(6) In the current case, it is necessary to take into account not only the reality of the new forecast but also the reality that the plaintiff's properties have in fact been affected by severe aircraft noise. The proposition put forward by Mr Cooper that, on paper, the noise should not have been as severe as was in fact experienced must be read in conjunction with the evidence, correspondence and admissions set out in section 6.6 of these reasons.
Thus, whilst, on paper, the position appears as it was in 1993/1994, in fact it is not. The circumstances are significantly different.
The evidence of the plaintiffs and the defendant was that in 1993/1994 there was little appreciable aircraft noise experienced at the site of the then proposed Resort. The 2002 ANEF indicated that in 2002 noise levels would be severe. The 2011 ANEF indicates that by 2011 aircraft noise affecting the Resort will be reduced to the point where the noise attenuation requirements of AS2021 will no longer apply. There is no evidence before the Court to suggest that this forecast already has application to the properties.
I am thus not persuaded that the publication of the 2011 ANEF is of any relevance in assessing the plaintiffs' loss as at the date of contracts for the purchase of their properties."
153 Mr Cooper to whom the judge referred was an acoustic consultant called by the Council, whose lengthy report included the opinion that, with changes in aircraft type and flight paths, the actual noise exposure at Fisherman's Village had fallen in the late 1990s and, if the 2011 ANEF (in fact an ANEC, see later) were used for planning purposes no noise control measures would be required. Mr Cooper added, however -
"152. Nevertheless, from the maximum noise level information that has been obtained for the purpose of determining noise controls for the subject development, I find that noise levels from aircraft operating at the weapons range in 1992 were greater than that experienced in the late 1990's and significantly greater than that experienced now."
154 The "evidence, correspondence and admissions set out in section 6.6" to which the judge referred was a series of matters, including consideration of Mr Cooper's report, which evidently caused her Honour to accept (see her para 6.8(3)) that aircraft noise became a significant problem commencing in the latter part of 1995.
155 Before going to the Council's submissions on appeal, something should be said of later noise exposure forecasts.
156 I have referred to the issue by the Department of a draft 2005 ANEF in May 1997. The evidence was not entirely clear. It seems that the draft was prepared for the Department by VIPAC Engineers & Scientists Ltd ("VIPAC"). According to Mr Cooper, the VIPAC draft was "never endorsed" because it was found that an assumption upon which it was based was incorrect. According to Ms Westing, subsequent to the issue of the draft the Department advised that it was "the final draft 2005 ANEF contours", but "never formally endorsed them". The evidence included two apparently different drafts, one showing the Fisherman's Village site partly within the 25 contour and partly within the 30 contour and the other showing it partly within each of the 20, 25, 30 and 35 contours. Whatever the position, it is apparent that the noise exposure forecasting was in a state of flux, but the forecast for the site tended to greater noise affectation.
157 According to Ms Westing, in January 2001 the Department issued a revised draft ANEF as the noise exposure forecast for Williamtown to 2010. Ms Westing nonetheless said that the 2005 ANEF "is still the most current information available for [the Range]". She apparently did not regard the noise exposure forecasts next mentioned as of planning significance.
158 In 1999 the Department commissioned GHD Pty Ltd ("GHD") to undertake a study of the likely impact of the introduction of the Hawk aircraft, as a replacement for the Macchi, in operations at Williamtown and the Range. GHD produced a 2011 Australian Noise Exposure Concept chart ("the 2011 ANEC"). It showed Fisherman's Village between the 20 and 25 contours.
159 Mr Moss of GHD said that an ANEC is "used for evaluation of particular operations such as used for this study". He put forward the description of an ANEC -
"An ANEC is an illustration on a map, which shows contours of defined noise exposure using inputs which may be quite different to the inputs used to produce an ANEF or ANEI. ANECs are prepared for the purpose of assessing the noise exposure of various operational or airport development alternatives and are based on a hypothetical set of conditions of runways, aircraft types and flight operations. Several ANEC maps may exist for some future year, based on different forecast conditions. ANECs should not be used for definitive land-use planning; however, the land-use compatibility table (Table A.1) is used to assess the potential impact of operations depicted on the ANEC plans."
