Real Property - Resumption or acquisition of land - Compensation - Time at which compensation estimated - Relevance of events subsequent to that time.

Land Acquisition Act 1993 (Tas).

Housing Commission of New South Wales v Falconer [1981] 1 NSWLR 547; Cairns City Council v CMB No 1 Pty Ltd (1997) 96 LGERA 306, referred to.

Judgment Number: [2005] TASSC 2

1 Pursuant to the Land Acquisition Act 1993 ("the Act"), s44, the Sorell Council ("the Council") has applied to the Court for the determination of a disputed claim for compensation made by William Bruce Downie in respect of 443.7 hectares of land acquired from him by the Council. The compensation is to be assessed as at the date the Council served notice to treat on Mr W B Downie, 14 October 1996, ("the assessment date").

2 The acquired land is depicted as lot 1 on the following indicative plan I have cobbled together of the relevant area ("the Plan").

3 The acquired land is part of about 2,000 hectares of land that Mr W B Downie and his son Robert farmed at Copping. The land is about 45 kilometres by road east of the Post Office in the centre of Hobart. The Council acquired the land for the purpose of waste disposal. The land is eminently suitable for use as a regional landfill site. It is adjacent to the Arthur Highway, but not visible from it or from any populated area, it is close to electrical power, it has gravel for roads and road maintenance, there is an unnamed tributary of the Carlton River about 200 metres from the proposed landfill area, but no water course running through the site. Clay subsoil forms a natural barrier to the escape of leachade and contamination of ground water, and also provides the necessary raw materials for lining the cells created to take the landfill.

4 Following the acquisition, coupled with the acquisition of land owned by Mr Robert Downie, the retained farm occupied three separate lots owned by Mr W B Downie. They are lot 5 to the north of the acquired land, lot 6 to the west of the acquired land, and lot 7 to the south of the land acquired from Mr Robert Downie. The acquired land is basin shaped and comprises about 80 hectares of pine plantations, 97 hectares of eucalyptus bush run, 53 hectares of fair pasture and 213 hectares of partly cleared open grazing.

5 Land was acquired by the Council from people other than Mr W B Downie to facilitate the landfill development on the land acquired from Mr W B Downie. His land enjoyed a right of way over land owned by Mr and Mrs Thompson which provided access to and from the Arthur Highway. The right of way is lot 3 on the Plan, and the Thompson land is lot 2. The right of way provided an existing single carriage roadway. In order to ensure that it had access that would accommodate the number of truck movements involved in a major regional landfill, the Council acquired the land subject to the right of way from Mr and Mrs Thomspon.

6 Lot 4 on the Plan, an area of land comprising 253.5 hectares was acquired from Mr Robert Downie. This area of land, known as the Blue Hill, consists primarily of a large hill, not particularly suitable for use as landfill and not particularly attractive as agricultural land. It was acquired to provide a buffer zone on the southern side of the proposed landfill area.

7 The majority of the land acquired from Mr W B Downie is zoned "rural" under the provisions of the Sorell Planning Scheme 1993, and forested areas in the south-western section of the acquired land is zoned "forestry". "Landfill" is a discretionary use under the planning scheme in the "rural" zone, that is to say it is permitted subject to Council approval. Subsequent to the acquisition the Council applied for and obtained a planning permit from itself and after an appeal to the Resource Management and Planning Appeal Tribunal, a consent decision from that Tribunal was given on 10 December 1999 affirming the permit.

8 Mr W B Downie's entitlement to compensation is to be assessed pursuant to the Act, s27(1), which relevantly provides:

"27 - (1) In determining compensation under this Act, regard is to be had to the following matters:

(a) the market value of the estate of the claimant in the subject land;

(b) any special value the estate in the subject land may have to the claimant which is -

(i) a financial advantage incidental to the claimant's ownership of that estate; and

(c) the damage caused by severance of the subject land from other land belonging to the claimant;

(e) whether other land belonging to the claimant is injuriously affected by the carrying out of, or the proposal to carry out, the authorized purpose;

(f) any disturbance relating to any loss or damage suffered, or cost reasonably incurred, by the claimant as a consequence of the taking of the subject land;

(fa) whether, under any other Act, the claimant or a former owner of the subject land has been paid or awarded any compensation or compensatory costs in connection with the authorised purposes for which it is being acquired;

(g) except as provided in this Part, such other matters as the acquiring authority, the Court or an arbitrator may consider to be relevant."

9 In the course of the hearing the parties agreed that the expert evidence of Mr W B Downie's entitlement to compensation in respect of the loss of timber on the acquired land valued his hardwood loss at $185,000 and his softwood loss at $125,000, a total loss of $310,000. The parties are in dispute as to Mr W B Downie's amended claim of $3.5m to $4m for the market value of the acquired land. That amount is claimed on the basis that the highest and best use of the land is for waste disposal:

"It is now settled, and for good reason, that a disposed landowner should be compensated for the value of his or her land on the basis of its highest and best use."; Boland v Yates Property Corporation Pty Ltd [1999] HCA 64; (1999) 74 ALJR 209, Callinan J, at 265 [271].

10 It being common ground between the parties that compensation should be determined on the basis that the highest and best use of the land is for waste disposal, Mr W B Downie does not pursue claims for compensation for any special value, severance, injurious affection or disturbance.

11 In Spencer v The Commonwealth of Australia [1907] HCA 82; (1907) 5 CLR 418, consideration was given to the provisions of the Property for Public Purposes Acquisition Act 1901 (Cth), s19(1), which required that the compensation for acquired land be assessed according to what was found "to have been the value of the land, estate or interest of the claimant" on the specified date. The case concerned the value of land acquired for the purpose of erecting a fort to defend Fremantle harbour. Griffiths CJ, at 431 - 432, said:

"In the case of chattels it is often, though not always, easy to ascertain the value. In order that any article may have an exchange value, there must be presupposed a person willing to give the article in exchange for money and another willing to give money in exchange for the article. When there is a large or considerable number of articles of the same kind which are the subject of daily or frequent sale and purchase, the value of the articles is taken to be their current price. Thus, in the Sale of Goods Act, the measure of damages for wrongful refusal to deliver goods is to be ascertained with reference to 'the market or current price of the goods.' The foundation of this doctrine is that a man desiring to sell such articles can readily find a purchaser at a price which is fairly certain, and conversely that a man desiring to buy can find a seller at about the same price. But these considerations are not necessarily equally applicable to land. There is, no doubt, much land in many places the value of which per acre is as definitely fixed as the price of wheat or sugar. But in the case of a new port, in a new State, where the area of land is limited, and each piece differs in many of its characteristics from the rest, it is impossible to apply any such rule. Bearing in mind that value implies the existence of a willing buyer as well as of a willing seller, some modification of the rule must be made in order to make it applicable to the case of a piece of land which has any unique value. It may be that the land is fit for many purposes, and will in all probability be soon required for some of them, but there may be no one actually willing at the moment to buy it at any price. Still it does not follow that the land has no value. In my judgment the test of value of land is to be determined, not by inquiring what price a man desiring to sell could actually have obtained for it on a given day, ie, whether there was in fact on that day a willing buyer, but by inquiring 'What would a man desiring to buy the land have had to pay for it on that day to a vendor willing to sell it for a fair price but not desirous to sell?' It is, no doubt, very difficult to answer such a question, and any answer must be to some extent conjectural. The necessary mental process is to put yourself as far as possible in the position of persons conversant with the subject at the relevant time, and from that point of view to ascertain what, according to the then current opinion of land values, a purchaser would have had to offer for the land to induce such a willing vendor to sell it, or, in other words, to inquire at what point a desirous purchaser and a not unwilling vendor would come together."

"... a claimant is entitled to have for his land what it is worth to a man of ordinary prudence and foresight, not holding his land for merely speculative purposes, nor, on the other hand, anxious to sell for any compelling or private reason, but willing to sell as a business man would be to another such person, both of them alike uninfluenced by any consideration of sentiment or need."

"... the all important fact on [the date at which compensation is to be assessed] is the opinion regarding the fair price of the land, which a hypothetical prudent purchaser would entertain, if he desired to purchase it for the most advantageous purpose for which it was adapted. The plaintiff is to be compensated; therefore he is to receive the money equivalent to the loss he has sustained by deprivation of his land, and that loss, apart from special damage not here claimed, cannot exceed what such a prudent purchaser would be prepared to give him. To arrive at the value of the land at that date, we have, as I conceive, to suppose it sold then, not by means of a forced sale, but by voluntary bargaining between the plaintiff and a purchaser, willing to trade, but neither of them so anxious to do so that he would overlook any ordinary business consideration. We must further suppose both to be perfectly acquainted with the land, and cognizant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood, as then appearing to persons best capable of forming an opinion, of a rise or fall for what reason soever in the amount which one would otherwise be willing to fix as the value of the property.

