Blackley Investments Pty Ltd v Burnie City Council (No 3) - [2013] TASFC 12

[2013] TASFC 12

COURT: SUPREME COURT OF TASMANIA (FULL COURT)

CITATION: Blackley Investments Pty Ltd v Burnie City Council (No 3) [2013] TASFC 12

PARTIES:  BLACKLEY INVESTMENTS PTY LTD
  v
  BURNIE CITY COUNCIL

FILE NO: FCA 838/2013
JUDGMENTS

APPEALED FROM: Blackley Investments Pty Ltd v Burnie City Council (No 3)

[2013] TASSC 14
Blackley Investments Pty Ltd v Burnie City Council (No 4)
[2013] TASSC 39

DELIVERED ON:  23 December 2013
DELIVERED AT:  Hobart
HEARING DATES:  4, 5 November 2013
JUDGMENT OF:  Blow CJ, Wood and Estcourt JJ

CATCHWORDS:

Appeal and New Trial – Appeal - General principles – Excessive or inadequate damages – Damages inadequate - Damages in lieu of specific performance – Appeal against rejected claim for expectation damages and damages for loss of chance – Assessment of market value – Cross-appeal against award of reliance damages and interest.

Burnie Planning Scheme 1989.
State Policies and Projects Act 1993 (Tas), ss13, 13C, 14.
Local Government Act 1993 (Tas), s20(1).
Land Use Planning and Approvals Act1993 (Tas), ss32, 33, 34, 63(2).
Hungerfords v Walker (1989) 171 CLR 125; Blackley Investments Pty Ltd v Burnie City Council (No 2) [2011] TASFC 6; Spencer v Commonwealth (1907) 5 CLR 418; Brewarrana Pty Ltd v Commissioner of Highways (No 2) (1973) 6 SASR 541; Minister for the Environment v Florence (1979) 21 SASR 108; Doherty v Commissioner of Highways (1974) 7 SASR 57; ISPT Pty Ltd v Melbourne City Council [2008] VSCA 180, considered.
Aust Dig Appeal and New Trial [112]

Equity – Equitable remedies – Specific performance – Alternative and incidental forms of relief – Damages – Other matters – Assessment – Damages for loss of chance – Expectation damages – Reliance damages.

Burnie Planning Scheme 1989.
State Policies and Projects Act 1993 (Tas), ss13, 13C, 14.
Local Government Act 1993 (Tas), s20(1).
Land Use Planning and Approvals Act 1993 (Tas), ss32, 33, 34, 63(2).
Hungerfords v Walker (1989) 171 CLR 125; Blackley Investments Pty Ltd v Burnie City Council (No 2) [2011] TASFC 6; Spencer v Commonwealth (1907) 5 CLR 418; Brewarrana Pty Ltd v Commissioner of Highways (No 2) (1973) 6 SASR 541; Minister for the Environment v Florence (1979) 21 SASR 108; Doherty v Commissioner of Highways (1974) 7 SASR 57; ISPT Pty Ltd v Melbourne City Council [2008] VSCA 180, considered.

Aust Dig Equity [1256]

REPRESENTATION:

Counsel:
             Appellant:  S B McElwaine SC and C J Bartlett
             Respondent:  M E O'Farrell SC and E G J Hughes
Solicitors:
             Appellant:  Bartletts
             Respondent:  Levis Stace & Cooper

Judgment Number: [2013] TASFC 12
Number of paragraphs: 144

Serial No 12/2013
File No FCA 838/2013

BLACKLEY INVESTMENTS PTY LTD
v BURNIE CITY COUNCIL (NO 3)

REASONS FOR JUDGMENT FULL COURT

BLOW CJ
WOOD J
ESTCOURT J (Dissenting in part)
23 December 2013

Orders of the Court

Appeal allowed.

Cross-appeal dismissed.

Judgment set aside.

Order that judgment be entered for the appellant against the respondent for $1,556,000 plus interest thereon at the rate of 8% per annum from 24 October 2011 until judgment, compounding on the first day of each month.

Serial No 12/2013
File No FCA 838/2013

BLACKLEY INVESTMENTS PTY LTD
v BURNIE CITY COUNCIL (NO 3)

REASONS FOR JUDGMENT FULL COURT

BLOW CJ
23 December 2013

I have read the reasons for judgment of Estcourt J in draft form. I agree that the appeal should be allowed, the cross-appeal dismissed, the judgment below set aside, and an order made that judgment be entered for the appellant against the respondent for a sum comprising $1.556m plus interest thereon from 24 October 2011 until today at the rate of 8% per annum, compounding monthly. Generally speaking, I agree with the reasons of Estcourt J.
Essentially this appeal concerns findings of fact relating to the value of the land which the respondent contracted to sell to the appellant. The appellant contends that, in assessing damages, Holt AsJ made a series of errors, and that this Court should make its own findings of fact based upon the evidence that he received, and make its own assessment of the damages. The circumstances in which an appellate court may disturb a finding of fact have been made clear by the High Court in a series of cases, particularly Warren v Coombes (1979) 142 CLR 531; Jones v Hyde (1989) 63 ALJR 349; Abalos v Australian Postal Commission (1990) 171 CLR 167; Devries v Australian National Railways Commission (1993) 177 CLR 472; and Fox v Percy (2003) 214 CLR 118. There was no suggestion in this case that the learned associate judge relied on observations as to demeanour or other credibility considerations in reaching his conclusions. He certainly had the advantages that derive from the obligation to receive and consider the entirety of the evidence and the opportunity, over a significant period, to reflect upon that evidence and to draw conclusions from it. However, after making all due allowances for the advantages available to the trial judge, the appellate court must not shrink from giving effect to its own conclusions: Fox v Percy (above) at par[29] (Gleeson CJ, Gummow and Kirby JJ).
For the various reasons stated by Estcourt J, I am satisfied that the learned associate judge erred in concluding that the appellant had failed to establish that the land in question was worth any more than $1m as at 24 October 2011. In my view ground 1 should succeed on that basis. I agree with Estcourt J that grounds 2 and 3 should succeed, for the reasons stated by him.
On the basis of Mr Cripps' evidence, I am satisfied that, if the land had no potential for rezoning, it would have been worth about $2m on the relevant date. I am satisfied that the land had a substantially greater value because of its potential for rezoning. On the basis of Mr Cripps' evidence, I accept that it would have been worth $3.58m on the relevant date if it had been rezoned as residential land before then. I reject the appellant's contention that the value of the land was $3.106m, representing the industrial land value of $2m plus the value of a 70% chance that it would be worth an extra $1.58m after rezoning. In my view a hypothetical purchaser would not have been willing to pay that much because of the risk of rezoning being refused or delayed. I agree with Estcourt J that it is necessary to adopt a "broad brush approach", and that the evidence establishes on the balance of probabilities that a hypothetical purchaser would have been prepared to pay 70% of Mr Cripps' valuation of $3.58m as at the relevant date.
It follows that the appellant must be entitled to judgment for $1.556m plus interest thereon from 24 October 2011 until judgment at the agreed rate of 8% per annum, compounding monthly. I would order that judgment be entered for the appellant against the respondent accordingly, with the interest to compound on the first day of each month.
File No FCA 838/2013

BLACKLEY INVESTMENTS PTY LTD v BURNIE CITY COUNCIL

REASONS FOR JUDGMENT FULL COURT

WOOD J
23 December 2013

I have had the advantage of reading the draft reasons for judgment of Estcourt J and I agree substantially with those reasons. I have also had the opportunity to read the reasons of the learned Chief Justice. I agree with those reasons and I take the same view that ground 1 should succeed; error was made by the learned associate judge in concluding that the appellant had failed to establish that the land in question was worth any more than $1m as at 24 October 2011. Ground 1 asserts error in that regard, but also in the failure of the learned associate judge to be satisfied that at least two hectares of the subject land could be developed and used for industrial purposes as at the material time. While that error was made, in my view the ground does not succeed in this latter respect. If the correct approach is taken to ascertaining the market value of the land, as explained by Estcourt J, a conclusion as to the extent of the land that could be developed and used for industrial purposes need not be determinative. I agree with the orders proposed by Estcourt J.
File No FCA 838/2013

BLACKLEY INVESTMENTS PTY LTD v BURNIE CITY COUNCIL

REASONS FOR JUDGMENT FULL COURT

ESTCOURT J

23 December 2013

The appeal

Blackley Investments Pty Ltd appeals against an order of Holt AsJ, whereby judgment was entered in its favour against the Burnie City Council ("the Council") after an assessment of damages in lieu of specific performance.
The learned associate judge in Blackley Investments Pty Ltd v Burnie City Council (No 3) [2013] TASSC 14, rejected the appellant's claim for expectation damages and damages for loss of chance. In Blackley Investments Pty Ltd v Burnie City Council (No 4) [2013] TASSC 39, his Honour assessed the appellant's reliance damages, together with damages in the nature of interest pursuant to the principles in Hungerfords v Walker (1989) 171 CLR 125, at $371,543.96.
The appellant appeals against the learned associate judge's rejection of its claim for expectation damages and damages for loss of chance. The respondent cross-appeals against the award of reliance damages and interest.

The notices of appeal

The appellant's notice of appeal sets out the following grounds:
"The Learned Associate Judge erred in law and/or fact:
1 In his failure to be satisfied, upon the balance of probabilities, that at least 2 hectares of the subject land could be developed and used for industrial purposes as at the 24th October 2011 and then, as a consequence, in his determination that the value of the land as at the 24th October 2011 was not more than $1 million.
2 In his determination that the residential zoned value of the land as at 24th October 2011 did not exceed $1 million or alternatively that the appellant had failed to establish that such value exceeded $1 million.
3 In his determination of the likely chance of the land being rezoned for a higher and better use as at 24th October 2011, whether or not based on an assumed or determined area of development."
The respondent's notice of cross-appeal sets out the following grounds:
"1 The learned Associate Judge erred in in law and/or in fact in finding that the respondent had failed to prove that the land was worth less than $1.4 million.
2 The learned Associate Judge erred in in law and/or in fact in finding that the industrial value of the land would not exceed $1 million if the developable area exceeded 1ha.
3 The learned Associate Judge ought to have found that the value of the land, zoned industrial, with the constraints that applied to it and the potential for rezoning as at 24 October 2011 was $1m.
4 The learned Associate Judge erred in in law and/or in fact in finding that an increase in developable industrial area to a little above 1ha would not be likely to result in a new access being required.
5 The learned Associate Judge erred in law and/or in fact in failing to consider whether the wasted expenditure forming the basis for reliance damages was abortive expenditure, which the appellant would have expended no matter whether the land was transferred to it, or not."

