 4 March 2014, the Court orders: (1) The respondent is granted leave to rely upon evidence referred to in paragraph 1(a) of the notice of motion; and (2) The respondent's prayer in 1(b) is stood over to the hearing.
2. In respect of the applicant's notice of motion filed 7 July 2014, the Court makes the following orders: (1) Stand over paragraphs 1(a)-(d) to the final hearing; (2) Refuse the leave sought in paragraph 1(e), but grant leave to the applicant to rely upon the statement of Edward Gleeson dated 8 October 2012, together with evidence in further explanation of that opinion, and noting that the amount of those costs is no more than $60 million; (3) Refuse the leave sought in paragraphs 1(f) and 1(g); (4) Grant the leave sought in paragraph 1(h). (5) Further to order 2(2) above, in the event that the Court at the final hearing determines that the evidence referred to in paragraphs 1(a)-(d) is not responsive to the Valuer-General's case (as it appears from the Valuer-General's served evidence), the applicant is to pay the Valuer-General's costs of replying to that evidence, as assessed or agreed, and the evidence is not, without further order, to be admitted.
3. The respondent's evidence in reply is to be filed and served by 23 September 2014.
4. The applicant's explanatory evidence referred to in Order 2(2) is to be filed and served by 19 August 2014.
5. The matter is listed for directions on 26 September 2014. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 16 July 2014