... Having mentally placed itself in the position of the bargaining parties as on the critical date, 1st January 1905, the question for the tribunal is, what is the point at which the parties would meet; what is the sum the one would be willing to give and the other to take?"

14 The means enunciated for the determination of the value of acquired land in Spencer v The Commonwealth of Australia have been applied in many acquisition cases and govern the approach to be taken when determining market value for the purposes of the Act, s27(1)(a). In Commonwealth of Australia v Arklay [1952] HCA 76; (1952) 87 CLR 159, Dixon CJ, Williams and Kitto JJ, in a joint judgment said, at 169 - 170:

"Where the amount for which a vendor may sell and a purchaser buy is not controlled the Court poses a hypothetical problem, the answer to which supplies this value. It is a familiar rule which in Australia was authoritatively formulated in Spencer's Case [1907] HCA 82; (1907) 5 CLR 418. Shortly stated what is required is 'an estimate of the price which would have been agreed upon in a voluntary bargain between a vendor and purchaser each willing to trade but neither of whom was so anxious to do so that he would overlook any ordinary business considerations' Commissioner of Succession Duties (SA) v Executor Trustee & Agency Co of South Australia Ltd [1947] HCA 10; (1947) 74 CLR 358, at p 367. It is simply an analysis of what in all the relevant circumstances would be the price that a willing purchaser would have to pay a vendor willing but not anxious to sell in order to obtain the land. Where land has no special suitability for some business or activity carried on by the owner and has no added potential value if put to some better use, the value on a free market is usually its market value. The best evidence of this value is that of comparable sales of other land either before or after the date of acquisition but this evidence is often not available."

15 In this case, the expert witnesses have valued the acquired land by a variety of different methods at substantially different amounts ranging from $375,000 up to $4m. This leads me to approach this matter mindful of the following comments.

16 In Doherty v Commissioner of Highways (1974) 7 SASR 57, Zelling J said, at 83:

"Judges do not have to accept the valuations of the valuers of either side and frequently arrive at a figure or figures which constitute a modification or modifications of the figures submitted by one or more valuers. For a typical example of the process, see the judgment of Walsh J in Anthony v The Commonwealth, especially at page 94. They are guided in coming to their conclusion by the evidence of the valuers together with the other evidence in the case. The Judge's duty is that set out in s25(a) of the Land acquisition Act 1969, namely, to assess the compensation payable to claimants and in this case to the respondents so as adequately to compensate the respondents for any loss that they have suffered by reason of the acquisition of the land. Everything else is simply evidence to be appraised by the Judge as all evidence is appraised, upon which he comes to his conclusions, ...".

17 In Brewarrana Pty Ltd v Commissioner of Highways (No 2) (1973) 6 SASR 541, Wells J said, at 559 - 560:

"A figure reached by the adoption of any given valuation method can only be regarded as an aid to fixing compensation: it is not the compensation, or even a pretence to be the compensation. As I understand the evidence and the authorities cited, such a figure can have relevance to this Court's task only because it represents, to use the words of Isaacs J in the same case [Spencer's case at 441] one of the 'ordinary business considerations', to be weighed along with all other circumstances of which the hypothetical buyer and seller are deemed cognizant, that 'might affect its value' in the hands of the owner. A reasonably prudent owner would ordinarily, for example, pay attention to comparable sales and the opinions of reliable valuers founded on them; would, no doubt, subject them and the land sold to careful analyses. But, in the last resort, they would not furnish him, as though they represented the material for a working formula, with a definitive figure to claim. He would pay close attention to the results of operating every method whose use he investigated but he would not regard any particular one as conclusive. What I have just said applies especially where the ingredients with which it is concerned are to a greater or less extent debateable."

"The judicial task is to see the combined results of the valuer's work not as another valuer would see them, but as material fit to be used in the course of applying the principle laid down in Spencer's Case; the two roles of buyer and seller must, in my opinion, finally merge in the Court. I must bear in mind the conclusions of the valuers, and try to accord to each the sort of bearing and weight that would be accorded to them in the notional transaction of sale and purchase propounded by Spencer's Case."

18 In Minister for the Environment v Florence (1979) 21 SASR 108, Wells J said, at 116 - 117:

"I wish once again to emphasize, what I stated first in the Brewarrana case, that [it] is contrary to principle to extract items from one valuer's calculation and items from another's, and bring them together to form a third. It may be objected that, if some such course as that is not adopted, a court may find itself faced, at the end of a case, with two or more valuations which, even after adjustments have been made to them in consequence of valid adverse criticism based on evidence or principle, give markedly different figures, and no safe ground may exist for discarding one and adopting another. What then (it is asked) should a court do? It would be plainly contrary to principle to strike an average; cases are not to be decided that way. Are such results to be regarded as intractable?

It seems to me that to reason in this way is to overlook the importance of Spencer's case and the function that it has in this jurisdiction. It is, in the final analysis, the court that fixes compensation in accordance with the correct legal interpretation of s25. One element in the assessment of compensation is the value of the land and for the purpose of assessing compensation with respect to the value of land the principles enunciated in Spencer's case are to be applied by the Judge as the tribunal of fact. Amongst the 'ordinary business considerations' which the hypothetical buyer and seller would not overlook are, in my opinion, to be included the valuations (adjusted or modified - it may be - in accordance with the evidence as a whole) to which the expert valuers have testified. Those valuations and all the other relevant considerations referred to in Spencer's case will then be weighed by the trial Judge in order to make a final assessment of compensation."

19 I will pay due regard to all of the various methods of valuation adopted by the expert witnesses in this case. As Callinan J observed in Boland v Yates Property Corporation Pty Ltd [1999] HCA 64; (1999) 74 ALJR 209 at [280]:

"There is no legal principle that purports to, or could close for all times the categories of methods of valuation which might be acceptable in a particular case."

20 I should say that the hypothetical vendor is not to be identified with Mr W B Downie, the respondent, Commonwealth of Australia v Arklay (supra) at 164. Personal attributes of a claimant, such as generosity, parsimony or indifference, are irrelevant. This does not mean that the hypothetical vendor is not aware of all that is known to the claimant in relation to the market for the land as at the date of the assessment. Similarly, whilst the hypothetical buyer is not to be identified with the acquirer, the fact that the acquirer was in the market for the land is a matter to be taken into account, Spencer v The Commonwealth of Australia (supra) at 420 and Albany & Ors v Commonwealth of Australia (1976) 12 ALR 201 at 210. In this instance the likely hypothetical purchasers are any entities interested in operating a waste disposal site on the eastern shore and include municipal councils and private operators.

21 A considerable amount of evidence was given of matters that have occurred since 14 October 1996, the assessment date. This evidence is of very limited assistance. With some exceptions a determination of market value revolves around the information available to the hypothetical parties to the transaction at the assessment date. An almost inevitable consequence of the adoption of the hypothetical negotiation approach to the determination of market value is that the Court's preference for actuality over prophesies when assessing damages in both personal injury and wrongful death cases has limited application to land acquisition cases where the issue is the market value of the acquired land . As Mahoney JA observed in Housing Commission of New South Wales v Falconer [1981] 1 NSWLR 547 at 576:

"In determining the effect which may be given to events occurring subsequently to the date of resumption, it is necessary to draw certain distinctions.

There are some cases in which the theory or principle on which the compensation is to be assessed prevents regard being had to subsequent events. Thus, where the compensation which is to be given is measured by the ordinary market price of the property taken, the principle on which that market price is to be determined prevents (or at least restricts) reference to subsequent events. That market price is the price acceptable to a willing but not anxious vendor and purchaser on the relevant date. Such persons are to be taken to know what an appropriately informed person would know on that date. That being the principle, it follows that such persons (and the court, as determining what they would have done) cannot be seen as knowing more. The price which such persons would accept at that date will be affected by the uncertainties as at that date, as to, for example, the future demand for land at the relevant time, future decisions of zoning authorities, and the like. Those uncertainties and the effect of them on the postulated vendor and purchaser help to determine what price will be found acceptable. In that regard, therefore, evidence of what subsequently has occurred in relation to such matters may not ordinarily be referred to. This does not operate so as necessarily to exclude evidence of subsequent sales: Melwood Units Pty Ltd v Commissioner of Main Roads (1975) 52 ALJR 593, at pp 597, 598; [1978] 3 WLR 520, at pp 527, 529, 530; [1979] 1 All ER 161, at pp 166, 167, 168; McCathie v Federal Commissioner of Taxation [1944] HCA 9; (1944) 69 CLR 1, at p 16."