The background

A brief history of the matter is set out by the associate judge in his Honour's reasons for judgment in Blackley Investments Pty Ltd v Burnie City Council (No 3) ("his reasons") at par[1] as follows:
"1 The plaintiff, Blackley Investments Pty Ltd, contracted to purchase land at Burnie from the defendant, the Burnie City Council, for the sum of $1m. The defendant refused to settle and the plaintiff sued for specific performance. Pursuant to the Supreme Court Civil Procedure Act 1932, s11(13), the Court, if it thinks fit, may award damages in addition to or in substitution for an order for specific performance. The parties agreed that if the defendant was in breach of its obligation to settle, damages should be awarded in lieu of specific performance. On 24 October 2011 the Full Court found that the defendant was obliged to settle and, in accordance with the parties' agreement, ordered that judgment be entered for the plaintiff for damages to be assessed. See Blackley Investments Pty Ltd v Burnie City Council (No 2) [2011] TASFC 6. The Court directed that the assessment be listed for hearing before me. This is my decision on the assessment."

The parties' positions below

The associate judge set out the respective claims of the appellant and the respondent on the assessment of damages at pars[2] - [6] of his reasons, as follows:
"2 The plaintiff says that the land, as at the date of the order for damages in lieu of specific performance, had a value of $2m with its existing industrial zoning under the Burnie Planning Scheme 1989 . The balance purchase price payable, if the contract had proceeded to completion, was $950,000. Accordingly, damages based solely on this land value would result in an award to the plaintiff of $1.05m.
3 Further, the plaintiff says that it ought to be compensated for the lost chance of a rezoning allowing residential development. As an indicative figure the plaintiff produced valuation evidence that the land, with an assumed approval for a 40 lot subdivision, had a value of $3.58m. The plaintiff says that its award of damages should reflect the value of the chance of the land significantly increasing in value in the event of a rezoning. The plaintiff adduced evidence from a planner estimating the chance of a rezoning as 70 per cent.
4 In the alternative, the plaintiff claims, that if it is not demonstrated that it would have profited from the transfer of the land to it, it is entitled to recover the money which it reasonably spent as a result of the contract. This alternative claim is for approximately $245,000, which sum includes the $50,000 deposit paid to the defendant.
5 The plaintiff claims in addition to its claim for damages for lost profit or lost expenditure damages in the nature of interest pursuant to the principles set out in Hungerford's v Walker (1989) 171 CLR 125.
6 The defendant says that the land, with its industrial zoning, had a value of $1m only, as at the date of the order for damages in lieu of specific performance, and has no higher value resulting from the claimed potential for a rezoning allowing residential use. Accordingly, it follows that the plaintiff would not have profited and would not even have recovered its expenditure resulting from the contract had there been an order for specific performance. The award should be for the amount of the deposit paid, being $50,000, less the cost of selling, with the end result being an award of nominal damages only."

The decision below

The associate judge approached the matter by first considering the appellant's claim that the land, zoned "Industrial" under the Burnie Planning Scheme 1989 ("the Planning Scheme"), had a value of $2m as at the date of assessment. The date of assessment was agreed between the parties as 24 October 2011, that being the date of the decision of this Court in Blackley Investments Pty Ltd v Burnie City Council (No 2) (above).
The valuer for the appellant, Mr Russell Cripps, and the valuer for the respondent, Mr John Austin, were agreed that the value of the "developable" or "useable" area of the land was $100 per square metre, but Mr Cripps was of the view that the useable area was 2ha whereas, Mr Austin assumed a useable area of 1ha.
The result was that Mr Cripps' valuation was $2m and Mr Austin's valuation was $1m.
The associate judge considered the structure of the Planning Scheme, as it related to the land at pars[36] - [43] of his reasons as follows:
"The Planning Scheme
36   At all relevant times the land has been within the area subject to the use and development controls contained in the Burnie Planning Scheme 1989. For many years it has been zoned 'Industrial'.
37   The 'Industrial' zone extends south across the railway line and Bass Highway and contains predominantly land used for industrial and commercial purposes, although there are some long established residential properties in the area.
38   The blocks of land, when purchased by the defendant in 1995, contained large industrial sheds used for abattoir operations. However, those operations had ceased and the sheds had been demolished by the time of the plaintiff's purchase.
39   Under the 'Industrial' zone developments for permitted uses include warehouse, timber mill, timber yard and bus depot. Other developments are specified to be permissible, subject to the favourable exercise of a discretion. Prohibited developments include houses, apartments, holiday units, motels, restaurants and licensed establishments.
40   The land, being within 1 km of the high water mark is within the coastal zone as defined by the State Coastal Policy 1996. The Planning Scheme contains the following provision:
'A1 IMPLEMENTATION OF STATE COASTAL POLICY
Where the planning authority determines that a proposed use or development would be inconsistent with the State Coastal Policy, that use or development is, unless prohibited by this scheme, and notwithstanding any other provision of the scheme, a use or development which the planning authority has a discretion to refuse or permit.'
41   The effect of the provision is that if a permitted or discretionary development under the balance of the Scheme appears to be inconsistent with the State Coastal Policy approval for the development will be refused unless it is demonstrated to be consistent with the policy, or by conditions or otherwise it can be made to be consistent with the policy.
42   The policy includes a requirement that the coastal zone be managed 'to conserve the diversity of all native flora and fauna and their habitats' and that the 'design and siting of buildings, engineering works and other infrastructure including access routes in the coastal zone, will be subject to planning controls to ensure compatibility with natural landscape'. The policy states that 'priority will be given to those (uses) which are dependent on a coastal location'.
43   Accordingly, there is a real possibility that even if a proposed development for an industrial use is designated as permitted under the Scheme, a development application will be processed as if the development was discretionary, and unless it can be demonstrated to be, or made to be, consistent with the policy the development application will be refused."
The associate judge next considered the expert planning and valuation evidence at pars[62] - [65] of his reasons as follows:
"62    The defendant's planning officer, Mr Earle, said in his report at pars[62 – 63]:
'62 It is difficult to say how much of the site is useable for industrial purposes:
None of the analysis to date has definitely delineated and calculated the useable area.
The Burnie West Coastal Strategy (to which I will later refer) suggests approximately one–third of the site or about 1ha is available – but then says such a figure is misleading if all management issues are integrated into a single solution.
In my opinion the absence of such specification is instructive in highlighting uncertainties with capability of the land for sustainable future use.
I am unable to say what proportion of the site is available for use.
63   It is tempting to contemplate that all restrictions on use of the land can be resolved through engineered and managed solutions. However, the particularities of the site both individually and cumulatively have potential to add significant cost to development.
If cost is not an object then it may be possible to say that the entire site is potentially available for use if engineered solutions are applied.
However, engineered solutions have potential to impact on the other site values, including for coastal processes, visual presentation and conservation management.
Engineered solutions must be based on best available knowledge. The level of understanding for impact of sea level rise on coastal inundation and process remains inconclusive. There can be no assurance engineered solutions will provide a consistent and acceptable level of protection for the life cycle of development.
Engineered solutions require maintenance to remain effective. There are ongoing cost and responsibility implications. Failure to adequately maintain can enhance the level of risk.'
63       Consultant planner, Mr Shephard, who was the principal author of the Master Plan, containing the case studies, to which I have referred earlier, said at par[10.3] of his report:
'I have identified the following assumptions [in Mr Cripps' reports] that I am able to comment on in a town planning context. They are common to both [valuers'] reports:
…
•    The usable area of the site is "guesstimated" as 2ha
Comment: None of the literature associated with the Disputed Land has definitely delineated and calculated the usable area, after subtracting penguin habitat, areas vulnerable to erosion, public access and use etc. The sub-precinct plan in the BWCA Stage 2 Study [the 2011 Master Plan referred to earlier in these reasons] shows approximately one third of the total area is usable for built development (buildings, car parking, access, recreational use), ie slightly more than 1ha. However this is potentially misleading as demonstrated by the case study examples which integrate the overall site management of various issues and elements into the overall development. In an integrated development of the site the only "unusable" areas of the Disputed Land are the areas of penguin habitat and foreshore edge where armouring may be required. If we simply subtract these areas then the Valuer's assumption seems a reasonable one. However approximately half of this 2ha is required under the sub-precinct plan in the BWCA to be used as buffers to the penguin habitat and vulnerable foreshore areas, so in reality the area that is "usable" for built development is only 1ha.'
64   Planner, Ms Duckett, who gave evidence on behalf of the plaintiff, was not asked to comment on or give an assessment of the developable area of the land and did not do so.
65   A prudent purchaser, wishing to purchase the land for industrial use, would make enquiries of the Council and would ascertain that a developable area in excess of 1ha would be uncertain. Engineering plans might need to be prepared and earthworks undertaken in accordance with those plans to raise the height of the land, if the lower lying land was to be developed. Depending upon the intensity of the development a developer might be required to include in the development proposal a substantial buffer area between the built industrial portion of the land and the coastal and penguin habitat areas and also to implement measures relating to coastal protection and the protection of the penguin habitat." (My bold italics.)

