Boland v Yates Property Corp & Anor- Webster v Yates Property

[1999] HCATrans 216

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S24 of 1999

B e t w e e n -

JOHN BOLAND (as representative partner of Abbott Tout Russell Kennedy, Solicitors)

Appellant

and

YATES PROPERTY CORPORATION PTY LIMITED and IAN FRANCIS YATES

Respondents

Office of the Registry
  Sydney  No S28 of 1999

B e t w e e n -

JOHN WEBSTER

Appellant

and

YATES PROPERTY CORPORATION PTY LIMITED and IAN FRANCIS YATES

Respondents

GLEESON CJ
GAUDRON J
GUMMOW J
KIRBY J
HAYNE J
CALLINAN J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON THURSDAY, 5 AUGUST 1999, AT 9.36 AM

(Continued from 4/8/99)

Copyright in the High Court of Australia

___________________

GLEESON CJ:   Mr Quick, before you resume your submissions, just for the purpose of sorting out the issues that require a decision and the issues that do not require a decision, could I ask you this question.  Was it argued in this case that even if the principle of immunity defeated the action in contract or in tort, it did not defeat the action under section 52 of the Trade Practices Act or the action under the Fair Trading Act?

MR QUICK:   Your Honour, I would have to look back at the reasons.  I know the matter was considered.  My recollection is that it was argued and submissions were made to her Honour following a particular judgment of Prestia v Aknar, I think, in the New South Wales Supreme Court, saying that the immunity did not apply in those circumstances.

GLEESON CJ:   Well now, that is a matter that it was unnecessary for the Full Court of the Federal Court to decide.

MR QUICK:   That is so, your Honour; it was not dealt with there, I can assure the Court of that.

GLEESON CJ:   But if you look at the various permutations and combinations of possible decisions that we might reach, if, for example, we were to come to the conclusion that the Full Court of the Federal Court was right about negligence but wrong about the immunity so that the action in negligence was defeated by the immunity, presumably we would have to remit the matter to the Federal Court to consider the question of whether there was a cause of action under the Trade Practices Act or the Fair Trading Act and if so whether it was defeated by any immunity.

MR QUICK:   That would be the necessary course of events unless the court were to decide either that the immunity did not provide any protection in any event or, alternatively, decided that the immunity was no longer to be the law of the country.

GLEESON CJ:   Yes.  There is no reasoning in any of the judgments below in the Federal Court about any cause of action and the relationship of the immunity to any cause of action under the Trade Practices Act, is there?

MR QUICK:   There is not, your Honour.

KIRBY J:   Would you wish to argue that the immunity provided no protection against the Trade Practices Act and any cause of action under that Act?

MR QUICK:   I am fairly sure that was argued before Justice Branson, but I must say I have not come prepared to argue it here today.  If in fact the Court decides, for example, that there was negligence and on the basis of that we should also win under the Trade Practices Act, then we would wish to argue that matter if the immunity were otherwise to keep us out of the judgment.

GLEESON CJ:   Yes.  So the proper course for us to take against that possibility would be to remit the matter to the Federal Court?

MR QUICK:   Yes, your Honour.

GLEESON CJ:   Thank you.

CALLINAN J:   Mr Quick, just on a slightly related topic, I wonder if you could help me out.  I asked you yesterday about the deceptive conduct, and I just wonder whether there is anywhere in the record that I can identify any particulars of it and what was relied upon.  I know you told us ‑ ‑ ‑

MR QUICK:   I can answer that, your Honour; I have looked at those matters.  First of all, by way of positive communications in writing containing advice which are either wrong or omit to mention matters, there are two ‑ ‑ ‑

CALLINAN J:   I see.  They were posted, were they?

MR QUICK:   Yes, your Honour.

CALLINAN J:   Thank you.

MR QUICK:   Posted, not necessarily direct to the – I should qualify that.  There are two letters, the first of 4 September 1985 and the other of 11 July 1986.  They are referred to in the statement of claim, paragraph 87 and it is in appeal book volume 1, page 31.

CALLINAN J:   Thank you.

GAUDRON J:   And they were posted?

MR QUICK:   They were certainly posted but they were also DX-ed as well and they have also been faxed as well.

GUMMOW J:   Fax is all right.  That uses telephone lines, does it not?

MR QUICK:   Yes, your Honour, and indeed, that is what we rely on but, apart from that, the statement of claim also relies upon the failure to give advice and silence and relies in that respect not only on what was said between the parties but also on the communications that passed between them in writing or by fax, and as instances we would rely upon the weekly letters that were sent by ATRK to the liquidator to which my learned friend Mr Macfarlan referred the day before yesterday.  Instances of those are to be found in appeal book volume 15, pages 3934 and 3976.  All of those things relate to the first of the appellants, ATRK, but that would be sufficient to found jurisdiction if ‑ ‑ ‑

GAUDRON J:   They were all posted or faxed?

MR QUICK:   Some of them certainly were but I cannot tell your Honour that I have checked them all.  In so far as the appellant Webster is concerned, the letter of 11 July 1986 was settled by him.  That appears from volume 13 of the appeal books, page 3276 in paragraph 5 of his affidavit in which he recognises that he settled that letter.  The pleadings in so far as they concern ‑ ‑ ‑

CALLINAN J:   He did not post that letter, though?

MR QUICK:   No, he did not post it but he certainly knew it was going to be delivered in writing and he made the statement in the – he settled the letter itself.

CALLINAN J:   But how does that ground a claim against him under the telegraphic power?

MR QUICK:   First of all, he has engaged in conduct by settling the letter.

CALLINAN J:   Is he engaged in commerce or trade?

MR QUICK:   That was a matter that is also considered in Prestia v Aknar.  That is debatable, your Honour.

CALLINAN J:   I would have thought so.

MR QUICK:   But there are conflicting decisions of the Federal Court.

CALLINAN J:   In any event, let me be clear about this.  He did not post the letter?

MR QUICK:   I would not expect so, your Honour.

CALLINAN J:   Was there any evidence that he knew that the letter was going to be posted, as opposed to being delivered, posted or faxed or?

MR QUICK:   No, I think not, your Honour.  The point is that jurisdiction would be founded as against ATRK.  That would then be sufficient to join the other defendants in.  I beg your pardon, your Honour?

CALLINAN J:   Why, Mr Quick?  They are not agents, they are not employees, it is not a principal and agent relationship.

MR QUICK:   The court would have jurisdiction in relation to the matter of proceedings under the Act against Abbott Tout.

GAUDRON J:   And you would then rely on the State Act, the equivalent provisions of the State Act for Mr Webster.

MR QUICK:   Yes, and they could all conveniently be heard in the same court.

CALLINAN J:   A lot depending, a lot of pendency there.  Anyway, thank you for the information.

MR QUICK:   I do not think I can be of any further assistance, your Honour.

There are a number of matters arising from what occurred yesterday afternoon in Court, one of them, a very minor matter, concerns the transcript at page 171 at line 7570 and following.  The position was that I was responding to a question by your Honour Justice Gaudron in relation to the particulars that we were relying upon as being breaches of duty.  The transcript reads, your Honour said:

Well, what you rely on is (f).

and I am then reported as saying:

(f), your Honour?

That is meant to be an assent to the proposition and then going on to list all the other matters.  So we do rely on (f) as well as (g) through to the others that are mentioned in the next statement.

At the bottom of page 171 and the top of page 172 your Honour the Chief Justice asked me the following question:

I do not understand this to be in dispute but, once again, the Full Court dealt with this matter upon the basis that the only material criticism of the way the case was conducted in the Land and Environment Court concerned the head start aspect of special value.  Is it, once again, safe for us to approach the appeal from the decision of the Full Court of the Federal Court on the basis that that is all that we are concerned with?

To which I responded:

Yes, it is, your Honour.

That is still the response, but perhaps I should say something by way of amplification of it.  The head start case involves two aspects.  It involves, first of all, an examination of the way in which the claim for special value was presented and the basis upon which it was presented in order to demonstrate that what was presented stood a very high risk of being rejected in the proceedings, either because the facts which were the basis of the special value claim were unlikely to be proved or accepted, or secondly, because the nature of the special value claim which was being put forward was contrary to authority.

GAUDRON J:   But the special value claim was, in fact, accepted.  It was put forward and was, in fact, accepted by Justice Cripps.

MR QUICK:   Your Honour, we do not disagree with the fact that his Honour made a special value assessment but he did not make it on the basis put forward by the valuers.  Rather, he relied upon the information that they had used for their assessments and he made an assessment of a head start kind but we submit it was grossly under-assessed because the required evidence properly to assess it was absent.  Sorry, I have gone very quickly saying that.

There are two steps involved.  One, what was presented had a stratum of fact which enabled Justice Cripps to make an assessment of a head start kind but what was not there and was not presented in the valuation of reports and evidence was the critical evidence which would enable his Honour to have fully assessed the head start and, had it been there, the amount would have been considerably greater than the amount which was awarded.  So that the answer to your Honour the Chief Justice’s question is still yes, but it involves an examination of what was presented and whether that was correct in law and likely to be accepted.

GAUDRON J:   Now, can you clarify for me how you say the claim for special value was put?  I do not want it in detail.  Was it put on an alternative site basis or do you describe it in some other way?

MR QUICK:   It is clearly put on an alternative site basis.

GLEESON CJ:   Is that another way of saying it was put on a disturbance basis?

MR QUICK:   Your Honour, we would submit that it was really put on a reinstatement basis which is, to take up a point that was put yesterday, more compensation, something in the nature of damages rather than strictly in relation to value.

GAUDRON J:   Do you have a finding about that anywhere?

MR QUICK:   Only in the Court of Appeal in New South Wales.  There was criticism made – I am sorry, first of all, his Honour Justice Cripps rejected that approach.  He said it was not open to him on authority.  The Court of Appeal held that his Honour was right and one of the reasons for it – there were a number of reasons, but one of the reasons was that it involved an application of the reinstatement principle.

CALLINAN J:   Kennedy Street in one respect, if anything, looks like a reinstatement case, Mr Quick, do you think?

MR QUICK:   It is, your Honour, but there is one crucial difference between the situation which had been put forward particularly on the remitter and Kennedy Street.  Kennedy Street does not measure compensation on the cost of acquiring the alternate site.  It is all about the time required to get the alternate site and the cost involved or other aspects of loss associated with the acquisition, but not the cost itself.  The cost itself is reinstatement and that is what was sought before Justice Cripps, the cost of the alternate site.

CALLINAN J:   But you got at least some components of what you would say was the reinstatement claim on the settlement of the second appeal to the Court of Appeal, did you not?

MR QUICK:   Yes, your Honour is quite right.

CALLINAN J:   You got the money related to legal costs and outgoings and stamp duty and buying another site, I think.

MR QUICK:   Your Honour, what we got was a sum of money.  We know what the reason advanced for it was and we probably know what the reason why it was paid was, and that was an assessment of stamp duty and so on, which would be of the kind payable in a reinstatement situation.

CALLINAN J:   And that was Mr Simos’s evidence, I think, which her Honour accepted.  I mean, one might wonder how Mr Simos knew that, but I think Mr Simos gave some evidence to that effect in his affidavit.

MR QUICK:   I cannot lay my hands on it, but that is my recollection as well, your Honour.

CALLINAN J:   And her Honour unreservedly accepted Mr Simos.

MR QUICK:   It is, and we have to live with the consequences that that is an amount paid in respect of special value, but we do not have to live with the consequences ‑ ‑ ‑

CALLINAN J:   Or reinstatement.

MR QUICK:   No, with respect, your Honour, it is money that we were paid and received; we gave no discharge for a reinstatement-type case, we gave discharge in respect of the special value.

CALLINAN J:   No, but if I have to characterise it now, that amount of money, if I have to, would I not be right to characterise it as reinstatement, if anything?

MR QUICK:   If one accepts that there is a binding position whereby that money was paid on account of stamp duty and conveyancing costs, I would agree with your Honour.  But the position is here ‑ ‑ ‑

GAUDRON J:   Although would it not equally, assuming there is such a consideration, be referable to head start, in the sense that a subsequent purchaser would have to pay those moneys?

MR QUICK:   It could well be, but it then would have to relate back to the original site, your Honour.

GAUDRON J:   Yes.

CALLINAN J:   What her Honour has done is put her finger on, if I might say so, one of the essential problems, that a lot of the terms can perhaps be used interchangeably and they have not been used consistently in the cases.

MR QUICK:   In relation to the resumed site or the ‑ ‑ ‑

CALLINAN J:   No, reinstatement, to special value, disturbance – they are not used exactly and they are not used as terms of art and they are often used interchangeably.

MR QUICK:   Your Honour, I would submit that is perfectly correct.

CALLINAN J:   Yes.

GLEESON CJ:   Mr Quick, I realise this is not in dispute, but what was the legal basis on which the claim for abortive expenditure was allowed?

MR QUICK:   Your Honour, it was allowed by consent.  Justice Cripps did not allow it at all at first instance and he held that no such claim was made.  It was pointed out in the Court of Appeal that that was erroneous and it was agreed that there should be allowance for it.  Your Honour, I cannot see that there is any finding that it was proper to allow that, either on the basis that it was disturbance or abortive cost.

GLEESON CJ:   That is what I am trying to understand.  Everybody is in heated agreement upon the proposition that Yates were entitled to the abortive expenditure, but why?

MR QUICK:   Your Honour, in Arkaba Chief Justice Bray says, effectively you are entitled to the abortive expenditure or the benefit of it, so that as a species of special value you can either have the abortive expenditure itself or the benefit that is acquired as a result of it.  Now, in the latter specie of case the amount of the abortive expenditure is normally mentioned but it is not specifically allowed.  For example, in both Kennedy Street and also in Baringa, Justice Hardie mentions the amount of the costs but allows a greater figure for special value.  One can either have abortive costs or special value based upon – I am sorry, abortive cost is an item of special value or one can have in lieu of the benefit of it, having regard to the amount that was paid.  I am sorry that is not a terribly satisfactory answer, your Honour, but that is the state of the authorities, as far as I know them.

GAUDRON J:   What species of special value do you assert it is referable to?  It seems to me it is equally referable to alternative site theory as it is to head start.

MR QUICK:   It would be equally referable to either, your Honour - to both.

HAYNE J:   The whole argument, Mr Quick, seems to focus on particular steps that are taken along the way to a final result, the final result being the value of the land, is that right?

MR QUICK:   Yes, it is, your Honour.

HAYNE J:   The value of land can no doubt be assessed in any of several ways.  Again, that would be unexceptionable, would it not, as a proposition?

MR QUICK:   Yes, although it varies, according to the purpose for which the value is being assessed.  It is different for income tax, for example, in relation to resumption of land.

HAYNE J:   I will not debate that proposition with you but for resumption you are concerned to identify a value.

MR QUICK:   Yes, your Honour.

HAYNE J:   A value about which reasonable valuers might differ?  Yes?

MR QUICK:   Yes.

HAYNE J:   And a value which might be assessed by any of several possible methods in a particular case?

MR QUICK:   Authority would not necessarily have it that way, your Honour.  The authorities suggest that, for example, when assessing market value the usual method is by comparable sales.  It is only when the comparable sales method is not available or for some reason does not afford adequate compensation that then is one permitted to use one of the other methodologies.  So, I give a qualified answer of “yes” to your Honour’s question.

HAYNE J:   But does your proposition come down, ultimately, to a criticism about what factual evidence was placed before the court on one aspect of one of several possible methods of arriving at a result?

MR QUICK:   No, it does not and it does not for a number of different reasons.  First of all, if we can start at the end first, of the possible methodologies for the assessment of special value, none were likely ‑ ‑ ‑

HAYNE J:   No, not for the assessment of special value - for the assessment of the compensation to be allowed, that is, for the assessment of the value of the land.

MR QUICK:   The same answer, your Honour.  There were a number of methodologies put forward.  None of them were acceptable and likely to be accepted because, in the first place, they were either attended by difficulties of proof or, alternatively, they were likely to be rejected as being contrary to authority.  That is the first basis.  Sorry, I have just lost my train of thought.  As your Honour went through there were about three things that occurred to me.  That is the first thing.

The second thing is that it is not right to say, I submit respectfully, that the complaint is ultimately about the failure to lead evidence on one particular aspect of one of the methodologies.  The failure in this case commences well before any leading of evidence.  It is all about the failure in the first place to even turn one’s mind to the availability of a particular type of case based on a particular proof of facts and to make an assessment of where that might lead in terms of money, and to make an assessment of whether or not that has better prospects of success than what was actually led.  So, ultimately, it might have something to do with what happens in court, but it is all about even investigating the availability of such a case, drawing comparisons, and so on.  I think that is all I can say in answer to your Honour’s question.

HAYNE J:   Yes.

MR QUICK:   Yesterday your Honour the Chief Justice asked me a couple of questions about the Arkaba Case (1970) SASR 94. It would probably be useful if I briefly reviewed the facts of that case which are a little unusual, although in the valuation jurisdiction just about every case is unusual.

GAUDRON J:   You concede, I think, do you not, that every case involving special value, as it were, must of its nature be unusual?

MR QUICK:   Unusual.

GAUDRON J:   Yes.

MR QUICK:   In Arkaba, the facts were that land had been acquired by the dispossessed owner, or the owner, for the purposes of subdivision.  The owner did not itself have the capacity to subdivide and so, therefore, was about to enter into an agreement with the developer and on the basis of that agreement the proceeds of the subdivision would be split between them – the exact division is unimportant.  The agreement was not executed because in between, the negotiations which had led to the oral meeting of minds and the signing of a formal document, the land was compulsorily acquired under the relevant South Australian legislation.

That legislation provided for a claim for compensation to be made.  One was lodged in which a series of heads of claim were set forward.  The issue was whether or not the oral agreement which had been reached which everyone conceded would have been executed but for the resuming act, whether or not that gave the land special value in the hands of the owner.  That was really the only issue that is involved in the case.  It was heard by Chief Justice Bray.  His Honour rejected the notion that there was anything special relating to the agreement and the value of the land in the hands of the owner by reason of the identity of the owner in so far as it had been able to enter into an arrangement with the developer and he rejected that there was any special value arising from the relationship between the owner and the planning authority which would result in the land being of special value to the owner but not to anyone else.

Whilst that was happening, the parties went off and negotiated an agreement between themselves as to the heads of compensation.  That agreement is set out on page 97 of the report.  The Court will see in the middle of the page a table.  The agreement provided that the defendant was to pay the owner $625,000 and there are various heads set out, “Market value”, “Damages for severance”, “Damages for injurious affection” and then 5, “Damages for disturbance calculated as follows”, and we have some interesting heads there:

(a) Saving in interest on current mortgages
(b) Saving in interest on refinance
(c) Saving by liquidity
(d) Expenses thrown away

Some of those start to sound very much like holding costs, but the report does not really tell us just precisely what they were for.  The agreement then goes on to say: 

(ii) that the plaintiff and the third parties –

I am reading from placitum (ii) in the middle of page 97 –

the plaintiff and the third parties –

the third parties were mortgagees –

have the right to obtain by reference to the Court a ruling as to whether as a question of law, the Chapman agreement –

that is the agreement with the developer –

can have any, and if so what, relevance to the ascertainment of any additional compensation to be paid to the plaintiff for the land taken over and above the ordinary market value.

On page 98 there is recorded a memorandum of agreement reached between the parties in relation to the earlier agreement.  The memorandum reads:

1.  As a question of law, can the Chapman ‘Agreement’ have any, and if so what, relevance to the ascertainment of additional or ‘special’ compensation to be paid to the plaintiff in respect of the land taken –

Now, if I could just leave the agreement there, and turn to the findings of Chief Justice Bray at page 100, at about point 6 on the page, the paragraph commencing “I come now”.  His Honour says:

I come now to the real question before me which is, can the Chapman agreement be regarded as creating some element of special value to the owner over and above the market value of the land?  In my opinion, it cannot.  It is, of course, well established that it is the value to the owner which must be paid, even if that value exceeds the market value (Pastoral Finance Association Ltd v The Minister; Minister for Public Works v Thistlethwayte).  The additional element is commonly called “special value to the owner” eg Thistlethwayte’s Case.  But this special value must in my view arise from some attribute of the land, some use made or to be made of it or advantage derived or to be derived from it, which is peculiar to the claimant and would not exist in the case of the abstract hypothetical purchaser.  Would a prudent man in the position of the claimant have been willing to give more for this land than the market value rather than fail to obtain it or regain it if he had been momentarily deprived of it?  (Pastoral Finance Case; per Justice Kitto in Turner v Minister of Public Instruction).  A typical case of special value is where the land is peculiarly adapted to a particular kind of use made or intended to be made of it by the claimant, eg a doctor’s consulting rooms (Griffiths v Municipal Tramways Trust), or agricultural land worked in conjunction with a neighbouring residence or farm buildings (Minister of Works v Robinson).

Now here this land is as unconnected with the plaintiff’s hotel, motel and restaurant –

that was their other business –

It is nothing more than an investment acquired for the purpose of re‑sale so as to make a capital profit.  The plaintiff never intended to make any use of it for the purpose of its own business or any other purpose except that of development and re-sale.  Its value to the plaintiff is the same as to any other entrepreneur.  The Chapman agreement certainly proves that the land was ripe for subdivision and that affects its market value.

HAYNE J:   And would not the making of the Chapman agreement, whereby the owner agreed to divide the profit with another, make the land less valuable to the owner than it would to the arm’s length developing purchaser, who would take to himself or herself the whole of the profit?

MR QUICK:   If he had to take it with the agreement as well, otherwise not.

HAYNE J:   But the arm’s length developer would pay more for it, unencumbered by this agreement, than would this owner who had to part with half of the profit.

MR QUICK:   But the case was whether or not this agreement gave any additional value.

HAYNE J:   Just so, and, at least at first blush, it seems to me to diminish the value to the owner.

MR QUICK:   That would not mean that they are entitled to less than market value, nor would it mean, your Honour ‑ ‑ ‑

HAYNE J:   Just so.

MR QUICK:   - - - that they are not entitled to compensation on the basis of the agreement which was reached between the parties and as expressed in paragraph 5 on page 97.

GLEESON CJ:   What was the basis of the entitlement to what were called “damages”?

MR QUICK:   Your Honour, the word “damages” is used in three separate of those paragraphs.  The first is “damages for severance”.  I would expect that that is the cost of moving from one place to another, but the report does not explain how there was any such cost.  It was just an agreed matter between ‑ ‑ ‑

GLEESON CJ:   No, I am asking you what was the legal basis of an entitlement to damages, in addition to market value.

MR QUICK:   The terms of the Compensation Acquisition of Land Act under consideration there do not appear in the report and I must say that I am not familiar with them at the moment and I cannot answer your Honour’s question any further.  We look that up in the library at lunch time and have the answer.  Your Honour asked me two things about the case; the first is whether it was correctly decided.  Our submission is that it is correctly decided on the basis of the particular facts of that case, and, in particular, the nature of the initial agreement with the Chapmans, and, secondly, it is a supplementary issue there having already been, obviously, agreement between the parties to the litigation, including some payment of a special value kind.

Yesterday your Honour suggested to me, or referred to the example given in that case of the agricultural land.  I am not very satisfied with the answer that I gave your Honour, so I would prefer to deal again with it this morning.  The special value that arises in that situation is by reason of the concurrence of ownership of two pieces of land close together which together assist in an activity, and if one loses one or other of them, the activity will either be interrupted while something else takes place, either building of the buildings or acquiring other land and one then loses cash flow form the activity.  So, let us assume it is a farm, let us assume that it is a grain farm, there is storage capacity on one of the pieces of land, harvest comes along and they have lost the land with the storage capacity, it has to be taken somewhere else and stored somewhere else, someone else has to pay for it.

The land which has been resumed is no longer the owner’s land and therefore the activity carried out in part on that land and other land becomes less profitable because they have to seek the same facility elsewhere or they have to build it and pay for it, or they have to build it themselves and incur the costs associated with it and the delay associated with it.  It is the concurrence of an activity carried on on two pieces of land.  That deals with the agricultural pursuit part of it but the example also deals with the residence - it is a farm activity and a nearby residence.  That would be more a matter of convenience there, but it could sound in compensation and value by reason of the fact that expense is involved in getting to or from some other residence.  Beyond that I do not think I can go further, your Honour.

Yesterday your Honour the Chief Justice also asked me, after I had made the submission that special value involves an issue of fact, how, we submit, should the court go about instructing a jury on that issue.  I only got as far as saying, “Well, first of all, the instruction would be that as a matter of fact” and I was about to go on and I was taken up with other matters.  This leads into the wider question of whether or not there exists an underlying principle which applies to the assessment of value in market value cases, special value cases and all of the other different types of value cases.

As to that, we make the following submission.  What is involved here is an entitlement to compensation based upon an expression which appears in a statute, the value of the land.  The legislation provides no assistance as to the principle upon which that value is to be assessed.  But whilst there is no legislative definition of the principle, there is a body of case law which discloses how that assessment is to be made in different circumstances.  We adopt what your Honour Justice Kirby had to say in relation to the matter in Yates Property v Darling Harbour Authority (1991) 24 NSWLR 156 at 159. That is actually in volume 2 of the – the relevant passage is at page 159 – if the Court will pardon me for a moment, I just have the wrong volume. At point AB, your Honour Justice Kirby said:

Because of the sparse economy and potential ambiguity of the phrase “the value of the land”, a vast body of common law “principle” –

and that word is in italics – or in quotations –

has been developed by courts to give meaning to the phrase as it applies to recurring fact situations following compulsory acquisition of land.  About some of the “principles” developed by the common law there may be debate.  Many of them appear to fresh minds to be ambiguous and contentious.  Others appear to be arbitrary categories of indeterminate reference, designed as much to obscure the judicial leaps to judgment that are required in these cases as to provide guidance about when, and how far, to leap…..  But as this painstaking elaboration of the economical statutory phrase has become the law since the large acquisitions which occurred following the spread of railway services after the 1840’s;  as it has been endorsed and applied by courts of the highest authority;  and as people have ordered their affairs on a legitimate expectation of its application, it is now too late to refashion the basic principles –

GAUDRON J:   Is that right, with all due respect to Justice Kirby?  It is settled that the phrase means value to the owner, or at least that is not in dispute any more.  What that value is is a question of fact.  How it is ascertained really is also a question of fact.  The only thing that might come into issue is really a question of relevance.  Is something relevant to the value of the land?