22 Evidence of comparable sales subsequent to the date for assessment is admissible in relation to the determination of the market value of the land, see Commonwealth v Arklay (supra), Woollams v Minister (1957) 75 WN (NSW) 103 at 109, Googong Pty Ltd v Commonwealth (1977) 13 ALR 449 and Melwood Units Pty Ltd v Commissioner of Main Roads (Qld) (1978) 19 ALR 453. A further qualification on the restriction on reliance on events occurring subsequent to the date on which compensation is assessed was addressed by Hope JA in Housing Commissioner of New South Wales v Falconer (supra). In that case, a question that arose was the use to be made of detailed evidence of increases in the cost of building that had occurred subsequent to the date on which compensation was to be assessed. As to this issue, Hope JA said, at 557 - 559:

"This question has to be considered in the light of the principle that this compensation has to be assessed by reference to what additional amount a prudent purchaser in the position of the owner would have found it worth his while to pay sooner than fail to obtain the land. There thus has to be considered not what a prudent purchaser in the position of the owner would pay after he had obtained a knowledge of all the circumstances that in fact occurred after the date of resumption, but what a person in his position would pay in the light of knowledge available at the time of the resumption. However, having affirmed this position, the decided cases dissolve into uncertainty. This Court, in Gosford Shire Council v Green (Court of Appeal, 11th July, 1980 unreported), took the view, in relation to a question, to which s 124 applied, that regard could not be had to events that took place after resumption. There a question arose, inter alia, as to the effect on the value of land retained by the plaintiff of the construction on the resumed land of a parking station and access roads. There was evidence that the parking station which was in fact built differed in some respects from that which a purchaser at the time of the resumption would have expected to be built. This question was asked in the stated case:

'Was I justified in law in assuming, for the purpose of considering the question of enhancement, that the knowledge of the hypothetical parties to an assumed sale of the plaintiff's remaining land was limited to the knowledge of a prudent purchaser at the date of resumption?'

The Court held that the answer to this question was 'Yes'. Reynolds JA said that there was no question of preferring actuality to prophecy. There was, however, no evidence in the case to suggest that a change of plans might have been contemplated by a hypothetical purchaser at the time of resumption.

However there are many decisions, including decisions of the High Court, in which it has been held that evidence of future events is admissible not to prove a hindsight, but to confirm a foresight: see, for example, Trustees Executors and Agency Co Ltd v Commissioner of Taxes (Victoria) [1941] HCA 18; (1941) 65 CLR 33; Minister for Army v Parbury Henty & Co Pty Ltd [1945] HCA 52; (1945) 70 CLR 459, at pp 514, 515; McCathie v Federal Commissioner of Taxation [1944] HCA 9; (1944) 69 CLR 1, at p 16; Australian Apple and Pear Marketing Board v Tonking [1942] HCA 37; (1942) 66 CLR 77, at p 108. [See also Cairns City Council v CMB No 1 Pty Ltd (1997) 96 LGERA 306 at 314 and 321.] An application of the principle namely, that 'The amount of compensation, being a matter of assessment, can, like damages, be calculated in the light of any subsequent facts to the extent to which they throw light upon items of value which can properly be taken into account in the calculation, having regard to the circumstances existing at the date of acquisition': Minister for Army v Parbury Henty & Co Pty Ltd [1945] HCA 52; (1945) 70 CLR 459, at p 514 is to be found in the decision of the Full Court of Queensland in Brisbane City Council v Thorpe (1965) 13 LGRA 31. In that case the council resumed land on which stood a part of a shop building, the other part standing on land retained by the owners. Two years after the date of resumption the council offered to move the existing shops back to the resulting new alignment. In his judgment Gibbs J, as he then was, with whom Hanger and Jeffries JJ agreed, said (at p 37):

'In the present case at the date of the resumption it was reasonable to expect that the council would offer to make the building available, since the purpose of the resumption was to widen a road and possession of a portion of a building could be of no use to the council. The fact that it has since made the offer may be regarded to show that as at the date of resumption the building would have been available.'

If such a principle were to be applied to the present case then it would seem that as at the date of resumption in March 1974, a prudent purchaser properly advised, would certainly have anticipated a significant rise in building costs. In the year ending 1973, the increase in the CPI was 6 per cent, but in the year ending 30th June 1974, it mounted to 12.9 per cent. Accordingly a prudent purchaser would have taken into account the probability, indeed certainty, of increasing building costs. The Court would not be concerned here, as it has been in ordinary damages cases, to determine what the amount of those inflated costs would be; it would be concerned with what a prudent purchaser would do in the knowledge that there had been a sudden and very large growth of inflation which was likely to continue. I do not consider that the Court would be entitled to credit the prudent purchaser with an exact knowledge of what increases in building costs would be between 1974 and 1977 and 1981; what would have to be determined is what would be the attitude of a prudent person in the hypothetical circumstances which the cases have described; but the actual increases could be looked at in confirmation of what the hypothetical purchaser, properly advised at the time of resumption, would have foreseen. The extent to which foresight coincided with or approached fact must be a question of fact - assuming there is evidence to support a conclusion - but it seems impossible to conclude that a purchaser in 1974 could predict what building costs would be seven years later. Undoubtedly there are many reported decisions concerning compensation for disturbance where regard has been had directly to actual costs subsequently incurred, but those are cases where, because of different legislation, because of the shortness of the time span, because the assessment was not tied to any particular date, or for other reasons, no challenge was made to the way in which the evidence of what had in fact happened should be used. I do not think that these decisions affect the principles I have described."

"3 The ascertainment of the market value involves the determination of the hypothetical sum which would have been accepted by the owner had he sold at the date of resumption: Commonwealth v Reeve [1949] HCA 22; (1949) 78 CLR 410, at p 418.

4 Special value is that additional sum over and above the market price which the owner would give for the land sooner than fail to obtain it at the time of the hypothetical sale assumed to have occurred at the date of resumption: Pastoral Finance Association v The Minister [1914] UKPC 77; [1914] AC 1083, at p 1088; Dangerfield v Town of St Peters [1972] HCA 15; (1972) 129 CLR 586, at p 590.

5 In relation to both market and special value, events subsequent to the resumption are of no relevance (McSweeney v Commissioner for Railways (1941) 14 SR (NSW) 18; 31 WN 14) except to the extent that they provide some evidence of what was foreseeable by the owner in calculating what he would have accepted or offered at the time of resumption: Minister for Army v Parbury Henty & Co Pty Ltd [1945] HCA 52; (1945) 70 CLR 459, at p 514."

23 I agree with the approach taken by Hope JA and do not consider that the Court is entitled to attribute to either of the hypothetical parties to the negotiation under consideration exact knowledge of any of the subsequent events about which evidence has been given. In some instances, however, that evidence reinforces the conclusion that matters in question were contingencies that the parties would have foreseen.

24 Differing considerations may apply to the utilisation of evidence of matters occurring subsequent to the date for assessment when considering heads of compensation other than market value for the purposes of the Act, s27, such as special value, severance, betterment, injurious affection, and disturbance. For an informative discussion of this issue in relation to a claim for injurious affection under quite dissimilar legislation to the Act, see Cairns City Council v CMB No 1 Pty Ltd (supra).

25 A great deal of evidence was put before the Court in relation to waste disposal in Tasmania, primarily in southern Tasmania, and the interest of local government bodies in obtaining suitable waste disposal sites. It is not necessary for me to canvass this evidence in detail. I will however touch on the evidence that would have influenced the hypothetical parties to the negotiation of the sale of the acquired land on 14 October 1996. Since at least the early 1970s there has been increasing concern and activity at all levels of government in Tasmania in relation to solid waste disposal. Many investigations have been undertaken and many reports have been prepared. In January 1994, the Tasmanian Solid Waste Management Policy was published. The policy was endorsed by the Minister for Environment and Land Management. It had been evolved over a number of years and had been the subject of several prior publications. Amongst many things, the policy proposed the rationalisation of municipal refuse disposal sites, the introduction of waste transfer stations, and in some instances, a regional, rather than a municipal, approach to waste management that would allow the disposal of waste from beyond municipal boundaries. On 27 November 1995, the Minister for Environment and Land Management issued a directive that no licences for refuse disposal sites in the southern region of the State should be issued prior to 30 September 1996 unless a strategic plan for solid waste management in the region was in place and such licence applications were found to be consistent with the strategic plan. The duration of this direction was subsequently extended and it was in operation at the assessment date. No strategic plan for solid waste management in the southern region was in place as at the assessment date.

26 In mid-1995 the Southern Tasmanian Solid Waste Management Study, prepared by Maunsell Pty Ltd, was published. That report had been commissioned by the State Government. It recommends the creation of a Southern Tasmanian Waste Management Council comprising the 12 southern councils and envisages two major refuse disposal sites in the southern region, one operating in Hobart or Glenorchy and the other on the eastern shore, close to the eastern side of the Derwent River. Prior to the publication of this report, the Council commissioned AGC Woodward-Clyde Pty Ltd to locate and assess potential refuse disposal sites in the Sorell Municipality. Fifteen sites are identified by Woodward-Clyde, 13 of which are considered to be worthy of further evaluation. In March 1995, Woodward-Clyde provided the Council with a report which concludes:

"Copping and White Hill are considered to be the most favourable sites for the future location of a refuse disposal complex. Copping is a good potential site because, although it is located 25 km from Sorell, it is large, well screened, appears to have good geological and hydrogeological conditions and is contained within two properties. White Hill is located closer to Sorell (13.9 km) and is also a relatively large site and is contained within one property boundary. This site should have good geological and hydrogeological conditions, but lengthy access along an un-made public road is a disadvantage.