His Honour concluded at par[66] of his reasons that the appellant had failed to present sufficient evidence to show, on the balance of probabilities, that 2ha of the land was "developable for industrial use", "without significant added cost, as assumed by Mr Cripps". (My bold italics.)
At par[67] his Honour said:
"67 The evidence only supports a finding that not less than 1ha of the subject site is developable for industrial use and, in accordance with that evidence and the evidence of the valuers, assigning a value of $100 per square metre to the developable portion of the land, I conclude that the industrial value of the land as at 24 October 2011 was not less than $1m. It might have a higher industrial use value, but I am not persuaded that this is more likely than not."
Next, the associate judge turned to the evidence given by Mr Colin Blackley, a director of the appellant, as to the loss of chance claim. His Honour found at par[71] of his reasons as follows:
"71 This evidence was not disputed. I have no reason to reject it. I find that the plaintiff would have made attempts to have the land rezoned to permit residential use had the land been transferred to it in October 2011. In the alternative, I find that the plaintiff would have attempted to sell the land at residential value with the purchaser obliged to pursue a rezoning and with the purchaser being able to bring the contract to an end should a rezoning not have been achieved following reasonable endeavours."
It should be observed at this point that Mr Blackley's evidence was that the appellant would not have actually developed the land itself and that what was likely, in Mr Blackley's words, was a "back to back sale". I infer from what he said in his evidence-in-chief that such a sale would likely have taken place after a successful application to have the land rezoned as residential. I note however, the associate judge's alternative finding in this regard at par[71] of his reasons. In any event, as will be seen, the real question in terms of the assessment of the appellant's damages revolves around the market value of the land as at 24 October 2011.
Next, the associate judge, in order to consider the value of the lost opportunity, went on to consider the appellant's claim that the land would have had a value of $3.58m if it was zoned residential as at 24 October 2011.
The appellant's expert valuation evidence as to that again came from Mr Cripps, and again the associate judge found himself unable to accept Mr Cripps' valuation.
His Honour said at pars[78] - [82] of his reasons:
"78 I am not persuaded on the evidence presented by Mr Cripps that the land, if zoned residential and capable of supporting a 40 lot subdivision, would have any greater value than its value as industrial land. The reason is that I am not persuaded that the comparative sales evidence relied upon by Mr Cripps to produce an end price per waterfront lot of $270,000 has been applied correctly.
79   Mr Cripps relied principally upon six sales of subdivided allotments at Park Grove in Burnie occurring in 2011. Five of the building allotments had an area of about 800m2 and the other building allotment had an area of 1,600m2. Four of the five smaller lots sold for $175,000. The other smaller allotment sold for $180,000. The large allotment sold for $345,000.
80   These comparative sales figures show that each of the six allotments sold for a price of about $220m2. The figures also show that there is a direct correlation between land size and price. If these figures are to be applied to the assumed 450m2 allotments, the price per non-waterfront allotment would be $220 multiplied by 450m2 producing an end sale price of about $100,000.
81   Mr Cripps went on to uplift by 50 per cent the prices obtained in the Park Grove subdivision for the presumed 28 waterfront allotments. This uplift is based on comparative sales figures showing that good quality waterfront land is worth at least 50 per cent more than similar quality non-waterfront land. Applying the same uplift, the value per square metre would rise from $220 to $330. $330 per square metre applied to a 450m2 building allotment produces an end sale price of about $150,000.
82   Because I have no evidence to support a conclusion that the value of building allotments is unaffected by land size I cannot accept Mr Cripps' valuation."
The associate judge then proceeded to recalculate Mr Cripps' valuation, taking into account land size. He arrived at a figure of $1.32m. However, his Honour went on to say that even if his recalculation was correct, he would still be unable to be satisfied that the recalculated figure represented the true pre-subdivision residential value of the land because of "other difficulties with Mr Cripps' assumptions".
At par[92] of his reasons, his Honour found Mr Cripps' residential valuation evidence "unpersuasive" and declined to accept it for "these reasons". It is not clear to me whether his Honour was, by use of the phrase "these reasons", referring there to the "other difficulties" with Mr Cripps' assumptions, or to the asserted "land size" flaw that led to his Honour adopting his own methodology to re-calculate Mr Cripps' valuation figure of $3.85m, or to both. I will assume for the purposes of these reasons that it was both.
It will be necessary to set out in full the associate judge's articulation of those "other difficulties" set out at pars[84] - [92] of his reasons and I will do so shortly.
Finally, although it was unnecessary in the light of his rejection of the appellant's residential valuation evidence, the associate judge went on to assess the chance, as at 24 October 2011, of a residential rezoning.
His Honour, after considering the expert planning evidence of the respondent's Director of Land and Environment Services, Mr Patrick Earle, and the consultant planner Mr Neil Shephard, called by the respondent, said, at pars[99] - [100] of his reasons:
"99 The intensity or nature of industrial development might be such that an extensive buffer zone is required rendering only about 1ha of the site developable. Residential development, however, might be better capable of accommodating appropriate conservation outcomes with a reduced buffer area. If this transpired, the rezoning might allow a developable area of up to 2ha. However, I would rate the chance of 2ha being developable as low having regard to the Master Plan 2011 and Mr Shephard's evidence. I would regard the chance of a rezoning enabling about 1.5ha of the site to be developed as a medium chance.
100 Assessing the chances, informed by the evidence provided, but acknowledging a degree of guesswork, and doing the best I can, I would have applied the following percentages:
•     Rezoning with 1ha developable land – 90 per cent.
•     Rezoning with 1.5ha developable land – 60 per cent.
•     Rezoning with 2ha developable land – 30 per cent."
In the light of the associate judge's conclusions that the industrial value of the land as at 24 October 2011 had not been proved to be more than $1m, and that it had not been proved that the land would have had a higher value, it followed that the appellants' claim for expectation damages failed and his Honour remained concerned only with the claim for reliance damages.
His Honour had earlier explained the application to the present case of the relevant principles he derived from Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64, and Sellars v Adelaide Petroleum NL (1994) 179 CLR 332. He said at par[20] of his reasons:
"20 The application of the relevant principles to the present case result [sic] in the following propositions:
(1)If the market value of the land at the date of the order, namely, 24 October 2011, and any lost chance damages are shown to exceed the sum of the purchase price that would have to be paid by the plaintiff to complete the contract and the reliance damages (subject to any adjustment for realisation expenses and for Hungerfords v Walker damages) the award will be for that amount.
(2)As to lost chance damages, if an order for specific performance directing the transfer of the land had been made and the transfer carried with it a better than negligible commercial opportunity for the plaintiff to profit from the land in addition to realising its market value, as at the date of the order awarding damages, which opportunity the plaintiff would have taken up, the value of the chance, as proved by the plaintiff, is to be assessed and included in the award (with any adjustment applicable for realisation expenses and pursuant to Hungerfords v Walker).
(3)If such an award (market value plus loss of chance damages less the cost to the plaintiff of completing the contract and realising the benefit) does not exceed the reliance damages, the award will be for the reliance damages (plus any addition pursuant to Hungerfords v Walker), unless the defendant can demonstrate, on the balance of probabilities, that some or all of the reliance damages would not have been recouped even if there had been performance."
Because it is necessary, in order to understand the outcome of his Honour's assessment, and to understand the cross-appeal, I set out in full the associate judge's reasoning in arriving at the conclusion that the appellant was entitled to reliance damages. His Honour said at pars[101] - [111]:
"101 The plaintiff's claim for reliance damages is particularised at about $245,000, including the $50,000 deposit paid under the contract. When the claim for interest on this sum is added, the total claim comes to about $460,000. The plaintiff has the benefit of the presumption, referred to earlier in these reasons, that expenses would be recouped if the breached contract had been performed. The onus is on the defendant to rebut the presumption on the balance of probabilities. Accordingly, to avoid the obligation to pay reliance damages the defendant must show that had the land been transferred to the plaintiff on 24 October 2011, the plaintiff would not have recouped the expenditure and interest.
102 The plaintiff would have had to pay a further $950,000 to settle the contract and so the defendant needs to show that the land would not have returned more than about $1.4m for the plaintiff, if reliance damages of about $460,000 are to be reduced or negated.
103 To show this the defendant would need to prove that the industrial value of the land was less than about $1.4m. If able to prove this the defendant would then need to show that even with a residential zoning the land would not have returned more than about $1.4m to the plaintiff if zoned residential or, alternatively, that the chance of a residential rezoning was less than 50 per cent.
104 Although the plaintiff has been unable to prove an industrial value in excess of $1m, conversely the defendant has not proved that the land was worth less than $1.4m.
105 The industrial value was assessed by both the plaintiff's valuer and the defendant's valuer at $100 per square metre of developable land. Accordingly, the defendant needs to show that less than about 1.4ha was developable for industrial use.
106 Having regard to the uncertainty as to the extent of any buffer area which might be ultimately required, in view of the contents of the Master Plan as set out at par[98] of these reasons, I am not satisfied that it is more likely than not that less than about 1.4ha of the land is developable land. The extent of the buffer area required will be influenced by the type and intensity of the industrial use. I am not satisfied that the land had, in October 2011, an industrial value of less than $1.4m. I note that the more intensive the use, the higher the likelihood is that a new access would be required at a cost of about $300,000 (see par[88] of these reasons). However, it was not suggested by the defendant that an increase in developable industrial area to a little above 1ha would be likely to result in a new access being required.
107 Counsel for the defendant submitted that the industrial value of the land would not exceed $1m even if the developable area exceeded 1ha. It was said that this is because a prudent purchaser would assume, at the time of purchase, that only 1ha might be developable with any degree of certainty. This, however, does not take account of a sale being conditional upon approval of a particular development proposed by the purchaser, which might involve using more than 1ha of the land. Although the comparative sales evidence relied upon by the defendant's valuer, Mr Austin, showed that the value per square metre for industrial land was lower for larger sites, the evidence is not sufficient to show, on the balance of probabilities, that the land value would fall significantly below $100m2 for land a little in excess of 1ha, say 1.4ha.
108 The defendant having failed to prove a land value of less than $1.4m, it follows that the plaintiff is entitled to reliance damages.
109 If the industrial value of the land had been shown to be less than $1.4m, it would have been necessary for me to consider whether the land would have a higher value if zoned residential. I would have determined, for the following reasons that it would not.
110 Firstly, I have already rejected the figures produced by the plaintiff's valuer, Mr Cripps, based upon the summation method of valuation.
111 Secondly, the comparative sales evidence available to me indicates that pre-subdivision broad acre residential land in Burnie has a lower value than industrial land. The 2008 sale of the broad acre pre-subdivision Park Grove land referred to in these reasons at par[87] reflects a value of about $40.50m2. The industrial land, opposite the subject site, referred to in par[57] of these reasons was sold in 2007 for $120m2."
As already noted, the associate judge went on in Blackley Investments Pty Ltd v Burnie City Council (No 4) (above), to assess the appellant's reliance damages and damages in the nature of interest at $371,543.96.

Appellant's submissions on ground 1

The written submissions of counsel for the appellant, Mr McElwaine SC and Mr Bartlett, may be summarised as follows:
·     Clause A1 of the Planning Scheme does not mandate refusal. If the planning authority determines that a proposed use or development "would be inconsistent" with the State Coastal Policy 1996, then the status of the development alters from permitted to discretionary.
·     The associate judge's reasoning at par[43] of his reasons discloses material error. Whether a planning permit might be refused, or must be granted, depends upon the content of a particular development application lodged. Self-evidently some development proposals might seek to use more of the land than other forms of proposal. It is the Planning Scheme which determines the extent of development.
·     No witness gave evidence in support of his Honour's conclusion at par[43]. Considerable documentary evidence which was before his Honour supported development of the land for industrial purposes.
·     His Honour did not reject the valuation methodology of Mr Cripps which supports his opinion of a value of $100 per square metre as at 24 October 2011.
·     Mr Cripps did not value the land with any particular development proposal in mind, except that he checked his rate per square metre by reference to a hypothetical five lot subdivision.
·     The extracts from the evidence of Mr Earle at par[62] of the associate judge's reasons cannot stand in the light of Mr Earle's cross-examination and the provisions of the Planning Scheme. Whilst individual discretions may be engaged on the content and form of a particular development/use application, and whilst conditions might reasonably be imposed to regulate subsequent development, neither results in a reduction in the area of the zoned land which is capable of development to 1ha.
·     The identified constraints, on the evidence, were perfectly able to be dealt with by the adoption of standard engineering solutions. The Resource Planning and Development Commission ("the RPDC") did not suggest in its July 2006 decision refusing the appellant's application for a rezoning and a planning permit for 36 residential units, 36 serviced apartments, an 80 seat restaurant and café, an indoor pool and car parking provision, that the footprint of the development proposed by the appellant in the application before it could not be achieved by the implementation of such measures.
The associate judge ought to have been satisfied that at least 2ha of the land could have been developed for industrial use.