MR QUICK:   Your Honour, there is nothing in what your Honour puts that is contrary to the argument that I am mounting which is that ‑ ‑ ‑

GAUDRON J:   I know it is not, but I think we might be getting a little bit too obscure about this.

MR QUICK:   Your Honour, there is even a greater reason for not embarking upon this, and that is that the statute has been repealed.

GAUDRON J:   I do not think it has anything to do with the statute.  It has to do with whether particular evidence bears on the value of the land to the owner.

MR QUICK:   Your Honour, what I was about to submit was that, in relation to the direction that one would give to the jury as to how that finding of fact is to be made, there is no underlying principle in the legislation.  There is no underlying principle in law, save for three restrictions that are imposed by the cases - two things, that you are not allowed to take into account, and one that you must take into account.  Those restrictions are, in the first place, you are only entitled to take into account those things which have economic value, and I will refer the Court to authority about that in a moment.

GAUDRON J:   Why is that, in your submission?

MR QUICK:   Your Honour, I am not seeking to justify it.  I am saying that that is what the cases say.  It does not really matter, for our purposes, whether it is economic or non‑economic.  It would be better for us if it were non‑economic, I suppose.  But for the present purposes, it is not ‑ ‑ ‑

GAUDRON J:   The reason why I ask is, may that be a necessary consequence of assuming a willing purchaser?

MR QUICK:   It might be, but not necessarily would be.

GAUDRON J:   I am sorry, a willing vendor.

MR QUICK:   Something could still have sentimental value, but one would still sell - might not necessarily extract, or want to extract, a greater sum for it.

GLEESON CJ:   The primary thing that you assume is a sale.

MR QUICK:   Yes.

GUMMOW J:   That is because value is perceived in terms of exchange.

MR QUICK:   Yes.  Your Honour, I will come to that question of where the parties lie in relation to that sale a little later.  It is inescapable for us to conclude that there is, in fact, some kind of exchange of money taking place, whether the dispossessed owner is considered to the purchaser in the special value situation and the vendor in the market value situation.

GLEESON CJ:   Before you leave the judgment of Justice Kirby, what do you say about what appears concerning special value on page 162, between letters C and D?

MR QUICK:   The passage is “a term of art”, yes, I was going to come to that, your Honour.

GLEESON CJ:   Well, the sentence before that:

Special value can only arise where –

et cetera.  What do you say about that?

MR QUICK:   Your Honour, in so far as it applies to the particular facts of the case at hand, that is, the Yates development?  Is that what your Honour has in mind?  Your Honour, we would say that the land was being put to some use for which it was especially suited at the time.

GLEESON CJ:   What was that?

MR QUICK:   It was being put to the use of being a market and carpark; it was already being used as a carpark, there was advertising hoarding up on the premises to show that it was going to be a market and carpark and the development of the work itself is part of the use for which it is especially well suited.

GLEESON CJ:   Well now, do you accept that proposition in that sentence?

MR QUICK:   Your Honour, it really depends upon what is meant by the expression “is actually putting the property to some use”.

GLEESON CJ:   All right.

MR QUICK:   If it means that the project has to be completed and is therefore functioning fully, we would say that it states the proposition too widely.

GLEESON CJ:   Well then, coming to the next sentence, may I ask you, in the present case, what is the characteristic of the expropriated interest that was of economic value to the owner, but which would not enhance the market value of the interest?

MR QUICK:   Your Honour, we would put it this way:  there was value to the owner in being able to stay where it was, because it required only a short space of time for the owner to complete the development and then to bring on an income stream.

GLEESON CJ:   How is that a characteristic of the expropriated interest?

MR QUICK:   Because the owner is no longer in a position to complete the project on that land.

GLEESON CJ:   The highest and best use of the land was for markets and both the owner and the hypothetical purchaser could use the land for markets.

MR QUICK:   Yes, your Honour.

GLEESON CJ:   What is it that justifies the hypothesis that the purchaser would put it to that use less readily than the owner?

MR QUICK:   Before I answer the question, may I say that, later on in my submissions, I will be turning to the reasons of the Full Court which explain why it is unnecessary to make that - what has been considered until now, a rather fundamental question.  The Full Court decides effectively, and I will take the Court to the particular passage, that there is advantage in being able to complete the project quickly.  If it is an advantage of which someone else will take notice and can have the benefit and put themselves in the dispossessed owner’s position, then that goes into market value, but the advantage still has to be assessed and you still get something for it.  If, in fact, it is peculiar to the owner because no one else can pick it up, then it goes into special value, so that ‑ ‑ ‑

GLEESON CJ:   It is not an advantage if someone else can pick it up and there is no head start if someone else can pick it up.  The whole theory of head start depends upon the assumption that it is valid to make the hypothesis that the hypothetical purchaser will turn this land to its highest and best use less readily than the vendor.  If you take away that assumption, the whole head start theory collapses.

MR QUICK:   Your Honour, we would submit that the way which the Full Court has expressed it is perfectly correct.  That is to say that if – compare two people on the land.  One person has just acquired it, wants to use it for the highest and best purpose and develop it to a market.  Let us assume that that is going to take any prudent person two years, but there is already someone on the land who has started that work and for that person it is only going to take a further six months.  So we have a difference in the capacity of two people to use the land.

GLEESON CJ:   My question is:  what is the justification for the former assumption?

MR QUICK:   Your Honour, it is not a matter of assumption, it is a matter of evidence, and there was evidence of it in this case.

GLEESON CJ:   So it is not a hypothetical purchaser at all?

MR QUICK:   Not necessarily, no.

GLEESON CJ:   It is a purchaser whose characteristics have to be proved by evidence.

MR QUICK:   Any purchaser - well, in fact, there was evidence given as to what the range of purchasers would do.  In one case one has a purchaser who would repeat the whole of the steps starting from resumption and it would take them two years.  That is at one end of the spectrum.  The other end of the spectrum is someone who would simply walk in and say, “I will use your building application, I will use your development application”, and although there might still be some time delays, but let us say that that person can for the sake of ‑ ‑ ‑

GLEESON CJ:   That is a person of the kind assumed by Mr Parkinson in his assessment of market value.

MR QUICK:   Yes, although in each case he allows six months for development actually to be made, otherwise that is so, your Honour, yes.  In the first case, that is the person who is going to repeat all the steps, that person is at a disadvantage with the owner because the owner is only going to take six months; they are going to take two years.

GAUDRON J:   You would wonder why he would purchase it in the first place if he was going to repeat all the steps.

MR QUICK:   Well, there may be very good reason.  Perhaps he thinks that it is super profitable and it is worthwhile paying a premium to get that particular place for that particular purpose.  But that is one end of the spectrum.  The other end of the spectrum is the person who picks it up immediately and uses the building and development approvals and so on, and that person can well go through the same process that is described by Chief Justice Latham in Reeve’s Case.  That is to say, here is someone with a particular advantage on this particular piece of land.  They are not going to give it up simply for market value; they will want something extra for it.  If I want the benefit of all their work, then I must offer them more for it, then it goes into market value.

CALLINAN J:   But, Mr Quick, at page 420, he refers - his Honour, I think – I think it is at page 420 – the passage I drew Mr Jackson’s attention to - Chief Justice Latham refers to “potential” when he refers to special value.

MR QUICK:   Page 420, your Honour?

CALLINAN J:   I thought that is where it was.  I am speaking from memory, I am sorry, Mr Quick.

MR QUICK:   Your Honour is quite right, I have got the passage marked.

CALLINAN J:   At about point 5.

MR QUICK:   The paragraph beginning:

Thus, if the land ‑ ‑ ‑

CALLINAN J:  

has some special value by reason of a potential use –

So, that that seems to be another, I suggest, inexact use or non-technical use of the word “special” or the phrase “special value” and I think it is at the heart of this problem that people have used the expressions differently from time to time, but there is nothing special about taking into account the potential of land.  Indeed, the process requires that to be done because one has to look at the highest and best use, and the highest and best use involves potential.

MR QUICK:   Agreed, your Honour, there is some looseness of language associated with this.

CALLINAN J:   No, I am just making the point that Chief Justice Latham may not be referring to special value in the way in which you would refer to it in this case.

MR QUICK:   But the sentence that I rely on is the sentence after the one to which your Honour has referred where Chief Justice Latham says:

Loss suffered by the owner by reason of disturbance of his business by compulsory acquisition is not itself (apart from special statutory provision) an element in compensation, but it would affect the price which an owner would be prepared to take if he were willing to sell and might, in a particular case, produce the result that a purchaser would pay more than would otherwise be the case.

That is just the point that I was attempting to make, I suspect not very successfully, to your Honour the Chief Justice.  Here is a situation in which someone would see Yates Property Corporation has done a whole heap of work in relation to the development of this market.  They are not going to give it up readily because they are only six months away from a cash flow but I can get in and I can buy all their plans, get all their information, do the whole lot, but they will expect something more from it because I will not have to start again.

CALLINAN J:   But is not that why they got $24 million approximately for a total outlay over the preceding three and a half years of, at most, $8 million?

MR QUICK:   No, your Honour, it is not, and furthermore, the real issue is whether or not they could have got more than $22 million, had this further information been put forward which was not put forward.

CALLINAN J:   There must have been something extra that was paid for.  I am not suggesting that price or expenditure equals value.  I mean, often it will be less, sometimes it will be more, but they are striking figures, are they not, 24 against 8 over a period of about, I think, three and a half years?

MR QUICK:   They are, but I am not in a position to offer valuation evidence myself.  It might be that that is a conservative figure according to what land values were doing in Darling Harbour at the time.

CALLINAN J:   It might be.  But it does suggest, does it not, that there was something in there, something in the statutory price of the compensation that was fixed.

MR QUICK:   No, your Honour, we could not accept that because all that was before Justice Cripps that was used for the purpose of his assessment was comparable sales and the work that Yates had done, but there was nothing there to say how long it was going to take him to finish the project.  There was, therefore, nothing on which he could say how long in order to calculate how much would a purchaser pay in addition to the market value assessed on comparable sales, nothing at all on which his Honour could have made the assessment.  The assessment that is made if $500,000.  When one compares that to the market value assessed on comparable sales, about $22 million, it was a minuscule assessment of the head start advantage and his Honour made that minuscule assessment because there was no evidence of how long the period should have been.

GLEESON CJ:   His Honour did not purport to assess a head start advantage.

MR QUICK:   No, he did not, your Honour.

GLEESON CJ:   He based his special value assessment on Kennedy Street which talks about disturbance, picking up, I presume, the language of Chief Justice Latham.

MR QUICK:   But, your Honour, the initial assessment his Honour gave did not state anything that would indicate that it was to do with head start.

GLEESON CJ:   The explanation he gave in his second judgment of the process of reasoning that led him to his first judgment related to Kennedy Street, did it not?

MR QUICK:   It does, your Honour.

GLEESON CJ:   And Kennedy Street bases special value, rightly or wrongly, on the concept of disturbance, does it not?

MR QUICK:   It does.  I was attempting to answer Justice Callinan’s question about whether or not Justice Cripps had actually allowed for it, and ‑ ‑ ‑

GLEESON CJ:   In the course of your answer you suggested to Justice Callinan that Justice Cripps set out to assess a head start advantage.

MR QUICK:   Your Honour, if I said that, that is not what I was intending.  What I was intending to say was he could not have assessed validly the head start claim.  Your Honour Justice Callinan was suggesting that we have received some money, and perhaps it includes the head start claim.  I am suggesting that is impossible because his Honour did not have the appropriate material before him to determine the period, he only had what was done and, furthermore, as your Honour the Chief Justice now points out to me, that there is also the fact that his Honour said, “Well, I am not doing it on that basis, I am doing it on another basis”.

GLEESON CJ:   Everybody at the Bar table agrees that Justice Cripps could not validly have assessed the head start claim, but the disagreement between you is why.

MR QUICK:   Except I understood my learned friend Mr Macfarlan to be submitting that, effectively, all the information was there but he chose not to do it.  We submit that not all the information was there, that is the difference between us.

GLEESON CJ:   The submission is that he chose not to do it because it would have been legally impermissible.

MR QUICK:   Your Honour, perhaps I had better reflect on that.

GLEESON CJ:   All right.

MR QUICK:   Justice Cripps did not do it because he did not have the evidence before him and it was not suggested to him that it was possible for it to be done.  He made an allowance as best he could for the value of the work done in the absence of evidence as to the period and the value that was involved.

GLEESON CJ:   You were going to take us to a passage in the judgment of the Full Court of the Federal Court where they dealt with a problem that I raised with you a little time ago.

MR QUICK:   Your Honour, it slipped my memory which particular passage ‑ ‑ ‑

GLEESON CJ:   I thought you were going to show us how they dealt with the problem as to the justification for making the hypothesis that the purchaser would be less ready to develop the land than the vendor.

MR QUICK:   Your Honour, may I do that in a little while?

GLEESON CJ:   Certainly.

MR QUICK:   I am proposing to do it and I have it in another part of my argument.  I was at the point, before discussing the question of what Justice Cripps did and why, we were making submissions in relation to the body of law by which a jury should effectively be instructed.  I said that there were two limiting factors and one inclusive factor that had to go into the direction.  The first of these is that, according to authority at least, there must be some economic advantage.  The second matter is that the owner’s actions in determining what he or she would pay are based upon only on prudent conduct.  So, the first limitation, it has to be economic value in determining the fact of whether there is special value.  It has to be of economic advantage.  Secondly, he is considered only to be acting prudently.

The third of the factors emerges from the decision of Justice Mahoney, again in the same case, at page – I am sorry, I think I have the wrong page reference – perhaps I can just state what it is, I will find the authority in a moment.  The third of the limiting factors is that the benefit must not be purely collateral benefit and his Honour, in the passage that I cannot find at the moment, refers back to Falconer’s Case where there is a reference made to excluding from consideration the considerations of benefit collateral contract.  My learned junior points out that the relevant passage in the reasons of Justice Mahoney in Yates Property 21 NSWLR 156 is at 169C to D. This is the third of the factors. His Honour says:

On that basis, the land would have special value to Yates only if and in so far as he had a reason why he would pay more for the land for that purpose and that reason was not, for example, merely collateral but relevant to the value of the land as such.

There are two examples given of collateral benefit in Falconer’s Case, again in the reasons of Justice Mahoney.  One is the benefit of a tax‑free sale and the second was the benefit of a totally unrelated contract, a benefit which derived from a totally unrelated contract.

So that in making the direction to the jury, we would submit that the judge should say, “This is an issue of fact for you to decide; the legislation does not tell us what you are to take into account but you may not take into account benefits to the owner which are not of economic value.  You must not take into account benefits which are derived only from collateral sources and you must assume that the owner is acting prudently”.  Those, in our submission, are the directions that would go to the jury.

Your Honour, I have not forgotten to deal with the way in which the Full Court said this had to be dealt with.  I will come back to that, but before I do that there is something else to which I would seek to refer.  This involves a rather fundamental problem arising out of what occurred yesterday in consideration of the matter, effectively, of whether Pastoral Finance was correctly decided and whether it should not be followed.  Throughout these proceedings there has been no challenge made to the correctness of Pastoral Finance nor has there been a challenge to the correctness of what was said by Chief Justice Bray in Arkaba.  So that the concept enunciated in Pastoral Finance, followed in Arkaba, again followed by Justice Mahoney in Yates v Darling Harbour, that has never been challenged until yesterday.  Moreover, the written submissions of both of the appellants accept the correctness of Pastoral Finance.  In the Abbott Tout submissions, that appears in paragraph 13(b), that accepts Pastoral Finance, and in paragraph 15 it accepts Arkaba.

CALLINAN J:   As authority for what, Mr Quick?

MR QUICK:   Authority for the statement made that the issue is:  what a prudent person in the position of the dispossessed owner would pay for the land rather than to lose it.  That is accepted in the ATRK ‑ ‑ ‑

CALLINAN J:   But not necessarily as the exclusive test of an assessment of special value surely.  It may be one but ‑ ‑ ‑

MR QUICK:   That may be so, your Honour, but the position which was reached yesterday was very close to saying to the Court “It is time to reconsider Pastoral Finance”.

CALLINAN J:   Well it is an unsatisfactory decision in lots of respects, because the Privy Council doubted very much what the jury had done, doubted the verdict and said that, nonetheless, they would not interfere with the result at first instance, because it had not been argued on the other side that the approach was wrong, but their Lordships doubted it.

MR QUICK:   It might have been a hard case for those reasons.

CALLINAN J:   No, their Lordships actually doubted it.

MR QUICK:   But at page 1088 Lord Moulton in the speech, it clearly sets out that that is what has to be considered.

CALLINAN J:   And it has to be considered in an appropriate case.

MR QUICK:   And I am suggesting this is not the appropriate case, one of the reasons being that it has never been raised before now in these proceedings.  Indeed, everyone has proceeded on the basis that what was said there was authoritative and correct; it is only a question of how it is to be applied having regard to other cases.  Now, not only is it said by Abbott Tout, do they admit the force of what is said and do they put it forward as being authoritative, but Mr Webster’s submissions do the same thing in paragraphs D2, D3, D6 and D8, all dealing effectively with Pastoral Finance and in D9 dealing with Arkaba.

In the submissions of the respondents, they also put forward the Pastoral Finance test for special value and Arkaba.  Paragraph 10 states the special rule in terms laid down by Lord Moulton in Pastoral Finance; paragraph 11 states the rules again in terms used by Chief Justice Bray in Arkaba.

HAYNE J:   Just apropos of Arkaba, Arkaba may also have to be understood in the light of the decisions of this Court in G & R Wills & Company Limited and The Corporation of the City of Adelaide (1962) 108 CLR 1 and the decision of Justice Dixon, to which their Honours refer in the Wills Case, The Moreton Club v The Commonwealth 77 CLR 253, particularly at page 257. Those are authorities which, at least at first blush, would seem to go in aid of your submissions rather than against them, Mr Quick.

MR QUICK:   Your Honour, I will do my best to come to grips with them over the luncheon adjournment.

GUMMOW J:   I think it is quite important because they are construing the Federal Act.  They are construing it, therefore, against the constitutional requirement of just terms and, in particular, Justice Dixon in Moreton Club is fixing upon the notion of the value to the owner and he is doing that, I imagine, because he has got 51(xxxi) in mind.  What he says there is not immediately and necessarily accepting, I think, that Spencer is covering the whole relevant universe.

HAYNE J:   And in turn it may need to be understood in the non-federal context, in light of decisions such as that of Justice Cousin in Wilson v State Electricity Commission of Victoria (1921) VLR 459, particularly at 464, where Justice Cousin was speaking to the Full Court, and again appears at first blush to focus on the concept of value to the owner as perhaps being something different from Spencer’s Case, a hypothetical purchaser-vendor constraint.

MR QUICK:   I am embarrassed that our researches did not pick up the same cases but they will certainly be looked at during the course of and before I have finished my submissions, I hope, in which case I will take that matter up further, if the Court pleases.

HAYNE J:   And, finally, apropos of Arkaba, it seemed to me, again, as a matter of first impression, that the statutory inquiry required of Arkaba under the Compulsory Acquisition of Land Act 1925 of South Australia was that dictated by section 12 of that Act which prescribes a number of rules, pre-eminent amongst which is rule (1)(a) that “regard shall be had” to “the value of the land taken” and at least at first blush, again, it seems that Arkaba is concerned to identify value rather than damage or compensation in the sense of damage.

MR QUICK:   I agree, your Honour.  I will come back to the point that your Honours have just raised later on, but if I might just continue on with the point that I am making about whether or not it is appropriate, in any event, to reconsider Pastoral Finance and Arkaba in this case.  The response of Mr Webster is a detailed response.  It comprises some 18 closely typed pages.  That is response to the submission made by us.  There is no challenge in it anywhere to what is said by the submission made on behalf of the respondents in paragraphs 10 and 11 which cite and refer to particular passages in Pastoral Finance and Arkaba, so that in relation to the submissions made everyone has worked on the basis that those cases are correctly decided and are authoritative.

The next thing I would draw attention to is that none of the grounds of appeal on valuation issues challenge the concept emanating from Pastoral Finance and restated in Arkaba.  We would submit that for these reasons alone the Court should not now decide whether it will depart from the concept as laid down.

GAUDRON J:   What concept are you talking about?

MR QUICK:   I have used “concept” your Honour.  Perhaps it is a bad work.

GAUDRON J:   Yes.

MR QUICK:   I am talking about whether or not the appropriate question to be asked is the question asked by Lord Moulton and Chief Justice Bray.

GAUDRON J:   He did not say it was the most appropriate.  He said, as I recollect it, probably the most practical way of dealing with it is to ask this question.  He did not assert that it was a definitive statement of principle, on any view.

MR QUICK:   Your Honour, I withdraw what I said.  I adopt what your Honour has said.  It is at least a permissible question ‑ ‑ ‑

HAYNE J:   And Lord Moulton’s question may differ significantly from the question that Justice Kitto presents.

MR QUICK:   Is this in Turner’s Case, your Honour?

HAYNE J:   Yes.  Justice Kitto’s question is cast in terms of what the dispossessed owner would have had to pay.  Lord Moulton’s question is cast in terms of what the dispossessed owner would have been willing to pay.

MR QUICK:   Your Honour, that passage of Justice Kitto’s is the only one that we have found where there has been that transposition of roles.

HAYNE J:   But Pastoral Finance presupposes the transposition of roles, does it not, where the dispossessed owner is in the position of purchasing?

MR QUICK:   I am sorry.  We are at cross purposes, I am sure, your Honour.  I was talking about the transposition of roles within consideration of the dispossessed owner.  In Pastoral Finance, Arkaba and Yates Property Corporation v Darling Harbour, particularly Justice Mahoney, the dispossessed owner is in the position of a purchaser - sorry, vendor, I have it around the wrong way.  I was distracted by movement on my right.

HAYNE J:   It is the best traditions of the Bar to blame your junior, Mr Quick.

MR QUICK:   It was not a slight of hand, but it was a movement.  Those three cases all have the dispossessed owner as a person willing to pay.  Justice Kitto’s decision seems to be the only one.  Perhaps it is another example of what Justice Callinan has been speaking of, and I am very reluctant to criticise a member of the Court in that way, but it might have been an incautious statement by his Honour.

For the reasons that I have advanced, we would submit that it is inappropriate, having regard to the conduct of this litigation and, indeed, this appeal, that that matter should now be reconsidered.  But there are additional reasons as well why it should not be considered and they include the fact that the relevant legislation has now been repealed but further, and more importantly, the issue in this case ‑ ‑ ‑

GAUDRON J:   We are not dealing with a valuation case.  Those submissions might have validity if we were dealing with an appeal from the decision of the Court of Appeal in this matter.  The question in this case is negligence.

MR QUICK:   Your Honour, that leads me straight into the next point that I was about to make.  The point that I am making about the repeal of the legislation is that by deciding this point you will not even help in relation to valuation issues.  It is not going to be of any assistance to anyone in relation to that statute and, therefore, it is another good reason for not touching it.

GAUDRON J:   The fundamental question in this case is negligence.

MR QUICK:   Your Honour, I will come directly to it.

GAUDRON J:   It seems to me that question is intimately bound up with negligence, but I do not see any way it can be disinterred and put to one side.

MR QUICK:   Your Honour, we would submit that the negligence issue has to be determined according to what was the understanding of the law in 1990, not what the Court might now decide it should have been.

GAUDRON J:   Well, that is interesting.

MR QUICK:   Well, I hope to develop that, if I may?

GAUDRON J:   We do not accept that as a statement of the relevant law in the case of specialist medical negligence, as such.  We do not talk about the understanding and one would hardly hold a person negligent for proceeding in 1970 on theories that were accepted as correct in 1980, for example.

MR QUICK:   I am sorry, I did not hear what your Honour said.

GAUDRON J:   I just said for example.  I mean ‑ ‑ ‑

MR QUICK:   Your Honour, we would submit that the medical negligence case is not analogous.  It is not analogous because the medical negligence case is not a loss of a chance in litigation case.  What we have before the Court now is an action for damages for loss of a chance in the litigation which was conducted in 1990, not litigation which is being conducted now according to what the law might be declared now to be.  We have that loss of a chance case on the basis of what the law was authoritatively laid down as at that stage, and how it was understood.  In my submission, it would work an injustice in the determination of that issue if the Court determined that all of the laid down authority at that stage was wrong, because the issue was what could have been had at that time.

GLEESON CJ:   It may be important to test this concept of loss of a chance in litigation.  Loss of a chance of what?

MR QUICK:   Of a greater award of damages, your Honour.

GLEESON CJ:   What, at first instance?

MR QUICK:   At first instance.

GLEESON CJ:   Sustainable on appeal?

MR QUICK:   Yes, your Honour.

GLEESON CJ:   So, loss of a chance of an erroneous decision in your favour is not something of value, or is it?

MR QUICK:   The question is when is the declaration as to error made?

GLEESON CJ:   I just want to understand what we are talking about in the context of litigation when we are talking about a chance.

MR QUICK:   Your Honour, the concept of a totally unmeritorious case in a loss of a chance situation is totally rejected in the speech of Lord Diplock in Saif Ali.  He says you cannot have a loss of a chance case if, in fact, you have no case at all.  We accept that.  But the position here is that in 1990 these cases were authoritative and they were understood in a certain way, and that is the way that they had not been open to question.  Their application might have been questioned, but their status as authoritative decisions was unchallenged.

GLEESON CJ:   Let it be supposed - and I am not suggesting for a moment that this is a realistic possibility, I am simply trying to test your proposition - let it be supposed that we were to come to the view that the entire concept of special value was completely misconceived.  What would that mean in this case except that your client got $500,000 too much in the first place?

MR QUICK:   One would first have to consider whether or not the determination of this Court on that issue would be considered as the relevant determination for the purposes of litigation which was to be conducted in 1990.

GLEESON CJ:   Yes, it all depends on what you mean by a chance.  A chance of what, a chance of a favourable outcome or a chance of a just outcome?

