See also Boland v Yates Property Corporation Pty Ltd [1999] HCA 64; (1999) 74 ALJR 209 at 279 [356] per Callinan J; Cassidy v Sydney Water Corporation [2008] NSWLEC 223 at [89] per Jagot J.
101 However, it was submitted that her Honour misstated the principle in the last sentence of [81] of her judgment which, for convenience, I repeat:
"The [respondents] submitted that when expert evidence is conflicting all doubts are to be resolved in favour of the claimant 'where practicable in order to achieve a just result': McBaron at 244-245 and that is the approach I intend to adopt."
102 In McBaron Talbot J said at the pages referred to:
"Unless a head of compensation can be found within s 55, it cannot be recovered under the [Just Terms Act] even if that means the person will not be justly compensated … Nevertheless it is appropriate to seek to do justice by adopting a generous approach in favour of the resumee to ensure that just compensation is paid so far as the Act allows. Therefore any discretion should be exercised in favour of the claimant where practicable in order to achieve a just result."
103 I would understand the discretion to which his Honour was referring as being the evaluative judgment called for in determining the relevant elements of value to be adopted for the purpose of assessing an appropriate award of compensation.
104 It was submitted that the principle (if that be its correct description) referred to has no application to the process of accepting or rejecting conflicting evidence of fact or opinion. Reliance was placed upon the following observation of Sheller JA, with whom Beazley JA agreed, in Archibald v Byron Shire Council [2003] NSWCA 292; (2003) 129 LGERA 311 at 323 [54]:
"Where a dispute, such as this one, involves something in the nature of an intellectual exchange with reasons and analysis advanced on either side, the parties are entitled to have the judge enter into the issues canvassed before the Court and to an explanation by the judge as to why the judge prefers one case over the other. This is particularly so where there is disputed expert evidence."
105 The respondents conceded that the statement of the primary judge in the last sentence of [81] involved an error of law. They contended, however, first, that although her Honour indicated that that was the approach she intended to adopt, there was nothing in the succeeding paragraphs of the first judgment that indicated that she had in fact favoured the evidence of Mr Bewsher over that of Dr Joliffe because to do so would achieve a more just result. Second, it was submitted that her Honour did not need to resolve and did not in fact resolve the conflict between Mr Bewsher and Dr Joliffe so to prefer the view of one to that of the other.
106 It was submitted that all her Honour found (at [86]) was that a prudent hypothetical purchaser would be prepared to add value to the purchase price of the relevant land on the basis that the Bewsher scheme might receive development consent which, when determining (at [156]) the appropriate rate per square metre to apply to that land, she discounted to take account of the fact that such a purchaser would consider that there was uncertainty about whether the Bewsher scheme would in fact obtain development consent for any individual lot.
107 In these circumstances, so it was submitted, notwithstanding the erroneous statement of principle to which reference has been made, it is apparent that her Honour did not apply the approach that she had indicated she intended to adopt in making her findings with respect to the Bewsher scheme.
108 The relevant principle as to the effect of an error of law such as that asserted by the appellant is well established. In Leichhardt Municipal Council v Seatainer Terminals Pty Ltd (1981) 48 LGRA 409 at 419 (a compensation case like the present), Moffitt P stated:
"It is not sufficient to show that some error of law appears in the judgment or during the course of the trial. The error has to be one upon which the decision depends, so the decision is vitiated by the error. …. It will not suffice to establish that one or some only of a number of alternative findings upon which the decision was given involved errors of law, if one alternative involved no error of law."
109 This statement has been repeated and applied in numerous cases including in this Court: see Yates Property Corporation Pty Ltd (In liq) v Darling Harbour Authority (1991) 24 NSWLR 156 at 177 per Handley JA; Minister Administering the Crown Lands Act v Deerubbin Local Aboriginal Land Council (1998) 43 NSWLR 249 at 255 per Handley and Powell JJA; Roads and Traffic Authority of New South Wales v Hurstville City Council [2001] NSWCA 11; (2001) 112 LGERA 223 at 229 [25] per Mason P with whom Sheller and Powell JJA agreed. In the last-mentioned case the President said:
"An error of law must vitiate the operative determination before it will ground an appeal."