Respondent's submissions on ground 1

The written submissions of senior counsel for the respondent, Mr O'Farrell SC, may be summarised as follows:
·     The" issue of what value should be attributed to this land" [sic] is what a prudent purchaser would have paid for it.
·     The prudent purchaser is one who is seised of all the matters necessary to make an informed decision about the land. This will depend in part on the particular characteristics of the land, but also on its potential for development.
·     The mistake the appellant makes is to discount any factors which may reflect negatively on the land from the perspective of a prudent purchaser. These factors were both recognised and fairly dealt with by the associate judge.
·     It is common ground between the parties that the principles set out by the associate judge at pars[7] - [20] of his reasons as to the approach to be taken to the assessment of the appellant's damages are correct.
·     Should this Court conclude that it should assess the appellant's loss of bargain damages, the case is not one where an award should be made for loss of chance, because the element of chance lies in the thing contracted for, in this case the land: McRae v Commonwealth Disposals Commission (1951) 84 CLR 377; Waribay Pty Ltd v Minter Ellison [1991] 2 VR 391 at 398 to 401; Roach v Page (No 37) [2004] NSWSC 1048 at pars[315] - [334].
·     The correct measure of damages is the difference between the purchase price paid and the value of the land at the date of assessment. The purchase price was $1m. The value is to be determined on well known principles: Spencer v Commonwealth (1907) 5 CLR 418 at 427.
·     The "chance" that the land might be zoned residential was an issue for the correct valuation of the land, based on its highest and best use, and as to that, the succinct summary of the valuation of Mr Austin identifying the potential for rezoning set out by the associate judge at par[60] of his reasons, is correct.
·     The associate judge's conclusion at par[43] of his reasons was that if development of land under the Planning Scheme is inconsistent with the State Coastal Policy, the development will be refused: "… unless it is demonstrated to be consistent with the policy, or by conditions or otherwise it can be made to be consistent with the policy". In its terms, clause A1 "does not mandate refusal" however, his Honour's construction of the clause, on any view, must be correct: State Policies and Projects Act 1993, ss13, 13C and 14; Land Use Planning and Approvals Act 1993, s63(2)(a).
·     The RPDC identified in its 2006 decision that constraints on the site consistent with those matters protected by the State Coastal Policy were likely be relevant to any use and development of land.
·     The evidence referred to in the appellant's submission relates to the residential development. That development was refused by the RPDC and it does not follow that the appellant could have developed 2ha of the land for an industrial development.
·     Mr Cripps was not qualified to give evidence about the developable area. He was reliant on the advice of town planners.
·     Mr Cripps also speculated that there were engineering solutions that could be applied. The appellant suggests that filling the land was not a difficult exercise. This questioning was disallowed.
·     There was no evidence of what the engineered solutions were, or to establish how they could be carried out. Mr Blackley was not an expert.
·     The associate judge's finding that Ms Duckett was not asked about the developable area was correct. In any event, Ms Duckett's evidence must be read subject to the evidence of Mr Shephard set out at par[63] of his Honour's reasons, which he was entitled to accept.
·     On the evidence before his Honour, if a well informed prospective purchaser asked the respondent what the developable area was, that person would receive an equivocal answer and would not be satisfied that more than 1ha of land on the site was developable: Spencer v Commonwealth (above); Cienda Pty Ltd v South Australian Urban Land Trust (1988) 65 LGRA 419 at 421, affirmed on appeal in Cienda Pty Ltd v South Australian Urban Land Trust (1988) 66 LGRA 360; 15 Lorimer Street Pty Ltd v Secretary to the Department of Infrastructure (1997) 97 LGERA 239 at 245.
·     The hypothetical subdivision proposed by Mr Cripps was flawed.
oIt was a proposal of his own invention. It resulted from doodling on a piece of paper that he could not produce.
oHe is not a surveyor.
oHe did not rely on any planning evidence; forty lots was something he felt "comfortable" with.
oHe could not say what the average lot size was.
oHe could not produce an itemised account of his costings for the development; his costings were not conceded.
oHis reliance on standard engineering solutions, and the attribution of costs to them, when there was not any evidence about what one of those might be, was unsatisfactory.
·     In any event, the use of a hypothetical subdivision as a method of valuation is inappropriate in a case where the land is not immediately ripe for subdivision: Cienda Pty Ltd v South Australian Urban Land Trust (1998) 66 LGRA 360 at 363ff; 15 Lorimer Street Pty Ltd v Department of Infrastructure (1997) 97 LGERA 239 at 252 - 253 and see also the evidence of Mr Austin, where he refused to embark on a hypothetical exercise, without a firm proposal.
·     If the associate judge's analysis of the developable area is found to be correct, there is no occasion to consider the value of the land as industrial land any further.
·     If it is found to be incorrect, the respondent relies on its valuer, Mr Austin, whose valuation conclusion is set out, uncritically, at par[60] of his Honour's reasons as follows:
"60 Mr Austin's report included the following:
'CONCLUSION
This is indeed a unique site which at the relevant date was zoned "Industrial" and was not subject to development approval. It is a vacant site with severe constraints, which if overcome, would seemingly have development potential for an industrial use and with rezoning, uses such as residential, mixed use residential, tourism, open space and the like could be permitted.
The market value of the property as at 24^th October, 2011 must be assessed having regard to what a prudent purchaser with full knowledge of the land, its zoning, site constraints and the like would pay unconditionally for it. I find this a difficult task with conflicting town planning advice, no clear economic use for the land, the lack of directly comparable sales evidence, and the fact that refusal for a change in zoning to permit a mixed residential use was given by Resource Planning and Development Commission sometime prior to the relevant date. Considering all available data and noting the obvious risks to the development of this holding, I am of the opinion it has a market value, exclusive of GST, at the relevant date in the sum of $1,000,000. My assessment is detailed as follows:
ASSESSMENT
3.1418 hectares @ $32 per square metre $1,005,376
(or 1 hectare developable area @ $100 per square metre)
*** Adopted Value $1,000,000 ***'"
·     Given the matters identified by Mr Austin (and in the evidence) the land, as at 24 October 2011, was not a particularly attractive proposition. Assigning a value to it involves a considerable degree of speculation. The cost of developing it, including the cost of investigating and managing the constraints and the limited development potential means that the land does not command a high value.
·     A hypothetical purchaser would not purchase vacant land on the basis of its potential for future development, unless the price took account of the highly speculative nature of the investment.