MR QUICK:   A chance of a favourable outcome and, indeed, a just outcome on the basis of the law as it was then authoritatively laid down and understood, and in the absence of the decision which this Court might now make as to the correctness or otherwise of that decision.  The fact of a decision by this Court at this stage is ‑ ‑ ‑

GAUDRON J:   Why do we not hypothesise simply the determination of this Court on appeal from the decision of the Court of Appeal?

MR QUICK:   Your Honour, that would raise different issues because the whole concept of head start was not raised in the ‑ ‑ ‑

GAUDRON J:   No, but let it be assumed for a moment that Darling Harbour had obtained special leave to appeal to this Court, and this Court had then held that there was no such concept as special value.  Is that not the way to approach it if we came to?

MR QUICK:   I am just trying to think through the ramifications of that.

GAUDRON J:   Yes, but is that not the way we have to evaluate this chance, because there was a live issue at all times between the parties in the Land and Environment Court as to whether there was any special value component to be allowed?

MR QUICK:   Your Honour, the way in which your Honour puts it leaves out of consideration one important factor and that is the time consideration.  There was a live issue until such time as the time for application for special leave expired or the time when this Court determined the matter, but there was no appeal.  So that, if I put it this way, that test would be valid if it had the element of time put into it.  The fact of the matter is that there was no appeal.

KIRBY J:   There was, in fact, an appeal but it was discontinued ‑ ‑ ‑

MR QUICK:   Yes, your Honour is quite right.

KIRBY J:    ‑ ‑ ‑ and it would not have been open to the Court of Appeal to determine that there was no such thing as special value because there were decisions of this Court and of the Privy Council which said that there was such a concept, so it would not have been open to the Court of Appeal to attack the fundamental.

MR QUICK:   Yes.

KIRBY J:   The question now being raised is, assume that that application for special leave had not been abandoned or settled but had been pressed forward and had come to this Court and we had had some of the debates we had yesterday and today, and this Court had said, well this is just fundamentally misconceived, then on that basis you would not have lost a chance because there was no chance.

MR QUICK:   I would agree, if that is the basis upon which it is to be dealt with, that would be the case.  But our submission is that – and I will take the Court in a moment to Tutunkoff v Theile and Nikolaou v Papasavas.  They are cases in which the court, and particularly Chief Justice Mason in Nikolaou v Papasavas, makes it clear that you must determine according to what was known at the time – I put that with respect when I say you must determine.  The Court should determine according to what was known at the time ‑ ‑ ‑

GAUDRON J:   What was known?  What do you mean by “what was known”?  It might be the facts, you could be talking about the facts known at the time.  The law does not change, well, at least in one theory, according to what is known.  The law is the law.

MR QUICK:   Your Honour, Papasavas v Nikolaou does concern a factual situation.  It was a personal injury case in which evidence became available years after the trial would have taken place, and that would have affected dramatically the assessment of damages.  Chief Justice Mason said you have to ignore all the later evidence because it is not something that would have been available at the ‑ ‑ ‑

GAUDRON J:   Well, that does not help in this particular context, does it?

MR QUICK:   We would adopt it by analogy, your Honour, and say that in a loss ‑ ‑ ‑

GAUDRON J:   But it is not analogous.  I mean, it would be analogous if you were talking about a distinct statutory change.  You would have to determine a chance by reference to the statute in force at the time.  Here you are in an area of law about which there has, at the very least, been some criticism by textbook writers, by Justice Kirby, in a sense, in the Court of Appeal.  Are we to determine it on the basis on what in truth is the correct statement of principle applicable at that time or on the basis of what is thought to be correct but is in truth erroneous, if that should be the way the decisions falls?

MR QUICK:   Your Honour, if I could summarise it in this way:  what is involved here is indisputably a question of fact.  What direction would the court have given in 1990 is the issue.  The direction that would have been given would have been in conformity with the principles laid down by the Privy Council, by this Court and the other courts to which we have referred, particularly the South Australian court, would have given a direction in those terms.

GLEESON CJ:   And you say that if a judge was directing a jury on this issue in 1990, the judge would have directed the jury about head start?

MR QUICK:   He would do.

GLEESON CJ:   He would have been an innovative judge, would he not?

MR QUICK:   No, your Honour, we would say he was supported in doing so by Baringa and by analogy by Kennedy Street.

GLEESON CJ:   Mr Quick, we thought that we would adjourn for 10 minutes or so.  Is this a convenient time?

MR QUICK:   If your Honour pleases.

GLEESON CJ:   We will adjourn for 10 minutes.

AT 11.00 AM SHORT ADJOURNMENT

UPON RESUMING AT 11.18 AM:

GLEESON CJ:   Yes, Mr Quick.

GUMMOW J:   Mr Quick, could you add to those cases Justice Hayne referred to you, which are not necessarily threatening ‑ ‑ ‑

MR QUICK:   Not necessarily threatening, your Honour?

GUMMOW J:   No.  A reference to the Executor Trustee Cases 74 CLR 358 at 373 to 374 in the judgment of Sir Owen Dixon, and in the joint judgment with which he agreed at 361 to 362, there is a reformulation at 362 of Pastoral Finance.

MR QUICK:   Thank you, your Honour, we will look at that at lunchtime.  Your Honour the Chief Justice asked me this morning whether or not the immunity point was raised before Justice Branson in relation to the Trade Practices Act and Fair Trading Act.  I have before me the written submissions on matters of law which were submitted to Justice Branson at first instance at page 42 of that document, and at paragraph 8.7 the point is taken that the immunity at common law has not expressly been incorporated into the Act and does not apply.

GLEESON CJ:   So, it comes to this.  The argument that there was a contravention of the Trade Practices Act or the Fair Trading Act was not independent of the negligence argument in the sense that if there was no negligence, it was acknowledged there was no misleading or deceptive conduct.

MR QUICK:   That is correct, your Honour.

GLEESON CJ:   However, those arguments were independent of the negligence argument in the sense that if negligence were established but were not actionable because of the immunity point, you still wanted to rely on the legislation.

MR QUICK:   That is so, your Honour.

GLEESON CJ:   Thank you.

MR QUICK:   It is at paragraph 8.7 of the written submissions.  In connection with the point that I was making before the adjournment as to the state of the law in 1990 and in relation to whether or not this Court ought to reconsider and declare now and for then the law to be something else, we would submit the following.  First of all, it was the attitude of the parties, that is, the Yates Property Corporation and the DHA at the relevant time, at least at the time of the remitter – I am sorry, the Court of Appeal - that the Pastoral Finance effectively stated the relevant test, although, as your Honour Justice Gaudron puts to me and which we accept, it is really a question of how one can pose the question, and that is an acceptable way, but that was accepted by the parties at that time.

There is evidence of that contained in a written advice which was in evidence before Justice Branson.  It is in appeal book volume 13 at page 3543 through to page 3548.  If my memory serves me correctly, the evidence was that this was prepared by Mr Webster.  This document which we have is unsigned, but my memory is that Mr Simos did not admit that he had ever signed the final document.  But, at all events, in relation to the appellant Webster, we find in that document a reference to the attitude of the Darling Harbour Authority in these passages.  At the foot of page 3544 at point 40 on the page:

The Respondent, in reply to the submission by Mr Simos QC objected to his Honour even accepting the document as evidence of anything but did admit that we should have been allowed Stamp Duty and Legal Expenses on a repurchase (Note this amounted to approximately $780,000 alone) however denied that in the circumstances it should be included at that stage –

If we can emphasise the words “at that stage”.  So they accept that there should have been stamp duty and legal expenses ‑ ‑ ‑

GLEESON CJ:   Is that some kind of disturbance theory?

MR QUICK:   I think it is a misapplication of Kennedy Street, but, of course, Kennedy Street relies upon Pastoral Finance, so, implicit in this is acceptance of the type of rule applied in Pastoral Finance.  On page 3547 of the same document at point 15:

It would seem obvious that his Honour did not wish to change his original decision and attempted to validate that earlier judgment by maintaining that all of the matters raised by Justice Handley had in fact been considered.  For the reasons, as extracted above, show that this was not his approach and in addition, his failure to even deal with the question of legal costs on acquisition of an alternative site which was admitted by DHA as claimable –

GLEESON CJ:   This has nothing to do with the outcome of the present appeal but, as a matter of interest, it looks as though that extra amount that was paid to compromise the second appeal was a payment made in conformity with a concession that had been made in argument.

MR QUICK:   I think that is right.  That document certainly makes that appear so, your Honour.  The first thing we submit is that, in relation to the loss of the chance case, the first thing that has to be considered is what was the attitude of the parties in relation to what is essentially a question of fact?  The attitude of the parties was that the appropriate question to be asked was that laid down in Pastoral Finance.  The original parties conducted themselves on that basis.  In the original proceedings, here, that was also accepted until yesterday, that Pastoral Finance was an appropriate way of proceeding.  Whilst there cannot be any formal estoppel in some way, because the parties are different in relation to what happened originally ‑ ‑ ‑

GUMMOW J:   The trouble is that, the more one looks at Pastoral Finance and looks at how it had been treated in this Court over the time, the less crystalline is its formulation.  It has meant a lot of things to a lot of people, from time to time, it seems to me.  That was partly because a number of the courts, including this Court, which were construing it at the time, were bound by the Privy Council decisions.

MR QUICK:   Your Honour, could I agree in part with what your Honour says?

GUMMOW J:   Whatever murmurings there were, they had to be formulated in a particular way.  There could be no frontal assault on it, in other words.

MR QUICK:   Your Honour, may I submit, that where the Court has treated Pastoral Finance slightly differently, that is really in relation to that part of the case where they are dealing with the use of profits, an earlier part of the case.  Our submission is that the way in which that test has been stated, the factual issue, there does not appear to be any change in that, except from the passage from Justice Kitto, that your Honour Justice Hayne referred to me in Turner’s Case.

HAYNE J:   And what their Honours described as the slight restatement in the stamp duty case 74 CLR.  It seems to me to be an inversion of the test rather than a mere slight restatement, but perhaps I am mistaken.

MR QUICK:   Your Honour, we would submit that that case is distinguishable on the basis that it is not a resumption case and that there are different considerations applicable in taxation and stamp duty cases.

So that our submission is that the chance that was available on this issue of fact was a chance which, irrespective of what the Court now determines, at that time was dominated by the attitude of the parties to what the law was and what the law at that stage was laid down, and that this Court in such a case should not depart from that position, even though it might now consider that the law should be changed and is prepared to declare that it should change and, effectively, that would declare the law for the earlier time as well.

In our submission, the cases of Tutunkoff v Theile (1975) 11 SASR 148 and Papasavas v Nikolaou are particularly important.  May I take the Court to those.  Tutunkoff v Theile was an action against a solicitor for allowing a personal injury action to become statute barred. The relevant passage in the judgment of Chief Justice Bray on which we rely appears at page 150 at the bottom of the page, the paragraph commencing with the words “Mr Fricker”. His Honour held this:

Mr Fricker, for the plaintiff, contended vigorously that I was only at liberty to assess the plaintiff’s chances of success in the lost action on the basis of the evidence before me.  In principle I do not think that this so –

so I stress that, it is a matter of principle first –

because what I have to decide is that what the plaintiff has lost by the defendant’s negligence and what he has lost is what a court would have awarded him in an action by him against his employer –

I stress the tense “have” –

not what I would award if the present action were an action against the employer and there was no other evidence than that before me.

So that is the starting point.  The issue is:  what would a court have awarded?  Now, in that respect, if this Court now determines that the law should change, was wrongly stated, that, with respect, is outside of the issue to be determined in such a case because it is what would a court then have determined?  The answer is that if it was acting lawfully, it would have determined that those cases correctly stated the law.

GUMMOW J:   You mean a trial court?

MR QUICK:   Yes, your Honour.  The particular passage to which I have referred is cited with approval in Johnson v Perez (1988) 166 CLR 351, the particular passage at pages 364 and 365 in the joint judgment of Justices Wilson, Toohey and Gaudron. Perhaps of more immediate or more persuasive – not persuasive, but more illustrative of the proposition, is Papasavas v Nikolaou reported in the same volume of the Commonwealth Law Reports, 166 CLR 394 and the particular passage upon which we rely is at page 399. This is in the judgment of Chief Justice Mason. This is a case where an action for personal injuries became statute barred. At page 399 Chief Justice Mason first of all referred to Tutunkoff v Thiele, that is five lines from the top of the page where his Honour says:

Rather it is an action for the loss of a chance to recover on a cause of action for those injuries.  In Tutunkoff v Thiele, Bray C.J. considered the assessment of damages –

His Honour then quotes the passage to which I have just referred.  His Honour then goes on:

In such a situation a court’s goal is to determine what amount of money would put the plaintiff in the position he would have been in had the solicitor not been negligent.  That inquiry requires that the court ascertain, as best it can, how large an award the plaintiff would have received in the underlying action.  Toward that end if may well be appropriate to consider evidence that has emerged after a final judgment should have been obtained if that evidence speaks to the condition of the plaintiff at that time and would assist the court in evaluating the case that the plaintiff could have made…..  That evidence would be useful in the historical task of determining just what the plaintiff has lost –

This is terribly important, they are saying ‑ ‑ ‑

GAUDRON J:   Except that what those cases are concerned with is the amount of damages.  Negligence is taken as given.  This is not a case, at this stage, concerned with the amount of damage.  It is concerned with whether or not there was negligence.  So, what is there being said does not automatically translate to the question of negligence.

MR QUICK:   Your Honour, we would submit that the passage – although it is true that these are cases where negligence is admitted, the nature of the inquiry is, we would submit, the same in each case, whether it be as to negligence or as to damages.  The inquiry is:  what would have happened at that time, had the action been tried and determined without the negligence of the defendant?

HAYNE J:   Both Tutunkoff and Nikolaou are cases in which the question was presented because different facts would have been proved at one time from the facts that were proved in the action which was subject of the report.

MR QUICK:   Different evidence would have been presented on the same issues.

HAYNE J:   Yes.  The debate in the present case concerns not a factual question but a question of law, does it not?

MR QUICK:   We would submit that it is a question and that what is involved is a an issue of fact, that there are no principles or concepts to guide but only common law statements as to how one decides that issue of fact.

HAYNE J:   What is the issue of fact that is in issue?

MR QUICK:   Whether there was special value to the dispossessed - the value of the land to the dispossessed owner.

HAYNE J:   Yes.

MR QUICK:   I will take your Honour to the – there are clear statements that that is an issue of fact.

HAYNE J:   Yes, I understand that.

MR QUICK:   Can I return to Nikolaou v Papasavas.  The point that is being made in the paragraph that I have just read is that the plaintiff may use in bolstering up or increasing the damages that could have been awarded evidence which comes to light later, but that situation is contrasted with evidence to the contrary in the next paragraph.  His Honour says:

But evidence relating to the consequences of the personal injuries which would not have been apparent before final judgment by definition could not have been part of the basis on which damages would have been assessed.  Although such evidence might be useful in ascertaining the true extent of the plaintiff’s personal injuries, it would not assist in establishing what was known or could have been known at the time the person injury action should have been heard.  The issue, after all, is not what actually was the extent of the personal injuries but what would have appeared to have been the extent of those injuries on the basis of the then known or knowable facts.  Therefore, evidence concerning developments occurring after the supposed judgment is not relevant to an analysis of what the plaintiff has lost as a result of the solicitor’s negligence.

I know that does not directly answer what your Honour Justice Gaudron puts to me but we would submit that it is a close analogy and the very heart of the action, the loss of the chance, is the loss of a right to something which might have occurred some time earlier.

CALLINAN J:   Mr Quick, her Honour Justice Gaudron said something about the need for a valuable chance in paragraph 34 of Naxakis, a decision recently handed down of this Court.  It is in the July Australian Law Journal, report 788 and I said something about it at paragraph 130 of the same report.  You may want to look at that.

MR QUICK:   Thank you, your Honour.  That is all that I wish to say in relation to the reconsideration of Pastoral Finance.

This leads on to the matter of the interaction of the Spencer test and the Pastoral Finance tests, in a case involving assessment of both market value and special value, and this is where I will take the Court to the way in which the Full Court analysed it and dealt with it.  The heart of the no head start case is that it is contrary to Spencer’s Case.  Evidence was given both by Mr Simos and Mr Webster and by an independent expert witness, Mr Davison, that the concept of head start, as put forward, was contrary to Spencer’s Case.  Her Honour discusses this in volume 1 of the appeal books at page 143 – that is his Honour the trial judge.  The passage in the judgment of Justice Branson is at page 143 through to page 145.

It is probably convenient at this stage to deal with the matter of the obviousness of the fact of head start.  At page 143 her Honour quotes two large passages – I am sorry, I will deal with that matter later – from the affidavit of Mr Simos, in which he explains that Spencer’s Case precludes, according to his view of it, the advancement of a head start case.  Her Honour then states the issue, at the top of page 146, the first line:

The issue before me so far as the second and third respondents are concerned, putting to one side the issue of barristers’ immunity, is whether they were negligent in forming the views which they did as to the proper understanding of Spencer’s Case.

Excuse me, if I just pause there, we disagree that that is the correct statement of the issue.

That is, whether in early 1990 competent senior and junior counsel who practised in valuation law could reasonably have held the views expressed by Mr Simos in the above quoted paragraphs from his affidavit, and prepared for and conducted the Land and Environment proceedings for YPC on the basis of those views.

And her Honours findings, having considered the evidence on all that, appears at page 151.

GLEESON CJ:   You said you disagreed with the test in the first complete sentence on page 146; do you disagree with the test in the second complete sentence on page 146?

MR QUICK:   Yes, I do, your Honour; I will explain why a little bit later in dealing with negligence, your Honour.  Her Honour’s conclusion appears at page 151 at the top of the page, commencing at point 10 on the page:

I have considered it appropriate to place reliance principally on the expert evidence –

There is some question about whether that was appropriate and we have dealt with that in our written submissions.

in considering the issue of whether the conduct of the respondents in failing to advise of the existence of, or to propound or cause to be propounded on behalf of YPC before the Land and Environment Court, a head start claim, conformed to the standard of reasonable care –

Her Honour then says:

Having regard principally to the expert evidence, but attaching weight also to my own reading of the authorities, I have formed the view that no negligence has been established against any respondent in connection with the alleged head start claim of YPC.

I find that the views of the law held by Messrs Simos and Webster at the relevant time were views which it was reasonably open to barristers of their respective seniorities experienced in valuation law to hold.

We would submit that her Honour was wrong in that finding, that, in fact, the views held by Mr Simos were not reasonable views to be held.

We submit that for a number of reasons, some of which were developed slightly yesterday, but which appear in our written submissions.  We say that her Honour was wrong because the basis of the opinion which was accepted by her Honour fails to take into account the fundamental requirement of the test in Pastoral Finance and that is, that the hypothetical person to be considered, when one considers special value, is not a vendor but is a purchaser.  One cannot apply the Spencer’s ‑ ‑ ‑

GAUDRON J:   And this is a vendor not willing to sell, is it?

MR QUICK:   Or one could alternatively - it is a purchaser.

GAUDRON J:  Yes.

MR QUICK:   One has either a purchaser, or alternatively, an unwilling vendor.  There has to be one or other of those two, neither of which is the situation in Spencer’s Case.  In fact, they are directly opposite to Spencer’s Case.  To say that Spencer’s Case and Pastoral Finance test ‑ ‑ ‑

GAUDRON J:   But it has to be a purchaser, really, re‑acquiring his own ‑ it either has to be a purchaser in the same position as a vendor, does it not, or a purchaser re‑acquiring his own land?

MR QUICK:   I do not understand what your Honour means by purchaser in the position of a vendor.

GAUDRON J:   Possessed of the information of the vendor.  You had better think about that.  I ask this question because I cannot see how otherwise that test can be applied.

MR QUICK:   Is your Honour referring to the Spencer test or the Pastoral Finance?

GAUDRON J:   Pastoral test.  That is, you would look at a hypothetical purchaser in exactly the same position as the vendor, or you look at a purchaser re‑acquiring his own land.

MR QUICK:   Your Honour, we would submit that, really, you have to do neither of those things; that the way in which the two tests can be satisfied is if they are satisfied independently, but one after the other.  One considers first the Spencer test and applies it.  Market value is then assessed.  It is a figure.  That assessment is a fact.  One then asks the question posed by Pastoral Finance, will someone pay more than the amount specified?

GAUDRON J:   Yes, but will someone with certain characteristics, presumably?

MR QUICK:   Yes, your Honour.

GAUDRON J:   And now I am asking you to direct attention to the characteristics of the hypothetical purchaser in the Pastoral Case.

MR QUICK:   The only thing we know about the characteristics in that case are that it is a person who does not wish to sell or ‑ ‑ ‑

GAUDRON J:   No, we are talking about the purchaser.

MR QUICK:   In Pastoral Finance, the dispossessed owner is the purchaser.

GAUDRON J:   That is right.  So we are talking about a purchaser in precisely the same position as the vendor.  That is to say, presumably, possessed of all the information, et cetera.

MR QUICK:   Your Honour, it is not just a person in the same position.  First of all, we would submit that one cannot postulate a purchaser in the position of a vendor.  They are contradictions.

GAUDRON J:   But you postulate a purchaser reacquiring his/her/its own land.

MR QUICK:   And presumably knows everything about it.

GAUDRON J:   Presumably knows everything about it.

MR QUICK:   But that person is clearly a purchaser or, alternatively, is an unwilling vendor who is going to demand more, if one takes the Justice Kitto approach ‑ ‑ ‑

GAUDRON J:   But there is never any suggestion anywhere that I have read of an unwilling vendor.  The hypothesis at all points is a reasonable and willing vendor.

MR QUICK:   Your Honour, with respect, in Pastoral Finance what is suggested is that there is a person who is so unwilling to part with the land that they are prepared to pay more than market value in order - not to be deprived of it, or if deprived, immediately to reobtain it.  It is a totally different mind structure that is being postulated.  In the one situation, you have someone who is a willing vendor and a not overanxious purchaser, contrary interests facing each other.  In the other case, although you have an exchange situation, you are only considering the position of one party to the exchange.  It is the position of the person who wants to keep the land.

HAYNE J:   Are you considering exchange or are you considering the limits of the will of the dispossessed owner?  How far would the dispossessed owner be prepared to go rather than ‑ ‑ ‑

MR QUICK:   That is a better way of putting it than I have.

HAYNE J:   But you have at once departed from exchange.

MR QUICK:   But the point that I am making, your Honour, is that it is only a one‑person consideration rather than two.

HAYNE J:   Just so.

MR QUICK:   And your Honour takes it out of exchange and puts it in a way which I would adopt as an alternate and, with respect, a better way of putting it than I have.

GLEESON CJ:   Whether he is right or whether he is wrong, which is a matter that ultimately we will have to consider, the essence of what Mr Simos was saying seems to amount to this.  Whatever awkwardness, conceptually, there may have been in precisely relating Spencer’s Case to the Pastoral Finance Case, the moment this head start theory came on to the scene, with its postulate of the purchaser being at a disadvantage compared with the vendor in relation to the development and use of the subject land, you throw quite out of kilter the hypotheses that you are being required by those two cases to make.  What he was saying, rightly or wrongly, is, “I cannot reconcile this head start theory and the postulate of a purchaser at a disadvantage, as compared with the vendor, with the assumptions that Spencer’s Case appears to require me to make”.

MR QUICK:   Your Honour, I think I respectfully agree that that was the way in which he was analysing the situation.  I should draw attention to the fact that that is not the view – that process is not the reasoning that he said he adopted before the Court of Appeal decision.  His evidence was he never considered the head start component, he never considered Baringa because ‑ ‑ ‑

GLEESON CJ:   What he was saying is “My approach to this case based on Spencer is irreconcilable with this head start theory”. 

MR QUICK:   He says, “I never thought about head start because of the view that I took of Spencer”, which is slightly different, your Honour.

GLEESON CJ:   What he says is at the bottom of page 143 and the top of page 144.  Now, you are at a point in your argument where you are seeking to demonstrate to us that he was wrong.  Where is the error in what he says at 143 and 144?

MR QUICK:   The error is that he takes no account of Pastoral Finance and that it is possible – I am sorry, I put that too hastily.  There are a series of errors in it.  First of all, it requires of Spencer’s Case assumptions which do not fit the situation which is postulated in Spencer’s Case.  The situation when one is dealing with the special value assessment is not the factual situation envisaged in Spencer’s Case.  Secondly, it does not fit with the words used in Spencer’s Case, but it does fit if one transposes the situation from a vendor to a purchaser with the words used in Pastoral Finance.

GLEESON CJ:   Let us test that by one particular aspect of the head start case.  One aspect of the head start case as explained by the Full Court, as I understand it, is that Yates had the advantage over the hypothetical purchaser of having a list of names of prospective stallholders, whereas the hypothetical purchaser would have to start from scratch and find some prospective stallholders.

MR QUICK:   Is your Honour talking about the Court of Appeal or the Full Court?

GLEESON CJ:   Let me just talk about your submissions.

MR QUICK:   I beg your pardon, your Honour, I thought ‑ ‑ ‑

GLEESON CJ:   That is one aspect of the head start case, it is not?

MR QUICK:   It is not an aspect that we were advancing in these proceedings, your Honour.

GLEESON CJ:   Is it now an aspect of the head start case?

MR QUICK:   In so far as it might cause some delay for someone else to go and get that information, it is because it affects time.

GLEESON CJ:   Very well.  Now, let us test the head start theory by reference to that concrete proposition.  How is it consistent with the assumptions required to be made by Spencer and referred to in the middle of page 144 at lines 23 to 25 that you assume that that information is not available to the purchaser, but that the purchaser has to start again from scratch and develop the information?

MR QUICK:   Your Honour, that inconsistent with the concession I have made in relation to the facts.  It is not that the information is available.  The information available is irrelevant to the head start, it is the time taken to use the information that is relevant to the head start.  One can have a total equality of knowledge in relation to the names.  One person has a relationship with the people, can enforce the contract straight away but the other does not, will have to go and see them and that will take time.  That is the part.

GLEESON CJ:   Do you support that part of the judgment of Mr Justice Handley in the Court of Appeal where he referred to the Western Australia Stamp Duty Case?  Do you know what I mean by that?