The site Sugarloaf Rd (Front and Rear) was considered unsuitable potential RDS [the acronym used for refuse disposal site] due to their relatively small size, and their high degree of visual exposure. The sites Fulham and Lovely Bottom are considered less suitable due to transport route issues.

After consideration of the information currently available, there are six sites which offer the most potential as landfills within the Sorell municipality. In order of preference the sites are:

27 In canvassing the potential for a regional refuse disposal site the report says:

"There is a high likelihood that the selected RDS site could ultimately become a regional waste management site servicing adjoining municipalities and part of the greater Hobart area, given the environmental, social or economic constraints on opening future sites in these areas and the relative proximity of the Municipality of Sorell. Municipalities which may wish to participate in a regional scheme and deposit waste at the selected site in the short to medium term (ie within 10 years) include Clarence and Brighton. In the longer term (greater than 10 years) a number of other municipalities, including Hobart, Glenorchy, Glamorgan/Spring Bay and Tasman, may wish to utilise a regional landfill facility in the Municipality of Sorell."

28 On the prospects for the selected site, the report concludes:

"If a new RDS only services the Municipality of Sorell it would be projected to service a permanent population of around 12,000 and an additional seasonal population of around 4,200 in year 2000, if current growth rates are maintained. However there is a strong possibility that an appropriately sited new landfill in the Municipality of Sorell could service the combined population of the municipalities of Sorell, Brighton and Clarence within 10 years. The projected population for these three municipalities is around 73,000 in year 2000, if current growth rates are maintained.

It is possible that a well sited and designed landfill within the Municipality of Sorell could serve a region comprising the municipalities of Brighton, Clarence, Glamorgan/Spring Bay, Glenorchy, Hobart, Sorell and Tasman in 15 to 20 years time. These seven municipalities would have a combined population of around 160,000 if current rates of population change continue.

The refuse disposal volumes are expected to be approximately 7,000 tonnes/an for the Municipality of Sorell only, or approximately 40,000 tonnes/an for Sorell, Clarence and Brighton Municipalities together."

29 The Copping site, identified by Woodward-Clyde, includes the land acquired from Mr W B Downie, which is the subject of these proceedings. During 1994, Woodward-Clyde obtained Mr W B Downie's consent to enter his land to investigate its suitability as a refuse disposal site. Whilst the report refers to 13 sites, it is apparent that in some instances the area identified by Woodward-Clyde as a site, itself contains a number of suitable sites. At Copping, four potential sites are identified. Their approximate position is indicated on the Plan as sites A, B, C and D. Site C is solely on Mr W B Downie's land and site D straddles land owned by him and Mr Robert Downie. Sites A and B are on the Thompson land. At both White Hills and Sugarloaf Road there are two sites. The report does not deal with the areas at Fulham, Lovely Bottom and Tier Gully in the same detail as is provided in relation to the more favoured areas mentioned. The report includes a plan containing an outline of all 13 areas identified as being potential sites. It seems from a comparison of the size of the areas of Fulham, Lovely Bottom and Tier Gully, with the size of Copping, that each of those areas contains a number of potential sites. This inference is supported by the report I next refer to, which was provided to the City of Clarence. In that report the estimated capacity of Tier Gully is up to 50 million cubic metres, whilst the estimated capacity of the site at Copping it deals with, which is solely within the land acquired from Mr W B Downie, is 10 to 15 million cubic metres. The capacity of the site acquired from Mr W B Downie was, in the course of the hearing, accepted as being 15 million cubic metres.

30 In November 1995, the Clarence City Council released a report it had commissioned from Environmental and Technical Services Pty Ltd in conjunction with Nolan ITU, titled Draft Waste Management Strategy. The report includes an evaluation of 16 refuse disposal sites east and north of the Derwent River potentially suitable for long term waste disposal from the Municipality of Clarence and other nearby municipalities. Six of these sites are in the Clarence Municipality, two of which are potential eastern shore regional sites. The remaining 10 sites, all of which are potential regional sites, are located in the Municipalities of Sorell, Brighton and Southern Midlands. The report identifies an area at Copping which is wholly within the land acquired from Mr W B Downie. The report gives each site an environmental score. The 12 potential regional sites have an average score of 183, the lowest, and most acceptable score is given to the Copping site, 146. White Hill's score is 161. As to environmental suitability, the report concludes:

"From the environmental viewpoint alone, there are three possible sites which hold some potential for suitable municipal fill areas (Bourbon Creek, Mt Mather and Sandford). On the regional scale, the Copping site is clearly the most acceptable, with a further group of four sites exhibiting approximately equal environmental acceptability (Grahams/Burrows Gullies, Tier Gully, White Hill and Fluffem Creek).

It is notable that these five possible regional sites are clearly environmentally preferable to any of the sites within Clarence municipality.

The environmental rankings cannot be regarded in isolation for the assessment of the suitability of future disposal sites, as economic parameters are also important."

31 Each site is also given an economic ranking in relation to two different transport scenarios and site development. Of the 12 regional sites, Copping is ranked seventh and ninth on the transport options and fifth in relation to development. In order to rank the sites on the basis of a combination of environmental and economic issues, they are subjected to an "environomic" assessment that assigns, as an approximation, equal importance to the environmental scores and economic costs. On this basis, Copping is rated first, Tier Gully second, and White Hill third.

32 Upon Mr W B Downie and Mr Robert Downie becoming aware of the suitability of portions of their land for refuse disposal, they began exploring options to realise this potential. On 3 June 1996, they held a meeting with representatives of Hazell Bros to discuss a joint venture to develop a refuse disposal operation on Mr W B Downie's land. By letter dated 12 August 1996 to the Downies, Hazell Bros confirmed its interest in participating in the joint venture and stated that it possessed the combined engineering, earthmoving and waste management skills and experience to professionally contribute to such a venture. At that time Hazell Bros had an involvement in waste management disposal at Wesley Vale. On 12 August 1996, Mr Robert Downie lodged an application with the Council for planning approval to establish and conduct a refuse disposal operation on Mr W B Downie's land. On 23 August 1996, following a meeting with officers of the Council, Mr Downie received a letter from the Council confirming that the proposed site had been identified by the Council's consultant, Woodward-Clyde, as the preferred site for a regional landfill "to serve Clarence City, Tasman, and Sorell Councils". The letter advised that the three councils had agreed to jointly fund the development proposal and environmental management plan for a new landfill at Copping and that Woodward-Clyde was currently finalising a site description for the landfill.

33 Mr Robert Downie visited some mainland landfill developers with a view to drumming up interest in the private development of the site. His visit elicited a letter from Twigg Plant Hire Pty Ltd, confirming its interest in being involved in the development. That company is experienced in the construction and operation of landfill developments.

34 By letter dated 11 September 1996, the Sorell Council outlined to Mr Robert Downie the process it was following in relation to the Downie site. The outline included advice to the effect that Woodward-Clyde was to make a representation to the Council as to the site on 13 September 1996.

35 On 12 September 1996, the Clarence City Council, Sorell Council and Tasman Council entered into an agreement titled South-East Regional Landfill Agreement, the purpose of which was to establish a waste disposal facility for the joint benefit of the municipalities of Clarence, Sorell and Tasman. By that agreement, the parties agreed to engage Woodward-Clyde to identify a suitable site for the facility at Copping and, subject to a favourable recommendation as to the site, it was agreed that the Council would lodge a development application for the development of the facility, pursuant to the Land Use Planning and Approvals Act 1993 and acquire the land, the subject of the development application.

36 On 16 October 1996, the Council served a notice to treat on Mr W B Downie referable to the acquired land.

37 An issue that emerged from the expert evidence is the likely volume and type of waste that might reasonably have been expected in October 1996 to have been received by a regional landfill site established on the eastern shore. The volume of the waste stream, and from this the revenue earning capacity of the site, is a crucial factor in any valuation of the site based on its earning capacity. Two valuers, Robin Hocking and Douglas Dickenson, relied directly on the likely net revenue of the site as the basis of valuations using a discounted cash flow method of valuation. Another valuer, Brian Dudakov made assumptions about the likely waste stream in order to arrive at a valuation based upon a royalty rate calculation.

38 The core evidence as to the likely cash flow of a regional landfill operated from the acquired land was provided by David Maltby who, in making this estimate, in turn relied in part on estimates as to the waste stream the site would attract made by James Wood.