Consideration of ground 1

I accept the submissions of counsel for the respondent as to the restrictions on the development of the land for industrial purposes, including land for a buffer zone and the application of the State Coastal Policy, however, in my view, Mr Cripps' adoption of approximately 2ha as the useable area of the land for industrial purposes was, as submitted by counsel for the appellant, supported by other evidence to which the associate judge did not refer.
Further, Mr Cripps' estimate of useable area was not, to my mind, displaced by Mr Austin's unexplained assumption of 1ha.
Finally, Mr Cripps' valuation did, in my view, sufficiently take into account the significant development costs alluded to by Mr Earle as potentially restricting the developable area.
Contrary to the respondent's submissions, the totality of the evidence, in my view, establishes on the balance of probabilities that approximately 2ha of the land could have been developed for industrial purposes.
First, of course, Mr Blackley gave evidence that the appellant intended to use a little over two of the 3.2ha of the land. The appellant had already put forward an intensive, albeit residential and mixed use, development proposal for the land in 2006 which had been approved by the respondent and refused by the RPDC for reasons unrelated to the site coverage of approximately 2ha.
Second, Mr Cripps in estimating a useable area of 2ha as his "best guess" was well aware that the particular characteristics of the site had "implications" for "the position and extent of coverage that any future development on the site might have".
Third, while the associate judge was correct in observing that the expert planning witness called for the appellant, Ms Duckett, did not give an assessment of the developable area of the land, she did note in her report, which was in evidence, that the site constraints could be successfully addressed with appropriate scaling and siting of development.
Moreover, Ms Duckett noted that case studies proposed in the Masterplan for Camdale prepared by Mr Shephard for the respondent and publicly exhibited prior to 24 October 2011 (and endorsed by the respondent in December 2011)[1], were not dissimilar to the footprint, scale and mix of uses submitted as part of the 2006 proposal put forward for the land by the appellant to the RPDC. In other words, Ms Duckett was obviously of the opinion that the site could be developed over an area of 2ha.
[1] Evidence of future events, ie events occurring after the date of assessment 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 of State for the Army v Parbury Henty & Co Pty Ltd [1945] HCA 52; (1945) 70 CLR 459, at 514, 515; McCathie v Federal Commissioner of Taxation [1944] HCA 9; (1944) 69 CLR 1, at 16; Australian Apple and Pear Marketing Board v Tonking [1942] HCA 37; (1942) 66 CLR 77, at 108. (See also Cairns City Council v CMB No 1 Pty Ltd (1997) 96 LGERA 306 at 314 and 321.)
By contrast and, critically in my view, in the passage from the report of Mr Shephard referred to by the associate judge at par[63] of his reasons, set out above, Mr Shephard in limiting the useable area of the land, "in reality" to 1ha, was referring specifically to the area of the land that was "useable" for "built development". He was not referring to the footprint of development. There is nothing in the evidence that conveys to me that Mr Cripps, in assuming a "useable area" of 2ha, was suggesting that the 2ha was to be covered by built development or built form.
I bear in mind that I am concerned at the moment with the value of the land as industrial land, and both Ms Duckett and Mr Shephard were referring in the evidence I have just mentioned to residential or mixed use case studies in the Burnie West Coast Area Strategic Master Plan dated December 2011 ("the BWCA"). There is nonetheless a parity of reasoning that can legitimately be applied.
Mr Earle, in his report said it was difficult to say how much of the site was useable for "industrial purposes" and was unable to say what proportion of the site was "available for use".
That evidence, set out by the associate judge at par[62] of his reasons, must however be read in the light of the cross-examination of Mr Earle, which demonstrates, as submitted by counsel for the appellant, that there are few controls in the Planning Scheme on the development of the land for industrial purposes; that no planning controls restrict the development to any portion of the site; that such controls as there are would be relatively easily met, for example by a warehouse development; that the special area provisions of Part 4 of the Planning Scheme would be relatively easily complied with for a warehouse development, and that there was no particular concern as to the requirements of the State Coastal Policy incorporated into the Planning Scheme by clause A.1.
It also needs to be borne in mind that in checking the correctness of his "direct comparison" method of valuation by a "hypothetical development" analysis, something not referred to by the associate judge, Mr Cripps assumed a five lot subdivision of the land without any consequential development at all.
In respect of his use of a hypothetical development analysis Mr Cripps was criticised by Mr Austin, as set out by the associate judge at par[60] of his reasons, however Mr Cripps responded to that criticism in a subsequent report (exhibit P7(g)), as follows:
"Mr Austin is critical of my use of a hypothetical development analysis to support a valuation conclusion of $2M which equates to $100/m2 of developable site area. In the context of a hypothetical development analysis it is not essential that a Plan of Subdivision be prepared and an area assigned to each of the proposed blocks. The simplest division of the site would be around a short cul-de-sac. … I cannot rationalize the opinion expressed by Mr Austin that 1ha of developable industrial land cannot be subdivided given the constraints that effect (sic) the site. These constraints in this instance are either outside of the developable area or resolvable by conventional engineering and design processes."
That response was not referred to by the associate judge, nor was the following passage from yet another report from Mr Cripps (exhibit P7 (d)), which I regard as highly relevant. It relates to Mr Austin's choice of 1ha as the area of useable land to which to apply the rate of $100 per square metre common to both valuers and is as follows:
"There is no discussion as to why he has done so and/or why engineered solutions to correct deficiencies would not be acceptable. Land which might occasionally in the future be subject to short term periods of inundation could easily be utilized as vehicle parking and manoeuvring areas and in essence still be part of the developable area. Site works to raise the height of the lower parts of the site by 0.5m to 1m would not be that difficult and would enable a very significant part of the property to be utilized. I refer to section 3.21 of the report prepared by Mr Neil Shephard in which it is stated that 'the more cautious contingency factors used by the BWCA study (free board of 800mm to 1m) results in a minimum elevation of between 3.5 to 3.9m.' It is my understanding that the site is already classified as being 3m AHD.
Adopting 1ha as the developable area is in my opinion, having regard to the information collated by Mr Shephard and the ability to undertake engineered solutions, to be (sic) exceedingly conservative."
Mr Blackley in fact gave evidence, albeit lay evidence, that the necessary filling of the site was not a difficult exercise, utilising a scraper, trucks and a bulldozer.
Finally, I return to the associate judge's conclusion set out above that the appellant had failed to present sufficient evidence to show that 2ha of the land is developable for industrial use, "without significant added cost".
The "significant added cost" to which his Honour was referring was, I infer, as I have already noted, that alluded to by Mr Earle in the second paragraph of the passage of his report set out above at par[18].
I am of the view that his Honour erred in concluding as he did, by failing to take into account that Mr Cripps had included in the "Industrial Scenario" analysis in his report, development costs of $225,000.
He said in cross-examination that in making an assessment as to how much of the site was likely to be able to be developed, he was aware of the penguin colony, the foreshore issues and the sea level rise issues, and that he was expecting that there would be some engineering works that would go on.
While Mr Cripps' costings were not produced in any detailed format and may not be conceded by the respondent's counsel, it was nonetheless not directly put to him in cross-examination that his figure for development costs was wrong, or insufficient to take account of his own or Mr Earle's concerns.
Moreover, Mr Cripps had also included 30% for profit and risk in his analysis which is, in part, a form of insurance against error in the estimates of costs.
I conclude from the foregoing, that the associate judge was in error in finding that the appellant failed to present sufficient evidence to show, on the balance of probabilities, that 2ha of the land was developable for industrial use, as assumed by Mr Cripps, without significant added cost.
It does not follow however, to my mind, that in so finding, his Honour erred in a material way or that, in refusing to assign a market value of $2m to the land as industrial land, his Honour made an error that affected the outcome of a proper assessment of the appellant's damages in lieu of specific performance.
As was submitted by counsel for the respondent, the relevant inquiry is as to what market value should be attributed to the land, and that is to be determined on well settled principles: Spencer v Commonwealth (1907) 5 CLR 418 at 427, per Griffith CJ.
In particular I refer to the passage from the judgment of Isaacs J, in Spencer, at 440 - 441, where his Honour said:
"The facts existing on 1^st January 1905 are the only relevant facts, and the all-important fact on that day 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?" (My italics.)
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." (Original italics.)
And, at 578, Wells J continued:
"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." (My italics.)
And finally, and importantly for present purposes, in Minister for the Environment v Florence (1979) 21 SASR 108, Wells J said, at 116 - 117:
"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." (My italics.)
What a hypothetical prudent purchaser, fully possessed of all available knowledge as to the matters necessary to make an informed decision about buying the land, in the present case as at 24 October 2011, would pay for the land as vacant land, would obviously very much depend on the potential of the land for development.
As at 24 October 2011, on the evidence before the associate judge, a hypothetical prudent purchaser "perfectly acquainted with the land, and cognizant of all circumstances which might affect its value" would not, in my opinion, have overlooked, among many things, the following:
·     That the land was currently zoned as industrial land and could be subdivided with few restraints or divided by strata title with even fewer restraints.
·     That a previous intensive development of the land for residential and associated mixed purposes had been rejected by the RPDC in 2006, largely for zoning conflict reasons, unrelated to its site coverage of slightly more than 2ha.
·     That the land had constraints that would affect any development of it, including those arising from the application of the State Coastal Policy to the site, possible traffic access requirements, the presence of a colony of the Little Penguin, and engineering requirements, necessary to address possible future rise in sea level and storm erosion.
·     That there was agreement among the valuers that the value of the land was $100 per square metre of useable or developable land as industrial land.
·     That the valuers disagreed as to how much useable or developable land was available for industrial development, and could only guess or estimate as to that, with the result that valuations of the land as zoned "Industrial" ranged from $1m to $2m.
·     That the planners either did not know, or did not agree, as to how much of the land was useable or developable for industrial development, however Planning Scheme building height limits were either flexible or non-existent.
·     That the relevant council officer did not know, and could not say, how much of the site might be developed for industrial purposes.
·     That things had changed since 2006 and very well advanced strategic planning documents, brought into existence since the RPDC's rejection of the appellant's residential proposal five years earlier, now foresaw the future of the land as residential and not as industrial.
·     That some residential development case studies proposed in a Master Plan for Camdale publicly exhibited prior to 24 October 2011 (and endorsed by the respondent in December 2011), were not dissimilar to the footprint, scale and mix of uses submitted as part of the 2006 proposal put forward for the land by the appellant to the RPDC.
·     That available advice from the relevant council officer was that a rezoning for a mix of residential, commercial, recreational and foreshore protection was strategically justified.
·     That the planners would say that the land was no longer suitable for industrial use and that the prospect of rezoning the land for residential development was thought to be as high as 70% or possibly even higher.
·     That valuers did not agree as to the correct approach to valuing the land as if it were rezoned as residential land, but that one valuation carried out on a hypothetical subdivision analysis yielded a value of $3.58m.
·     That there were no truly comparable sales underpinning that valuation, only values extrapolated from sales of non-waterfront land.
·     That the hypothetical analysis, as well as making provision for development costs, included a profit and risk allowance of 30%.
·     That the valuation of $3.58m was not contradicted by any other valuation by a valuer instructed to undertake a valuation upon the assumption that the land might be rezoned so as to facilitate residential, or some form of residential and mixed commercial use.
Given the foregoing considerations, I am of the view that a hypothetical prudent purchaser would not be at all interested in seeking a further or other more definitive valuation of the land as industrial land but would instead be critically concerned as to the potential value of the land, as it would be if zoned residential.
Possessed of knowledge of valuations of the land as industrial land, the hypothetical prudent purchaser would, I apprehend, take them into consideration as pieces of historical information, but would be looking to pay a price for the land that was calculated, not by reference to them, but rather by reference to a realistic valuation of the land as residential land and would consider that valuation in the light of a realistic estimate of the prospects of achieving a residential rezoning.
The hypothetical prudent purchaser would not consider buying the land for industrial development at all in my view. Conversely, a hypothetical prudent vendor would not be prepared to sell the land for $1m or $2m when possessed of a realistic valuation of the land as residential land at $3.58m and a realistic estimate of the prospects of achieving a rezoning of 70%. Those considerations would give the land a value in the order of $2.506m.

This approach is consistent with the approach taken by Evans J to the assessment of market value in a compulsory acquisition case in Sorell Council v Downie [2005] TASSC 2 at pars[62] - [64]. In that case Evans J considered that the valuation information available to the parties provided no clear or reliable basis for assessing the value of the acquired land, but nonetheless concluded that the hypothetical parties would have taken all matters into account, including what he regarded as "speculative projections of experts".
That approach was endorsed, and an appeal against Evans J's decision, dismissed by this Court in Downie v Sorell Council [2005] TASSC 74.
In my opinion, these considerations render any definitive valuation of the land as industrial land as largely irrelevant to the question of the assessment of the appellant's damages in lieu of specific performance.
To the extent that the appellant seeks to start from a base of $2m as the value of the land as industrial land, and to then argue a loss of chance of achieving the difference between that sum and 70% of $3.85m, such an approach does not accord with the well understood principles of assessing market value to which I have referred. Those principles are used for assessing market value for a range of purposes and are the principles which should be applied in the present case.
Moreover, equitable damages are intended to operate as a true substitute for specific performance, and so far as possible to put the appellant back in the position it would have been in had there been performance of the contract. It is relevant in that regard to recall that Mr Blackley's evidence was, that upon securing the transfer of the land on performance by the respondent, the appellant would have pursued a course of endeavouring to obtain a rezoning of the land to residential and selling the land again "back to back". It was not intending to carry out any development itself and may, on the associate judge's alternative finding, have simply on sold the land by way of a conditional contract.
I accept, as submitted by counsel for the respondent, that the present case is, properly characterised as, "a case in which the element of chance lies in the nature of the thing contracted for itself": Waribay Pty Ltd v Minter Ellison (above) at 398 – 399, per Young CJ and Kaye J. It is not a loss of chance case of the type involved in Sellars v Adelaide Petroleum NL (above).
In view of my conclusion it is unnecessary for me to go on to consider the respondent's further submissions as to the asserted flaws in Mr Cripps' hypothetical subdivision approach to the valuation of the land as industrial land, or the correctness of Mr Austin's approach in the absence of comparable sales.

Disposition of ground 1

It follows from the foregoing that, in my view, there was no material or operative error committed by the associate judge in wrongly concluding that the appellant had failed to establish, on the balance of probabilities, that, without "significant added cost, approximately 2ha of the land was 'useable' for industrial development".
I would dismiss ground 1.