MR QUICK:   Yes, I do know what you mean, your Honour.

GLEESON CJ:   Do you support that part of his reasoning?

MR QUICK:   I think I have to say “No”.  In so far as the way in which his Honour ‑ ‑ ‑

GLEESON CJ:   What is the flaw in his reasoning?  Everybody seems to agree, now, that it is wrong?  What do you say is wrong with it?

MR QUICK:   It is wrong because it applies Spencer’s Case in the situation which does not require it.  Spencer’s Case has no application at all, in our submission, in relation to the assessment of the very complex factual situation of what was the dispossessed owner prepared to pay, acting prudently, rather than being dispossessed of the land?  Now, that does not call for application of the Spencer test, and, in fact, the way in which we have submitted the two can be put together in the way in which we have submitted it in paragraph 15(c) of our submissions on page on page 5.

GLEESON CJ:   Just so that we can be precise as to that part of the reasoning of Justice Handley to which you and I were both referring, could you go to the judgment in the Court of Appeal in 24 NSWLR, or at volume 2 of the appeal books in the present case.  At 376 between letters D and E do you support that part of the reasoning of Justice Handley?

MR QUICK:   No, I do not, your Honour.  Where his Honour says:

While Spencer’s cases requires the assumption to be made that the hypothetical purchaser is aware of the information in those documents, it does not require further assumptions that the purchaser can remember it all or…..If the documents recording this information would be of value to a purchaser, they would also be of value to the owner.  In such a case because the owner does not either have to purchase the documents, or repeat the work, the land may be worth more to him than to anyone else.

GLEESON CJ:   So, we can take it that it is common ground in this appeal that what Justice Handley said there is wrong?

MR QUICK:   Only to this extent, your Honour, his Honour seems to be continuing on the application of Spencer’s Case whilst there is consideration of a special value aspect of the matter.  Where we depart from what Justice Handley said is by saying that Spencer’s Case needed to be considered at all.  What his Honour says there is not unhelpful to my cause – to the cause I am advocating – but it does seem to say that his Honour accepts that the Spencer’s Case assumptions continue to apply when one is dealing with special value.  It is that with which we disagree.

GLEESON CJ:   Is it still part of the head start theory that one of the advantages that Yates had over a hypothetical purchaser is that Yates had those documents and the hypothetical purchaser would not have them?

MR QUICK:   No, it is unnecessary for that to be part of the case; that is not part of our case.  He could have the documents, he could not have the documents; the only thing that is important is time.  There would be an advantage if he had the documents by his familiarity with them, familiarity with the people.  If he did not have the documents, the advantage would be bigger but it is still the same advantage.  Spencer’s Case, we submit, does not apply in either of those situations.

GAUDRON J:   Now, question how is time an attribute of the land?  I thought it was agreed on all sides there had to be something special about the land.

MR QUICK:   It is time in relation to the use of the land, your Honour, and it is that concept on which there was full agreement in the Court of Appeal in New South Wales.  All three judges were of the same view, that there could be something arising from time, and it is time in relation to the turning of the land to an income‑producing state.  That is what it is about, not just time itself.  Time is money because, if one can turn the land to income producing in a shorter time than someone else, the land is more profitable to the person who could do it in the shorter time than in the longer time.

GLEESON CJ:   Is it your submission that the manner in which that subject was addressed in Kennedy Street was correct?

MR QUICK:   Your Honour, it is not incorrect, it is just different.  In Baringa the same test ‑ ‑ ‑

GLEESON CJ:   Let us just look at Kennedy Street.  I want to understand whether your submission is that what was said in Kennedy Street was right or wrong.  Now, what was the approach taken in Kennedy Street to the matter that we are now discussing?

MR QUICK:   Kennedy Street was a case in which the trial judge decided that here was vacant land being developed for the purpose of resale.  Expropriation of the land prevented it happening.  There was a certain amount of time which would have been required for that to be done on some other site.  Allowance was made for special value, including the time taken to acquire that other site.

GLEESON CJ:   Now, was that allowance made on the basis of disturbance or was it made on the basis of some theory of head start?

MR QUICK:   The reasons do not make it clear, your Honour.,

GLEESON CJ:   Do they refer to head start?

MR QUICK:   No, they do not.

GLEESON CJ:   Do they refer to disturbance?

MR QUICK:   No they do not, but they do refer to time-related advantage, and head start is just another way of saying that; there is nothing magical about the word.  It just so happens to be a nice word that Justice Handley decided to use in respect of a time-related advantage.

GLEESON CJ:   Well, we know that Kennedy Street was relied on in argument at first instance on the first occasion before Justice Cripps.

MR QUICK:   In an impermissible way, we would submit.

GLEESON CJ:   What was impermissible about that?

MR QUICK:   It was relied upon in support of the argument that one was entitled to the cost of the alternate site, whereas what Kennedy Street allowed for was the time delay or the lost time advantage in relation to the need for an alternative site.

GLEESON CJ:   Are you not confusing between the way Kennedy Street was relied upon on the second occasion before Justice Cripps and the way it was relied on on the first occasion?

MR QUICK:   Yes, your Honour, there are differences in the two ways in which it was relied upon.

GLEESON CJ:   Let us just concentrate for the moment on the reliance placed on Kennedy Street by Justice Cripps on the first occasion.

MR QUICK:   I am just trying to think what that was.  It is at page 325.  Firstly, it was relied upon by counsel for YPC as a starting point for the alternate site theory.  That is really what they relied on Kennedy Street for, as a case – we would say, not authorised by Kennedy Street, but they relied upon it as the basis of the alternate site approach and Justice Cripps said at page – of the reported decision, that is, (1990) 70 LTRA 187 at 200, reported in our books at 325 in volume 2.  I am reading from point 33 on that page:

It appeared to be submitted by the Authority that, properly understood, the principle enunciated in Pastoral Finance could have no application to vacant land or, if it could, it could have no application to vacant land where the dispossessed owner was not carrying on a business elsewhere –

reference to Savage’s Case –

Although it is true that many of the High Court cases cited by Mr Gyles were concerned with existing buildings on land, I do not think his proposition is consistent with authority:  see, eg, Kennedy Street –

So, the case is used for the purpose of rejecting the proposition that it is only vacant land that can be the basis of an application for special value – the Pastoral Finance principle.  So that, whereas the authority was saying Pastoral Finance can have no application to vacant land, that is inconsistent with later authority including Kennedy Street.  So, that was what it was used for at first instance by Justice Cripps, but on remitter ‑ ‑ ‑

HAYNE J:   Just before you come to remitter, can I understand something about the course of proceedings before Justice Cripps.  If you go to page 326 of the appeal book you see, at about line 35, his Honour referring to special value to Yates.  At about line 40, his Honour deals with Mr Parkinson’s assessment of that, and puts it to one side.  He rejects it.  If we come then to 327, his Honour deals with the evidence of Mr Dimasi.  Mr Dimasi was called on behalf of which party?

MR QUICK:   Yates.

HAYNE J:   Did Mr Dimasi put forward an estimate of likely cash flows to be obtained had the resumed land been turned to use as a market, including, in particular, hypotheses about when that cash flow would come home?

MR QUICK:   Your Honour, I would have to have that checked.

HAYNE J:   In particular, did he make assumptions about when Yates, with whatever advantages it had, would have expected to have had income flowing to it from the development of the resumed land, and if he did make those assumptions, whether they were accepted or no; does not that evidence constitute evidence put on behalf of Yates about its position with whatever advantages or disadvantages it had?

MR QUICK:   Your Honour, I will have the matter checked, but I am confident that Mr Dimasi did not give that type of evidence, because he was not that kind of expert.  He was an expert in running shopping centres and markets, not an expert in developing projects from vacant land through to the existence of a market.

HAYNE J:   And took no account of the time value of money by determining when this income stream would come on.

MR QUICK:   Your Honour, he did not give any valuation evidence at all.  He provided that ‑ ‑ ‑

HAYNE J:   I am not asking about that.  Did Mr Dimasi’s opinion take account of when this money would come in, if the land were developed by Yates?

MR QUICK:   Your Honour, I will have that checked, but it is highly unlikely.  The income streams, and the commencement of the income streams, were the subject of assumptions made by Mr Parkinson, Mr Woodley and Mr Egan, using the income forecasts, from whenever they would start, supplied by Mr Dimasi.  Those forecasts were in turn rejected by Justice Cripps as being ‑ ‑ ‑

HAYNE J:   It would be interesting to know whether then Dimasi was talking in dollars of the day, dollars of the future or what.

MR QUICK:   Probably discounted back to the dollars of the day.

HAYNE J:   But just so, discounted back over what time?

MR QUICK:   But your Honour, that is a different matter from saying that, even if he concluded from day one, or day 50, or whatever it is, it is a different matter from saying that he gave some evidence of the time required to bring the markets to a conclusion.  I am confident that if he gave evidence of that kind, it should have been rejected because he was not expert in that – nothing to do with building construction.  He was actually an operator who could talk about profits.  His evidence would have been weightless and should not – I am sorry.  I respectfully submit that his evidence ought not to have been accepted in that respect, even if it was given.  I am confident that it was not, but I will have that checked.

The way in which we submit that the Court is able to apply both Spencer and Pastoral Finance is set out on page 5 of our submission in paragraph 15(c).  Our submission is that the way in which to assess in a special value case a way which gives full application to the Spencer test and to the Pastoral Finance test and involves no conflict between them is the way set out in that paragraph.  The first step is, make the Spencer assumptions and assess the market value.  That assessment becomes a fact, a monetary amount is fixed, and that is the market value.  One then ceases to make the assumptions that underlie it, they are no longer important. 

GLEESON CJ:   It is one thing to cease to make them, it is another thing to depart from them.Now, in making your assumptions pursuant to Spencer’s Case about the market value of the land, you are assuming that it is going to be used for its highest and best use, and Mr Parkinson was assuming that it would be developed within six months.  Are you suggesting that when you come to make your assumptions for the purpose of special value you then make a different assumption about that matter?

MR QUICK:   No, I am not suggesting that at all.  What I am suggesting is that the whole thing is theoretical because one is dealing with what would happen if the resumption had not occurred.  Now, in the first situation, one must make assumptions which did not take place because the resumption occurs.  Those assumptions are of the kind made in Spencer’s Case.  We would submit not only is it permissible then to say that those assumptions cease to apply, but it is also permissible to say that one can then assume something different for another purpose.

GLEESON CJ:   Something inconsistent.

MR QUICK:   They certainly are inconsistent, I agree.  But the gravamen of that is not as it might otherwise seem, because the whole thing is a construct.  It is not as if one is saying we make this finding of fact and now we make a contrary finding of fact.  What we say is we make this assumption for the purpose of determining what everyone else out there in the market will pay, but that is not an assumption that needs to be used or should be used when one is thinking about what someone else will require.

GLEESON CJ:   But if you have the benefit of a particular assumption for the purpose of assessing market value, you surely cannot pay an inconsistent assumption for the purpose of assessing special value.

MR QUICK:   Your Honour, we would say that it is a burden, rather than a benefit, the application of the Spencer test, in some respects.  It gives us benefit in some way, but in other ways it provides us with a burden - produces a burden.

GLEESON CJ:   When Mr Simos in his evidence said “I think it would be inconsistent with Spencer’s Case to make this assumption about head start”, that is only another way of saying, is it not, the head start theory now being propounded involves making an assumption inconsistent with an assumption that I made in putting my market value argument?

MR QUICK:   I agree with that, your Honour.

GAUDRON J:   And would you agree it was not only inconsistent but one which if put had a tendency to undermine the value, the market value that would be given to the land, ascribed to the land?

MR QUICK:   Only to the extent that any alternative case does that.  For example, we would submit that the second situation could have been put in the alternative and should have been put because the risk of doing what was done was so high that it had a very high prospect of being rejected and in those circumstances there would be virtually nothing left of the special value case.  The question of choice as to whether to put it depends upon how good was the case which was otherwise going to be put forward.

GLEESON CJ:   In either Pastoral or Kennedy or Baringa or Arkaba or in any case in which there has been a successful claim for special value, has that claim been based upon an assumption inconsistent with an assumption that was made in the same case for purposes of assessing market value?

MR QUICK:   I think it has.  That is the inescapable conclusion of what occurred in Baringa.

GLEESON CJ:   Perhaps we should have a look at Baringa.  Is Baringa the only case in which that has ever happened?

MR QUICK:   Baringa directly and, by analogy, Kennedy Street, where time-related advantage is taken into account ‑ ‑ ‑

GLEESON CJ:   Just making it clear, I am asking you whether in any of these cases the assumption that has been made in relation to special value is inconsistent with the very assumption that has been made in the same case in relation to market value.

MR QUICK:   Your Honour, that is the inescapable conclusion from what occurs in Baringa.  It is not stated in those terms, but it has to be.

GLEESON CJ:   Is there any other case to which you can point in which that has occurred?

MR QUICK:   In relation to an alternate site theory, Kennedy Street.  It is the same thing but in relation to a different block of land.

GLEESON CJ:   So that the special value case was in tension with the market value case?

MR QUICK:   Yes, in both of those cases.

GLEESON CJ:   Let us have a look at Baringa so you can demonstrate that.

MR QUICK:   The relevant passages are – Baringa is (1965) 15 LGRA 201 and the relevant passage is 205. The facts in that case involved a piece of land at Manly on which there was already constructed – do I need to go through the facts? My learned friend Mr Macfarlan went through them.

GLEESON CJ:   Exactly.

MR QUICK:   If the Court does not require that to be done, if I could just take the Court to the relevant passage on page 205.

GLEESON CJ:   What I want you to do is point out to us the inconsistency between the special value case and the market value case.

MR QUICK:   In this case the award includes, we would submit, an award for what is stated at the top of page 205 in the fifth line:

The plaintiff company could also have undertaken a project of that type with less waiting and preparatory time; thus the plaintiff company would have had an advantage over other purchasers, in that it would not have had to bear so much by way of carrying costs; also it would have had some benefit –

and so on.  Now, to put that in practice, that runs directly in conflict with Spencer.

GLEESON CJ:   Baringa was a case in which the owner was in a special position as compared with anybody else because there had been a change in development policy by the counsel, but for a reason that is not completely clear but seems to have been accepted.  The owner could have expected, because he had his foot in the door, as it were, to have been treated more favourably than anybody else by the council.

MR QUICK:   That was a factor, we agree.

GLEESON CJ:   So we start off with the proposition that it was legitimate in that case to talk of an advantage.  The advantage was not one that was being hypothesised; the advantage was the inevitable consequence of an objective fact.  The owner was better off than anybody else not by hypothesis, but as a fact.

MR QUICK:   Yes, your Honour.  We would submit that there is an additional factor as well.  It is the additional factor that makes the difference, not the fact that your Honour mentions.

GLEESON CJ:   What is that?

MR QUICK:   The additional factor is, as his Honour found, that it was more profitable for the owner by reason of less waiting time and therefore less holding costs; the very thing that we have been speaking about.  It was more profitable for that person than anyone else.

GLEESON CJ:   But the reason why there was less waiting time and less holding cost resulted from the fact that I have earlier mentioned, did it not?  It resulted from the fact that the owner had the benefit of a certain approval which could not be passed on to anybody else.

MR QUICK:   Your Honour, I do not think that can be assumed from what his Honour says in the judgment.  He says:

The plaintiff company could also have undertaken a project of that type with less waiting and preparatory time ‑ ‑ ‑

GLEESON CJ:   But why?

MR QUICK:   The way in which Mr Jackson put it in his written submissions to the Court - he had had a trial run.

GLEESON CJ:   Can I direct your attention to the fourth line in the right‑hand column on page 205?

MR QUICK:   I am sorry, I have a ‑ ‑ ‑

GLEESON CJ:   I am sorry, we might be looking at a different print.

MR QUICK:   Thank you, I now have it, your Honour.  I am sorry, could your Honour give me the text, please?

GLEESON CJ:   Yes, “The plaintiff company as at the date of resumption”, et cetera.  Do you see that?  It is the first complete sentence on that page.

MR QUICK:   Yes, your Honour.

GLEESON CJ:   “Was reasonable entitled to take a certain view” – now, that was because of some kind of council policy, was it not, that, as I understood it, gave people who already had or had previously obtained approval ‑ ‑ ‑

MR QUICK:   That sentence – I think that is correct, your Honour.  I agree, it is correct.

GLEESON CJ:   Now, what, if any, relationship is there between that proposition and the rest of the facts recited in the same paragraph?

MR QUICK:   They could be interrelated but, for the purpose of our argument, makes no difference because it is the fact of time by reason of – or the time‑related advantage by comparison with anyone else.  It matters not whether it derives out of an association with the council or it derives with an association with the development plan.  It is still time;  it still saves money.

GAUDRON J:   But I think the point there is, one is not hypothesising a purchaser who would have taken longer, one is dealing with a fact that this purchaser was in an immediate position, that the owner was immediately in a position to do things.

MR QUICK:   That is precisely our case, your Honour, that we were, by reason of ‑ ‑ ‑

GAUDRON J:   But, and the fact that, not a hypothesised consideration, the fact that a purchaser would not be.

MR QUICK:   That is precisely what our case is.

GLEESON CJ:   It is summed up, is it not, in the sentence in the following paragraph, about the middle of the page where his Honour said:

I am also of opinion that the plaintiff company would have been reasonably entitled to conclude that it could have obtained building approval for a type of development better than and more extensive and more profitable than could have been obtained by a new owner.

That is the essence of the case, is it not, that for a particular reason relating to a change in council policy, the use that the vendor could reasonably be expected to make of the land was different from the use that anybody else could make of it?

MR QUICK:   Your Honour, we do not read the case in that way.  First, it is a factor but not the only factor.  The sentence begins with the words:

I am also of opinion –

The following sentence commences with:

Looking at the matter from all aspects –

So that our submission is that his Honour in that sentence that your Honour refers to me refers to one of the factors, but there are others and one of them is plainly a time-related factor of the kind to which her Honour Justice Gaudron puts, namely, the real fact that this owner has an advantage in relation to this land ‑ ‑ ‑

GAUDRON J:   Because of something directly bearing upon an attribute of the land.

MR QUICK:   And we would submit that that is exactly what occurred in Yates’ case.  He was the owner who had commenced to develop the land, had done all sorts of ‑ ‑ ‑

GAUDRON J:   But what is the equivalent factor in this case to the change in council policy?

MR QUICK:   There is no equivalent to that factor but ‑ ‑ ‑

GAUDRON J:   Well, what is the attribute of the land?

MR QUICK:   The attribute of the land that is – it is the plaintiff’s familiarity with the land and its capacity to do something.  It knows the land and the buildings on it, it knows how it can be exploited, within the use that is the highest and best use how best to do it so that it becomes more profitable, by bringing it on more quickly.

GAUDRON J:   What you are seeking, if you put the matter that way, is compensation for the inability to put knowledge to use, not value which attaches by reason of some attribute of the land.

MR QUICK:   Your Honour, we would submit that it is precisely the same.  Here is the relationship between the developer and the council.  That is as much an attribute of the land ‑ ‑ ‑

GAUDRON J:   No, it was not, it was a right in one person, or the probability of a right in one person, to use the land in a particular way that would not inhere in another purchaser.

MR QUICK:   That may be so in respect of the type of development but does not explain the passage where Justice Hardie talks about “and with less waiting time”.  That has to be in connection with the development itself.

GAUDRON J:   Because he has already got a development approval which will not pass to another purchaser.

MR QUICK:   But it is not a development approval which it is intending to use.  The postulation is that it will get a different development there – a different development.

GAUDRON J:   Building.

MR QUICK:   Yes.  I am reminded that the building approval had actually lapsed in that case.  It was going to do something different but it was going to be able to do the something different differently from everyone else in two respects. One, it had a chance of getting a better building approval, but apart from that, and in addition to that, with less waiting time.  That is what made it more profitable, or one of the factors which made it more profitable.

In our submission, one cannot give those words in relation to ‑ the words dealing with less waiting and preparatory time, any different meaning from the situation in relation to the Yates Case.  They are talking about waiting and preparatory time in getting something through to conclusion.  That is what we are talking about too.  That is why we say this case is inconsistent with the assumptions suggested in Spencer’s Case.

GUMMOW J:   But it still had a current development consent.

MR QUICK:   Yes, your Honour.  They were not proposing to continue to develop in accordance with it.  It was going to be different.

GLEESON CJ:   In Falconer, Baringa was cited at page 573 of (1981) 1 NSWLR, you will find it behind tab 11 in this folder that Mr Macfarlan handed up.  Baringa was cited by Mr Justice Mahoney in conjunction with Kennedy Street as an example of a case in which:

The owner’s efforts have, for example, made it more likely that he will obtain particular building permits in respect of the land –

MR QUICK:   I am sorry, your Honour, which page was your Honour on?

GLEESON CJ:   Page 573.

MR QUICK:   Thank you, your Honour.

GLEESON CJ:   Before Mr Justice Handley’s judgment, was Baringa ever cited by any judge or any author of a textbook as authority for a head start proposition?

MR QUICK:   Not that we are aware of, your Honour.  As far as we are aware, no, your Honour.

GLEESON CJ:   And it was referred to in Mr Fricke’s book, behind tab 12, footnote 29 on page 32, as a case about:

Land in the process of redevelopment for flats and shops where the claimant’s chances of obtaining a renewed building approval were better than those of a prospective purchaser.

MR QUICK:   Yes, your Honour.  Your Honour, the author, we would submit, has overlooked that part of Justice Hardie’s judgment dealing with time related advantage rendering something more profitable.

GLEESON CJ:   Is it the case that until Mr Justice Handley’s judgment, judges and commentators who had directed their attention to Baringa had uniformly treated it as a case turning upon the circumstance that the claimant had a better chance of getting a certain approval from the council than anybody else?

MR QUICK:   Your Honour, I cannot say whether they have uniformly done that.  Some of them do, but none of them advanced it the way that we have now put it.

GLEESON CJ:   No.

GAUDRON J:   And you put it in disjunction from the building permit, or the development approval.

MR QUICK:   No, your Honour, I put it in conjunction.  There are two things that enabled the ‑ ‑ ‑

GAUDRON J:   You put it in conjunction with a development approval and the possibility of building approval superior to that which a purchaser could obtain.  You put it in disjunction from that.

MR QUICK:   Your Honour, the unity of the two things comes in the word “profit”.  The profit comes from two sources:  one is the profit in relation to being able to have a better development by reason of the relationship with the council and by reason of the previous permits; the second is the profitability arising from being able to get an income stream sooner with less holding cost ‑ ‑ ‑

GAUDRON J:   Simply because of ownership, that is to say, disjoined from the permits obtained and likely to be obtained.  You centre it strictly on ownership, do you? 

MR QUICK:   No, your Honour, it is definitely not on the permits that have been obtained because they are not going to be used.  It is on the relationship with the council or the planning authority together with the time-related advantage of knowing the block, knowing what they want, what is required and so on.

GAUDRON J:   So it is something peculiar to the owner which is disjoined from any particular attribute of the land, as you put it.

MR QUICK:   Your Honour, we would submit that that is part of it.  It is the owner’s capacity to use whatever attributes are there for its own economic advantage.  In the same way - for example, in the agricultural example it is the fact that the owner has extra land which can be used in conjunction with it.  That does not attach to the particular land in any different way either.  It is the owner’s capacity to use it for economic advantage.  Sorry, I did not mean to put it quite so strongly, your Honour.

GAUDRON J:   I think I understand it.

CALLINAN J:   Mr Quick, what do you mean “relationship with the council”?  Council officers are officials, they are bound to deal with people on a proper basis, not on some preferential basis to some people or others.  If you comply with the planning by-laws and the building by-laws, you have proper plans and you have approvals.  You are not getting to get preferential treatment because you know a couple of councillors or you have been dealing with the shire or city engineer or something, are you?

MR QUICK:   Your Honour, I am not attempting to defame the council ‑ ‑ ‑

CALLINAN J:   No, but that was what you said.  You said “relationship with the council”, and I do not understand that.

MR QUICK:   Your Honour, there is a perfectly legitimate relationship that they would still have advantage.

CALLINAN J:   Well, how does it give them an advantage?

MR QUICK:   In the sense that, having given a building Act approval – a development Act approval of a particular kind, the council then changing its regulations generally, and not granting ‑ ‑ ‑

CALLINAN J:   That is a different thing from relationship.  This is nothing to do with relationship that the council has changed its regulations.

MR QUICK:   Perhaps, your Honour, allow me to please explain the circumstances and then the relationship will evolve out of that.  First of all, there is a development approval given.  It lapses through bad luck, if you like, because finance is not available, time runs out and, meanwhile, the council changes its planning policy.  There is a relationship existing there where they may well think, having given the approval to this developer for this block of land, even though we have changed our policy, we should not change that in relation to this block because of what we have already done and because it is really through no fault of anyone that it has not gone ahead.

CALLINAN J:   But the Act provides for that, does it not?  The Act simply says that your permit is good for two years, it cannot be changed – I think it is section 79, is it not, of the relevant legislation?  I think it is, and your permit is good for two years and if you have not acted upon it in that time, then you lose it.  Use it or lose it.

MR QUICK:   That may be the strict position in relation to the ‑ ‑ ‑

CALLINAN J:   It is the legal position, as I understand it.

MR QUICK:   No doubt it is, but there is absolutely nothing wrong with the council saying that in relation to a future application for the same site by the same party, one having lapsed, “If they make application for another one, we will give them one in the same terms”.

CALLINAN J:   It depends whether they have a discretion to do so or whether they are bound to require somebody to comply with the changed laws.

MR QUICK:   That is my point, your Honour.

CALLINAN J:   Is there any evidence that the law has changed here?

MR QUICK:   In relation to Baringa?

CALLINAN J:   No, in relation to this case, because I know that there is a reference to it ‑ ‑ ‑

MR QUICK:   No, the head start is not based upon any relationship with the council, but your Honour is putting to me that there might be something improper in suggesting that in Baringa the judge took into account the relationship with the council.  I am submitting that there is a matter of discretion, it was perfectly valid for them to take into account we have had a development application for this particular site by this particular person, it has been approved, we should not now change it.  That would be perfectly valid.