160 Mr Cooper described an ANEC as "a hypothetical concept … that has not been subject to the rigorous examination and cross checking of an ANEF", and his report included -
"41. If one considers the possibility of projected aircraft operations, at some point in time in the future, then the chart that is produced is identified as the Australian Noise Exposure Concept (ANEC) chart. As there can be different opinions under consideration for an aerodrome development, there may be several ANEC charts at any one point in time. As such, the ANEC may not necessarily be the considered position of the airport at some point in time and therefore does not have status as a document to be used for land-use or planning purposes.
42. The Australian Noise Exposure Forecast (ANEF) chart is a contour map determined from a projection of aircraft operations at some point in the future. This chart is a contour map that has been developed following extensive consultation and validation of the forecast of aircraft movements, operating times, types, flight paths etc, developed for an aerodrome. Obviously an ANEF at one point in time would have been an ANEC.
…
The ANEF chart is an ANEC that has been examined for its accuracy in terms of computer generated predicted levels, input data and modelling results and having received an endorsement is the official ANEF document to be used for planning purposes."
161 In 2003 the Department commissioned GHD to prepare a new ANEF for Williamtown and the Range. GHD's report noted that "[t]he current, endorsed 2002 ANEF for [the Range] is included in the 2002 ANEF for Williamtown and was produced in 1992", and that the Hawk aircraft had replaced the Macchi and it was "therefore appropriate that a new ANEF be published". The report proposed a 2012 ANEF in which Swan Bay appears to be within, but only just within, the 20 contour.
162 The Council did not challenge on appeal the judge's acceptance of valuation evidence. It submitted that the differences between the values and the contract prices should not have been awarded as damages, because the Department had published a new noise contour map showing Fisherman's Village in the 20-25 ANEF contour so that the purchasers were -
" … at the date of the trial and remain, in the same position that they claimed that they believed they were in at the date of purchase. That is, that they each owned cabins in the Resort that are unaffected by an adverse noise forecast requiring the provision of noise attenuation".
163 The new noise contour map on which the Council relied at this point was the 2011 ANEC, although the Council equated it with an ANEF. It referred also to the proposed 2012 ANEF, changing from one to the other rather indiscriminately; that proposal was not shown to have gone beyond the GHD report. It is not clear to me that, or the extent to which, the 2011 ANEC or the proposed 2012 ANEF had entered the public domain, although the purchasers' submissions did not include that no account could be taken of them because they had not.
164 The submission was again put in two ways. The first was that the purchasers' losses were contingent losses only, although not because it was necessary that the lots be sold in order to establish a loss, but because the purchasers had in fact not sold their lots and suffered losses but continued to hold them when the subsequent publication of the new noise contour map meant that they were no longer exposed to sale at a loss. The second was that the subsequent publication of the new noise contour map meant that no losses had been suffered. I do not understand the submissions to have gone to the consequential losses, although it was not entirely clear, but it is difficult to see how they could negate the consequential losses or at least the entirety of them.
165 As to contingency, the Council relied on Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 and Murphy v Overton Investments Ltd (2004) 216 CLR 388. The contingency there in question was different from the relevance of the later noise exposure forecasts to the purchasers' losses. The purchasers suffered losses immediately they purchased their lots, in the difference between the prices paid for their lots and the lots' then values. The present question is rather one of ascertaining the values of the lots in quantifying the loss, and whether and how in doing so there is taken into account the subsequent event of the 2011 ANEC or the proposed 2012 ANEF. The High Court made plain in HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640 that contingency as considered in Wardley Australia Ltd v Western Australia and Murphy v Overton Investments Ltd was a different matter, see below.