Appellant's submissions on the first component of ground 2

The appellant's written submissions on ground 2 fall into two parts, dealing firstly with the associate judge's refusal to accept Mr Cripps' valuation because of an absence of evidence "to support a conclusion that the value of building allotments [was] unaffected by land size" and secondly, with the "other difficulties" his Honour perceived "with Mr Cripps' assumptions".
The first part of the appellant's submissions on this ground may be summarised as follows:
·     Mr Cripps proceeded, once again, by assuming that 2ha of the land could be subdivided. Unlike his reasoning at pars[66] - [67] of his reasons, his Honour did not conclude that the appellant had failed to demonstrate that 2ha could be developed for residential use or for a mix of residential and commercial use: although he did make findings of varying likelihood at par[100].
·     Mr Shephard expressed the opinion that a 2ha assumption is reasonable in an integrated development.
·     The 2ha area is depicted at page 34 of the BWCA and is confirmed by the evidence of Mr Shephard.
·     It also equates to the area in each of the two alternative proposals at pages 38 and 39 of the BWCA.
·     At par[82] of his reasons, his Honour concluded that he could not accept the opinion of Mr Cripps because he said, "I have no evidence to support a conclusion that the value of building allotments is unaffected by land size". (It is clear from the context that his Honour was referring to the value per square metre, not the value per lot.)
·     This paragraph discloses the essential error in his Honour's reasoning.
·     To understand this one must commence with the written opinions of Mr Cripps. He could not identify any comparable sales of waterfront land in the Burnie area. He chose therefore to consider vacant land sales "for better blocks with better views". He could not identify a sale of subdivision en globo land. In the absence of comparable waterfront land sales he extrapolated values for non-waterfront sales by the application of his experience. In his view, a premium of at least 50% ought to be applied. Based on this premium he determined a range of $255,000 to $270,000 per lot.
·     Mr Cripps' 50% premium is supported by detailed comparable sales evidence referred to by him in re-examination. His comparable sales evidence became exhibit P9. Notably, Mr Austin said that the uplift could be greater, up to 100%.
·     Mr Austin conceded that a premium is paid for waterfront land, as distinct from non-waterfront land, and ultimately he could not disagree with the 50% figure.
·     Mr Cripps then assessed a value, by reference to comparable sales, for non-waterfront allotments in a hypothetical development.
·     He then undertook the hypothetical development analysis and, after correction of some of the figures in his oral evidence, he calculated an en globo value of $3,580,000.
·     His Honour reasoned, at par[78] of his reasons, that he was not persuaded by the comparative sales evidence for the waterfront allotments.
·     Mr Cripps assumed 40 residential allotments within 2ha. That simple division does not produce lots of 500m² each in the area as an allowance must be made for access and open space. Consequently, Mr Cripps assumed lots of 450m² in area.
·     Mr Cripps was cross-examined to the effect that one cannot translate the comparable sales evidence for larger lots and arrive at a reliable value for smaller sized lots. Mr Cripps disagreed.
·     It is apparent from the associate judge's decision at pars[79] - [81] that he did not accept the reasoning of Mr Cripps. In essence, his Honour concluded that the comparable sales evidence for the land in the Park Grove subdivision disclosed a direct correlation between land size and price.
·     With respect, his Honour misunderstood the analysis. The method Mr Cripps adopted requires a determination of the gross realisation price, less all subdivision costs, and less an allowance for profit and risk. Mr Cripps explained the methodology in his oral evidence. He did not directly transpose a value per square metre for a 800m² allotment in order to determine the value of a 450m² allotment. He said, "it's the values that I've transposed through as distinct from the land area".
·     Mr Cripps rejected a submission from cross-examining counsel that the comparison is only able to be undertaken between two lots of the same size. He explained that this "totally distorts the relativities from which the study point of the exercise begins".
·     He explained that his relativity analysis is something which he has observed "in countless other locations".
·     The associate judge makes no reference to the relevant evidence of Mr Austin. Mr Austin explained his methodology for assessing the en globo value of the land with the prospect of a rezoning. He too, as a comparable sale, refers to the Park Grove subdivision. He says that this sale:
"Provides the best evidence in assessing the worth of the Camdale site. Whilst I acknowledge that the Camdale site is superior to the St James Court holding, a prudent purchaser would make allowance for the risks involved in a rezoning application and the addressing of all site constraints. Not knowing what conditions might be imposed on any approval and what yield might be achieved would need to be considered but I doubt if an en globo value of $65,000 per lot would be exceeded."
·     Mr Austin assumed a development area of 1ha and 15 "normal sized allotments". A normal sized allotment in the residential zone is 550m² pursuant to the Planning Scheme. On Mr Austin's evidence this indicates a value of $975,000, subject to his 1ha assumption.
·     The en globo value per lot derived by Mr Cripps was $106,000 per lot for waterfront land, and $51,000 per lot for non-waterfront land. Thus his average of 40 lots is $78,500.
·     If it is assumed that Mr Austin made an error in limiting his development parcel to 1ha, and if we simply apply Mr Austin's analysis of $65,000 per lot, then it follows that 30 lots could have been developed with an en globo value of $1,950,000.
·     Another aspect of the evidence of Mr Austin, not referred to by his Honour, is that the Park Grove subdivision comparable sale relied upon by him was sold with a development approval for 20 lots with an average area of 800m². Without making any adjustment for the subject land, Mr Austin determined that this sale indicated an en globo value of approximately $40,500 per undeveloped lot. He then translated this figure to the subject site, clearly constrained by his 1ha development assumption and a lot yield of 15 lots. He adjusted the en globo value, because of the superiority of the subject site, to an en globo value of $65,000 per lot. That is to say, $65,000 per lot for each of his 15 lots at 550m², not 800m². Thus, on the analysis of Mr Austin, the value of a smaller lot per square metre is higher at this location. The simple reason is that this land is more desirable because of its location: the difference is between waterfront and non-waterfront land.
·     This is precisely what Mr Cripps did. It is evidence directly contrary to the conclusion of his Honour at par[82] of his reasons. Having reached this conclusion his Honour, with respect, ought not to have undertaken the analysis at pars[83] - [90]: Cienda Pty Ltd v South Australian Urban Land Trust (1988) 65 LGRA 419 at 420-421.
As to the second part of the appellant's submissions on this ground, counsel responded in turn to each of the six difficulties enumerated by the associate judge between pars[84] - [91] of his reasons. I will turn to those further responses shortly.

Respondent's submissions on the first component of ground 2

The respondent's written submissions in response to the first part of the appellant's argument on ground 2 may be summarised as follows:
·     The premise behind ground 2 is that the associate judge should have accepted the evidence of Mr Cripps, which he did not. The question is, should he have done so? The answer is, it was up to his Honour to consider the evidence.
·     The respondent repeats its criticism of Mr Cripps' evidence, and in particular his hypothetical 40 lot subdivision.
·     The appellant submits by reference to the BWCA that 2ha of land was available in an integrated development. That is not what Mr Cripps relied upon in his valuation. His valuation is not based on the types of developments in the BWCA. It is firmly based on a 40 lot residential subdivision.
·     There are important matters to note about the BWCA.
·     It was suggested to witnesses in cross-examination that, with the introduction of the BWCA, the Council was obliged to frame its planning scheme accordingly. The Land Use Planning and Approvals Act 1993 ("LUPA"), ss32, 33 and 34 were put to witnesses in support of this line of questioning. These provisions were not relevant to any issue in this case. Under s20(1)(d) a planning scheme for an area must have regard to the strategic plan of a council referred to in Div2 of Pt 7 of the Local Government Act 1993 as adopted by the Council at the time the Planning Scheme was prepared.
· The BWCA is not a strategic plan of the respondent under Div2 of Pt7 of the Local Government Act. There is no other provision in LUPA that suggests that the BWCA requires the Council to conform to it.
·     Accordingly, it did not follow that the respondent's mere endorsement of the BWCA required it to zone the area according to the strategy. Ms Duckett agreed that the respondent was not obliged to follow its strategy. Mr Earle gave evidence that he did not know of any statutory compulsion to do so.
·     The recommendation for the endorsement of the BWCA included a statement that:
"4.0     LEGISLATIVE REQUIREMENTS
The Burnie West Coastal Area Study has no formal statutory status.
However, the document will provide justification for strategies which underpin any amendment to the current planning scheme and will support submissions to the Tasmanian Planning Commission that proposed changes in local planning controls will reflect and give effect to sound and informed long term strategies."
·     The BWCA is, therefore, not immutable. To the contrary, it is a flexible document.
·     The case study put to the witnesses is not the only case study proposed by the BWCA. Two of the studies are recognised by his Honour at par[45] of his reasons. The third study at page 40 proposes a café at the west end of the land, with no other building, but instead picnic areas and substantial conservation.
·     Part 3.8 of the BWCA provides:
"The case studies illustrate the range of ways in which the Strategic Master Plan circulation structure, form and sub-precincts could be interpreted. The case studies are not recommendations or proposals.
The case study examples show some of the varied uses that could occur in the Camdale Point Precinct …".
·     The conclusions of the BWCA at Part 5 suggest an incremental approach to development, from short term to moderate long term and a "City-wide consideration of how to address the new requirements and still allow flexibility, implicitly required by these and other sites".
·     The BWCA did not require the Council to invoke any one of the case studies shown in the concept plans for the land, or to adopt a particular zoning.
·     Mr Earle's approach to adopting a protected view of the site was entirely consistent with cautious approach contained in the BWCA.
·     The BWCA lends no support for the view that there is any imminent, or even medium term need or possibility that the land can or will be zoned for mixed use residential.
·     Mr Cripps' valuation was not the summation method, properly called: Marcus Clark & Co Ltd v Commissioner for Railways (1949) 29 LVR 98 at 137; see also, Valuation Principles & Practice, Australian Property Institute, 2nd ed, at 155 - 159.
·     It was no more than a hypothetical subdivision, the dangers of which are addressed above.
·     On the assessment, the respondent advanced the following contentions concerning the market evidence, including comparative sales.
oThe site is unique, there are no comparable values.
oThe extrapolation of the Park Grove Lots of 800m² to lots of 400m² at Camdale was inexplicable and remained unexplained. It grossly inflated Mr Cripps' values.
oIn any event, Park Grove was a residential subdivision. On any view of the evidence as it stood at the end of the assessment, Mr Cripps' subdivision would never occur on this site.
oThere was no evidence that any of the vacant lots (all of which are residential in nature) used in Mr Cripps' comparisons suffer from the same constraints as the Camdale land.
·     The reason why Mr Cripps' hypothetical subdivision would never occur is to be found in the BWCA, upon which the appellant relied heavily for an assessment based on loss of chance.
·     Even if he had identified a more likely development of the site, it would still not have been "ripe for development".
·     The purpose of the associate judge's "recalculation" of Mr Cripps' valuation at par[83] of his reasons, was merely to test the assumptions that Mr Cripps had made. His Honour specifically pointed out at par[84]: "… even if my recalculation was correct, and I do not know whether it is …"
·     This was not an attempt by his Honour to substitute by using his own valuation. It was merely to test whether he could be satisfied of the internal consistency of Mr Cripps' valuation.