CALLINAN J:   But in Baringa the application just could not be implemented by the plaintiff because he did not have the money.

MR QUICK:   They ran out of money.

CALLINAN J:   And he had to apply for a different one and a smaller one; it was going to be an entirely different development.  He would have had to have submitted new plans, it was a new proposal entirely.  That is another reason why I frankly have some difficulty with Baringa on its facts.

MR QUICK:   There must have been evidence before Mr Justice Hardie for his Honour to say, this particular owner would get a better development approval from the council in the exercise of their discretion because of their previous relationship.

CALLINAN J:   Well it might have helped if he had revealed or summarised the nature of that evidence.

MR QUICK:   Your Honour, I do not think it is in the report.

CALLINAN J:   No, it is not; that is what I am saying.  Not you, it was not a criticism of you.  I am sorry, no, please do not understand me, Mr Quick, I meant Mr Justice Hardie.

MR QUICK:   I am grateful for that, your Honour.

CALLINAN J:   I find the decision somewhat inscrutable for that sort of reason.

MR QUICK:   It is a difficulty but ‑ ‑ ‑

CALLINAN J:   I am not criticising you, please do not misunderstand me.

MR QUICK:   Thank you, your Honour.  That is really all I have to say about Baringa; that is the basis of the inconsistency.  Now, by analogy, we submit that Kennedy Street supports that.  It does not support it directly in the sense of it being the same site approach but in Kennedy Street Justice Hardie there makes allowance for the delay in bringing to fruition a stream of income and, this time, in relation to an alternate block rather than the same piece of land, and it is vacant land in that case.  So that by analogy we would say, here is one case directly contrary to Spencer; here is another case that, by analogy, is contrary to Spencer.

GUMMOW J:   They could not be.  They are bound by Spencer.  It is not for Mr Justice Hardie to decide cases inconsistently with Spencer and for someone to be bound to follow up what Mr Justice Hardie said. 

MR QUICK:   I am sorry, I am not suggesting that that was not open to Justice Hardie.  What I am suggesting is that on the view of Spencer’s Case adopted by Mr Simos, there is an inconsistency with the decisions of Justice Hardie.  We are submitting that what Justice Hardie did was correct because our view of Spencer is different from that proposed by Mr Simos.

May it please the Court, I propose now to go on to the matter of the way in which the Full Court dealt with the tension that is said to exist between Spencer and Pastoral Finance.  The relevant parts of the judgment are in the second appeal book at page 248.  At the foot of page 248 the Full Court, first of all, describes how the case is put by the two sides.

GUMMOW J:   Yes, well, that was read to us yesterday.  Line 35?

MR QUICK:   Line 35, yes.

GUMMOW J:   Yes.

MR QUICK:   I will not read it again.  I would like to draw attention, however, to certain features of the next two paragraphs:

The respondents sought to meet this case by disputing that the advantage –

I will not read that.  Then:

Their case was that Spencer’s Case required it to be hypothesised that the hypothetical purchaser should be deemed to have available to him all of the knowledge –

in relation to the resumed land, and they then state the case.  It is then the next paragraph that becomes very important:

It will be apparent that both sides proceeded on the assumption that if Yates was in a position to develop the market immediately by reason of the work undertaken before its land had been resumed, that resulted in an advantage that was of economic value and for which it was entitled to receive compensation.

So, he is talking about the fact.  Both sides proceeded on the basis that if Yates was in a position to immediately proceed then that would give it an economic advantage.

Indeed Mr Simos said in evidence that it was “obvious” that an ordinary hypothetical purchaser who intended to develop the resumed land immediately after purchase in accordance with the existing development approval and building approval would pay a higher price for the land.

GLEESON CJ:   Now, why I have trouble in understanding is why the second sentence is regarded as an explication of the first sentence?  Why is what Mr Simos said in evidence an indication that both sides proceeded on a certain assumption?

MR QUICK:   Your Honour, it is clear that Yates proceeded on the assumption that if Yates was in a position to proceed immediately, it had an economic advantage.  That was its whole case.

GLEESON CJ:   There may be a confusion between the word “advantage” and the word “benefit”.  What was being resisted, as I understand it, by Mr Simos was the suggestion that that was a benefit that was unavailable to the purchaser.  The conclusion expressed in the first sentence of that paragraph just does not follow from the premise expressed in the second sentence, does it?

MR QUICK:   I do not think it is put in that way at all, that the ‑ ‑ ‑

GLEESON CJ:   The word “indeed”, as I understand it, is used as an introduction to the second sentence by way of demonstration of the validity of the proposition in the first sentence.

MR QUICK:   No, your Honour, we disagree with that.  We would respectfully say that it is an explanation of part of what is said in the earlier sentence and it is an explanation of that part of what is said which applies to Mr Simos, but not in relation to that part of it which deals with Yates.  In fact, it would be contradictory of the first part of the sentence if it were to apply to both.

GLEESON CJ:   If the first sentence is intended to mean that Yates before Justice Cripps proceeded on the assumption that this was an advantage which it had over any hypothetical purchaser, then that is inconsistent with the proposition that the head start case was not put before Justice Cripps.

MR QUICK:   Your Honour, with respect, it might be inconsistent with what is put before Justice Cripps, but his Honour here is talking about the case that is put before Justice Branson.  I am sorry, I should have made that clear.  This passage of the judgment deals with the way in which the present case is put before Justice Branson and his Honour says, and it is inconsistent with what was done before Justice Cripps.  That is the very source of our complaint.  What the Full Court is saying in this paragraph is that before this court, both sides proceeded on the basis that there was economic advantage, and this is correct, we certainly did; and in relation to Simos, he says:

Indeed Mr Simos said in evidence that it was “obvious” that an ordinary hypothetical purchaser –

and then he goes on an finishes off, so that both – and I will demonstrate that what is said there to be obvious is, in fact, the case.  I will refer to the evidence.  There are three separate sources where Mr Simos has spoken, or two where he has used the word “obvious” and one where what is said is said with such force that it could only have been said by someone contending that it was obvious.  The first of those passages is in the affidavit of Mr Simos, in volume 12 at page 3112, which commences at page 3112.  It is the very affidav
it where those two large chunks of Mr Simos’ evidence are taken from the affidavit and used by Justice Branson in her Honour’s reasons.

Rather than to take the Court all the way through the affidavit, it is quite a lengthy affidavit, Mr Simos talks about the factual situation of there being some advantage.  He does that in paragraph 22.  He then talks about Spencer’s Case in paragraph 23.  Then, in paragraph 24, we have the critical passage.  He says:

Even if it were permissible, contrary to my opinion, to hypothesise –

we question that:

that there were ordinary hypothetical purchasers in the market who would delay for 598 days in commencing development of the land, it would also have to be hypothesised that there were other hypothetical purchasers in the market who were interested in purchasing the resumed land on the basis that they intended to develop the land immediately after the purchase in accordance with the existing DA and BA.

If I could just pause there.  His Honour has taken both extremes.  He says, on the one hand, if you can hypothesise someone who is going to start from scratch and repeat everything, 598 days, on the other end, you can hypothesise someone who is going to pick up the BA and DA and start immediately.

Mr Simos then goes on:

Indeed, in my opinion, then and now, this is what Spencer’s Case requires.  It is obvious that an ordinary hypothetical purchaser in the latter category would pay a higher price for the land than an ordinary hypothetical purchaser in the former category, and that it is that higher price which will reflect the true market value of the land.

And that is precisely the point made by the Full Court at page 249, to which I have referred.

GAUDRON J:   But the Full Court does not go on to add that it is that higher price which will reflect a true market value of the land; that is the difference.  Now could I ask you one question:  is it the necessary consequence of your case that in every case where an owner has taken some step towards the development of land, he, she or it is entitled to receive special value?

MR QUICK:   No, it is not my case.

GAUDRON J:   Well, what distinguishes it?

MR QUICK:   It will all depend upon the circumstances but, for example, take the situation in Horn’s Case.

GAUDRON J:   Why does not every person who has taken a step towards the development of land have a time advantage, on your argument?  What is it that takes people out of the time advantage category?

MR QUICK:   First of all, the development must be for the highest and best use.  So, if it is done for something other than that, it may not give them any advantage at all.  It would take them beyond market value.

GAUDRON J:   Why does highest and best use bring about an advantage?  Do you say there is something else as well?

MR QUICK:   I am saying, first of all, you would leave out all of those cases where the development is not for the highest and best use, those cases ‑ ‑ ‑

GAUDRON J:   Well, in every case where development is for the highest and best use, what falls on one side of the line and what falls on the other?

MR QUICK:   First of all, what has to be done has to be done prudently, it has to be of economic advantage.  After that it is a question of quantum.

GAUDRON J:   You say then, assuming the steps taken have been, we will say reasonable, and in the normal course they would be productive of economic benefit, you say in every case that attracts special value over and above market value.

MR QUICK:   Yes, provided it is a development for the highest and best use.  Yes, I do, but there is support for that in the decision of the Court of Appeal in this very case.

CALLINAN J:   Do you say that even if what has been done is of equal utility to any purchaser?

MR QUICK:   Yes, your Honour, but it can either be market value or special value, but if it is of benefit, then a purchaser who can come along and use it immediately will say, in the same way as Justice Latham suggests in Reeve’s Case, the person who owns this is not going to give it up just for some market value assessed on comparable sales.  They are going to want some value for what they have done.  I am going to have to pay more.

GLEESON CJ:   Why is that an attribute of the land?  I understand how it is a feature of the owner’s business.

MR QUICK:   Your Honour, that is actually discussed in Reeve’s Case where the Court says that the Commonwealth has to pay, not for acquiring the business, but for acquiring the land; and when the purchaser comes along and says “I will have to pay more because the business has to be given up”, it is the fact that that person says “I will pay more” that means that it is an attribute of the land.  It is an attribute of the land that that business is established on it at that time, and that is a different thing from compensating for the business itself.  I have said that very quickly, your Honour, but ‑ ‑ ‑

CALLINAN J:   The distinction is between an attribute of the land and a fixture on the land perhaps; it does not have to be a fixture on the land.

MR QUICK:   That is right; in Reeve’s Case they leave aside the question of the value and fixtures and so on.  It is not an easy concept to grasp, but it has been accepted in the Court, particularly in Reeve’s Case, that where someone goes out and will pay more, because the owner can be expected not to go without receiving some value for the work they have done or the business that they have established, it goes into market value, and we are getting close to the justification for what I would submit is the correct analysis of it by the Full Court here.

That is to say, once it was recognised by both sides that there was economic advantage, if the hypothetical purchaser would repeat all of the work, you have a head start in that way and it forms part of special value but, if the owner would not repeat it, the new owner would pick it up and take advantage of whatever is there, it is likely that market value would be enhanced by the value of that advantage, which is the difference between completion of the project and that part of the project which has been completed, and that is something which would then go into market value.  But, in this case, the error and the negligence occurred by reason of failing to demonstrate what period was involved in the work that had been done and what cost was saved in that period and it therefore did not go into either special value or market value, and that is the way the Full Court determined it and, in our submission, that was correct.

HAYNE J:   Of what significance to that part of your argument is it that at least two, and probably three, of the valuations put forward by Yates in the Land and Environment Court were founded in large part, if not entirely, on estimates of the present value at the date of resumption of the net income that would have been received by Yates from the operations of the market, and received by it, at the earliest opportunity at which Yates expected to do so?

MR QUICK:   Your Honour, the problem with those valuations was that they were liable to be rejected, either because the facts supporting them were never going to be proved in terms of profit, or that they were contrary to judicial decisions.

HAYNE J:   Because, as to the latter part of that answer, these were not valuations of a Spencer type, or for some other reason?

MR QUICK:   For other reasons, your Honour, and we have dealt with those in our submission.  I will come to them.  But the consequence of it is, your Honour, and this is where the negligence comes into clearer focus, once those valuations were rejected for these other reasons, there was nothing left of the special value case except the abortive costs.  But, in fact, the holding costs and the period involved in this development were substantial.  There was a case there not for a couple of hundred thousand dollars, but for millions of dollars – somewhere between five and ten million.

On top of that there was then going to be interest for the period between the resumption in 1985 and the case in 1990 which had come close to nearly doubling that.  So that what was involved here was a risk that if the case that was put forward was rejected they would be getting 200,000‑odd but there was still there a case which was not presented and which could have been presented in the alternative which would have returned them somewhere between $5 million and $10 million, plus interest.

HAYNE J:   And is that a case that, if presented, would have suffered the same infirmities as the factual infirmities in the valuation evidence that was?

MR QUICK:   Your Honour, that is one of our prime points.  It was an easy case to present by comparison with what was presented.  One does not need to postulate the profitability of an enterprise, the expenses of an enterprise, all of these types of things, in the way which one had to postulate the profitability of a market which had not even been established.

HAYNE J:   That I find difficult to grasp at the moment because the head start that is attributed is a head start of Yates over a hypothetical developer who is, itself, pursing the same venture that Yates intended to pursue.  Why do you not then have to consider the difference in time of receipt of profit?

MR QUICK:   Because one assumes that the other developer will develop prudently, will get on with the job and do it in a reasonable way.  That was the very evidence that was called by Mr Hart, Mr Crone, Walker and all the others.  They gave evidence to the effect that, “This is what happens, and you should get a project of this kind finished, once you have your BA and your DA”, which they had in this case, “you should be able to finish it within 20 months”, or whatever the figure was.

CALLINAN J:   But, Mr Quick, all of this depends upon the correctness of your first proposition which was that the valuations based upon profits had no chance of succeeding.  Now, that is what I understood you just to say, is that correct?

MR QUICK:   Not no chance, but the prospects of them being successful are pretty slim.

CALLINAN J:   Well, were the lawyers supposed to say to the valuers, “Look, those are hopeless valuations, you should not go ahead with them”.  Is that your case?

MR QUICK:   Your Honour, yes, it is.  Right from the start, Mr Hemmings and Mr Tobias both said, “Going down the profits path is going to be very, very difficult”.

CALLINAN J:   But what if they were wrong as a lot of authority - two cases in this Court included, which I referred to yesterday - demonstrate that, if anything, Mr Tobias and Mr Hemmings were wrong about that?

MR QUICK:   They were talking about difficulties of proof, your Honour, and, in fact, what they predicted became the fact.

CALLINAN J:   But this sort of proof is adduced in compensation cases throughout this country all the time.  The two High Court cases are only two instances of it.

MR QUICK:   Your Honour, perhaps I can speak to that after lunch, but ‑ ‑ ‑

CALLINAN J:   On my own experience, I have been in numerous cases where precisely this sort of exercise is done.  It has been done on both sides, by the resuming authority as well as by the dispossessed owner, and the difference has been as to what the result would have been likely to have been; nothing unique or novel or even, indeed, particularly adventurous or risky.

MR QUICK:   Your Honour, those are obviously cases in which the parties had agreed that that was an appropriate way in which to proceed.

CALLINAN J:   No.  No, some of them were not cases in which the parties had agreed.  Some were and some were not.  But, what do you say about the two cases in this Court, the decisions of his Honour Mr Justice McTiernan and Mr Justice Starke?  They did precisely that exercise and there were no more or fewer contingencies that had to be considered there, I suspect, than here.

MR QUICK:   Your Honour, our researches have revealed only one case, in a resumption case in New South Wales law where, for the purpose of an assessment of compensation, it has been permitted, where comparable sales are possible, for there to be the use of some other method.

CALLINAN J:   Well, take subdivision cases.  You do not suggest that in cases of subdivision or land that is subdivisible but not yet subdivided and resumed that precisely this sort of exercise is not done?  It is done all the time, is it not?  They work out how many block will be obtained, what the council conditions will be, what the cost of doing the development will be, what the cash flow will be for allotments as they are sold, then there is a conversion into the present value of the money and, in addition to that, there is regard had to the profit and risk of realisation, and the period of time during which the development will take to bring to fruition, and to sell.  Now, how is that different in principle from what the valuers were suggesting here?

MR QUICK:   First of all, it runs heads – and I will say with respect – it goes quite contrary to what is suggested in, first of all in Pastoral Finance, and also in ‑ ‑ ‑

CALLINAN J:   No, it does not.  It does not run contrary to it.

MR QUICK:   Your Honour, those are factors which might be taken into account by a valuer for the purpose of assessing what the value of the land is, but they do not give rise to a value in themselves.  Profit is to be distinguished from the judgment which is made on the expectation of the profit.

CALLINAN J:   It is not so, because the two High Court decisions were cases in which the valuations were based fairly and squarely from the results of precisely that sort of exercise.

MR QUICK:   With respect, they were contrary to the opinion of the board in Pastoral Finance, where the Court said one does not take into account the profit except as a factor, the expectation of the profit.

CALLINAN J:   It might be in a certain case the most important factor.  It might be the overwhelming factor.  It might, indeed, be the exclusive factor, and the Privy Council does not suggest that in those circumstances it is not the factor which will determine what the valuation is.

MR QUICK:   The Privy Council determined that the likely profits are something which would be taken into account by a prudent person.

CALLINAN J:   Well probably the approach of financial markets and business people today is a great deal more sophisticated than it was in 1914.  Today business people and investors undertake that sort of feasibility study and exercise all the time before making an investment.

MR QUICK:   I agree, for an investment purpose in particular, and particularly because cash flow is important there and because the considerations of a banker are different; is this person going to repay the loan?

CALLINAN J:   What would a purchaser be doing here if he was not making an investment?

MR QUICK:   The purchaser here was, in effect, establishing a business on the land.

CALLINAN J:   As an investment.

MR QUICK:   Yes, as an investment, but clearly ‑ ‑ ‑

CALLINAN J:   Of course.

MR QUICK:   Investment decisions are different from valuation exercises for the purpose of resumption of land.

CALLINAN J:   The valuation exercise is done precisely to enable a person to know whether to make an investment and, if so, what investment to make.

MR QUICK:   I agree, your Honour, but they are not done for the purpose of valuing the land for the purpose of the statute.  What is involved under the statute is assessing the valuation of the land, but, when a person makes a business investment, they are working out one of a series of investments, which is the more profitable, whether or not it has sufficient security behind it, whether the cash flow is going to be adequate and received at the right time and so on.

GLEESON CJ:   Mr Quick, is this a convenient time to adjourn?

MR QUICK:   If your Honour pleases.

GLEESON CJ:   We will resume at 2pm.  Are you still on track to finish by 3pm.

MR QUICK:   I regret not, your Honour; I am sorry, I have spent a lot of time answering questions this morning, but I will do as best I can, your Honour.

GLEESON CJ:   Well when do you expect to finish; would 3.15pm see you out?

MR QUICK:   I will accept 3.15pm, if I may, your Honour, with respect.

GLEESON CJ:   Very well, done. 

MR QUICK:   An unwilling purchaser. 

GLEESON CJ:   We will resume at 2pm.

AT 1.01 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.04 PM:

GLEESON CJ:   Yes, Mr Quick.

MR QUICK:   In connection with the matter raised by your Honour Justice Callinan immediately before lunch and in particular the use of the evidence of capitalised profits in valuation cases, may I suggest, your Honour, there is a special category of case where that is more acceptable than anywhere else, and that is in the case where the land is being subdivided for the purpose of sale, because there one is concerned not with the profits from an ongoing business other than the business of sale of the land, so that it has been suggested to me – and I must say I have not had a chance to look at the cases – but the cases in which your Honour was involved were probably those involving subdivision for sale rather than the assessment of value based upon the potential profitability of a business which is then the subject of specific calculations.

Here what is involved is not subdivision for the purpose of sale, it is something very different.  I am sorry, I should say Kennedy Street is a case of subdivision for sale.  Here what is involved is something very different.  The owner of the land was not proposing to subdivide it.  It was proposing to establish on it a very substantial business which was going to return ongoing income of a very substantial nature.

Whilst Mr Davison, an expert who gave evidence, to say this was as close as one could possibly get to Kennedy Street, we would submit that it is a vastly different proposition from Kennedy Street in one particular respect, because of what was going to happen here.  A good indication of what was going to happen on this land is to be gained from the analysis of potential profits made in the report of Mr Parkinson which appears at volume 10 page 2472.  This is an annex to the report of Mr Parkinson which gives some indication of the type of activity.  It is the calculation of income to be derived from the premises in the second year. 

If one looks at the total income, it is there postulated as being something of the order of $11 million.  When one looks, however, at the big items of expense, it is apparent that what was going to be done involved a considerable amount of activity.  Advertising is over $600,000; cleaning is over $300,000.  But there are two items of management there that also come to over $300,000.  This makes it a very different case from the cases where there is land being subdivided for the purpose of sale.  The other indication, of course, is that it is not just a sale that is over, done, finished.  This was a calculation based upon an activity to be carried on over 10 years or more, but predominantly 10 years, so that ‑ ‑ ‑

HAYNE J:   The numbers we see at 2471 and 2472 are based on feasibility studies, as appears at 2466?

MR QUICK:   Your Honour, as I understood it, these are the sorts of figures that one gets out of the Dimasi Report.

HAYNE J:   Yes, and they are feasibility studies of a kind that a person purchasing this land with a view to using it for this use would wish to have access to in deciding what price they would pay.

MR QUICK:   They would be helpful but they would not determine the value.  No, I agree.  Yes, I think they would be helpful and they would like it.  The point that I am making here, your Honour, is that what was to be carried on on this land was an activity.  It is not a case of the kind where comparable sales cease to be the best method of assessment.  It is not a case where capitalisation is appropriate.

Before lunch, your Honour Justice Hayne asked me to determine whether or not the Dimasi Report contained any estimate of the timeframe within which to have the development completed and then to run on.  Your Honour, the Dimasi Report is not in the appeal books; our only source of information is the judgment of Justice Cripps.  There is a later reference to what is contained in the Dimasi Report in the first decision of Justice Cripps in 2 appeal book at page 329.  Your Honour, it appears as if there is no estimation of time at all.  It is a simple calculation based on the fact that the markets are up and running at the time of the ‑ ‑ ‑

HAYNE J:   And it was the valuers rather than Dimasi who then identified in their reports when that income stream would come into place, namely, six months after the date of resumption?

MR QUICK:   Yes, your Honour.  Of the cases mentioned by your Honours Justice Hayne and Justice Gummow this morning, I have had a chance to check The Moreton Club and the Executor Trustee Case, both of which we would adopt as being cases which accept the appropriateness in special value resumption cases of the Pastoral Finance ‑ ‑ ‑

GUMMOW J:   The Moreton Club was referred to in the Full Court, was it not, at appeal book page 242 line 15?

MR QUICK:   Your Honour, I had forgotten, I had overlooked that.  Those cases do support the adoption of the test in Pastoral Finance.  In addition, the judgment of Justice Dixon, as his Honour then was, in Executor Trustee supports the proposition that valuation principles used for valuation purposes in fiscal inquiries may be different from those involved in acquisition cases.

If I could then come back to where I was just before lunch, in talking about the obviousness of the fact of a head start, I gave the Court reference to the affidavit of Mr Simos in which he spoke of the person in the position of a purchaser who was going to adopt everything that had been done and that person would pay more as part of the market value.  But there are two other parts of the evidence of Mr Simos where he indicates again the same obviousness, and it is obviousness that is of importance.  The first is in the transcript of proceedings before the Full Court.  I am sorry, before I get to that, at volume 7 page 1714, it contains as an exhibit to an affidavit part of the transcript of proceedings of 25 March before Justice Cripps.  And this is Mr Simos talking again, at page 1714J, middle paragraph.  He commences talking about Kennedy Street and then at line L:

In Kennedy Street, the work done by the owner likewise did not become part of the character or quality of the land.  Because of it the owner was in a position to subdivide the land more quickly than any other purchaser.  And your Honour this is the second basis of special value upon which we rely.  The saving in time in relation to the alternative site that the owner – in other words, I think it’s obvious but I’ll try and say it.  If the owner has to do all this work again in relation to the other site, that is going to delay him in what he wishes to do with the site as compared to the position he would have been in in respect of the resumed property.

Now, I know he is talking about a different situation but if it is obvious there then it has to be equally obvious in relation to the resumed site.  The same point is made and he describes it again as being an obvious one.  In volume 14 of the appeal book there is further reference to discussion of the head start and its reference in terms is of obvious – the word “obvious” is not used but Mr Simos makes submissions which are rather forcefully put in relation to this point.  Volume 14, page 3599.  This time this is before the Court of Appeal.  I commence midway through page 3599.  Justice Handley at point 25:

What is the difference between this and someone else who got fired up with the Yates concept and bought the land for its highest and best use as a market?

SIMOS:  Because Mr Yates has a relationship with the land having regard to all the things he did in relation to the land as set out in item J and adumbrated in his Honour’s judgment which other hypothetical purchasers didn’t have.

HANDLEY, JA:  The other hypothetical purchasers were still going to buy it for its highest and best use as a market.

SIMOS:  They were, but because Mr Yates had all these things in J --

KIRBY, P:  He had a stake in this land which was above that of a theoretical purchaser.  But for the acquisition, he would have gone ahead and built the markets.

SIMOS:  And Mr Egan agrees.

I will go on to the next question:

HANDLEY, JA:  Why are these profits which Mr Egan is talking about not available to any other purchaser of the site?

SIMOS:  I suppose what Mr Egan may be saying is that the average hypothetical purchaser is not going to be concerned about these matters.  He is not going to pay any more than the market value.

I will miss the next question, but the one after, about point 13.

HANDLEY, JA:  I fully accept that, but my feeling at the moment is that if market value is determined on the basis that the highest and best use is for this type of market, then you have already carried into the market value assessed on that basis whatever extra an ordinary purchaser would pay for this land so that he, she or it could run a market of this kind on it and then the special value is that Yates had a jump on them.  He was X-months –

The statement is not finished when Simos interjects and says:

More than a jump, your Honour.

HANDLEY, JA:  Well, I mean 15 jumps, but he had document J available to him which meant that he would get his market up earlier than any other buyer ‑ ‑ ‑

GLEESON CJ:   Why?

MR QUICK:   A whole range of circumstances, your Honour, because he was already – he had ‑ ‑ ‑

GLEESON CJ:   Do you mean he would not make document J available to another buyer?