110 In AMP Capital Investors Limited v Transport Infrastructure Development Corporation [2008] NSWCA 325 (also a compulsory acquisition case) at [120], Gyles AJA held that where there was an error on a question of law, that error would require any finding based upon it to be set aside unless it was clear that the result would not change in the event of reconsideration. It was not sufficient (to avoid the setting aside of the relevant finding) that some basis may exist for upholding the decision.
111 The relevance in the present case of the foregoing observations of Gyles AJA is the requirement that the finding sought to be set aside must be based upon the relevant error. This is consistent with the statement of Moffitt P in Seatainer Terminals that the error must be one upon which the challenged finding depends.
112 Finally, in Tuite v Wingecarribbee Shire Council (No 2) [2008] NSWLEC 321, Preston CJ, having found that a commissioner erred in law in his determination of an appeal against the refusal by a council of a development application, observed (at [33]):
"However, it is well settled that it is not sufficient to establish merely that the decision under appeal discloses an error of law; that error must be of such significance as to vitiate the ultimate decision."
113 The issue which therefore arises in the present case is whether her Honour's alleged error in stating that she intended to adopt an approach with respect to the conflicting expert hydrological evidence whereby all doubts were to be resolved in favour of the respondents where practicable in order to achieve a just result, had relevantly infected her finding in the first sentence of [86] (which I have extracted at [92] above) that there would be an assumption made by the hypothetical prudent purchaser that the Bewsher scheme was likely to be considered favourably by the Council.
114 As I noted at [55] above, that finding was summarised in more detail by her Honour at [178] as including the following:
"(ii) The Bewsher scheme is a matter which a prudent, hypothetical purchaser is likely to obtain advice about and he or she would be likely assign value on the basis that such a scheme could be implemented on individual properties, that is, development in isolation, not at the same time as a whole regional scheme."
115 Although the appellant's submissions focussed on the finding in the first sentence of [86] as being a finding based upon the relevant error, in my view it is important to read that sentence in conjunction with that which immediately follows it, namely:
"While I consider that a prudent purchaser would be prepared to add value to a purchase price on the basis that a scheme such as the Bewsher scheme may get development consent, I do not consider that extends to an assumption that all relevant property owners would cooperate and carry out the scheme at the same time." (Emphasis added)
116 Furthermore, the finding also has to be read in the context of her Honour's discounting (at [156]) of the rate per square metre to be applied in determining market value
"to take into account that a prudent hypothetical purchaser will consider there is uncertainty about whether the Bewsher scheme would gain development approval for any individual lot."
117 I have already referred (at [86]) to her Honour's reference at [79] to an agreement by the hydrology experts that a drainage strategy would have been formulated to facilitate development and that that would be likely to be available to a prudent purchaser.
118 Again, at [80] her Honour observed that while Dr Joliffe considered that the Council would not approve the Bewsher scheme because the land in the flood zone was required for detention basins, the joint report of the experts stated that detention basins could go elsewhere in the Strangers Creek region. She therefore concluded from the joint expert evidence that there was flexibility as to where the detention basins could go to accommodate the regional drainage needs of the Strangers Creek area.
119 Her final finding prior to her reference to McBaron was in the first sentence of [81] where she stated that she considered a prudent purchaser was likely to consider that it would be feasible to obtain development consent for proposals such as the Bewsher scheme on the basis that any detention basins planned for the area could ultimately be located elsewhere.
120 It was therefore not until the end of [81] that her Honour referred to what she regarded as the McBaron principle which she stated in the context of the Court having been presented with conflicting evidence from the expert hydrologists as to the advice which would be provided to the hypothetical purchaser. As she noted, Mr Bewsher proposed his scheme as one that such a purchaser could rely on, whereas Dr Joliffe considered that the scheme was unlikely to be approved by the Council.
121 After indicating at the end of [81] that she intended to adopt an approach whereby the doubts raised by the conflicting expert evidence were to be resolved in favour of the respondents "where practicable in order to achieve a just result", her Honour proceeded to make findings with respect to the advice which a prudent hypothetical purchaser would obtain from a town planner (not a hydrologist) in terms of the permissibility of implementing a scheme such as the Bewsher scheme which involved filling, observing (at [83]) that such a purchaser would speak to a Council officer to obtain advice on whether a scheme such as that of Mr Bewsher was likely to be considered for possible approval. Her Honour then referred to the meeting between the experts and Council officers on 2 January 2008 and to the minute of that meeting prepared by Mr Rowan (the appellant's expert town planner) to the effect that a scheme such as the Bewsher scheme "would be considered".