Consideration of the first component of ground 2

As to the first part of the appellant's argument on this ground, I accept that the associate judge fundamentally misunderstood Mr Cripps' analysis in the manner enumerated by counsel for the appellant in their written submissions set out above.
Mr Cripps did not directly transpose a value per square metre for a 800m² Park Grove allotment in order to determine the value of a 450m² allotment for the purpose of his hypothetical subdivision analysis. As pointed out by counsel, Mr Austin did exactly the same thing when translating the figures for the Park Grove subdivision through to the subject land. The explanation is as given by Mr Cripps in his evidence that is, that it is the values that are transposed through for the particular method of valuation, not the land area.
In Brewarrana Pty Ltd v Commissioner of Highways (No 1) (1973) 32 LGRA 170, Wells J said at 174 – 175:
"I have always taken the view, and shall continue to do so unless directed by a superior court to do otherwise, that the creation of a special division in a court to deal with a particular class of case is not intended to turn the presiding judge into an independent expert in the very field in which testimony will be tendered to him that he will be called on to evaluate. It would never occur to a trial judge who, for example, had heard many cases in which expert medical evidence had been tendered, to choose between the conflicting testimony of two medical witnesses by applying to it his own medical knowledge. That knowledge would, no doubt, have been of inestimable value in understanding the testimony; in suggesting questions; in comparing one set of opinions with another. But it would be quite contrary to principle, I apprehend, for the judge to bring a third set of opinions into the arena, and to supplement or condemn testimony properly adduced before him in reliance on his own theoretical grasp of principles and precepts of medicine. The judge may have proper and rational grounds for preferring one expert to another; such grounds are well-known and accepted. He may, by a consideration of the whole of the evidence, expert and non-expert, be able to conclude that one opinion is more likely to be sound than another or others, even though both or all opinions are given by men of integrity, learning and skill, and are supported, within self-ordained limits, by impeccable reasoning. He may, because he has been persuaded by the evidence of one expert, find that there is a fatal flaw in the reasoning of another. It may appear that, having regard to the whole of the evidence, certain factual assumptions, and hence the opinions based on those assumptions, are not well founded. But the judge cannot arrogate to himself the role of an expert who is, in any respect, primus inter pares."
The expert evidence of Mr Cripps (and extrapolated, the methodology of Mr Austin), was in direct contradiction of his Honour's conclusion and, in my view, he ought not to have rejected Mr Cripps' valuation methodology in the way in which he did, relying on his Honour's own theoretical grasp of the relevant principles. His Honour ought not to have recalculated, what he referred to as, but in truth was not, a "summation method" using his own assumptions.

Mr Cripps was cross-examined about his assumption of 18 months to sell the lots and he rejected the suggestion that it would take longer. It was a considered opinion and there was no expert valuation evidence to the contrary. Mr Shephard's view as a planner was that an attractive form of residential development with potential for high residential amenity was possible for the site.
So, again there would seem to be no basis for the observation by the associate judge that the question "did not appear" to have been taken into account.

Appellant's further submissions

Next, as to the finding by the associate judge, at par[85] of his reasons, that Mr Cripps had "apparently not taken into account" a reduction in value due to the land being "neither pristine, peaceful nor idyllic waterfront land", the appellant's counsel submits as follows:
·     At par[85] of his reasons, his Honour observes that several matters were "apparently not taken into account" by Mr Cripps. He lists the location of the land as adjacent to an industrial precinct, next to a busy highway and abutting a railway line. He sets out a finding, presumably of fact, that the foreshore area is "not attractive" and swimming in the sea may be dangerous. His Honour does not identify any evidence upon which, apparently, each finding of fact is based. Once again his Honour fails to expose his reasoning process.
·     Mr Cripps was clearly aware that the land was adjacent to an industrial and commercial precinct: he gave a detailed description of its location and its site characteristics.
·     His Honour makes no reference to the relevant evidence of Mr Shephard by reference to the concept plan in the BWCA. Mr Shephard accepted that an attractive form of residential development is capable of being established on the land and that he, as one of the authors of the report, had designed "attractive living spaces". Mr Shephard said: "The concept plan, if implemented to a high standard, could be very attractive from my point of view, but I don't know how the market would see it."
·     Further, he said that the concept "has very good potential" to have "high residential amenity".
·     Mr Cripps was perfectly entitled to proceed on the same basis. The proposal of Mr Shephard as contained in the BWCA necessarily takes into account each of the site characteristics identified by his Honour at par[85].
·     Mr Austin expressed the opinion in his report that the Camdale site is "superior to the St James Court holding", a residential subdivision in upper Burnie.
·     There are other examples in north-west Tasmania of very pleasant residential developments intercepted by a highway and a railway line, notably Penguin as Mr Austin conceded.
·     The point was touched on in cross-examination, but cross-examining counsel did not pursue the point with the witness. There is no proper basis for his Honour's finding that Mr Cripps, apparently or not, failed to take these matters into account. He plainly did. His Honour failed to expose his reasoning process which leads him to the contrary conclusion. Notably, his Honour fails to refer to any of the evidence which is contrary to his reasoning.

Consideration of the appellant's further submissions

I accept the appellant's submissions. In the light of the evidence of Mr Shephard to which counsel for the appellant drew attention there was, in my view, no requirement on Mr Cripps to refer to a specific discount to take account of the undeveloped site quality. It would have been a most obvious factor operating upon his mind in carrying out his valuation. And again, if a matter such as that is touched upon in cross-examination, then in the absence of other evidence pointing to an error of omission, there is no warrant, in my opinion, to say that an expert witness has "apparently not taken [it] into account".

Appellant's final submissions

Finally, as to the criticism by the associate judge at pars[86] - [90] of his reasons, as to Mr Cripps' consideration of the George Town Ferry Terminal site, his Honour's preference for the "more compelling comparative sales example" of land at Park Grove in Burnie; and the associated, repeated criticism of Mr Cripps based on the error asserted by his Honour at pars[78] - [82] that Mr Cripps assumes that land values are not affected by land size, counsel for the appellant submits:
·     At par[86] his Honour found unconvincing a comparison drawn by Mr Cripps with the sale of the George Town Ferry Terminal site. The problem with this is that his Honour has reconstructed the valuation opinion in an impermissible way: Cienda Pty Ltd v South Australian Urban Land Trust (above) at 420 - 421.
·     Mr Austin relied upon this as a comparable sale in his valuation. Mr Cripps refers to it as having "some relevance" in his report. He simply makes the point that the land sale price implied a value of $18,750 "per equivalent unit site". In a subsequent report Mr Cripps said that this site "is a poor comparison in many respects". He gives reasons. He makes it plain that he included this sale in his report "because it is an indicator of what developers would aspire to achieve on the subject property".
·     In another report, Mr Cripps says that the subject site is not comparable because "it is a unique parcel of waterfront land with an attractive accessible sandy foreshore".
·     With respect to his Honour, Mr Cripps did not rely upon the sale of the George Town Ferry Terminal site as a comparable sale, and nor did he undertake a mathematical analysis of the type set out by his Honour at par[86] of his reasons.
·     At par[87] his Honour regarded as "even more compelling" the sale of land at Park Grove in Burnie which his Honour says "was not included by Mr Cripps in his analysis". It was. It is in his reports.
·     It is the Park Grove land which Mr Cripps relied upon in order to derive his gross sale price. The confusion is perhaps explained by a difference in the naming of the highway. Mr Cripps explains this in his report.
·     In any event this is the sale which Mr Austin relies upon in order to produce an en globo value of $65,000 per lot. Self-evidently, considerably more than the outcome of his Honour's analysis at par[87].
·     At par[88] his Honour refers to the likely cost of installing traffic lights and lowering the railway line. He appears to have accepted the plaintiff's evidence that the likely cost was $300,000.
·     His Honour's reasoning is wrong. One does not simply subtract that sum from the land value. One includes an allocation, on a per lot basis in the en globo analysis of the type undertaken by Mr Cripps. As has been noted, Mr Cripps specifically corrected his opinion in this report so as to take account of this precise cost.
·     At pars[89] – [90] his Honour returns to the George Town Ferry Terminal site. He criticises Mr Cripps for assuming "that land values are not affected by land size". As has been demonstrated, this criticism is not based on the evidence.
·     Any comparison between this land and the George Town Ferry Terminal site is not correct and was not relied upon for this purpose by Mr Cripps.

Consideration of the appellant's final submissions

I accept each of the appellant's submissions.
To the extent that the associate judge "reworked" Mr Cripps' results and made assumptions about comparable sales and was thus, again, arrogating to himself the role of the valuer, his Honour ought not to have done so. More importantly, I apprehend that his Honour misunderstood the relevant parts of the evidence in the manner explained by counsel for the appellant in their written submissions.
In part his Honour's misapprehension of Mr Cripps' position as to the George Town Ferry Terminal site might be attributable to that fact that he was confronted with no less than four separate reports by Mr Cripps. However, ultimately, my reading and understanding of the evidence aligns with the appellant's submissions.
That is to say, Mr Cripps did not rely on the George Town site as a comparable sale, did not make the mathematical errors assumed by his Honour, and did not fail to include the Park Grove sale in his reported analysis.
Finally, as to the associate judge's criticism at par[91] of his reasons of Mr Cripps' reference to the Seaport development in Launceston, I accept that Mr Cripps was not asserting that it was a comparable sale.
Mr Cripps said in his report of 24 May 2012 (exhibit P7(b)), that the land the subject of this appeal had "some similar site characteristics" to the Seaport development but (including the George Town Ferry Terminal site), he found an absence of any comparable waterfront land sales. He ultimately used extrapolated values from non-waterfront sales.

Disposition of ground 2

It follows from all that I have said in my consideration of this ground that, in my view, the associate judge impermissibly arrogated to himself the role of a second expert in reconstructing Mr Cripps' valuation of the land as residential land as at 24 October 2011, and, in doing so, made erroneous forays into Mr Cripps' methodology and analysis. Further, his Honour, in my opinion, misunderstood and as a result erroneously rejected Mr Cripps' expert evidence.
Finally, I am satisfied that there was no evidentiary basis for any of his Honour's "other difficulties" with Mr Cripps' valuation, and that there was no basis for his Honour's conclusion that it was unpersuasive, or for his consequent rejection of it.
The valuation represented the expert opinion of Mr Cripps as to the value of the land if zoned residential, and was not, in my view, either by virtue of its methodology or as a result of ignoring relevant factors, a valuation that would not be taken into account by a hypothetical prudent purchaser as a realistic expert assessment of the relevant value of the land made on the limited empirical data available.
I would allow ground 2.

Ground 3

The associate judge, after considering the evidence of the strategic planning documents that had come into existence after the RPDC's decision to reject the appellant's residential proposal considered by it in 2006, concluded from the case studies in the December 2011 Master Plan (some of which it will be recalled were not dissimilar to the footprint scale and mix of uses the subject of the appellant's 2006 proposal), that the clear strategy was to change Camdale to a predominantly residential locality.
His Honour assessed the chance of a rezoning, allowing residential development, at 90%. However, as can be seen from the passages at pars[99] - [100] of his reasons set out above in these reasons, his Honour's assessment of a 90% chance of rezoning was against the background that the rezoning might not be such as to create or permit "a developable area of 2ha as assumed by Mr Cripps in his valuation".