39 Mr Wood, an environmental scientist, was the manager of the waste management branch of the then Department of Environment and Land Management (now known as the Department of Primary Industries, Water and Environment) from 1994 to May 1996. For six years prior to 1994, he was a senior waste management officer in the Department. He was the principal author of the Tasmanian Solid Waste Management Policy referred to in par25. He was also the Department's contact person for a number of other studies into regional waste management. These studies include the Southern Tasmanian Solid Waste Management Study, June 1995, referred to in par26, and the Regional Waste Disposal Strategy for Southern Tasmania which, although not published until April 1997, was in the course of preparation during 1996. Mr Wood did not agree with a proposition put to him in cross-examination that all that was in the strategy was known in October 1996. He referred to a recommendation made in the Southern Tasmanian Solid Waste Management Study that at most there should be two major regional landfill disposal sites in southern Tasmania, and said that the rational behind this recommendation was to avoid a monopoly and a need for two sites due to the greater travel distance involved in hauling waste to one site. He said that more than two regional landfills was thought to be likely to lead to an over-supply and a third regional site would increase the risk involved in establishing such a site. On the basis of his experience, a substantial quantity of data and information and a number of estimates and assumptions, Mr Wood calculated the expected volume of waste that, in October 1996, could reasonably have been expected to have been received by a regional landfill site at Copping over a period of 20 years from 1 July 1998. The assumptions and estimate made by Mr Wood for the purposes of his calculation include:

* The projected life of the landfill site operated by the Sorell Municipality at Carlton.

* The projected life of two small landfill sites operated by the Tasman Municipality.

* The projected life of the landfill site operated by the City of Hobart at McRobies Gully.

* The projected life of the landfill site operated by the City of Glenorchy at Jackson Street.

* The portion of the waste generated that would consist of putrescible waste and the portion that would be solid inert material.

* The impact on recycling of the volume of waste going to landfill.

* The putrescible portion of the waste from Hobart and Glenorchy being directed to sites outside of those cities and 50 per cent of that portion being diverted to the Copping site by the beginning of 2004.

* The volume of solid industrial waste to be generated in the southern region and the likelihood of it being directed to the Copping site.

In very brief summary, Mr Wood concluded: that from 1 July 1998, the Copping site would receive the whole of the solid industrial waste generated in the southern region, 31,488 tonnes per annum; that in 2002 the site would commence to receive all municipal waste from the Sorell, Clarence and Tasman areas of 46,250 tonnes; and that in 2004 the site would also receive 35 per cent of all municipal waste from Hobart, Glenorchy and Brighton (50 per cent of the 70 per cent that is putrescible), a total of 25,866 tonnes per annum.

40 As to his predictions referable to the Hobart and Glenorchy tips, Mr Wood relied upon a policy that had a focus on improving environmental management of disposal sites and improved landfill siting criteria, which he considered would lead to the gradual phasing out of poorly sited landfills such as Hobart and Glenorchy. He also relied upon a document titled Tasmanian Landfill Code of Practice; Draft for Comment issued by the Department of Environment and Land Management in November 1996. Mr Wood said that this document had been in preparation throughout 1995 and 1996 and its content was well known prior to the assessment date, 14 October 1996. In substance, he said that it was known that the Hobart and Glenorchy tips would not be able to meet the requirements of the draft code. However, he agreed in cross-examination that it was predictable, in October 1996, that both the Hobart Council and the Glenorchy Council would fight tooth and nail to maintain their tip sites for all manner of waste as long as they possibly could.

41 Mr Wood's projections and assumptions were evaluated by John McCambridge, a Doctor of Philosophy (Agricultural Science). From 1981 to 1984, Dr McCambridge held various positions in the Department of Environment and Land Management or its predecessor. Since that date, he has been the principal environmental scientist and the manager of the environmental section of SEMF Holdings Pty Ltd. He said that in 1995 and 1996, there was uncertainty associated with the details of waste management in the south of Tasmania and that whilst the overall approach to regional waste management was well under way by early 1996, there were no specific arrangements being made in relation to landfill closure (apart from those landfills known to be nearly exhausted at the time), or redirection of waste based on these closures. As to the landfills operated by the Hobart and Glenorchy City Councils, he said that the estimated life of each site was 15 to 20 years and 20 to 25 years respectively and that these estimates were public knowledge prior to October 1996 as they were contained in each Council's management plan. This evidence is consistent with evidence from David Richardson that the Southern Tasmanian Regional Organisation of Councils' report as at January 1996, estimated the closure dates for the Hobart and Glenorchy sites to be 2018 and 2020 respectively. Dr McCambridge denied that it was anticipated in 1996 that either the Hobart landfill site or the Glenorchy landfill site would be closed for failing to meet the expected requirements of the draft landfill code of practice. He said it was considered that both landfills were performing adequately to continue for their predicted life; there was no expectation that they would be required to close within a period other than their estimated life; and there was no expectation on the part of any relevant council that waste from Hobart or Glenorchy would be diverted to a landfill site on the eastern shore or anywhere else by 2004. He said that over the period from the beginning of 1995 to October 1996, there was no correspondence from the Department of Environment and Land Management to the Hobart Council or the Glenorchy Council that stated that the landfill sites operated by either council would not be able to meet the requirements of the draft code; the Department and the Hobart City Council were working together in 1996 to ensure that a proposed hazardous waste site to be developed at the Hobart site would meet departmental guidelines; and that an inspection undertaken by the Department of the Glenorchy site in November 1995 found that the management and condition of the site was excellent. As to hazardous industrial waste, he said that in 1996 both sites were entitled to receive hazardous waste subject to the licences governing the sites. He said it was likely that the large majority of industrial waste in southern Tasmania was not particularly hazardous and as such that there was no reason to anticipate that even if a landfill site on the eastern shore was licensed to receive hazardous industrial waste, the waste would be diverted to that site. Returning to putrescible waste, he said that in 1996 it was considered highly unlikely that Hobart, Glenorchy and Brighton would be disposing of waste at an eastern shore site in 2004.

42 I favour Dr McCambridge's evidence of the prognostications that would have been made as of October 1996 on the likely diversion of waste from Hobart and Glenorchy to a regional waste disposal site on the eastern shore, and I conclude that on the information available at the relevant time, the hypothetical parties to the sale and purchase would have done likewise. More pertinently, I conclude that both parties would have formed the view that on the information then available, there could be no certainty about the projected waste stream, in particular that which might come from western shore, and that any predictions on the matter were no more than informed speculation. I should say that I favour Dr McCambridge's projections in this regard over those of Mr Wood, notwithstanding that Mr Wood put his mind to reviewing what was known in October 1996 at a much earlier date than Dr McCambridge did.

43 Mr Maltby is a geological engineer and has worked as an environmental professional for 15 years. He has provided waste management services for clients including landfill strategic planning, financial modelling, landfill design, construction and operation support. His experience includes seven years during which his major responsibilities were to develop the CSR waste management business and environmental management. He was responsible for the permitting, construction and development of four major landfills. He was also involved in the day-to-day operations of the landfills over that period. As a consultant, he has been involved in the siting, establishment and remediation of landfills in Australia and the United States. He gave evidence in relation to a report he prepared setting out projected cash flows for the proposed regional landfill on the acquired land. His report is based on his expertise and estimates and assumptions derived from information that would have been available in October 1996. He calculated projected cash flows over a period of 25 years commencing from 1997. The period of 25 years was adopted as this is a reasonable time period over which to amortize the set up costs of the project. Any revenue earned beyond this time has little impact on the total project value where a discount rate on the cash flow is used. Landfill cash flows are obtained by calculating the fixed costs for site establishment and infrastructure, fixed annual costs and the variable costs, which are affected by the volumes of waste coming to the site. The fixed costs are either incurred before the opening of the site (such as the establishment costs and infrastructure costs) or may be ongoing after establishment of the business (such as environmental monitoring costs, rates, ground water monitoring and energy costs), which will not vary with the volume of waste disposed at the site. The variable costs are those which are dependent on the volume of waste coming into the site. Some costs are directly proportional to the waste volume, in that an increase or reduction in the waste volume causes a corresponding increase or reduction in the cost (such as liner and capping costs). Other costs may vary in incremental steps. For example, a two person landfill can handle up to a certain tonnage per annum. However, at a certain point, the landfill requires a third person to assist with operations. In very brief summary:

* His calculation of the projected revenue is based on Mr Wood's estimate of waste volumes the site was likely to attract. By the second year of its operation, 1998, it was expected to receive 15,744 tonnes of industrial waste and thereafter 31,488 tonnes of that waste per annum. In the sixth year, it was expected to receive 46,250 tonnes of waste from Sorell, Clarence and Tasman and thereafter a reducing annual amount from this source down to 27,500 tonnes in the 25th year. In the eighth year, it was expected to receive 25,866 tonnes of waste from the western shore and thereafter a reducing amount down to 16,030 tonnes in the 25th year. The highest volume of annual waste, 101,729 tonnes, was expected to be received in 2004, reducing down to 75,018 tonnes in the 25th year, 2021. To these volumes he applied an estimated charge per tonne of $25 for municipal waste and a $40 for industrial waste.