122 It was in the context of the foregoing findings that her Honour then concluded (at [86]) that a hypothetical prudent purchaser would assume that the Bewsher scheme was likely to be considered favourably by the Council.
123 It is clear from her Honour's findings which followed the statement that she intended to adopt the McBaron approach in resolving doubts with respect to the conflicting expert evidence that she did not expressly state that those findings were based upon that approach. Of course, her ultimate finding that a hypothetical prudent purchaser would be prepared to add value to the purchase price he or she would be prepared to pay for land within the flood zone was based on a scheme such as the Bewsher scheme in respect of which development consent was at least a possibility.
124 There is no doubt that that was a critical finding, as the relevant land, being in the flood zone, would have had no potential for any form of urban development if it was unable to be filled. In one sense it could be said that that finding involved a rejection of Dr Joliffe's evidence had it been that the Bewsher scheme had no chance of being approved. But his evidence was necessarily more circumspect than that. Her Honour found that Dr Joliffe considered only that the scheme was "unlikely to be approved by the Council".
125 Assuming that the last sentence of [81] contained an error of law, the issue which arises for consideration is whether the primary judge's finding in the first sentence of [81] and repeated in the first sentence of [86], was based or depended upon that error.
126 As I have noted at [123] above, there was no express reference by her Honour to her resolving doubts between the conflicting views of the hydrologists in favour of those of Mr Bewsher.
127 Furthermore, her finding in the first sentence of [81] follows on from her findings at [79]-[80] which, in large part, were based upon the agreement between the hydrologists as to the possible alternative location of detention basins to accommodate the regional drainage needs of the Strangers Creek area.
128 Of significance is that immediately following the alleged error of law in the last sentence of [81], her Honour at [82] and [83] proceeded to deal with the planning evidence, giving particular weight to the meeting of 2 January 2008 (apparently instigated by the appellant's planner, Mr Rowan) and from the minutes of which she concluded that a scheme such as the Bewsher scheme "would be considered". In other words, the hypothetical purchaser would not have been informed that the scheme would have been rejected outright; rather he or she would have been informed that, subject to the making of a detailed development application, it would at least be considered for "possible approval".
129 Finally, her Honour in the first sentence of [86] found that the hypothetical purchaser would be aware of the need to provide a riparian zone for any development proposed, this being, it would seem, a reference to the 60-65 metre wide drainage corridor to be provided under the Bewsher scheme. That finding, she said, provided further support for her finding that there would be an assumption made that the Bewsher scheme was likely to be considered favourably by the Council. This was a reference back to her finding in the first sentence of [81].
130 As I have already noted at [115] above, those findings need to be read in conjunction with her Honour's further finding in the second sentence of [86]. When [79]-[86] are read as a whole, it appears to me that the primary judge's critical finding that a hypothetical prudent purchaser would be prepared to add value to the purchase price he or she would be prepared to pay for the land in the flood zone on the basis that a scheme such as the Bewsher scheme "may get development consent" was not one which depended upon her Honour resolving the conflicting evidence of Mr Bewsher and Dr Joliffe in favour of the former.
131 Accordingly, I am not positively satisfied of any such dependence. In the absence of that satisfaction it cannot be said that her Honour's finding with respect to the hypothetical purchaser's attitude to and assessment of the Bewsher scheme so as to inform the price which that purchaser would be prepared to pay for the land within the flood zone, was vitiated by the alleged error.
132 Since preparing these reasons I have had the benefit of reading in draft the judgment of Allsop P. I am grateful for his Honour's more thorough recitation and analysis of the relevant authorities going to the issue of when an error of law by a judge will vitiate his or her decision. As will be appreciated from my own more cursory discussion of the issue, I am of the view that it is for the party asserting error to satisfy the appellate tribunal that the error has affected the relevant decision in the sense that it was one upon which the decision depended. As the President acknowledges, there is support for this view in the passage from the reasons of Barwick CJ in Vocisano which his Honour has emphasised at [14] of his reasons as well as in the passage from the judgment of McHugh J in HG cited by Basten JA (with the agreement of Beazley and Santow JJA) in Hamod and extracted by the President at [18] of his reasons.