MR QUICK:   No, it is not just document J, it is ‑ ‑ ‑

GLEESON CJ:   No, well, I am talking about document J.  I thought this morning that you said you did not support that part of the reasoning of Justice Handley where he fastened onto this document and its unavailability to a buyer, but let me ask you why would the availability of document J mean that he would get his market up earlier than any other buyer?

MR QUICK:   It is not just the availability of that document.  The availability of the document is just a factor.

GLEESON CJ:   Let us test that factor.  Why would the availability of document J mean that he would get the market up earlier than any other buyer?

MR QUICK:   Your Honour, document J is not actually a document, it is an evidentiary document.  It is a document which itemises all the work that Yates had done.  It is not something that is going to be made available to the purchaser or anything of that kind.  It is a document which comes into existence for the purpose of the proceedings.  I am sorry, your Honour might be under the ‑ ‑ ‑

GLEESON CJ:   I am just trying to understand what Mr Justice Handley said.

MR QUICK:   Your Honour, I think document J is a document which sets out all of the work which Yates had done.  It sets out the expenses involved and so on.  It is not something that would be relevant to the exchange of - or exchanged at the time of the sale of the premises or whatever.  I will have that checked, but ‑ ‑ ‑

GLEESON CJ:   No, do not please take any time over it.

MR QUICK:   If I could go on with the quotation:

which meant that he would get his market up earlier than any other buyer and that was the special value to Yates, that he had a six, nine, twelve – whatever it is – months lead on anyone else so that he would get his market up and running and have an income stream available X-months or X-years before anyone else and he would pay more rather than lose the site, and that is the special value.

Mr Simos says:

That is one way of putting it, and I would not disagree that that is one way of putting it.

I have just been reminded – this is totally out of the context of what I am saying – I have to correct, before I sit down, the statement made to the Court in response to your Honour Justice Hayne in relation to the Dimasi Report.  It is in the papers and there is some reference to time frame in it.

If I can proceed, the reason why I emphasise the obviousness is because it is at the heart of the negligence case and we have the two passages where Mr Simos has used that word himself, but it is an obviousness that arises out of an appreciation of the facts.

GAUDRON J:   While you are on obviousness, could you formulate precisely what it is that you say the duty was in this case - in a sentence.  You must be able to do it in a sentence.

MR QUICK:   I will do my best, your Honour.  The duty of the solicitors was to take reasonable care in the conduct of the litigation to do all those things that were necessary to avoid foreseeable loss in the form of economic loss.

GAUDRON J:   Okay, can we get a little bit more particular?  The duty was what?  To draw to Yates attention - go on.

MR QUICK:   In the first place, your Honour, to respond to Yates’ inquiry about whether or not he would be entitled to something.

GAUDRON J:   Yes, but to inform him what?  What?

MR QUICK:   To inform him of the existence of a basis for claiming special value, which was not being propounded by the valuers, which would result, if accepted, in a substantial award of special value above the abortive cost level and which was not attended by the same risks of rejection as were the valuation methodologies being considered and which were ultimately put forward.

KIRBY J:   This sounds as though it is skirting a little close to the formulation of the principle in respect of medical liability in Rogers v Whittaker where, you will remember, the patient asked for information and it was not given, it was said, according to the standards of the medical profession, but the Court upheld the claim of the patient to have the best and most accurate information given in answer to the patient’s question.  Subject to the immunity issue, there would seem to be no reason, in principle, to distinguish the liability of a legal practitioner to a client from the liability of a doctor to a patient.

MR QUICK:   In respect of providing information, which has not necessarily been specifically asked for, I would agree.  I have taken matters a step further than your Honour has put it to me, that, first of all, I agree that, in fact, there is no great distinction between the – or no distinction at all in ‑ ‑ ‑

KIRBY J:   There seems to be a very important distinction in policy and in the history in respect of the immunity which descends upon an advocate.

MR QUICK:   I would submit, your Honour, that is a different matter.  We are talking here about the – in particular, the solicitors who are not performing the role of an advocate at that time.

GAUDRON J:   Would it be correct, though, to say – to take it back one level of generality - that the duty you assert was to inform the client of all alternative bases of ‑ ‑ ‑

MR QUICK:   No.

GAUDRON J:   I am not talking about breach.  As I read that, your breach is the failure to inform him of that matter.

MR QUICK:   Yes, it is.

GAUDRON J:   I am asking what you posit as the duty and then I will ‑ ‑ ‑

MR QUICK:   It was their duty, either themselves to consider, or to ask others to consider and receive their advice, with respect to all reasonably available grounds of founding a claim for compensation.  Then, in respect of those which appeared likely to be profitable, which appeared to be likely to have a chance of success, to examine those possibilities that then remained opened.  In this case ‑ ‑ ‑

GAUDRON J:   We started with “all reasonably available” grounds.

MR QUICK:   It was their duty to look at them all for a start, and then to make some sort of assessment as to ‑ ‑ ‑

GAUDRON J:   We are talking about reasonably available.  We do not have to make any further assessment if they are reasonably available, do we?

MR QUICK:   Your Honour, their duty might have refined down as time went by.  Whilst in the first place they would have to look and see what is available, they would then make an informed and reasonable decision as to which of those they ought to pursue further.

KIRBY J:   We are talking in the realm of negligence here and, therefore, not of super human beings.  We are talking of reasonably competent legal practitioners.

MR QUICK:   Agreed.  What we would submit should have happened was that they should have looked at what the valuers, or even before the valuers started looking, they should, themselves, have looked and said, “These are the types of claim we could make”.  They should have said, in relation to the type of case that was actually presented, profits and so on, “That is a good one to run because it is going to produce a very high award.  But, on the other hand, it is not such a good one to run because it might be rejected on the grounds that we cannot prove the basic matter of profits, or it might be rejected because it is contrary to law.”

KIRBY J:   This is where a valuation in the presentation of a case to a decision maker such as you have been doing in this case, comes into play.  You have to allow latitude for how you present a case, especially when there may be inconsistent claims.

MR QUICK:   But, at this stage, your Honour, we are not anywhere near the presentation of the case.  We are talking about what evidence we are going to get, what evidence we are going to look for, evaluate and then make a decision.

KIRBY J:   But the evidence is linked to the presentation of the case.  No evidence, no case.

MR QUICK:   In that case, your Honour, if the immunity applied, the solicitor could never be liable for negligence in the conduct of any litigation.  There has to be a point after the actual receipt of instructions where the solicitors are working on matters which do not, even though they might at another end of the scale be said to affect a decision made in court, the gathering of evidence, for a start, just gathering the evidence in, prior to assessment, that does not.  In one sense, it might be said to result in a decision in court, but the decision is really made later after the receipt.  What we are talking about here is the failure to go out in the first place and to find out whether or not there was any evidence.  It is the type of thing that the evidence of Mr McClellan in the case was all about.  He said, “What you do is you go and find out whether, in fact, there was likely to be a head start.” Then once you have all the evidence, you get the interest rates and you would go to a valuer and you would say, “How is that likely to be assessed in the market, as to value?”.  Then you would make a decision.  Is this a good case to present?  Is it more favourable in this respect, less favourable in that?  You would then make your decision.

But in so far as the solicitors are concerned, what happened was that they never asked for any advice, they never got any advice and they never passed on any advice to the effect, “Look there is a good basis for a special value case here.  It might not get you as much money as the basis that is being suggested, but if what is being suggested is rejected, you are going to get next to nothing”, if one can call $200,000 next to nothing, “But there is an intermediate course which will result in you getting five to $10 million, plus interest.”  There is no reason why the case that we are going to run and that intermediate case cannot be run together.  Mr Simos says it is because the amount of money was inconsistent, that one necessarily had to detract from the other.  But, we would submit that was a matter for the client to decide.  In any event, the client should have been informed of that matter and the two could have been run as alternatives.

So that there was no reason why - if the solicitors had turned their mind to it and obtained advice, someone might have come up with the proposition without too much difficulty, here is a case which can be run without difficulties of proof; it can be run without falling foul of the reinstatement principle, without falling foul of the other reasons why it was rejected in the Court of Appeal.  It does not have those difficulties.  It is supported by Baringa and by analogy by Kennedy Street.  Every case depends on its own facts and it is an issue of fact, and this could return $5 million to $10 million instead of $200,000.  In those circumstances, you would have to start thinking, now, is the view that I have taken about Spencer a reasonable view?

That does not solve the issue.  one might even say, “Let’s assume that Spencer’s Case is not going to be followed” or “I might be wrong about my views about Spencer”, and one would start to develop a case based on Baringa, as has subsequently happened.  But the negligence arises in the case of the solicitors from the failure ever to consider and to gather evidence or to request advice in relation to this particular type of claim.

KIRBY J:   Well, that gets down to a very high degree of specificity.  They did seek advice, they went to the best lawyers in Phillip Street in this area, specialists, highly skilled and very experienced lawyers.  Now, I think of when I was a solicitor, what more could you do?  What more could you do than to go to the very best in the street?  I mean, we have to be reasonable here as to what is reasonable to demand of solicitors, and they turned attention to the question of special value, so they are directing the mind into that area and there is no doubt that they investigated that issue.  What more can a solicitor do?

MR QUICK:   With respect, your Honour, that is not what happened in fact.  What happened was that a very young and inexperienced solicitor, who did not have a sufficient knowledge of the law, was left in charge of a case and supervised at weekly intervals for a short period of time by a partner who was not expert in this aspect of the law.  They never asked for advice in relation to what type of evidence they should be gathering and considering.  Mr Webster gave evidence of the fact that he did not consider it his duty to consider those things and he was never asked for advice.  They never asked Mr Simos for advice in relation to these things.  They put themselves out of the position where they could do their duty, which was to consider advice by not asking for it.  When it was not received they did not press for it, they never got anything, except that this case was drifting along in the hands of the valuers, drifting along with Mr Webster giving no advice at all.

They never asked the relevant questions and, if they had been doing their job competently, they would have said, “Here is a huge case in resumption law, here is a case which deserves special attention because of what the developer has been doing.  We’d better ask, otherwise we might miss something fundamental that might be very valuable”, and that is in the result what occurred, because the head start claim was just missed; no one ever thought about it.

KIRBY J:   No author had ever referred to it.  No previous case had ever referred to it in those terms and the solicitors went with a brief and had regular conferences with the top people in the field, and asked them to advise on the bases of entitlement including special value.

MR QUICK:   It is true that it has never been referred to in the terms “head start”, but bear in mind what Mr Simos said, not once, but twice – once to the Court of Appeal and once in an affidavit here – that the fact of the head start, that is if it exists, it is obvious that it would be of advantage to someone.  Now, here we would say, if a developer has been developing the land as this company had been, for a period of years, had done enormous – spent $2.5 million on developing it, you would think, and were getting close to finishing the project, six months only to go before an income stream is going to come on, and the client comes in and says to you, “Am I going to get anything for not being able to have my income stream in six months?”  You would have to say, “Well, the law should not allow you to go without compensation, we had better look into that”.

GAUDRON J:   Or you might say, “No, that is comprehended in the market value”.  For example, take a block of flats rented - built, rented.  I come along to you when it has been resumed and I say to you, “But what about my income stream”?  You say, “That is comprehended in the market value”, do you not?

MR QUICK:   Your Honour, I accept – what the Full Court said was, it could be.  But what your Honour says advances my case significantly because it is that the only evidence that was presented in this case in relation to market value, other than the fanciful evidence that was rejected, was comparable sales.  There was no evidence on which to bring into the market value assessment the time related advantage.  In the same way as the case that your Honour puts to me, there would need to be evidence of the fact that the premises were let, what the rentals were, and all of those sorts of things ‑ ‑ ‑

GAUDRON J:   Would there?  No.  Let us assume this is in a developed area where there are blocks and blocks of flats, rows and rows of these blocks of flats and they are all rented, they have not been strata titled.  No difficulty.

MR QUICK:   I agree, in that situation, but that would have to be taken into account in assessing the comparable sales.  But here, one would have to say, as Mr Simos says, as the Full Court said, “Well, if there is an advantage in relation to time, it has to go on top of the comparable sales situation”, and if there is an advantage in time the court needs to have evidence of how long it is going to be and how big is the advantage in order that it can be taken into account, along with comparable sales, to assess market value.

GLEESON CJ:   Mr Quick, I think that you have reiterated on a number of occasions the argument that you advance in terms of the obviousness of what was not considered or overlooked, and we understand that argument and the importance you attach to it, but you have to cover matters such as immunity and Giannarelli.

MR QUICK:   I will get on, your Honour, I will.  Your Honour, if I might just proceed straight on with that.  But we still have to establish negligence and the type of argument is outlined in our written submissions and as I have put forward to the Court at the moment.  There are a couple of submissions that have been made that I should deal very briefly with, that is, the suggestion made that the Full Court misinterpreted its function by reason of making findings adverse to those made by the trial judge, in particular as to the availability of finance and the availability of head start.

If I can deal with the availability of head start, it is important to look at just what her Honour did actually find in this context.  This is at appeal book pages 154 to 156 in volume 1.  Her Honour does not find, as has been suggested to the Court, that there is no head start.  What her Honour does at page 154 is to go through, first of all, the evidence which was presented in relation to the head start matter.  That occupies pages 154 through to 157.  Her Honour then says at page 157 commencing at line 19:

Such evidence indicates, in my view, that where land is sold in respect of which a development proposal, which reflects the highest and best use of the land, has been advanced prudently and competently to a stage at which appropriate DA and BA have been obtained, the purchaser might –

and then she instances three situations:  one, repeat everything, two, repeat nothing, three, do something in between.  Her Honour then goes on:

Whilst the adoption of a middle course might be statistically the most likely, only a detailed examination of the proposed development, the professionalism of the work undertaken, the personalities, objectives and circumstances of the persons involved, and possibly, depending on the facts of a particular case, other matters, would allow a judgment to be made in any particular case.

Her Honour then says this:

In my view, it would be a rare case in which it could be said that a prudent purchaser who would not repeat the steps previously taken by the vendor could not reasonably be hypothesised.

Her Honour has not actually decided whether there is head start, no head start.  She is talking about a hypothesis of the existence of a person who might do one of the three courses suggested.

GUMMOW J:   You have to go to the next sentence, have you not?

MR QUICK:   Your Honour, I agree that she is bringing it back to this case but her Honour is saying – she is talking about a reasonable hypothesis.

GLEESON CJ:   Of a prudent purchaser, not a prudent potential bidder.  She is hypothesising a sale.

MR QUICK:   I agree, your Honour.

GLEESON CJ:   That is the starting point of this whole exercise.  The hypothesis is that there is a sale.

MR QUICK:   I agree, your Honour.  The point that I am trying to make is that this passage is being put forward as a rejection of the fact of an advantage by reason of having done a whole lot of work, but in fact that is not what her Honour is doing.  Her Honour is making a hypothesis in relation to a hypothetical sale.  It is not a rejection of the evidence as such.

HAYNE J:   Would Yates have had a head start over the prudent purchaser identified at line 9 on 158?

MR QUICK:   If that purchaser was going to repeat everything, yes.

HAYNE J:   No, I am sorry, the prudent purchaser there hypothesised is he or she who would not ‑ ‑ ‑

MR QUICK:   I beg your pardon, your Honour.

HAYNE J:   Would Yates have had a head start over that prudent purchaser?

MR QUICK:   No, your Honour, but that prudent purchaser, as the Full Court found, would have taken into account when purchasing the land the fact that Yates would expect more than comparable sales valuation and therefore it would come into the assessment of market value.  So, if one looks at the three situations postulated on the previous page, the first of these is a case in which there is a long head start and forms part of special value.  The second is a situation in which there is no head start but the value of the work done forms part of the market value, as the Full Court found.  The third case is intermediate and there would be a moderate case of head start.

Yesterday your Honour Justice Callinan was putting to me some propositions in relation to the actuality of head start based on access to the plans and perhaps being able to start in a week or more.  There is a full explanation given as to why that is not the case in the evidence of Mr Hart and Mr Walker.  Mr Hart’s evidence is at volume 7 - I will not take the Court to it now – 1848 to 1849 and 1840 to 1841, and Mr Walker at volume 8, 1898 to 1899.

The next factual consideration that was said to have been made adversely and not taken into account by the Full Court was respect to the availability of finance.  Justice Branson commences her decision in this respect at page 101.  Her Honour goes through the history of the financial arrangements that Yates had been into.  The early part of that history relates to the period 1983 and 1984.  Eventually her Honour at page 103 makes a finding with respect to the availability of finance.  That finding is in these terms.  I am sorry, page 103, your Honour.

CALLINAN J:   Mr Quick, just before you go to that – and I am sorry, I do not want to detain you but I have looked at page 1848 line 15 to line 32, and the basis of what the expert says is that no prudent purchaser, having spent over $22 million purchasing the land, would uncritically accept the multi-faceted work of a vendor.

MR QUICK:   Yes, your Honour.

CALLINAN J:   That is the sense of it.  But, Mr Quick, a person would not pay $22 million unless that person had satisfied himself before he paid it that he could utilise that work, because that is a major component of what he is paying for.

MR QUICK:   Your Honour, he would satisfy himself to the degree necessary in order to determine whether $22 million was a fair price to pay.

CALLINAN J:   And in order to do that he would satisfy himself that this sort of development could be undertaken, what it could be undertaken for and what it would be likely to yield.  It is unthinkable that a purchaser would not satisfy himself about all of those matters before the purchaser entered into the contract.

MR QUICK:   That is so, your Honour, but it is another question to say whether or not he would then set about checking these things before building the building and commencing business.

CALLINAN J:   He had checked them before he bought, he had checked them before he paid the money.

MR QUICK:   Your Honour, I would simply ask the Court to read what is said by Mr Hart and by Mr Walker in order to determine that matter.  But the finding of Justice Branson in relation to finance is at page 103.  Her Honour, after reviewing the availability of finance to Yates in 1983 and 1984, at the top of page 103 refers to the only piece of evidence that her Honour takes into account, other than the findings of Justice Cripps on this issue.  And her Honour refers to a statement by Mr Miles, at the top of the page, saying that in March 1985, that is a little over two months before the resumption:

The title was cluttered with caveats –

nothing more than that.  Her Honour then goes on to say:

I find positively that Yates did not as at that date –

7 May –

have the financial capacity immediately to erect the markets.

That finding is contrary to a finding, we would submit, made by Justice Cripps.  The passage appearing at the bottom of page 103 and at the top of page 104 is incomplete.  The emphasis made by Mr Justice Cripps is much stronger than that passage suggests.  He says that finance was available and had been available.  Her Honour then goes on to say, well, Justice Cripps was not considering a head start concept.  But Justice Cripps was considering, and expressly says that he was considering, on what date the income stream would come into place, because that was the foundation of the valuation evidence.

CALLINAN J:   Mr Quick, I have also had a look at page 1898 and I see the author of that report says “The design of a building itself is a topic rife with subjectivity”.  We were talking about a steel‑framed shed here, were we not, on one level?

MR QUICK:   Your Honour, no, that is wrong.

CALLINAN J:   Well, it was a steel‑framed shed, was it not, effectively, of 12,500 square metres?

MR QUICK:   The evidence of Mr Meredith, the Quantity Surveyor, has not been reproduced in the appeal books, but I will have it handed to the Court, indicates just how complex this structure was and how much subjectivity there was involved in it.

CALLINAN J:   In a steel‑framed shed?

MR QUICK:   The outside structure may well have been steel framed, but what was involved here was the establishment of a whole range of stalls, of different sizes.  It had to be able to be cleaned, it had to be converted into a car park, it had all sorts of complexities with it, albeit with a steel frame.

CALLINAN J:   But there had been a building approval for just such a design.

MR QUICK:   True, but it is far from a steel‑framed shed.  If I can return to Justice Branson?  Her Honour seems to have thought that the finding by Justice Cripps was other than it actually was, but his Honour had before him the very issue, namely, when are we going to be able to start?  When would this have started?  His Honour had that before him some seven years earlier than did her Honour, and his Honour had before him the banker, Mr Tarrant, he is referred to in the judgment, and all of these things happened ‑ ‑ ‑

GAUDRON J:   It does not matter.  Different parties, different evidence.

MR QUICK:   Some of which we would suggest, your Honour, goes only to damages and in relation to damages, Nikolaou v Papasavas principle comes firmly into play.  It was what was available at the time in 1990.  The evidence that was available in 1990 would not have included the evidence of Mr Miles because he was acting for YPC.  He would not have been saying what he knew about the title and so on.  Her Honour has made a leap from what Justice Cripps actually decided;  has not given proper weight to the fact that his Honour did decide the very issue;  has given weight to some evidence which would not have been available to the DHA in 1990.  In our submission, at the very worst for us, this position is one which would bring back the head start a little, but the best analysis is that it should have been rejected, it was not a matter open for her Honour to decide because it had been decided by Justice Cripps.

I need very briefly to deal with some aspects of solicitor’s duty.  First of all, there were no limits on the retainer of Abbott Tout.  I refer to the evidence at volume 4 pages 962 to 963.  It is a concession made by my learned friend, Mr Macfarlan, that there are no documents which evidence any restriction on the retainer of Abbott Tout.  As to the Abbott Tout expressed expertise, that is in volume 8 page 242.  Mr Silvia, the liquidator, gave evidence that he relied upon Abbott Tout for expert advice, that is in volume 4 pages 848 and 849.

As to the duty of solicitors, we submit that it is not limited to the retainer, but involves giving advice in respect of all aspects of a matter on which the client needs advice from the basis of the instructions given.  The cases which support that proposition are cases 28 and 29 on our list of authorities, Cade Pty Ltd v Thomas Simmons (1^st instance) (1987) 191 LSJS 99 at 142, a decision of Chief Justice Doyle, and the decision of the Full Court of the Supreme Court of South Australia, not reversed on this point, in Austrust Ltd v Astley (1996) 67 SASR 207 at 224 to 235.

As to the reliance by the solicitors on the advice on counsel, the cases relied upon simply do not come into play here.  That is because they never received advice from counsel.  They received silence.  They could not consider the advices of counsel in relation to Baringa although they knew of Baringa and that is admitted on the pleadings, paragraph 68B of the defence of Abbott Tout.  They knew of the existence of the case, they professed expertise, they knew of the facts, they never got advice from counsel.  They could therefore never have considered the advice of counsel.

KIRBY J:   Can it not be said, though, that they had sought advice generally from counsel on the way in which they would present the case?  I am trying to think of this practically and what actually happens in the real world when solicitors go up the street and they see barristers.  There is a whole range of people.  You can get people who have never done a valuation case and they go up and they see the top people in the street.

MR QUICK:   This was a firm - not just an individual – it was a firm that professed expertise.  I have given your Honours the reference to that.  They were retained because they had expertise.  The liquidator relied on them because they had expertise.  It was their duty to go and ask specific questions if they did not get the appropriate advice, and nowhere did they go along and say, “Have you considered this?”, and they knew about Baringa and they could see for themselves how much work had been done.  It would not take a moment’s imagination to realise the holding costs would be substantial.  They never asked for advice.  So, in a practical sense, your Honour, it is a situation in which they should have been asking for it and they did not, asking for specific advice and not leaving it in the hands ‑ ‑ ‑

KIRBY J:   This is because not that they are a solicitor but they are a solicitor who held themselves out with special expertise in this area?

MR QUICK:   We would submit both, your Honour, because even if they were not especially expert it was still their duty to consider what counsel was considering, and they never did that either because they were never told what counsel was considering.  Emphasis has been laid on the matter of reliance on other counsel, or that other counsel did not consider the head start concept.  There are four counsel involved.  First, Mr Tamberlin.  There is no evidence at all that he was involved in any substantial way in the matter.  Secondly, there is Mr Tobias.  The evidence is that he was involved to the extent of one conference in 1984 for the duration of an hour and a half and there is no indication that he was ever briefed on the relevant facts or gave any consideration to the head start.

CALLINAN J:   He was asked 14 specific questions – Mr Tobias – and he gave quite a lot of advice, if the notes of the conference are accurate - and I take it they are - about capitalisation and methods of valuation.

MR QUICK:   He said, “Don’t touch it”.

CALLINAN J:   Yes, and I think, with all due respect, perhaps he was wrong about that, but it is not right to say that he did not turn his mind to it.  He did look at it very carefully.

MR QUICK:   Your Honour, he had an hour and a half in which to answer 14‑odd questions.

CALLINAN J:   No, he had had the brief, I think, for some weeks before that.

MR QUICK:   He had had the brief ‑ ‑ ‑

CALLINAN J:   He was delivered a brief and in the time between when he was delivered the brief and he had the conference there was a further conference with Mr Hemmings in which very similar matters were canvassed.  He had the brief for a considerable period of time.

MR QUICK:   Your Honour, he had the brief, I think, from about 26 September.  The conference with Mr Hemmings was on 3 October and the conference with Mr Tobias, I think, was on 8 October.  I might be a day or two out but I would submit that is about right.

CALLINAN J:   That sounds right.

MR QUICK:   Now, your Honour, he had to answer a whole range of questions about a whole range of factors.  There is no evidence that he ever thought about or was ever asked to think about or ever did give advice about the availability or unavailability of this type of case.

CALLINAN J:   He was giving general advice about the sort of compensation claim that might be made, and he made no reference in doing so to a head start claim.

MR QUICK:   My submission in relation to that, your Honour, is that in those circumstances it could hardly be said to be the detailed, considered advice that one would normally give on receipt of valuation evidence.  It was all far too preliminary.  The resumption had not even occurred.  It was 1984.

CALLINAN J:   These conferences were intended to shape the nature of the case and the valuations.

MR QUICK:   No, with respect, your Honour, it is far too early for that.  None of the documents had been obtained from the authority.  None of the discovery had been obtained.  After this, challenges were mounted to the legislation.  It changed.  All sorts of things happened.