(i) An estimate of personnel costs. This is the number of workers, wages and related expenses such as workers compensation and superannuation.

(ii) An estimate of machinery operating costs. This is the machinery required and the cost of operating it.

(iii) An estimate of liner and capping costs. The liner is a layer of clay compacted to a particular level of permeability installed by 25 centimetre lifts to a total thickness of 1 metre. The purpose of the liner is to reduce the flow of contaminated liquid from the site. Capping refers to the placement of a 600 millimetre clay cap over the top of the waste which, in turn, is covered by top soil. Expenses associated with lining and capping are incurred throughout the life of the site.

(iv) An estimate of site establishment costs. This is a substantial item that involves the cost of some 25 matters, the largest being road construction estimated at $500,000. Other matters are as diverse as a leachate pond, fencing, wheel washing and fire protection services.

(v) An estimate of machinery purchase costs. This is the cost of the machinery required.

(vi) An estimate of other items such as road maintenance and environmental monitoring.

44 Mr Maltby calculated that the projected revenue of the site for the first 25 years of its life and the sale of machinery in its 26th year would be $57,963,520. Costs over the same period were calculated at $15,898,730. Adopting the discount rate he considered appropriate, 12 per cent, the net present value of the cash flow at the start of 1997 was $9,390,564.

45 Robin Hocking is a registered valuer based in Victoria who has over 30 years of experience as a valuer. He has had extensive experience in the valuation of landfill sites in both metropolitan Melbourne and regional country Victoria, New South Wales and South Australia. He has valued landfill operations for a number of banks, municipalities and private operators. His primary means of valuing the acquired land is a discounted cash flow method that seeks to derive the present capital value of land (or, more accurately, the value of the assets of a business or project to be pursued on the land) by estimating the expected future cash flows over a given period, and then discounting those cash flows to arrive at a present value at which someone would be prepared to purchase the land in order to receive the future income. Whilst he acknowledged that in the great majority of cases the best and most reliable evidence of the market value of land is evidence of comparable sales, he was of the view that the sales of land for use as landfill in Tasmania in the years preceding the acquisition were not sufficiently comparable to be relied on. He did, however, analyse several sales in Victoria and South Australia, but emphasised that the results of that analysis was to be treated with great caution. He said that all landfills must be assessed as different and individual sites.

46 For the purposes of his discounted cash flow valuation, he adopted the estimates prepared by Mr Maltby and as to those estimates he said that he was satisfied from his own experience in the landfill industry that Mr Maltby's estimates are conservative. He said that an appropriate discount or capitalisation rate for the business was in the range of 18 per cent to 24 per cent and settled on 22 per cent. Applying the cash flows detailed in Mr Maltby's spreadsheets and discounting them by 22 per cent, he concluded that the net value of the site was $3,669,512 on the assumption that all expenditure was made and all income was received at the end of each year in the period of 25 years. On the assumption that all expenditure was made and all income was received at the beginning of each year, he said that the net value of the site was $4,476,804. He concluded that it was reasonable to assume that a potential purchaser of the site would have arrived at a compromise between these two figures and would have been prepared to pay $4m at the assessment date. With reference to the proposition that the site would only attract this price if alternative sites were not available, he said he believed that a purchaser would decide on the best site available regardless of the asking price and that even if another site appeared to be cheaper, the best site would win the day. I do not accept this to be correct and have no doubt that both hypothetical parties to a negotiated sale would have regard to the availability of, and the price of, alternative sites.

47 With reference to the sale of refuse disposal sites Mr Hocking identified in Victoria and South Australia, the dates of sale were 1998 - 1999, December 1999, July 2000 and two in June 2001. In relation to those sales, he arrived at a value per cubic metre of the air space usable for waste disposal that was the subject of the sale, that is the air space that was likely to be used over the estimated life of the landfill. The average price paid per square metre of air space in relation to the sales to which he referred was $1.55. On the assumption that the waste stream over a period of 25 years at the Downie site would use 1,875,000 cubic metres of air space, he said the site had a value of $2,906,250. As this calculation is based on transactions that occurred up to 4½ years after the assessment date, it is of no assistance. It is not information that the parties to the hypothetical transaction could have had in mind.

48 Douglas Dickenson has over 30 years of experience as a valuer in Tasmania. He has worked in or otherwise been associated with the pastoral and rural real estate industries in Tasmania for 44 years. For the past 22 years he has conducted a business on his own account as a valuer and estate agent specialising in the sale of pastoral and rural properties. Of the valuers who gave evidence, I consider him to be in the best position to give evidence of the value of the acquired land as rural land. In this regard, he referred to Mr Robert Downie's sale of 253.5 hectares, the Blue Hill, lot 4 on the Plan, for $220,000. This sale was negotiated shortly after the assessment date. Mr Dickenson said that the Blue Hill was unattractive agricultural land and the average price obtained, $876.50 per hectare, was above the price for rural land of its type in that area. He also referred to Mr W B Downie's sale of 297 hectares, lot 2 on the Plan, to Mr and Mrs Thompson on 26 November 1995 for $238,000, an average price of $800 per hectare. He said this was at about agricultural value. In my view the hypothetical parties to the negotiation of the sale and purchase of the acquired land would approach the negotiation on the basis that its average value as rural land was $800 per hectare.

49 In valuing the acquired land for its highest and best use as a waste disposal site, Mr Dickenson said that, for reasons I accept, there were no sales of land in Tasmania sufficiently comparable with the acquired land to provide a guide to its value. He, like Mr Hocking, concluded that the discounted cash flow method was the most appropriate method of valuing the acquired land for its highest and best use. Mr Dickenson considered that an appropriate discount rate fell within the range of 20 per cent to 25 per cent. He adopted a rate of 22.5 per cent, applied that rate to the cash flows calculated by Mr Maltby and arrived at a value for the land of $3,516,203. On this basis, he valued the land at $3,500,000. Mr Dickenson acknowledged that for the acquired land to have this value, it needed to be uniquely suited for waste disposal and that if other properties were available for that use, its value would depend upon what the owners of those other properties would sell for.

50 The conventional (River Bank Pty Ltd v Commonwealth (1974) 48 ALJR 483 at 484) and most reliable means of estimating the value of acquired land is from comparable sales. Raymond Westwood placed reliance on two sales in Tasmania as comparable sales for the purposes of his valuation. He has many years of experience as a valuer and has served as the Valuer-General of Tasmania. The key sale upon which he relied was the sale of 36 hectares of land at Dulverton near Burnie to the Dulverton Regional Waste Management Authority on 27 May 1992 for $200,000. The 36 hectare site had a usable area of 23 hectares for waste disposal. At the time of sale, it was not an operating tip. His analysis of that sale was that the footprint, that is, the area that was usable for waste disposal, was valued at $8,000 per hectare and the balance of 16 hectares was valued at $1,000 per hectare. In assessing the value of the balance of 16 hectares, the buffer zone, at $1,000 per hectare, Mr Westwood did not address the value of agricultural land or similar land in the Dulverton area. He relied upon details he had of the agreement reached with Mr Robert Downie upon the sale of the Blue Hill (lot 4 on the Plan), following the acquisition of that land from him. Whilst I appreciate that this land was acquired for the purposes of a buffer zone, I do not accept that this transaction is a comparable sale for the purposes of assessing the value of a buffer zone acquired several hundred kilometres away at Dulverton. The reliability of Mr Westwood's conclusion that the value of the footprint was $8,000 per hectare depends upon the reliability of his assumption that the balance of the land was valued at $1,000 per hectare. I note, however, that even if no value is ascribed to the balance of the land, the value of the footprint would not exceed $8,700 per hectare. In cross-examination Mr Westwood agreed with the proposition that the validity of his adoption of the same value per hectare for the footprint at Dulverton and the footprint at the Downie site was predicated upon his assumption that the initial volume of waste to go to each site was the same, that is, 35,000 tonnes per annum.