133 Although I generally agree with the remarks of the President at [54] and [56] of his reasons, I am unable, with respect, to agree with his Honour's proposition at [41] and the last sentence of [52] that a decision will be vitiated by error unless the appellate court can be persuaded to the relevant degree of satisfaction that the issue to which it is alleged the error related was not affected by that error.
134 I accept that there are passages in some of the authorities to which the President has referred which support the proposition which his Honour has adopted and which finds its genesis in Collins. However, with respect, the preponderance of opinion in this Court is that the burden of persuasion of the vitiating character of the error lies upon the party who asserts it: see, for example, the passage emphasised by the President from the judgment of Handley JA (with whom Mason P and Bryson JA agreed) in Mosca cited at [17] of the President's reasons.
135 The point the President then makes is that the placing of the onus on the party asserting error does not answer the question as to what establishing vitiation entails. It is at this stage of the debate that we part company. The President's proposition based in particular on the Federal Court authorities he cites, is that a decision is only vitiated if it cannot be established that the asserted error did not "affect' or "influence" the relevant finding or was not operative in bringing it about.
136 The difficulty I have is that his Honour's proposition requires proof of a negative and thereby places the burden of persuading an appellate court that the error did not affect the judge's finding with respect to the relevant issue upon the party seeking to defend that finding. In my respectful view, that reverses the onus and is inconsistent with the proposition established in Seatainer Terminals that the error must be one upon which the finding or decision depends. It is that element of dependence that constitutes vitiation of that finding or decision.
137 The problem which I have sought to identify is acutely illustrated by the present case. The asserted error is that the primary judge indicated that she proposed to resolve the doubts raised by the conflicting opinions of Mr Bewsher and Dr Joliffe as to whether a hypothetical prudent purchaser would take into account the Bewsher scheme, in favour of the respondents as the dispossessed owners. As I have noted at [123] above, her Honour did not expressly state that her findings with respect to this issue were based upon the approach she said she intended to adopt. Further, as I have sought to demonstrate, there are a number of findings (particularly at [107] to [111] of the primary judge's reasons) which support the impugned finding and which, on analysis, do not evidence any reliance upon or application of the error disclosed in her indication as to how doubts should be resolved.
138 It follows that in a case such as the present, there is the risk that notwithstanding that there may be a correct chain of reasoning and other findings which support the impugned finding, it could nevertheless prove impossible to state with any degree of satisfaction that the judge was not influenced, consciously or subconsciously, by the particular error asserted for one simply would not know and, therefore, could not say that the judge's findings were not, to some unknown degree, based upon that error. As it happens, in my view in this particular case, her Honour's reasoning process was such that I can be satisfied that the negative proposition adopted by the President is established. But I can easily imagine cases similar to the present where it would be more difficult to come to that conclusion. Such is the consequence of having to establish a negative proposition.
139 Thus even if the President's proposition is accepted, in the circumstances of the present case and in light of my analysis of the primary judge's reasoning process which I have detailed at [113] to [130] above, I would be satisfied that her Honour's finding to which I refer at [131] above was not dependent or affected in the relevant sense by the error alleged. This accords with the approach of Lockhart J in Hales referred to by the President at [15] of his reasons. In other words, the primary judge's reasoning process which leads to her ultimate finding with respect to the Bewsher scheme stands independently from the asserted error.
140 Before leaving this part of the appeal I should indicate that notwithstanding the concession of the respondents to the contrary, I have significant doubt as to whether, when read in context, the primary judge did in fact err in the last sentence of [81]. The expert evidence to which she was there referring was that of Mr Bewsher and Dr Joliffe, the hydrologists called by the parties. Their evidence conflicted only in the sense that each opined as to whether, in the hypothetical situation they were asked to consider, it was likely that the Council would, in light of the planning history of the area, favourably consider the Bewsher scheme or some variation of it.