166 As to the subsequent publication of the new noise contour map, the Council again relied on Kizbeau Pty Ltd v W G & B Pty Ltd and also on HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd; the latter case was decided after the judge's reasons of 14 May 2004.
167 In Kizbeau Pty Ltd v W G & B Pty Ltd Kizbeau had purchased a motel business relying upon a representation by WG & B that an upstairs portion of the premises could lawfully be used for seminars and conferences. Conditions in a council permit prevented this use, and the representation was false. Damages were assessed as the difference between the value of the business at the date of purchase and the price paid. Relevantly, it was held that it was necessary to take into account that Kizbeau had in fact used the upstairs portion for seminars and conferences, and had after a time obtained an amendment to the conditions of use whereby, subject to a limitation of numbers, the upstairs portion could lawfully be used for seminars and conferences.
168 In the joint judgment of Brennan, Deane, Dawson, Gaudron and McHugh JJ it was said (at 291) that, although the value of the thing acquired was to be assessed at the date of the acquisition, subsequent events "may be looked at insofar as they illuminate the value of the thing as at that date", although only those subsequent events "that arise from the nature or use of the thing itself" as distinct from subsequent events "that affect the value of the thing but arise from sources supervening upon or extraneous to the fraudulent inducement". Their Honours said (at 295) that in arriving at the value of the business the valuer should have considered the likelihood that the conditions of use might change, even if they had not been changed when he valued the business, and that "[a]rmed with the knowledge that the conditions in the town planning permit have been changed, the Federal Court was bound to act upon that knowledge even though the change in the conditions occurred after the date of sale".
169 This was further explained in HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd. In April 1977 Astonland purchased a shopping arcade in reliance on HTW's valuation, which it was held should have been qualified by informing the reader that the effect on rental income of a rival shopping centre then under construction was uncertain. The trial judge awarded damages measured by the difference between the price paid by Astonland and the value of the shopping arcade at the end of 1998, after the rival shopping centre had been operating for the better part of a year. It was held that this was incorrect, and that Astonland's loss did not await the establishment and a year of trading of the rival shopping centre; but that in ascertaining the value of the shopping arcade in April 1997 it was necessary to take into account how the uncertain effect on rental income was known to have evolved into certainty. The result in that case would have been to increase the damages, because the value so arrived at would have been less than the value at the end of 1998.
170 In the joint judgment of Gleeson CJ and McHugh, Gummow, Kirby and Heydon JJ it was said (at [28]) -
"If the plaintiff had learned the day after entering the contract to buy the Plaza, or the day after completing that contract, that the defendant's conduct had been misleading in the sense ultimately found by the trial judge, it could have started proceedings then and there. There was unchallenged evidence from Mr Dodds that on either of those dates the plaintiff was in fact worse off as a result of the defendant's breach, since the market value was less than the price. It was not necessary to wait for nearly two years to ascertain that some loss had been suffered. The plaintiff could have found out at once that it had bought something which was worth less than that which it had agreed to pay and did pay. It could have recovered at least the difference between the price paid for, and the market value of, the Plaza. The limitation period would have begun to run."
171 Their Honours went on to say (at [29]-[30]) that the case was not like Wardley Australia Ltd v Western Australia or Murphy v Overton Investments Ltd, and that Astonland had not been exposed to a contingent loss but had suffered an actual loss. The Council's submission as to contingency can not stand with this.
172 Their Honours accepted Astonland's submission that the correct measure of damages, apart from consequential losses, was to deduct the value of the shopping arcade at the date of purchase from the purchase price, and in assessing that value to bear in mind post-acquisition events. They said that the approach of subtracting value from price was flexible, and that -
"[36] One key qualification of the rule which prevents it from being inflexible is that the test depends not on the difference between price and 'market value', but price and 'real value' or 'fair value' or 'fair or real value' or 'intrinsic' value or 'true value' or 'actual value' or what the asset was 'truly worth' or 'really worth' or 'what would have been a fair price to be paid … in the circumstances … at the time of the purchase'. This distinction is sometimes difficult to draw, but it is old and fundamental.