51 In arriving at a value for the acquired land, Mr Westwood applied a value of $8,000 per hectare to a footprint area of 68.2 hectares. He gave that immediate value to 17 hectares of the footprint and the same value to the balance of the footprint (in two portions), but discounted the value of these two portions over 30 years because it would take that time to realise their potential. In valuing the acquired land outside of the footprint, he applied values of between $1,200 and $300 per hectare to different portions. Those values were based on details he had of values that had been ascribed to various portions of the Blue Hill for the purposes of the purchase of that property from Mr Robert Downie. Again, the amount he calculated as being payable for some of the portions was discounted to reflect the time it would take for forestry rights over those portions to expire. As to the value of rural land in the vicinity of the Downie site, Mr Westwood also derived support from the sale of 297 hectares of land for $238,000 by Mr W B Downie to Mr and Mrs Thompson on 26 November 1995, that is an average price of $800 per hectare. Mr Westwood valued the acquired land at $521,443. To this amount he added $55,000 for injurious affection as a result of blight. He said that even though no claim was pursued for injurious affection, he considered this amount should be included in the compensation payable. He accordingly totalled the compensation payable in relation to the acquired land at $576,443.

52 Mr Westwood also placed some reliance, as a comparative sale of a landfill site, on a contingent sale agreement dated 24 March 1995 in relation to 230 hectares of land near Brighton known as Jews Hill. That sale was not completed. As with Dulverton, Mr Westwood agreed in cross-examination that Jews Hill was only a comparable sale if the waste stream to go to that site was the same as the waste stream to go to the Downie site, which he took to be 35,000 tonnes per annum. The Jews Hill agreement was not in evidence when Mr Westwood initially gave evidence. When the agreement was later put into evidence it became apparent that Mr Westwood had some mistaken beliefs about its contents. The consideration was $145,000, together with a further amount of $20,000 in the event that the property was rezoned for use as a waste disposal site. In addition, it was agreed that if used as a waste disposal site, the purchaser would pay the vendor a royalty of 50 cents per compacted cubic metre of material deposited on the site for 10 years up to a maximum of $225,000. An area of 38 hectares on the Jews Hill site had been identified as a suitable footprint for a regional waste disposal site in the Draft Waste Management Strategy released by the Clarence City Council in November 1995. In that report, of the 16 regional sites assessed, the Jews Hill site received the second worst environmental rating. Mr Westwood mistakenly read that report as giving the site the second best environmental rating. Mr Westwood understood that the benefit provided by the agreement, if the land was used for refuse disposal, was the payment of a royalty of $25,000 per annum for 10 years; the benefit was in fact the payment of $20,000 plus a royalty over a period of 10 years of up to a maximum of $225,000. Mr Westwood discounted a royalty of $25,000 per annum for 10 years at 4.5 per cent to arrive at a capital value of $197,817, which he considered was the value of the waste disposal site aspect of the sale. He accordingly capitalised the sale price at $145,000, plus $197,817, that is, $342,817. Mr Westwood assumed that the value of an area of 10 hectares that was needed for a buffer zone was $1,000 per hectare. He was of the mistaken belief that the agreement for sale related only to the footprint of 38 hectares and a buffer zone of 10 hectares, that is, a total of 48 hectares. On this basis he made the following calculation:

Mr Westwood felt that this calculation provided some support for the conclusion that he drew from the Dulverton sale, that is, that the market value of a footprint was about $8,000 per annum. When the Jews Hill agreement was put into evidence after Mr Westwood had given evidence, it became apparent that the total area covered by the agreement was 230 hectares, not 48 hectares. The Draft Waste Management Strategy described the beneficial use of the Jews Hill land as broad acre grazing and low density subdivision. The base sale price of $145,000 for 230 hectares values this land at $630 per hectare. Applying this value to the land, Mr Westwood's revised calculation would be:

182 hectares of surrounding land at $630 per hectare

This highly speculative calculation puts the value of the Jews Hill footprint at $5,740 per hectare, not $8,750 per hectare, as calculated by Mr Westwood, and it provides no support for his valuation of the footprint on the acquired land at $8,000 per hectare. Mr Dickenson and Mr Hocking did not accept that either the Dulverton sale or the Jews Hill agreement was a comparable sale.

53 Mr Westwood also investigated the sale of 19 landfill sites in Victoria. He visited the sites in October 1997. He said that he did not find any of the sites helpful in terms of comparable sales as the market in Victoria and the market in Tasmania are totally different because of Victoria's greater population and the very high volumes of waste going into Victorian sites as compared with the expected volume of waste to go to the Copping site. He also said that the sites in Victoria are often disused quarries where cubic capacity became very important, whereas the Copping site had a huge footprint. He said the Victorian sales evidence was only pertinent to the Copping site in relation to a green field location to take a low initial volume of waste per annum (40,000 tonnes), which had a distance from population centres (25 kilometres), had a distance of road to be upgraded (4 kilometres) and had a lack of environmental approval at the date of acquisition. He said that the most comparable transaction in Victoria was a purchase by the City of Shepparton of a site for $950,000. The site was excavated and had an annual waste stream volume of 52,000 tonnes.

54 I conclude that both parties to the hypothetical negotiation would regard the Shepparton transaction and other somewhat comparable transactions, such as the Dulverton sale and the Jews Hill agreement, as very broad and general indicators of the range of values for which land suitable for waste disposal might be sold. However, such transactions are not sufficiently comparable to the sale and purchase of the acquired land to provide an accurate guide to its value. It is also pertinent that for comparable sales evidence to be of real assistance there must be a sufficient volume of it. In Maurici v Chief Commissioner of State Revenue [2003] HCA 8; (2002) 212 CLR 111 [18], five members of the High Court said:

"In valuing the land the respondent's valuer did not proceed rationally, in that he was unreasonably selective in ultimately confining himself to two sales of scarce vacant land for the purposes of the comparison. The respondent could not, and did not suggest that he would be performing his statutory duty if he made other than a fair estimate of the value of the subject land. A fair estimate could only be made here on the basis of a fair, that is to say, a reasonably representative group of comparable sales. A group of comparable sales cannot be representative if it does not go beyond sales of scarce vacant land. That is not to say that sales of comparable vacant land may not provide useful evidence of value. But as J F N Murray observes in Principles and Practice of Valuation 4th ed (1969) at 120 in discussing valuations under federal land tax legislation of land in its notionally unimproved state, 'sale evidence [must be] relevant and sufficient in volume' (emphasis added)."

55 Brian Dudakov is a well qualified valuer based in Victoria. He has 28 years of experience in the valuation of commercial, industrial and residential real estate throughout Victoria, including quarry properties and landfill properties. He has no experience in valuing rural land or landfill sites in Tasmania.

56 In a report prepared by Mr Dudakov and put into evidence, he adopted a royalty rate means of valuing the acquired land. He noted that there was limited evidence of royalty rates paid for landfill sites around Australia. He referred to three Victorian transactions and the Jews Hill agreement and in the light of these matters, together with his own knowledge of market royalty rates for landfill sites, he adopted a royalty rate of $1 per tonne, which he equated to 80 cents per square metre. He adopted a royalty rate of $1, which was double the Jews Hill rate, as his valuation included the land. The Jews Hill royalty was in addition to the amount agreed to be paid for the land. On the basis of Dr McCambridge's review of Mr Wood's estimates of the waste stream that would be attracted by the Copping site, Mr Dudakov adopted an annual utilisation rate for the site of 45,000 tonnes, an annual royalty return of $45,000. In capitalising this return, he adopted a rate of 12 per cent in perpetuity to arrive at a figure of $375,000. On this basis, he assessed the total compensation payable for the land at $375,000. In his written report, by way of a cross-check, he referred to the Dulverton sale and two other sales in Tasmania for landfill purposes that occurred subsequent to the assessment date. These sales put a value on the total area sold at between $841 and $5,556 per hectare and a value on the footprint sold at between $2,417 and $8,696. He said that these sales provided the best evidence for a direct comparison. He said that the value of $375,000 he assessed on a royalty rate basis for the acquired land equated to approximately $845 per hectare over the whole site and $4,167 per hectare for the maximum footprint of 90 hectares. He said that these results were consistent with the sales evidence and supported his assessment on a royalty rate basis.