141 Unlike expert evidence given in other types of cases, the opinions of Mr Bewsher and Dr Joliffe were expressed with respect to a hypothetical as distinct from a real situation. To that extent, and though based on a factual planning history, their opinions were in a sense speculative. This is so because although Mr Bewsher and Dr Joliffe were expert hydrologists, it is not entirely clear that the opinion of the latter with respect to the prospects of the Council approving a particular drainage strategy was within his area of expertise as a hydrologist. Rather, if anything, it was within the expertise of Messrs Grech and Rowan, the town planners called by the parties. The primary judge seemed to recognise this when she said in the opening sentence of [82]:
"A prudent purchaser is likely to obtain the advice of a town planner concerning the likelihood of obtaining consent [from the Council] for a particular drainage scheme."
142 The relevance of the evidence of the hydrologists was, as their joint report indicated, that the detention basins planned for the area could be located elsewhere as her Honour found at [80], the relevant part of which I have extracted at [87] above.
143 The passage from the judgment of Sheller JA in Archibald relied upon by the appellant to which I have referred at [104] above was made in the context of an issue with respect to the intensification of the use of a quarry. The expert evidence directed to that issue, and which was described by his Honour as technical and complex, was from expert surveyors who expressed opinions as to what each considered to be the extent to which the quarry was physically used at various times. That evidence involved, amongst other things, the use and interpretation of aerial photographs as well as physical surveys of the site. The reliability of the techniques adopted by each of the witnesses was very much in issue. There was nothing hypothetical about the opinions expressed.
144 Unlike in Archibald, the opinions expressed in the present case by the hydrologists based on the planning history of the area did not involve an "intellectual exchange". It was purely the expression of different opinions with respect to a hypothetical situation, namely, the likelihood of the Council giving favourable consideration to the Bewsher scheme.
145 Furthermore, as the primary judge noted at [69], which I have recorded at [83] above, she was not required to accept one opinion or the other as to whether the Council would consent to the Bewsher scheme: that was not a choice she had to make. The issue which she was required to determine was what advice the prudent hypothetical purchaser would take into account with respect to the land within the flood zone and whether that purchaser would be prepared to add value to the purchase price on the basis that a scheme such as the Bewsher scheme may receive development consent. This exercise involved an evaluative judgment in the course of which her Honour was entitled to resolve doubts in favour of the respondents as the dispossessed owners.
146 In my opinion, the principle for which McBaron was cited at [7] extended to the so-called conflict between the advice which each of the hydrologists opined would be given to the hypothetical purchaser by a hypothetical hydrologist and, for that matter, a hypothetical town planner. The evidence of those experts falls, in my view, into the same category as the opinion evidence of expert valuers. In the normal course, in a case such as the present (and indeed in the present case), the valuers called by the respective parties would take and analyse comparable sales to determine a rate per square metre to apply to the acquired land. Each would express an opinion as to whether the rate derived from the comparable sales should be adjusted up or down to take account of, for instance, the potential highest and best use of that land and its other characteristics to the extent to which they differed from the sales evidence. In determining a rate to be adopted, the judicial valuer was required to resolve the doubts or conflicts raised in the expert evidence as to the rate to be derived from the analysis of the sales and the adjustments, if any, to be applied to that rate, in favour of the dispossessed owner.
147 The conflicts in the evidence of Mr Bewsher and Dr Joliffe involved the extent to which, if at all, the hypothetical purchaser would receive advice as to the possibility of the Council considering favourably a scheme such as the Bewsher scheme. The primary judge was entitled to resolve those doubts, like other doubts bearing upon value, in favour of the respondents. She stated the principle in unexceptionable terms at [7] and I do not believe that she was intending to refer to or rely upon a different principle in the last sentence of [81].
148 In my opinion, therefore, I would not be prepared to accept that in the context in which her Honour stated the principle or approach she intended to adopt in that sentence, she erred in law. Her choice of words when referring to a conflict in the expert evidence may have been better expressed but that should not be taken as evidencing an erroneous statement of a well-established principle of valuation.
149 It thus follows from the foregoing that either no error of law is to be found in the last sentence of [81] or, if error there be, it had no operative effect on any relevant finding of fact. I would therefore reject the appellant's third ground of challenge.