Now, I press on to Mr Hemmings, his commencement - I am sorry, Mr Tobias is out of the action by 1984.  Mr Hemmings was in the action from 1984 through to 1987.  He did give substantial advice.  But he does leave well before the valuation evidence starts to crystallise.  He is gone by October 1987.  As to Mr O’Keefe, it is suggested that he settled the first valuation report.  We contest that.  We have given the evidence references in paragraph 1 of our outline of submissions.  The evidence comes from a suggestion made by Mr Webster that that report was settled by Mr O’Keefe.  One looks at the correspondence between the solicitors and Mr O’Keefe.  One looks at the fee notes of Mr O’Keefe.  There was nothing that happened on 10 May.  That is the day when the report was said to have been settled in the chronology, but in fact another document in the same chronology shows the report having gone off to the Darling Harbour Authority on 4 May.  It is highly unlikely that the document would have gone off to the Darling Harbour Authority well before it had been settled by counsel.

I have one more submission to make in relation to the negligence matters, and then very briefly get on to the immunity.  It concerns the issue of causation.  I refer the Court to the decision of the Court in Bennett.  I am not sure whether the Court has copies made available.  It was on the supplementary list of authorities of one of the respondents.  It is Bennett v Minister for Community Welfare (1992) 176 CLR.  If the Court does not have copies, we have multiple copies here.

GUMMOW J:   We have it.

MR QUICK:   There is one passage that I refer to.  It is in the judgment of your Honour Justice Gaudron at pages 421 to 422, at the bottom of that page.  This is one of those cases where it is not difficult to deal with the causation issue, because the very nature of the breach of duty almost inevitably proves the causation as well.  But if we are wrong about that, there is still, however, evidence that Mr Silvia would have done certain things if he had been given ‑ ‑ ‑

GAUDRON J:   We are talking about injuries, we are not talking – I think you will find other cases in which I have said that it is not exactly the same when you are talking about what people would or would not have done if they had been given certain advice, or what would or would not have happened if advice or information had been disclosed.

MR QUICK:   It is an action about the pure economic loss associated with failure to institute legal proceedings, which is the same type of, very much the species here.

GAUDRON J:   Yes.

MR QUICK:    I press on, I say nothing more about it other than to say that Mr Silvia, the liquidator, gave evidence of his reliance upon the solicitors in particular for advice.  Justice Branson found that there was also reliance upon counsel, so in terms of causation, there ought not to be any problem.

May I come immediately to the Giannarelli v Wraith point, to the immunity.  We rely upon our written submissions in relation to leave to have the matter reconsidered.  The submissions are at pages 23 to 25, the grounds are paragraphs 89 through to 94.  We bear in mind the time involved.  I propose to develop the argument rather than to develop the leave application.  The argument we rely upon is set out fairly fully in our written submissions and, in particular, the first section of the argument deals with the continuation of the immunity at all.

We invite the Court to reconsider the policy considerations which were considered in Giannarelli v Wraith, and to make the value judgment again that was made then.  We invite the Court to do that now for a number of reasons.  The first of these is that Giannarelli v Wraith – if I could put them not necessarily in descending order of importance.  The first of these matters is that Giannarelli v Wraith was a case which involved criminal proceedings, and in the case all of the majority Judges placed particular emphasis on the damage that will be done to the public reputation of the administration of justice in criminal cases.  Now, if in fact the weight of the immunity is greatest in those cases, the present case not being such a case, and if, in fact, the Court has to consider only to keep the immunity for the purpose of protecting the public confidence in the administration of justice, we raise the issue, should the immunity, if it is to continue, be limited to criminal proceedings?

GLEESON CJ:   So the immunity would continue where the liberty of the subject is at stake, but not where money is at stake?

MR QUICK:   Yes, and we say that not only because it is something not necessarily considered by the Court in Giannarelli, but because the Court attached so much weight to that particular matter.

HAYNE J:   It would be an ironic result, would it not, if a barrister could be held liable for being careless with somebody’s money but not for being careless with whether they serve 20 years in gaol?

MR QUICK:   Your Honour, it is difficult to separate out the ironies in this case but, even if there are ironic results, they should be tolerated because the purpose of the immunity is not to protect the barrister; it is there to protect the public confidence in the administration of justice.  There is nothing ironic about hiving off part of the immunity that is unnecessary if it is unnecessary to further that purpose.  It might be thought ironic that one person receives a protection and the other does not if the purpose of the immunity is to provide that protection, but it is not.

GLEESON CJ:   Should the immunity go in relation to witnesses?

MR QUICK:   No, your Honour, absolutely no necessity for that.

GAUDRON J:   Why should an expert witness be any different from a barrister or solicitor?

MR QUICK:   Your Honour, the only difference between the expert witness and the barrister is that the expert witness does not have a professional relationship directly with the client, or indirectly with the client as the barrister through the solicitor.  The expert witness is a person who comes along, gives evidence, admittedly he is paid an expert witness’s fee for it, but is not in a contractual relationship in order to the giving of evidence, whereas the solicitor is in a contractual relationship; the barrister has a relationship, although not a contractual one, with the client and is under a duty to the client, save for the immunity.  The witness has no duty to the client.

If I could just go back to the criminal proceedings aspect of the matter.  If the Court is of the opinion, as was the Court in Giannarelli, that the matter is most difficult in criminal situations, that is the potential harm is harshest in criminal cases, then one needs to consider afresh the weighing process in the civil case, and that does not appear to have been separately addressed in Giannarelli.  There appears to be a general weighing of all cases, criminal and civil, with the detriment of providing the immunity.  Our submission would be that the Court needs to look at the weight of the detriment of the immunity in civil proceedings against the weight of the benefit to the public confidence and administration of justice in civil proceedings.

The other major matter addressed in Giannarelli v Wraith as to the basis of the immunity is the so-called risk of collateral attack on a judgment of the court.  We make submissions in relation to that matter, if I could just very briefly summarise the most important of them.  It is that the assumption of harm in this particular circumstance to the public confidence in the administration of justice really attributes to the public a very low level of understanding and it attributes to the public the inability to understand that a judgment in a negligence action involves a different issue, ultimately, from what took place in the first action.

In the negligence action it is not whether the decision was right or wrong.  That is forbidden.  It is a question – and we say it is forbidden on the grounds of Tutunkoff v Theile and those cases.  What is involved is:  would the result have been difference if counsel or the solicitors had done their job properly?  If that is the case it is not too difficult to realise, “Well, the first case wasn’t the judge’s fault, it wasn’t the court’s fault but it was because the legal representatives didn’t do what they were obliged to do properly”.  So that the magnitude of a collateral attack, we would submit, was possibly overestimated in Giannarelli v Wraith.

Could I draw attention very briefly to the submissions in relation to the – going back to the criminal aspect of the matter.  There is in our submissions at paragraph 132 a list of differences between criminal prosecutions and civil proceedings which highlights, we submit, the difference between the need for the immunity in criminal proceedings and the need for civil proceedings.  It is not simply a matter of the liberty of the subject, although that is probably the most important.  There are other differences as well and we have set them out there.

If the Court determines that the immunity should remain and it should remain in relation to civil proceedings the next question is, “To what extent does it extend in out-of-court work?”  Now, in this respect there are two principal submissions which we make.  The first is that if one examines the precise wording of Justice McCarthy in Rees v Sinclair and the precise wording of Chief Justice Mason in Giannarelli, it looks very much like the Court is talking about actual decisions rather than failure to make a decision.  There is reference made to an actual decision.

If I can just tell your Honours which particular part of the submissions are involved.  I am sorry, I have gone so quickly I have gone out of the context.  If one looks at the actual words used by Chief Justice Mason, he commences with reference to Rees v Sinclair and uses the actual words explained.  He then says it is necessary that there should be the protection for out-of-court work in relation to preliminary decisions, again a word which invokes the actual making of an election.  His Honour then goes on to say, “Well, what were the circumstances here?  Was this an election?”, and his Honour says “Well, there are two possible causes why the objection wasn’t taken to the evidence in this case.  One was a misinterpretation of a decision of this Court and other was that counsel failed to even think about the matter”, and his Honour then says, “It is probably the form” in which case - his Honour is actually deciding the case on the basis that what was done there was the making of an actual decision.  There is good reason why the immunity should be confined to the making of actual decisions rather than the failure to consider a matter.

One of those reasons is that the immunity is said to protect freedom of speech and freedom of decision making of an advocate.  Those things need no protection, or are given no protection if the immunity provides protection in the case of a failure to consider something.  If there is no election made, there is nothing to protect.  So that there is really no need, in the advancement of those aspects of the immunity, for the immunity to continue to exist.  The test in Rees v Sinclair has given rise to difficulties.  For example, there is the decision – we have set this out fairly fully in the written submissions – in Keefe v Marks, your Honour the Chief Justice then sitting in the Supreme Court of New South Wales, determined that in the application of the immunity, one would not have regard to the precise dealings that took place between lay client, solicitor and counsel.

Your Honour also determined that the policy considerations, as such, had no part to play in determining or making the decision about whether or not the immunity should apply to particular conduct.  Now, the latter part of that decision, that is, that policy considerations have no part to play, is contrary to the later decision of the Court of Appeal in MacRae v Stevens where the court does say, “We will look at the policy considerations”.  Then it is also contrary to what the Full Court did in this case, by saying, “Well, let us look at the policy considerations as well”.

This is not just a reason for renewing or looking again at Giannarelli, it is a reason for abandoning the immunity in respect of out of court procedures because of the difficulty of making distinctions of this kind.  An immunity of this kind should have certainty of application.  If the rule is not capable of certain application, it is likely to result in differences which themselves will bring into disrepute the administration of justice.  So, we develop that submission in relation to the matter generally up to paragraph 149 of our written submissions.  In relation to the solicitors, the Full Court, in our submission, correctly determined that there was an alternate basis for rejecting the immunity apart from the intimate connection test.

KIRBY J:   Can I just ask you very quickly, have there been any moves in any other country of the common law or the adversary system to confine the immunity by judicial decision, along the lines that you have alternatively suggested?

MR QUICK:   Your Honour, I cannot say we have looked at the Indian subcontinent.  Canada has no immunity at all.  The United States, there is just so many different varieties of what happens, we thought it could not be of any assistance, and contingency fees apply there and it is a different situation altogether.  In the United Kingdom we found nothing that would suggest that, nor in New Zealand.

KIRBY J:   They, with Ireland, would be the systems closest to our own.

MR QUICK:   The Irish system was looked at and there is nothing to suggest that the immunity would be different from the English situation, although there is nothing quite definite that applies Rondel v Worsley or Saif Ali.  The immunity of solicitors was rejected by the Full Court on two grounds.  One, it did not satisfy the intimate connection test but, secondly, because the solicitors were never acting as advocates.

My learned friend Mr Macfarlan’s argument to the Court was, “If the solicitors are performing the same function, they should be entitled to the same immunity”.  Now, the answer to that is that that does not follow.  The immunity is not there for the purpose of protecting the solicitors.  It is there for the purpose of advancing the public confidence in the administration of justice and promoting free speech in court.  Those problems just do not arise in the case of solicitors who are not acting as advocates.  When they are acting as advocates, they do arise.  But if the solicitor is never going to speak in court, if counsel is engaged and are going to speak in court, there is no need to protect the solicitor’s freedom of speech because they are not going to speak, and were not engaged to speak.

There is no need of protecting their freedom of election in court because they are never going to do anything in court.  There is no need to protect their freedom in all of the respects which justify the immunity in court.  If there is no need to protect them in court, it needs to be borne in mind that the immunity outside of court is not freestanding.  It is intimately connected with the conduct in court.  If there is no need to protect the solicitor in court, there is no need to protect the solicitor out of court.  On that basis, the immunity should not exist.

One final submission in relation to intimate connection.  It is that the work in this case results from a failure to consider right from the outset.  It is not simply a matter in the case of either the solicitors or Mr Webster of making a decision about what is going to happen in court from a number of different choices which were considered.

GLEESON CJ:   You said it was a failure to consider right from the outset.

MR QUICK:   Yes, your Honour.

GLEESON CJ:   Right from the outset until when?

MR QUICK:   I agree, it certainly goes into court and that is the type of situation your Honour had in mind in Keefe v Marks and it is specifically dealt with, but, in our submission, the Full Court is correct when it says that there are two different types of decision:  one you can say is intimately involved and the other is this continuing course of conduct.  There is a need to protect the former, but not the latter, because it is even preliminary to the making of the actual decision in court.

I said that there was one final submission; I have one other thing I should draw the Court’s attention to.  I would have made fuller submissions, but I am conscious of the time in relation to these other issues.  In the event that the appeals succeed, and I address that situation, both of the appellants say that the orders of Justice Branson should be reinstated.  They included orders for indemnity costs against Yates and also costs personally against Mr Yates in the event that the company failed to pay the costs.  Now, those were the matters of a separate appeal to the Full Court and the Full Court heard argument in relation to those, occupying half a day or thereabouts.  The Full Court in the end did not make a decision on those matters, because, having determined that Yates Property Corporation was not liable, therefore there was no use to be made of those orders and so those orders were quashed as well.

The appellants give no reason for reinstatement of the orders made in this respect; there is nothing in either of the submissions made.  In our submission, it would be the most blatant denial of natural justice and contrary, for example, to cases in this Court such as Stead v SGIC- I am sorry I cannot give the Court the reference to it, it just occurs to me ‑ ‑ ‑

GLEESON CJ:   Well, is your submission that if we were to uphold the appeal, we should remit to the Federal Court for further consideration the appeal in relation to the orders for costs made by Justice Branson, because that appeal has never been considered on its merit.

MR QUICK:   Yes, your Honour, that is our submission.

GLEESON CJ:   I understand. 

MR QUICK:   May I correct what I said to your Honour Justice Hayne earlier today.  The Dimasi Report appears in volume 9 of the appeal books, the particular passage involved is at page 2407, about line 15.

HAYNE J:   Yes, thank you.

MR QUICK:   We undertook to your Honour the Chief Justice to look up the statutory provisions in relation to Arkaba.  Those provisions are in section 12 of the Compulsory Acquisition of Land Act 1925 of South Australia.  It requires: 

regard shall be had to –

(a) the value of the land…..,

(b) the damage (if any) by reasoning of the severing of the land taken from other land of the person entitled to compensation; and

(c) the damage (if any) to other land adjoining the land taken or severed therefrom or the person entitled to compensation by reason of the execution of the works, or of the carrying on or use of the works –

et cetera.

Damages for disturbance, which is one of the grounds of agreed compensation in Arkaba, and which forms the basis of the submission made on page 102, does not have a statutory basis for it.  My learned junior says it is all explained on page 102 of the report.

GLEESON CJ:   Thank you very much.

MR QUICK:   May it please the Court, those are the submissions of the respondents, your Honour.

GLEESON CJ:   Thank you, Mr Quick.  Yes, Mr Macfarlan.

MR MACFARLAN:   If the Court pleases.  Your Honours, I would wish to reply first to my learned friend’s proposition that one is required by Spencer to assume equality of knowledge for the purpose of market value, but not for the purposes of special value.  If assuming equality of knowledge for the purpose of market value results in the dispossessed owner having taken into account the alleged advantage which he or she has in respect of the dispossessed land, because other purchasers are assumed to be in the same position as that dispossessed owner, the alleged advantage is no longer an advantage, if it ever was, in our submission, and it is certainly not one peculiar to the dispossessed owner.  That is one reason why one does not then come to special value, because there is no peculiar advantage.

The second reason is that there would be double counting which is probably just another way of putting the same point.  The dispossessed owner has received the advantage of the assumption of equivalence of knowledge for the purposes of market value, and that has been beneficial and he or she should not receive the advantage again, and the fact that it is beneficial can be seen by reference to Messrs Parkinson’s and Woodley’s report which your Honours will recall showed that an assumption was made that income would be commenced to be received within six months of the resumption date, that is, that the building of the markets structure could commence immediately.

Now, my learned friend suggested that at times the making of the assumption could be adverse and perhaps in some circumstances it could be, but clearly in the present circumstances the making of the Spencer assumption in respect of market value was beneficial. 

In respect of what your Honour Justice Callinan said in connection with the Hart Report, that your Honour could not see one item that would have been readily transmissible to a purchaser, we would add this, because that was a proposition my learned friend joined issue with.  We would remind your Honours of the cross‑examination of Mr Hart to which I took your Honours in‑chief which was to this effect:  firstly, that unless the information or documents in question were ones that would be of benefit to the dispossessed owner in other circumstances, that is, in respect of other properties – and Mr Yates said that was not the case – then Mr Hart agreed that the information would be available to the purchasers and the steps taken by YPC would be ones of which the purchasers could obtain the benefit. 

He also agreed that he had proceeded in preparing his report on a quite different assumption, in fact, the opposite assumption, namely, that those matters would not be available to the purchasers and, finally, he came to agree at the end of the cross-examination, upon the assumption that this information would not be of benefit elsewhere, he came to agree that the prospective purchaser would be in the same position, or substantially so, as YPC was.  The effect of that was a concession that on that particular assumption I mentioned, there would be no head start and that accorded with her Honour’s finding as to that, to which your Honours have been taken.

We would only add, in relation to that finding, this, that my learned friend pointed out that the finding was not that all the purchasers would be in the same position as YPC, and that is a matter of common sense.  There would be a variety of positions in which purchasers would be.  But to make good YPC’s case, it had to show that YPC had an advantage over all purchasers and the references to which I took your Honours in‑chief showed that it recognised that.  It asserted before Justice Branson that it had an advantage over all purchasers.

Now, once one concludes, as her Honour did, that there was not an advantage over all purchasers and that some, at least, would be in the same position as Yates, then it becomes a matter of market value because there are purchasers out there over whom there is no advantage and in respect of whom logic does not suggest that they would be prepared to pay anything different than YPC if YPC was in the position of purchaser.  So, her Honour’s finding was indeed a rejection of the head start approach because it was made in close proximity to a statement by her Honour of the case formulated by YPC which, as I say, expressly put the matter on the basis that there was an advantage over all purchasers.

My learned friend seeks to reject the proposition that the claim was adequately put in respect of market value through the reports of Messrs Parkinson and Woodley to which I have referred, by saying that they were likely to be rejected for other reasons.  Now, he accepted yesterday, before this Court, that the only attack made on the reports was in relation to head start, and that is in the transcript at 171 lines 7605 to 7611, and that was, with respect to him, a sensible concession, but the effect of what he says today seems to be in conflict with that.

We would also remind your Honours that the Full Court found that there was nothing wrong in law with the valuations in so far as they dealt with capitalisation and the like and Justice Branson did likewise, and in that respect Justice Branson and the Full Court were taking a different view than Mr Justice Handley in the Court of Appeal.  But, in any event, your Honours, the YPC claim was pursued, of course, through separate special value claims and in the context of special value YPC was also given the benefit of an assumption that because of the work done by YPC it could start work immediately.  The references to that, so far as the special value claim is concerned, are in Mr Woodley’s report, volume 10, page 2527, especially line 30, and Mr Egan, volume 10, 2503.  I point out that Mr Woodley, as well as looking at the acquisition cost of an alternative site, looks at a number of other matters including holding costs, for example, at line 25 on 2527, contrary to what my learned friend would suggest.  His suggestion was that there was an absence of consideration of holding costs.

Now, your Honour Justice Kirby asked at one stage what was wrong with the head start approach and my learned friend Mr Jackson referred, and with respect to him, rightly, to the Spencer test.  We wish to add one comment in addition to that.  That is this, that if the inquiry is what the owner would pay to hold on to the property rather than lose it, then one can logically see that the owner would start thinking about what it would cost him or her to conduct whatever the relevant activity was elsewhere, and that was the matter to which so much of the evidence before Mr Justice Cripps was directed.

It is not logical to hypothesise that the owner in that position would start thinking about the advantage that that owner had over other purchasers and think, “Well, because of that advantage I have I would be prepared to pay more to hold on to the property”.  There is just no logic in that.

GLEESON CJ:   Mr Macfarlan, the statutory entitlement was only to value of the land, and that was given a gloss against a background of judicial interpretation to mean value of land to the owner.

MR MACFARLAN:   Yes.

GLEESON CJ:   But, there was no statutory entitlement to damages.

MR MACFARLAN:   No, there is a limited severance right, your Honour, in the relevant section.

GLEESON CJ:   What is that relevant section?

MR MACFARLAN:   It is on page 314 of the second volume of the appeal books, your Honour, section 124; it talks about damage for severance.

GLEESON CJ:   Apart from a claim for damage for severance, there is no entitlement to any damage or compensation for loss.

MR MACFARLAN:   That is so.

GLEESON CJ:   Does it follow that in so far as it is legitimate to talk of things such as disturbance or reinstatement, they can only be taken into account as arguments in support of some kind of special value.

MR MACFARLAN:   Yes, if they are described as disturbance, but something very similar could come into the assessment of market value, if the siting question has advantages over other possible sites for the conduct of an activity, which represents the highest and best use of the subject site, then the comparison of this site to the others is obviously something that comes into market value and although it is not disturbance, it would very closely mirror the sort of quantification that one would be looking at through disturbance claim.

GLEESON CJ:   But the theory that links it to a value of the land, for the purpose of the statutory provision, is this concept of special value, is it, unless it is taken up to an extent in market value?

MR MACFARLAN:   Yes, your Honour.

GLEESON CJ:   It can only be market value or special value?

MR MACFARLAN:   Yes, that is so.  But, could I say, your Honours, that we adopt the submissions made by my learned friend, Mr Jackson, and I did inform my learned friend, Mr Quick, that I would be saying that before Mr Quick commenced his submissions.

Your Honours Justice Gaudron and I think your Honour Justice Callinan referred to a figure of about $8 million and I think your Honours were referring then to the purchase price of $5 million and probably the figure of, I think, it was $2.7 million referred to in the Full Court’s judgment at volume 2 page 234 line 30.  We point out to your Honours that there was not any evidence in relation to that $2.7 million figure; the reference made by their Honours in the Full Court was to evidence that was rejected and we have set out the details in relation to that matter in the written response we handed up yesterday to questions that were asked of me on Monday; it is dealt with at the foot of the second page.

CALLINAN J:   So that, at most, it would have been $8 million.  You say it was not because it was questionable but that was certainly the ceiling of any amount.

MR MACFARLAN:    Certainly, the ceiling, yes, your Honour.

GLEESON CJ:   Can I come back to that question I raised about section 124 of the Public Works Act.  Suppose that there is a particular parcel of land that is resumed which is located in such an area that nobody except the dispossessed owner would have had access to it.  How is that factor taken into account in working out the value to the owner of the resumed land?

MR MACFARLAN:    Well, conventionally that would be an advantage peculiar to the owner and would come in under special value.

GLEESON CJ:   Because no hypothetical purchaser would have access to that land.

MR MACFARLAN:    That is right, and the ‑ ‑ ‑

GLEESON CJ:   That would be a pretty simple example, would it not, of a case where the value to the owner would be radically different from the value to any hypothetical purchaser?

MR MACFARLAN:    Yes, and the orthodox interpretation of Baringa gets one to the same position.  That is that there was an ability which the dispossessed owner had to do things on the land which no one else did because, for whatever reason, that dispossessed owner was able to obtain a relevant building approval.

GLEESON CJ:   You do not, for example, have to assume a subdivision and access when you are valuing the land?

MR MACFARLAN:    I am sorry, when?

GLEESON CJ:   You would not be able to subdivide a block of land unless there was access to it.

MR MACFARLAN:    No, that is so.

GLEESON CJ:   So that, for the purpose of valuation under the Public Works Act, you do not have to assume subdivision plus access?

MR MACFARLAN:    No, and, your Honour, one of the reasons that situation is different from the present is that Spencer’s Case cannot have any operation where the supposed advantage, or alleged advantage, is not one based on knowledge or something that can be transmitted to a purchaser but is something which is indeed peculiar to the owner.  Solicitorss duties, your Honours ‑ ‑ ‑

HAYNE J:   Just before you go on, the landlocked land example would not be dealt with under the severance provisions?

MR MACFARLAN:    It might be, your Honour.

HAYNE J:   I do not ask you to stay and consider that.

MR MACFARLAN:   It might well be, your Honour.  As to solicitors’ duties, your Honours, we suggest it flies in the face of common sense to suggest, as my learned friend Mr Quick does, that the barristers did not give any advice in the present case.  Clearly they did by their numerous directions and suggestions to the valuers and to the solicitors, of course, largely at least, if not wholly, in the presence of the solicitors and in the barristers’ ultimate approval of the reports of the valuers and in their framing of the written and oral submissions.  There is clearly a wealthy of implicit advice in that as the solicitors observe what the barristers are doing.

Your Honours, what occurred here reflected a very sensible division of functions between members of the legal team.  It was a circumstance where the client was in liquidation and funds were obviously limited.  It would not have been sensible in those circumstances to allocate yet another senior person to the lengthy conferences which occurred and which, indeed, were necessary to thrash out the very complicated valuation issues that were present in this case.  Already there were two highly experienced counsel on the job and there were three very eminent valuers.

Your Honours, that is a very important issue because if the Full Court judgment continues to set the guidelines for solicitors in this country on that issue, then we submit considerable duplication of function will occur because the realities of the situation will have to be put to one side and needless expense will have to be incurred in duplicating expertise being applied to issues where duplication is not necessary.

GLEESON CJ:   I will have to read it again and check, but I thought the Full Court laid a lot of emphasis on the expertise professed by the solicitors.

MR MACFARLAN:   They did, yes.  But, your Honours, that expertise could not be brought to bear in a case such as the present without attendance upon the valuers in the sort of detailed discussions which did occur between valuers and counsel over a long period.  The valuation issues were complex indeed.  If the solicitors were going to be in a position where they could deal with the nuances of these issues, then they would have had to spend that time, as did counsel.  And, already, one had five experts on the valuation issues with their heads down in discussions.  What the point of having the sixth would have been, we suggest ‑ ‑ ‑

KIRBY J:   But I detected that the sting in the submission was that Mr Schwaiger was really a very inexperienced person and that, although they held themselves out to be expert in this area and thereby secured the retainer from the liquidator in Yates’ interests, that really Mr Schwaiger was not able to perform the real job of a solicitor, which is to add value, not simply to perform the messages that counsel give.

MR MACFARLAN:   He was certainly adding value, your Honour.  He was doing invaluable work.

KIRBY J:   But in the intellectual component of the legal profession’s tasks, that is what was said, I think.

MR MACFARLAN:   The work he was doing involved a considerable intellectual element.  He had to ‑ ‑ ‑

GUMMOW J:   Yes, he had to go away and refamiliarise himself with the cases.