57 In the course of giving evidence, Mr Dudakov said there was no comparable sale to the transaction involving the acquired land but that the Jews Hill agreement was by far and away the most comparable in terms of evidence of the market. In placing reliance on that agreement he said the valuer's art was to adjust sales to bring about a degree of comparability. He, in substance, said that the Jews Hill agreement confirmed his hypothesis, although it was not a comparable sale. With reference to the acquired land, he said that in the back of the vendor's mind would be a benchmark based on the price that the land could be sold for as rural land if not sold for landfill. He said he formed the conclusion that the acquired land had a value of about $600 - $650 per hectare on the basis of what Mr Westwood and other valuers had said in relation to it. On this basis he said the acquired land would have a value of about $300,000. He reduced this figure to $220,000 as 80 hectares of the land was encumbered by timber rights. He then turned to the Jews Hill agreement for guidance on the premium that a vendor would accept above and beyond the rural value of land sold for use as a landfill site. He noted that the Jews Hill vendor had been willing to accept royalties of up to a maximum of $225,000 over ten years, that is, $22,500 a year. Applying a discount rate of 12 per cent, he arrived at the sum of $120,000. (I note that the discount rate Mr Westwood adopted for this purpose was 4.5 per cent.) On the basis that the amount of $120,000 was not receivable for about five or six years when the landfill operation began and waste was available, he further discounted that amount at the rate of 12 per cent to $75,000. He said that this amount was the premium payable for the landfill aspect of the Jews Hill site and observed that this was about a 50 per cent premium over the agreed rural land value of the Jews Hill site, $145,000. He applied this 50 per cent premium to his approximate estimate of the rural value of the acquired land which he put at $250,000, albeit that he had previously estimated it at $220,000, and by this process again assessed the value of the acquired land at $375,000. Another means by which he derived comfort for his valuation of the acquired land at $375,000 was a calculation he made based on the proposition that over the next 20 to 25 years, the Copping site would receive about 1.2 million cubic metres of waste. The division of that volume by his valuation provides a rate per cubic metre of 31 cents. He, in substance, said this compared favourably with what he estimated as the rate per cubic metre agreed to be paid in relation to Jews Hill and Dulverton. The gist of his evidence was that based on the likely utilisation of those sites over the next 20 to 25 years, the price agreed to be paid for waste was 20 cents per cubic metre. I should say that there was some confusion in his evidence as to the calculation of the rates in relation to Dulverton and Jews Hill, but I believe I have correctly distilled what he intended.

58 At the request of the Sorell Council, KPMG prepared a business analysis proposal to develop and operate the acquired land as a refuse disposal site as a private, commercial operation, using facts as known at October 1996. David Richardson, a consultant manager and financial adviser with KPMG, was involved in the preparation of this analysis and gave evidence referable to it. He said that risks and uncertainties that would impact on a private operator's decision to proceed with the proposed development included:

* the absence of the necessary approvals for the development from the Department of Environment and Land Management;

* the likely volume of waste the site would attract and the terms to be agreed with the providers of the waste.

Notwithstanding the risks Mr Richardson concluded that the development of a refuse disposal site on the acquired land represented a reasonable business proposition. He paid regard to the risks when in determining the alternative discount rates (11 per cent and 14 per cent) he applied to the anticipated future cash flow of the business.

59 As to the likely volume of waste that the site would attract, Mr Richardson proceeded on the basis that all waste from Sorell, Clarence and Tasman would go to the site in 2001, that the Hobart waste disposal site would close in 2012 and that the Glenorchy waste disposal site would close in 2017. He modelled two scenarios:

* scenario 1 which assumed that waste from Hobart and Glenorchy would go to the development site upon the closure of the waste disposal sites in those areas; and

* scenario 2 which assumed that the development site would service the sub-region alone for 30 years.

For the purpose of his analysis he made a multitude of assumptions as detailed in the report put into evidence. I note that some of these assumptions rely on a report and other information that was not available at the assessment date. I will not detail the assumptions. Suffice it to say that, almost inevitably, many of the assumptions are no more than speculation that could well prove to be wrong, albeit that it is speculation based on the best information that, in the main, was available at the assessment date.

60 On the basis of scenario 1, the receipt of waste from Hobart and Glenorchy upon the closure of the waste disposal sites in those areas and on the assumption that the acquired land could be purchased for $521,000, the report concluded that the project was a marginal investment as an investment in domestic equities, residential properties, domestic fixed interest, or domestic cash could yield equivalent returns over an extended period with less risk and effort. Even at the lower end of the two rates of return that it was postulated an investor would require, the investment would not achieve a positive net present value until 20 years after its commencement. An extension of the anticipated closure dates of the Hobart and Glenorchy waste disposal sites would have rendered the investment unviable. Similarly, the viability of the project would be reduced if the price at which the acquired land was purchased increased. On the basis of scenario 2 the project was not viable as it would not achieve a positive net present value at any time over 30 years.

61 The calculations detailed in the report were made on the erroneous basis that certain capital costs totalling $1.62 million would be incurred at the outset of the project, rather than over the life of the project. Mr Richardson prepared recalculations in which those costs were deferred over the life of the project. They showed that scenario 1 was viable and scenario 2 was marginally viable. Again, the viability of scenario 1 would be adversely affected by any extension in the anticipated life of the Hobart and Glenorchy waste disposal sites and the viability of both scenarios would be affected by any increase in the price paid for the acquired land. However at the lower of the two discount rates that Mr Richardson applied, scenario 1 would remain viable up to a purchase price of $3m.

62 I turn to the hypothetical negotiation of the sale and purchase on the assessment date. As should be apparent from what I have written, I consider that the valuation information available to the parties provides no clear or reliable basis for assessing the value of the acquired land. In these circumstances my determination of the amount on which the parties would have settled is more conjectural than is normally the case. In approaching this task, I am conscious that: "In a case of compensation doubts are resolved in favour of a more liberal estimate ...", Commission of Succession Duties (SA) v Executor Trustee and Agency Co of South Australia Ltd [1947] HCA 10; (1947) 74 CLR 358, Dixon J at 379. In my view the hypothetical parties to the negotiation would have taken into account matters that included:

* That the average value of the acquired land as rural land was $800 per hectare.

* That the land had a significantly higher value if used for waste disposal than as rural land, as considerably more income could be generated by its use for the former than the latter.

* That the information available on sales of land suited for waste disposal demonstrated that a premium was ordinarily paid for it above its value had it not been suitable for that purpose, but the information did not provide any consistent guidance on the amount of that premium.

* That there was a high probability that planning and related approvals would be given for the use of the land for waste disposal.

* That if the land was to be used as a waste disposal site, it would be necessary to reach an accommodation with Mr and Mrs Thompson in relation to the access to the land so as to ensure that there were no disputes about using the access for that purpose or about the maintenance of the access.

* That the land was the best potential site for a large regional waste disposal on the eastern shore, but that there were a number of other potential sites.

* That the only site likely to obtain a premium sale price because of its suitability for waste disposal was the first site utilised for that purpose. In these circumstances a purchaser intent on developing the first substantial waste disposal operation on the eastern shore was likely to generate considerable competition to sell amongst the owners of potential sites.

* That if the site became the major regional landfill site on the eastern shore and the speculative projections of experts proved to be correct, its value assessed on a discounted cash flow basis was in the view of one expert $3.5m and another expert $4m. However, this means of calculating its value was highly speculative and unreliable until the site was operational and such matters as waste streams could be established with some certainty. More importantly, as the site was not the sole site available, this means of calculating its value was misleading. To illustrate this point, assume that an entity was entitled to an exclusive business venture that when up and running was guaranteed a return valued at $10m using the discounted cash flow method. Assume also that there were a number of sites from which the business venture could operate. Each of those sites would not by reason of its suitability for the business venture assume a value of $10m. The value of any one of the sites would be its market value unrelated to the potential business, plus such premium as the entity entitled to the exclusive business venture was prepared to pay and an owner was willing to accept in order to achieve a sale and purchase. Plainly, in this negotiation, each party would be influenced by the price at which alternative sites could be purchased.

* That the purchaser would derive no benefit from timber on the acquired land that was subject to timber rights until those rights expired and that during the duration of those rights, they governed the use that could be made of the land to which they extended.

63 In my view the hypothetical vendor would not have been interested in selling the acquired land for use as a waste disposal site unless a considerable premium was paid for it above its value as rural land. This would have been obvious to the hypothetical purchaser. I cannot envisage the vendor being induced to sell for less than double the rural value of the land, regardless of contingencies. As to that value, I consider that the vendor would have taken a pragmatic and broad brush approach and adopted an average value of $800 per hectare for all of the land, that is a rural value of $354,960. In result I conclude that the vendor would have been willing to sell for $700,000. The vendor would have appreciated that the sale being unconditional it would go ahead regardless of whether the purchaser was able to proceed with the waste disposal project. Accordingly, the risks associated with planning and related approvals and dealing with Mr and Mrs Thompson in relation to access would be solely the purchaser's problem. The vendor would also have been aware that about 80 hectares of the land was subject to timber rights. I do not consider that matters such as these would have persuaded the vendor to make any reduction in the sale price. A hypothetical purchaser would have been aware of all of these matters. In my view, in order to secure the best potential site, the hypothetical purchaser would have been prepared to pay up to about double the rural value for the land, notwithstanding the risks and the timber rights. At a price beyond this I consider that a hypothetical purchaser would have turned to alternative sites. Whilst a premium that, in a real sense, is more than 100 per cent is significant, it should be borne in mind that the rural value of the land is not substantial and a premium of $350,000 is not exorbitant in the context of the total project.

64 I accordingly assess the compensation payable for the acquired land at $700,000 and the compensation payable for the timber at $310,000. The applicant has already paid $422,188.70 to the interests of the respondent by way of a payment to the respondent's mortgagees. Judgment will be entered for $1,010,000, less the amount of any payments already made by the applicant, together with interest calculated in accordance with the Act, s47(1) and (3).