Appellant's submissions on ground 3

The appellant relies principally on the evidence of its expert planner Ms Duckett who stated in her report of 5 February 2013 (exhibit P6(b)), as to the prospects of success of an application for rezoning:
"In my opinion an application is likely to have been approved, and if I were to assess the likelihood in percentage terms, I would say 70% likelihood of approval. The nature of technical issues facing the site was (sic) all, in my opinion and experience, able to be successfully resolved, and once the industrial strategy was in place and there were no other barriers to a successful rezoning.
The form of development on the site would follow the nature of the Planning Scheme amendment, and the controls which the scheme provided, whether they be residential A as originally proposed, residential C as preferred by Mr Sheppard, or a specific area plan for mixed residential and commercial uses, as provided for under the Tasmanian Planning Commission's template PD1 for Planning Schemes."

Respondent's submissions on ground 3

Senior counsel for the respondent submits that the ordinary measure of damage is the difference between the purchase price paid and the value of the land as at the date of assessment, for its highest and best use, and with its inherent element of chance.
As to that he submits:
·     Essentially, Mr Austin's view was as follows.
oLand should be valued at its highest and best use.
oHe believed that in order to do an en globo valuation, a formal development plan was required.
oHad he been asked to do an en globo valuation (which he was not), he would have sought expert advice.
oIf he was asked to assume a 70% likelihood of rezoning, his valuation would depend on the conditions of the rezoning.
oThat would be the case even if he assumed a straight rezoning to residential C.
oEven on the assumption of a straight rezoning, the question of whether the higher and better use would result in a greater valuation depended on the constraints on the site.
·     The suggestion of residential C comes from Mr Shephard's evidence, based on his preference for the implementation of the BWCA. No one valued the site on the basis of the implementation of the BWCA. For the reasons already submitted, the implementation of the BWCA in the short to medium term will not necessarily result in a rezoning.
·     The only accurate statement of a valuation of the land, based on the possible rezoning to mixed use residential, is in Mr Austin's report, reproduced at par[60] of the associate judge's reasons for judgment.
·     His Honour was correct to find that rezoning might not result in a developable area of 2ha as assumed by Mr Cripps (even if his valuation could be applied to the kind of mixed use residential development envisaged under the BWCA).
·     It may be true that the Council has no power to impose conditions on a certificate under the Strata Titles Act 1998, s31, however, the Council nevertheless has a discretion to act in the interests of the community. Before the Council issues a certificate under s31, it must be satisfied (amongst other things) that the requirements of the relevant planning scheme have been met.
·     Because of the State Coastal Policy, and the constraints on the site, the Strata Titles Act does not provide the appellant with a rubber stamp for development.

Consideration of ground 3

The market value of the land as at the date of assessment must be a value discerned by reference to its highest and best use, and the potential inherent in that notion in this case can only be assessed in prospect, by reference to the element of chance of achieving that use.
In ISPT Pty Ltd v Melbourne City Council [2008] VSCA 180, in a joint judgment in what was a site valuation case, Warren CJ, Kellam JA and Osborn AJA said at pars[37] - [41]:
"37 The concept of highest and best use is implicit in the theoretical basis of assessment of market value at a given point in time. Such value is understood to be ascertainable in accordance with the formulation of Isaacs J in Spencer's case:
'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.'
38   It is implicit in this formulation that both vendor and purchaser are to be regarded as aware of the potentially most advantageous ongoing use of the land and not simply its current use, when formulating the relevant value. Such potential is a circumstance which necessarily affects the value of the land either advantageously or prejudicially.
39   Further, in Turner v Minister of Public Instruction Dixon CJ stated:
'After all the purpose (of valuation) is to ascertain the full return which may reasonably be expected from the sale of the land, not the most conservative value.'
40   In Commonwealth Custodial Services Ltd v Valuer-General (NSW) Biscoe J elaborated the concept by reference to relevant authority in the following terms:
'There is no statutory definition of "highest and best use". It has been described in the High Court as "the most advantageous purpose for which [the land] was adapted": Spencer v The Commonwealth. It "is the present value alone of such advantages that falls to be determined": Cedar Rapids Manufacturing and Power Co v Lacoste. In Park v Allied Mortgage Corporation Ltd Hill J said at [70]: "As Spencer's case itself makes clear the valuation must proceed by reference to the best use of the property. For this purpose the valuer will take into account not only the present use to which the land is applied, but any more beneficial use to which it may reasonably be applied. This is the process which a purchaser negotiating to purchase the property would undertake. Thus, it is not inappropriate in valuing property to take into account a potential development of the property, for among the range of hypothetical purchasers can be assumed to be a person who would undertake such a development as would maximise the usage of the land". In Adelaide Clinic Holdings Pty Ltd v Minister for Water Resources, Jacobs J said:
"Common experience shows that land ideally suited for commercial development will fetch a higher price per unit of area than residential land, but it does not follow that the highest and best use of all land is a commercial use, for the highest and best use means exactly what it says — the most advantageous use of the subject land having regard to planning and all other relevant factors affecting its present and future potential. The first task of the valuer is to determine what that use is and then to value the land on that basis. It is not appropriate to determine the highest and best use by reference only to value."'
41   In the present case the Tribunal summarised the underlying concept as follows in terms with which, with respect, we agree:
'Highest and best use represents the most profitable potential use to which land can be put having regard to both planning and like controls and the circumstances of the land. It is to be distinguished from the present use of land; although the present use might also be the highest and best use. When land is sold, the market values the land at its highest and best use: as buyers will not be constrained to continue the existing use; and the seller will seek to achieve the highest price for the land. This is why highest and best use is relevant in assessing value, whether improved value or site value'."(My italics.) (Footnotes omitted.)
The highest and best use of the land in this case must, in my view, on all of the available evidence be as land capable of being rezoned as residential land and used for residential development, or a mix of residential and commercial development. The highest and best use is not the present use of the land.
It might be inferred from the decision of the RPDC in 2006 that the highest and best use of the land when it was purchased by the appellant from the respondent was its present use, as industrial land suitable for industrial development, but if it was, in my view, it is clearly no longer the case.
I have already said I accept the submission made by counsel for the respondent that this case is properly characterised as, "a case in which the element of chance lies in the nature of the thing contracted for itself"; Waribay Pty Ltd v Minter Ellison (above) at 398 – 399, per Young CJ and Kaye J.

And, for the reasons I have already given, it is not, in my opinion, appropriate to characterise the relevant loss as a loss of a valuable commercial opportunity in the sense discussed in Sellars v Adelaide Petroleum NL (above).
The market value of the land is therefore to be arrived at by a hypothetical prudent purchaser considering the value of the land for its highest and best use, but taking into account the element of chance of achieving (or the risk of not achieving) that use.
As noted, the associate judge assessed the chance of a rezoning allowing residential development at 90% but did so against the background that the rezoning might not be such as to create or permit "a developable area of 2ha as assumed by Mr Cripps in his valuation".
As I have already stated, and for the reasons I have already given, I see no impediment to a potential intensive development of the site, as indeed some of the case studies contemplate, and I accept Mr Cripps' estimate of a useable area for development of approximately 2ha of the land. It follows that, in my view, the associate judge's approach is not the correct one to employ.
I also accept Mr Cripps' valuation as at 24 October 2011 of $3.58m for the land as residential land as well reasoned, well founded and not unrealistic. It is not however, taken on its own, determinative of the question of market value.
As earlier noted, the valuation is but another piece of information available to a hypothetical purchaser "perfectly acquainted with the land, and cognizant of all circumstances which might affect its value, either advantageously or prejudicially". As such, it would assist that purchaser in making a judgment as to what price to pay for the land as at the date of assessment, bearing in mind the other factors I enumerated at pars[62] – [65] above.
It is that price, so arrived at, that represents the market value of the land with its inherent element of chance, and it is that price that is in turn determinative of the appellant's damages in lieu of specific performance.
The other vital component relevant to the price that a hypothetical prudent purchaser would be prepared to pay for the land for residential development is the degree of likelihood that an application to rezone it from "Industrial" to some form of residential, would succeed.
The appellant does not agitate that degree of likelihood at any higher figure than 70%. In my view, notwithstanding the associate judge's view that it was, in effect, near certain that a rezoning would be allowed, the figure of 70% is reasonable in all of the circumstances and would in my opinion, be relied upon by a hypothetical prudent purchaser for use in conjunction with Mr Cripps' valuation of $3.58m.
The figure of 70% is obviously not inconsistent with the associate judge's assessment, constrained as it was by his Honour's view of the limitation on the developable area suggested by Mr Austin and, on his Honour's view, also by Mr Shephard.
It is a percentage that is consistent with the strategic planning material that came into existence after the rejection of the appellant's 2006 proposal by the RPDC, and it may indeed, notwithstanding the acknowledged non-binding and flexible nature of the BWCA, be regarded as conservative, given the footprint, scale and mix of uses contemplated as suitable for the land by case studies contained in the Master Plan.
I accept the appellant's submission on this ground. Nothing in the respondent's reliance on Mr Austin's evidence on this question, or in a consideration of implications for a rezoning arising from the BWCA, or s31 of the Strata Titles Act, causes me to think that a 70% chance of a rezoning is unreasonable, or that such a chance must be assessed on the basis of a particular development plan.

Disposition of ground

I would uphold ground 3.
In my opinion, notwithstanding the competing nature of the considerations available to a hypothetical prudent purchaser, and the limited empirical data underpinning Mr Cripps' valuation, I am satisfied that, on the balance of probabilities, the hypothetical purchaser, as at 24 October 2011, would, on a broad brush approach, have been prepared to pay for the land a price calculated as 70% of Mr Cripps' valuation of $3.58m. The relevant issue is not whether the RPDC would actually have approved a rezoning or a particular associated development, it is how the hypothetical buyer and seller themselves would have viewed the circumstances affecting the chance of rezoning and development and the effect of those things on the value of the land: De Ieso v Commissioner of Highways (1981) 27 SASR 248 at 253; Macarbell Pty Ltd v RTA [2006] NSWLEC 366 at [10].
I am satisfied that a hypothetical prudent vendor would, for the reasons given at pars[68] – [71] of these reasons, have been prepared to sell at such a price but not less. A hypothetical vendor would more than likely regard a 70% chance of rezoning as quite conservative in view of Ms Duckett's opinion and in view of the BWCA and the case studies in it for Camdale Point.
That price, that is, 70% of $3.58m, is the market value of the land. It exceeds the sum of the purchase price and the amount of the appellant's reliance damages. On the approach I have adopted, no question of realisation expenses relevantly arises.
For my part therefore I would proceed to assess the appellant's damages in lieu of specific performance at 70% of $3.58m, namely $2.506m, less the unpaid balance purchase price of $950,000. The resulting sum is $1.556m, to which must be added damages in the nature of interest pursuant to the principle in Hungerfords v Walker, calculated at the agreed rate of 8% per annum compounding monthly.

Disposition of the cross-appeal

It follows from my conclusions on the appeal that I would dismiss grounds 1, 2 and 3 of the cross-appeal.
I find it unnecessary to determine grounds 4 and 5, notwithstanding the desirability, ordinarily, of determining all grounds of appeal.