[37] A second qualification flows from the first. The distinction between a value which answers one of the tests just stated and market values means that market values - the prices actually obtainable in market sales - may be disregarded if they are 'delusive or fictitious' because they are the result of 'a fraudulent prospectus, manipulation of the market or some other improper practice on the part of the defendant'. There are other reasons why the law does not limit recovery by reference to market value - the amount for which the plaintiff might have sold the assets acquired. One is that, subject to mitigation issues, the plaintiff is 'not bound to sell them'. Another is that there may not be a market. Another is that the market is mistaken on some basis other than manipulation. It is common to speak of shares being undervalued (or overvalued) by the market.
[38] The last point is supported by another matter to which Dixon J [in Potts v Miller ] referred, in the context of shares:
'[T]he real value of what the plaintiff got must be ascertained in the light of the events which afterwards happened, because those events may show, for instance, that what the shares might have sold for was not their true value or that it was a worthless company.'
He referred to Sir James Hannen's observation in Peek v Derry -
'[S]ubsequent events may shew that what the shares might have been sold for was not their true value, but a mistaken estimate of their value.'
Dixon J continued:
'[L]ooking back from subsequent events to the earlier state of the company it may appear that at the time the shares were taken the assets of the company did not correspond in value to the money paid.'
[39] In the same way, in Kizbeau Pty Ltd v W G & B Pty Ltd this Court pointed out that, in many fields of law, assessments of compensation or value at one date are commonly made taking account of all matters known by the later date when the court's assessment is being carried out. This has been so in relation to the remarriage of widows, the termination of a dependency by early death after the date from which damages were to be assessed, the death of a person having a claim for personal injuries which was unexpectedly early and unrelated to those injuries, rises in wage rates, assessing the value of reversionary life interests which never came into possession, valuing annuities, and assessing compensation for the acquisition or destruction of property rights. The limpid words of Lord Macnaghten about the duty of an arbitrator in determining compensation are far too well known to escape repetition:
'Why should he listen to conjecture on a matter which has become an accomplished fact? Why should he guess when he can calculate? With the light before him, why should he shut his eyes and grope in the dark?'
The significance of Kizbeau Pty Ltd v W G & B Pty Ltd is that it endorsed that approach in relation to s 82 of the Act when the court is assessing damages by comparing the price and the real value of the asset at the date of the acquisition." (citations omitted)
173 Importantly, their Honours explained when post-acquisition events were to be taken into account, saying -
"[40] Finally, although the court is entitled to take into account events after the date of acquisition, it must distinguish among possible causes of the decline in value of what has been bought. 'If the cause is inherent in the thing itself, then its existence should be taken into account in arriving at the real value of the shares or other things at the time of the purchase. If the cause be "independent", "extrinsic", "supervening" or "accidental", then the additional loss is not the consequence of the inducement'." (citations omitted)
174 This explanation was illustrated. Their Honours considered that the fall in value of the shopping arcade was "not independent, extrinsic, supervening or accidental", but "lay in circumstances crucial to the value of the Plaza at the time when the plaintiff acquired it - the current building, and the impending opening, of the Beach Road Shopping Centre" (at [41]). They considered that the rental levels, and therefore the value, of the shopping arcade were "doomed from the start - 'pregnant with disaster' - because so long as the building of the Beach Road Shopping Centre continued the loss was inevitable", and compared the shopping arcade to a horse which died of a latent disease inherent in its system at the time of its purchase, as distinct from one which died of a disease contracted after the purchase (at [43]).
175 The valuer had valued the shopping arcade as at April 1997 taking into account the "serious risk" of the rival shopping centre being completed as having an "impact on the market at that time". In their Honour's view, the court should go further. Their Honours said (at [44]-[46]) -
"… In carrying out valuations, [the valuer] had to take account of risks so far as the market perceived them to be present realities at the date at which value was to be fixed. The task of valuation is to be conducted without hindsight - that is, without knowledge of events which have not happened by the date at which the value is to be ascribed, though they have happened by the date on which the valuation takes place. That task is different from the task of assessing loss, because the latter task is to be conducted with hindsight.
[45] Thus, in assessing damages in this case, the court is not limited to the assessment of risk as at 28 April 1997, but is entitled to take account of how those risks had evolved into certainties at dates after the date on which the comparison of price and true value was being made. The market values Mr Dodds arrived at may well have been entirely accurate; if so, they demonstrated not that he was in error, but that the market assessment of the risk was erroneous. In short, the market value in 1997 was not a 'true value, but a mistaken estimate of … value'.
[46] Figures worked out by analysing what willing but not anxious buyers and willing but not anxious sellers would agree on, without taking account of subsequent events, may correspond with market value; but they do not necessarily correspond with true value because the market can operate under some material mistakes. In particular, some material factor may not be apparent to it. A mistake of this kind, it seems likely, was present here. Though the market value on 21 April 1997 was $400,000, and in July 1997 it was $375,000, one matter was not apparent then which was apparent later. The trial judge found that $130,000 was 'the value of the land more or less since it became apparent that tenants were largely unavailable except at minimal rentals.' That unavailability was an inevitable consequence of the Beach Rd Shopping Centre once it was completed, but the perception of the likely effect of that completion was obscure in 1997, and only became clearer from the latter part of 1998 on." (citations omitted)
176 The essence of their Honours' reasoning was that, although it may not have been operating in the market to reduce the value of the shopping centre as at April 1997, a factor material to the true value (as distinct from the market value) of the shopping arcade was the inherent vulnerability of the shopping arcade to the competition of the rival shopping centre under construction at the time of purchase. The inevitable manifestation of that vulnerability, as it had come to be known, could be taken into account, and the valuer fell short of taking it into account because he paid regard to a risk rather than the known consequence.
177 The circumstances of the present case are in my opinion quite different. When the purchasers purchased their lots, there was no doubt the possibility that changes in aircraft types and usage of the Range would bring changed noise affectation for the site of Fisherman's Village. The evidence did not show that, at that time, any change would be for the better rather than for the worse; indeed, the draft 2005 ANEF demonstrates the possibility that it would be for the worse. It is still by no means certain that it will be for the better. The 2011 ANEC has the status only of a study, not an examined and approved ANEF, and the proposed 2012 ANEF may not be adopted. Whatever aircraft types and usage of the Range lies behind the 2011 ANEC or the possible 2012 ANEF would, even if the ANEC came to adoption as an ANEF or the proposed 2012 ANEF became an adopted ANEF, be open to further change, either with better or with worse consequences for noise affectation. Neither the 2011 ANEC nor the proposed 2012 ANEF is anything like the inevitable manifestation of the inherent vulnerability of the shopping arcade in HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd.
178 The values of the of the purchasers' lots as at the dates of their purchases would have reflected the market's understanding of, amongst other things, the possibility that noise affectation from use of the Range might change, for the better or for the worse. The Council's submission was not that the valuer had failed to take into account the possibility that it might change for the better. It was that the mere fact of the 2011 ANEC or the proposed 2012 ANEF meant that the purchasers were now in the positions they claimed they believed they were in at the dates of their purchases, and so they had suffered no loss. Kizbeau Pty Ltd v W G & B Pty Ltd and HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd do not support that, nor do they support an argument that the diminutions in value were nil because the real values of the lots, as distinct from their market values, were shown by subsequent events to have been the same as the prices paid for them. The Council did not call valuation evidence to the effect that a market informed of the 2011 ANEC or the proposed 2012 ANEF, and thus with any mistake of the kind afflicting the valuer in HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd corrected, would have paid for the lots the prices the purchasers in fact paid. Perhaps on reasoning different from that of the judge, I do not think the Council has shown error in the judge's assessment of diminutions in value.