MR MACFARLAN:   He had to go away and examine documents, he had to ‑ ‑ ‑

GUMMOW J:   Yes, the fact is that your clients seem to have accepted this retainer and reliance upon this expertise, and then not applied it.

MR MACFARLAN:   Well, your Honour, the reference to ‑ ‑ ‑

GUMMOW J:   Applied it by directing them to counsel.

MR MACFARLAN:    ‑ ‑ ‑ expertise occurred in 1985, I think it was, before the commencement of the liquidation.  There was no evidence that the liquidator was aware of any such claim, but a particular division of labour occurred after the commencement of liquidation.  Her Honour heard all the evidence about this and her Honour said that after the commencement of the proceedings in early 1986, YPC looked to counsel and not to the solicitors for advice.

GLEESON CJ:   But your submission is that this judgment sets the bar far too high in terms of the standard for solicitors, but the Full Court gave importance to a combination of circumstances, as I understand it, they being:  one, the expertise professed by your clients; the second being what they regarded as the obviousness of the point that was missed; and the third being the fact that this was a case where nothing happened about the point, not a case where they mulled over it in conference with counsel and ultimately deferred to the judgment of counsel.  It is that combination of circumstances that, as I understand it, led the Full Court to the view they took.

MR MACFARLAN:   But the Full Court judgment involves the proposition that the expertise necessarily had to be applied irrespective of the circumstances, but it could only be applied in the circumstances such as these in a way that was relevant by frequent attendance at these conferences with valuers and the like.  It was not a point, if one accepts everything put against us, that would emerge from a distant and brief consideration of a valuation report.  It was something that would only appear after a detailed mulling over of the matter, a discussion with counsel and the valuers as to what had or had not been considered and what was the justification for the ways in which they had decided to approach the case.

GUMMOW J:   Yes, but there is a perception, and I do not know whether it is right or wrong, but in many big firms in large cities these days partners bring in the work, and that is their primary function, and the work is then actually discharged by a number of employees.

MR MACFARLAN:   Yes.

CALLINAN J:   The partners being described as rainmakers.

GUMMOW J:   Exactly.  There are not people around today, the perception is, of the ilk of Sir Norman Cowper. 

MR MACFARLAN:   Yes.  Mr Yates knew exactly what was going on, your Honour.  The evidence was he was at some 40 conferences with counsel and the valuers and he accepted this position.  He knew Mr Schwaiger was the person from Abbott Tout involved and he had no objection to that situation and the evidence showed that whenever Mr Yates wanted ‑ ‑ ‑

HAYNE J:   It sounds like a defence of volenti.

MR MACFARLAN:   Well, it is a defence of instructions, your Honour.

KIRBY J:   Except that Mr Yates was not, himself, a lawyer and was in the hands of lawyers and says he raised certain matters which were not appropriately attended to.

MR MACFARLAN:   He does not say he raised them with the solicitors, your Honour.  It was alleged he raised them with Mr Webster but that is very much in dispute and is dealt with in Mr Webster’s submissions.

CALLINAN J:   Mr Macfarlan, to make out this sort of argument you probably need to be able to point to some terms, either express or implied, of the kind that the majority in this Court thought might be possible in Astley’s Case.  This Court said it was a matter of contract – the relationship was a matter of contract and if solicitors wished to limit their liability then they would need to have terms to that effect and the charge-out rate would be made to reflect the reduced liability.

MR MACFARLAN:   Yes.  Your Honour, the charge-out rate did reflect the position here because the evidence was that the charges made reflected the seniority, or lack of it, of the persons involved and if the partner or an expert ‑ ‑ ‑

CALLINAN J:   Yes, but did Mr Yates know that?  Did Mr Yates know and did he accept that he would be getting a lesser service because he was paying less?

MR MACFARLAN:   There are two steps in that, your Honour.  Mr Yates knew exactly who was involved on behalf of Abbott Tout and he, and subsequently the liquidator, were the subject of her Honour’s finding, having looked at all of the evidence, that YPC looked to counsel and not to the solicitors for advice on the substantive matters.

CALLINAN J:   But that is hardly the point, is it?

MR MACFARLAN:   It is a narrowing, your Honour, an implicit narrowing of the duty by conduct occurring over some four years.  That was the way in which the team worked, to the knowledge of the client.

CALLINAN J:   But the fact that Mr Silvia and Mr Yates may have been looking to the barristers did not mean that they were not entitled to get value from the solicitors.

MR MACFARLAN:   Indeed, but the finding was that they looked to the barristers and not to the solicitors for advice; they got a lot of value from the solicitors, but they were not charged for, nor was there any occasion for them to be charged for, the attendance of a senior solicitor at the very many conferences with the valuers and counsel.

CALLINAN J:   Was every letter of any substance at all, dealing with any matter of substance that was sent by the solicitors to Yates or the liquidator, done without reference to the barrister?  There must have been some, must there not?

MR MACFARLAN:   Your Honour, there were two very early letters that dealt with the valuation issue in an extremely general form, not descending beyond the level of saying that it may be a special value claim, and her Honour dealt with those and described those as very preliminary and having no causative effect and they were consistent with her Honour’s findings, because it was really only one, in particular, that I have in mind, was written after a request from Mr Yates to be pointed in the right direction because he wanted to consider the cases referable to issues that may arise and he wanted to do the work himself.  But, her Honour relied very heavily on the very many occasions when Mr Yates did have questions in relation to valuation matters, and they were always directed by him to counsel, either directly or through the solicitors.  Mr Yates said to the solicitors, I want counsel to answer these questions.  But there was a wealth of material and her Honour was really the only one, we submit, who was in a position to fully assess it.

Could I give an example, your Honours, of the extreme lengths to which the Full Court judgment went on this issue at page 264 of volume 2 of the appeal book.  At line 29 they speak of:

a solicitor with expertise in an area of the law cannot rely on counsel to the same degree.....Sometimes the solicitor will be too busy to deal with the problem himself and for that reason will obtain the services of counsel.  But for whatever reason counsel’s advice is sought, when the specialist solicitor receives that advice he is well placed to consider it and form his own view about its correctness.  In our view there is no justification for the conclusion that he is absolved from that task merely because he has taken the advice of experienced counsel.

If one pauses for a moment, your Honours, and looks at one of those examples, the Full Court is suggesting if a client comes to a solicitor and asks for some advice and the solicitor says, “I’m too busy to give it, but I’ll obtain it for you from counsel”, still, the solicitor has an obligation to give that advice himself.

GLEESON CJ:   Let me take a practical example from the practice in the past of the New South Wales Bar.  Suppose the barrister who is giving the advice is charging at an hourly rate about a third of the rate being charged by the solicitor who is receiving it.  Does the solicitor have an obligation to check it?

MR MACFARLAN:   No, your Honour, the solicitor’s obligation will be dependent on the instructions.  In that situation where the solicitor said he did not have time, it cannot be his obligation to ‑ ‑ ‑

GLEESON CJ:   I am assuming that the solicitor who attends in conference with counsel to receive counsel’s advice is charging much more to listen to the advice than the barrister is charging to give it.

MR MACFARLAN:    At most, his obligation is to keep his or her eye out for something which is glaringly wrong, but that is the extent of the obligation.  It is not to redo the advice.

CALLINAN J:   I knew some solicitors who came to barristers’ conference without even a pen and piece of paper.

KIRBY J:   Many who just sat there and stared into space or enjoyed the cup of tea.  I mean, you say the Full Court has set the bar too high and that this Court must not set the bar too low.

MR MACFARLAN:    That is so.  Your Honour, the obligation, we submit, is to be astute for advice or steps taken in conduct of proceedings which is glaringly wrong unless the solicitor is required, expressly or implicitly, to spend the time himself or herself in apprising himself or herself of the issues because that will involve considerable expense.

KIRBY J:   The “glaringly wrong” principle sets the self-image and role of a solicitor lower than I would have thought.  They are part of a legal team and they ought to both be turning their attention to the legal problem which is submitted to them for their advice.

MR MACFARLAN:    Well, if it is submitted to them, your Honour, if what happens is the client comes to the solicitor and says, “Well, I’d like counsel’s advice on this”, and the solicitor agrees to obtain that, the solicitor may have an obligation to look at it briefly and see whether there is something glaringly wrong in it, but he has not got an obligation to do the work again and duplicate the expense, in our submission.

Your Honours, on the question of causation, my learned friend said that Mr Silvia said he would have done certain things if he had got the advice about the point in question.  But the critical point to which my learned friend has not responded is that the evidence of Mr Silvia was that, in the first instance he would, of course, have expected the legal team that he was instructing to discuss it amongst themselves.  But it was only if the legal team could not resolve it amongst themselves that there would be the occasion to go and seek advice of the court, or to take one of the other possible extreme steps that might have been necessary to resolve it.

The solicitors’ evidence in these proceedings was that, if the point had occurred to them, they certainly would have raised it.  They would have discussed it with counsel.  But if counsel had given apparently sensible reasons for rejecting it, then, not surprisingly, they would have accepted that.

Your Honours, the section 52 claim, my learned friend Mr Jackson will be dealing with this.  But I mention in passing, that was abandoned at the Full Court stage, your Honours.  My learned friend Mr Jackson will hand up material which demonstrates that.  So it would not be appropriate, in our submission, to remit to the Full Court in any circumstances for a consideration of a 52 claim.

GLEESON CJ:   But, what about the matter of costs, the last matter that Mr Quick touched on?

MR MACFARLAN:    Your Honour, we cannot say any more than is said in paragraph 38 of my learned friend Mr Jackson’s submission.

GLEESON CJ:   But the issue may or may not arise.  But if it does arise, what Mr Quick says is right, is it not?  That is, that there has never been any consideration on its merits of the appeal against the special order for costs made by Justice Branson.

MR MACFARLAN:   That is the position.

GLEESON CJ:   We are hardly in a position to consider that matter on its merits for ourselves, are we?

MR MACFARLAN:   That is also the position.  As to immunity, your Honours, we have prepared a written submission concerning that which we would seek to make available to the Court.  It deals both with the question of leave to argue the point and the merits of the point itself and, unless your Honours wish me to, I would content myself with reliance upon the document, and that will be made available ‑ ‑ ‑

GLEESON CJ:   Thank you.

KIRBY J:   If it is true that the section 52 claim was abandoned, then at least on one view one could approach this matter simply dealing with whether or not your client fell within the immunity and Mr Jackson’s client, and if they did, then all other matters really fall by the wayside.

MR MACFARLAN:   That is so, your Honour, but there are matters of reputation at issue here and it certainly would not be our preferred course, because there would otherwise stand condemnations of my clients and Mr Webster as having been negligent and they would be, of course, most concerned about that.

GLEESON CJ:   I understand that, but the problem with our going into the details of the law of valuation is that this is not the appeal from the Court of Appeal’s decision, and we have not really had a contra dicta that would have brightened the issues.  I understand what you say about the ‑ ‑ ‑

MR MACFARLAN:   Yes, the easiest way forward, your Honours, is that even if the point about Baringa is correct, which we say it is not, it plainly was not an obvious point, in our submission, and there cannot have been any negligence in failing to advert to it.

GLEESON CJ:   Mr Macfarlan, I must have failed to hear something you said a moment ago.  Do you say that any reliance on either the Trade Practices Act or the Fair Trading Act by Yates was abandoned somewhere during the course of these proceedings?

MR MACFARLAN:   Yes.

KIRBY J:   I thought that was what we were told on the first day, but I thought Mr Quick had resiled from that to some extent.

MR MACFARLAN:   Yes, my learned friend Mr Jackson is going to hand the documents to your Honours, but what it shows is that a notice of appeal was lodged which embraced section 52 and also section 42 of the Fair Trading Act.  The written submission dealt only with section 42 of the Fair Trading Act.  In argument – and we have the transcript – before the Full Court there was an express indication by my learned friend to the Full Court that the section 42 matter was not being pursued and ‑ ‑ ‑

GLEESON CJ:   That is very different from the impression I got from the answer Mr Quick gave to a question I asked first thing this morning.

MR MACFARLAN:   Yes, well, he no doubt has not recalled what happened, but that appears to us to be what the documents show.

GLEESON CJ:   Anyway, Mr Jackson is going to deal with that.

MR MACFARLAN:   Yes, indeed.

CALLINAN J:   Mr Macfarlan, before you sit down, if we were to uphold the appeal, if we did, why could not we deal with the matter of costs before Justice Branson?  It was just an ordinary exercise of discretion, was it not?

MR MACFARLAN:   Yes.  That is basically what is said in that paragraph 38 of Mr Jackson’s submissions to which we do attach ourselves.

CALLINAN J:   Mr Jackson might say something about that.

MR MACFARLAN:   Yes.

GLEESON CJ:   Yes, but he was entitled to have the exercise of the discretion reviewed by an appellate court and he has never had that done.

MR MACFARLAN:   He has not had it done.

KIRBY J:   And if we do it, then he has got no further right of further review, he loses that opportunity forever.

MR MACFARLAN:   That would be so.

GLEESON CJ:   I mean, what material do we have before us that would permit us to review the exercise of discretion?  I thought this was why the Full Court said they would not remit it to Justice Branson.  I thought it was because of some of the material she looked at in relation to the issue of costs but that is not material that we have looked at, is it?

MR MACFARLAN:   No, it is not, your Honour.

GLEESON CJ:   Yes, thank you.

MR MACFARLAN:   I just add one thing, your Honours.  In relation to immunity, the same policy reason, we submit, as applies in respect of counsel applies, so far as the protection of solicitors are concerned, if the solicitors have the same duty as to the conduct of the case as counsel.

KIRBY J:   Yes, but if we stretch “intimate connection” too far then no solicitor will ever be liable in law for any work done in connection with litigation.

MR MACFARLAN:   We are not asking your Honours to stretch it too far, only as far as Keefe v Marks and that is not very far, your Honour.

GLEESON CJ:   Yes, thank you, Mr Macfarlan.

MR MACFARLAN:   If the Court pleases.

MR QUICK:   Would the Court just hear me a moment with a personal explanation in relation to what has occurred before the Full Court.  I made submissions to the Court this morning on the trade practices matter without any recall of what actually occurred before the Full Court, apart from the reference to the documents which I had before me which were written submissions made to Justice Branson.  It is 18 months ago and I have never had the benefit of reading the transcript of the Full Court proceedings because we never obtained one.  If there has been a mistake I assure the Court that it was an omission on my part of recall rather than to mislead the Court and I apologise for it.  There is one other thing I should do ‑ ‑ ‑

GLEESON CJ:   Do you accept that the point was abandoned in the Full Court?  It could affect what we do.

MR QUICK:   Your Honour, I have no recall of that.

GLEESON CJ:   You do not remember it but, if Mr Jackson is able to demonstrate that that is what happened, you do not seek to contradict him.

MR QUICK:   I certainly would not wish to say anything more.

GLEESON CJ:   All right.

MR QUICK:   Your Honours, in our written submission, we said we would hand up some material that is not contained in the appeal books.  It relates to the evidence of Mr Meredith and all of the valuation evidence.  May we do that informally afterwards?

GLEESON CJ:   Yes, certainly.

MR QUICK:   If the Court pleases.

GLEESON CJ:   Yes, Mr Jackson.

MR JACKSON:   Your Honours, many of the matters I would otherwise wish to say by way of reply are set out in our document of submissions by way of reply.  May I simply deal with a number of matters that have arisen in the course of the oral argument.  The first concerns the method of valuation that was actually used.  Our submission is that it is inappropriate for the respondent to complain as there appears to be an underlying complaint in the submissions about the capitalisation, as it were, method of valuation that was adopted.

That was an issue on which they failed in the two courts below and, your Honours will see, and I will not take your Honours to it, but in volume 2 page 240, the view adopted by the Full Court.  That is something, of course, that is not the subject of challenge in these proceedings.  And, your Honours, that means is a means which is very commonly adopted in valuation cases and, if one takes simply the land subdivision cases, Turner in this Court is a case where that approach had been applied below.

Your Honours, reference is made to Mr Dimarsi’s report.  You will see a relevant passage – the report is in volume 9 - but if I could just take your Honours to one page of it, which is in volume 9, page 2404.  Your Honours, much has gone before in the report which commences quite some pages earlier.  But what your Honours will see then is, in section 4 on page 2404, it deals with the heading “Commencement of Trading”, and then works on the assumption, which you will see about line 25:

that had construction proceeded, the Harbour St. Market could have been operating by early 1985, certainly before the date of resumption  –

which is May 1985.  He then says, about line 30, that it was to be “an efficient market”, and so on.  What your Honours will see, going on from that, is that at the end of his report, commencing at page 2411, he has a number of charts which show the estimated net income potential in 1985/1986 of various scenarios, including trading on four days and five days, and so on.  That all relates back to what he describes as the net income projections on page 2409.

HAYNE J:   To be understood, is it not, Mr Jackson, in light of his brief recorded at 2385, line 14 or 15, a brief to assess as at a date:

Optimal net income which a well designed and well managed market could have generated.

MR JACKSON:   Yes, that is so.  Your Honours, could I move from that then to say something about Mr Woodley’s report.  Could I take your Honours for one moment to part of it in volume 10 at page 2534.  This was material before Justice Cripps and what your Honours will see is that in paragraph  2 of that “Alternative Basis of Assessment of Special Value”, such items as:

(b)  Holding costs 12 months…..

(c)  Perceived increase in costs of an equivalent market development –

and so on.  Now, your Honours, my learned friend ‑ ‑ ‑

GLEESON CJ:   Repeatedly I notice the expression Mr Woodley uses on line 15, “A hypothetical purchaser in the same position as Yates Corporation”.  Unless my memory is playing tricks on me, time and again in his reasons for judgment Justice Cripps referred to “a hypothetical purchaser in the position of Yates”.  That seems inconsistent with head start.

MR JACKSON:   Yes, your Honour, yes, it does, and that is the point I was seeking to make yesterday.  If you take the description of such a person, that seems to be the person who is one of the two assumed people in Spencer and, your Honours, that is why one goes back to a submission which I was making yesterday but do not wish to go further into now, but simply to say that if you look at really what was being said in Pastoral Finance, as distinct from views that have been taken of it afterwards, the purchaser they are describing is really the person who has the knowledge of the potentiality of the land that the person from whom the resumption has occurred – it is that person, to put it shortly.

GLEESON CJ:   Well, the expression that Justice Cripps repeatedly used to describe that person was a person in the position of Yates.

MR JACKSON:   Yes, your Honour.  Your Honours, our learned friend Mr Macfarlan has dealt with the evidence later called at the trial before Justice Branson and your Honours have been taken to the discussion of that evidence, but he is right to say that her Honour did treat it with a degree of reserve, and your Honours will see that in the passage at volume 1 pages 157 to 159.

The next matter to which I would wish to go is this, your Honours:  our learned friend said, correctly, that our submissions in relation to special value and Pastoral Finance went rather further than was contained in our written submissions; your Honour, I accept that, but, I think I said yesterday, in dealing with the matter, that our oral submissions did go further than the written ones had gone.

Your Honours, our written submissions do try, of course, to analyse the doctrine, albeit, I will accept this, somewhat imperfectly, but that, with respect, does have some basis in the difficult nature of the concept, whatever it may be.  Your Honours, could I refer also in that regard to the fact that our notice of appeal, which is in volume 2 page 286, grounds 10 and 11, does deal with the issue and it is really perfectly clear from that that we do seek to at least limit the ambit of the doctrine.

Your Honours, could I come then to say something about The Moreton Club Case to which reference was made this morning.  Your Honours, an important thing to remember about it is that it is a case, and one needs to see the observations in the context in which they are made, which took place where the resumption occurred, at a time when there was control of the rents that might be obtained, and the fact that there was a control is referred to in Arklay as a relevant matter, to which I will come in a moment.

Your Honours, The Moreton Club Case 77 CLR 254 is an indication of a case where, because of the control, the land did have a greater value to the dispossessed owner than the market value which was then obtainable. Could I take your Honours for a moment to the case. Your Honours will see the reference at the bottom of page 257 to what was being sought to be done. It is at the last paragraph on that page. His Honour sets out:

By these arguments the Commonwealth sought to show that the club’s interest in the premises could have no great value, if value was to be estimated by the money into which the interest might be lawfully converted by one means or another.

And that, your Honours, as appears from the preceding part of it, was because of the restrictions on rent.  Your Honours, it is that which brings about the next observations – it is the owner’s loss that is to be estimated and that may be done in various ways.  There is then the quotation from Justice Cussen in In Re Wilson v State Electricity Commission of Victoria.  What your Honours will see at the top of page 258 particularly is the observation that:

In cases of compulsory acquisition, however, an answer may be able to show that the value to him is something more than such market price -

Such market price, your Honours, going back to what is on the bottom of the preceding page:

A willing seller who was desirous of getting rid of the property and had made his preparations accordingly.

It really sounds as though what his Honour was talking about was someone who was putting it on the market for no particular defined use, but simply putting it on the market.

Your Honours will see, also, that the quotation contains the following, about the third line of page 258:

He may either set out in detail all possible elements making up the value to him, or he may with regard to some incidental expenses and claims give general evidence indicating that a lump sum should be allowed in respect of a number of matters with relation to which it would be difficulty or an unnecessary waste of time to go into details”

Yours Honours will see, if one looks at the example given immediately following the reference to Re Wilson, that what is set out is something that is, in effect, a disturbance claim or a claim for replacement or reconstruction costs but all things seem to be related in one way or another to the difficultly caused by the obligation to move.  I will not go through it now but if your Honours were to look in due course at the way in which his Honour then assessed the compensation which appears from the last paragraph on page 258 through to the top of page 260, what your Honours will see is that what he did was to work out what the value of the lease that was resumed would have been absent, there being any restrictions, then to work out what the value of the lease was with the restrictions, which was a low figure and then to work out what the cost would have been to go somewhere else, if it were available, which was a much higher figure and in the result to say if there was a value in being able to stay there because of the difficulty of obtaining other premises at any reasonable cost and, accordingly, the amount that he gave was something above, not market value in the open market, but something above the value that was the value in the rent controlled market.

When one comes then to look to see how the protected rentals were dealt with by the Court, including Sir Owen Dixon in Arklay 87 CLR 159 at 169, what your Honours will see in the last – and this is a passage to which I referred yesterday – the last paragraph on page 169 there is a reference to section 28 of the Act providing that:

regard shall be had to the value of the land acquired.  It is established that “value” in such a context means the value of the land to the owner.  Where the amount for which a vendor may sell and a purchaser buy is not controlled the Court poses a hypothetical problem, the answer to which supplies this value.  It is a familiar rule which –

was stated in Spencer’s Case.  So, your Honours, it is difficult, in our submission, to quite see that the notion, whatever precisely it may be, of special value is one that can be seen to be supported by, for example, the decision of three members of the court in our claim.  Your Honours, could I just mention one minor thing.  There was some discussion about what the land was being used for.  The pleading was that the land was vacant land – we admitted that.  You will see that in the statement of claim, paragraph 42(a) volume 1 page 14.

Your Honours, could I come then to the question of the loss of the prospect or chance of some success.  This is an issue which was dealt with relatively recently by the Court of Appeal in the United Kingdom in a case McFarlane v Wilkinson (1997) 2 LLR 259.  I have given your Honours an extract from the case, but particularly pages 275 to 277.  It was a case where the contention was that there should have been a claim based not just on common law but also on breach of a statutory duty.

The court held that in fact there was not a case of breach of statutory duty but made a number of observations which are relevant to the present circumstances.  Your Honours will see the facts commence relevantly, I think, at page 276 in the right column halfway down the page and, your Honours, if one goes to the last paragraph  on that page, his Lordship says that:

This evidence shows that Junior Counsel interpreted the effect of reg. 32(3)(a) correctly.

and –

it is quite absurd to consider that she could be liable in negligence for exercising her judgment in the way she did –

Then, your Honours, there are some observations on the top of the next page about the “exercise of judgment” by counsel and the undesirability of having every possible issue raised in every case.  That goes through almost to the bottom of the left column on page 277.

KIRBY J:   Is this a factor in immunity that views can differ in that until you get to the ultimate court, you never know what is the authoritative ‑ ‑ ‑

MR JACKSON:   Well, it is a fact, your Honour, I am just going to come to that in just a moment.  But I could I say about it this, that it is not unknown, if I can put it that way for, for example, this Court to overrule previous decisions, one of its functions, from time to time.  It would be always possible, on the theory that our learned friends would really have to advance, to say that it is negligent not to include things that may be overruled by the Court if the matter could come there, and perhaps ‑ ‑ ‑

KIRBY J:   Another case years later.

MR JACKSON:   Oh, yes, your Honour.  Well, one could also have a situation where, let us assume that the question was asked, “Should we include this cause of action?”,  and one says, “No that is nonsense, and there is no chance of it running, you will not go anywhere with that”.  Then, being always proved wrong, the matter comes here and one out of seven Justices says, “Yes, that cause of action exists”, six do not.  Do they get one seventh of the damages?  Your Honour, it would seem bizarre if that were the case.

CALLINAN J:   There might be some pretty difficult problems too.  I would not have liked to have had to advise on the cross-vesting case in the last two years, or what the situation would be on cross-vesting, Mr Jackson.  You probably did.

MR JACKSON:   Well, your Honour, I do not make any admissions, your Honours, for the purpose of any potential litigation.

CALLINAN J:   There are quite a lot 4:3 cases in this Court too, are there not, 4:3 decisions?

MR JACKSON:   Indeed, your Honour, yes, and that is what I was going to say, your Honour.  If one got to a situation of the kind I was postulating and the result was 4:3, should one say that they get three‑sevenths of the damages, or perhaps maybe it should be three‑quarters, because one only needs four to succeed.  Your Honours, I will not trouble your Honours with that any longer, but could I just say that if I go back to what was being said in McFarlane v Wilkinson, the question of the manner in which there should be a calculation of damages for loss of a chance, where the question was one of law, was dealt with at the bottom of the left column on page 277 in a passage going through to the end of the reasons of Lord Justice Brooke and, your Honours, I will not read it out now but you will see, particularly in the paragraph commencing about point 3 on page 277, that he refers to cases where the court often has to assess what would have been the likely result on the facts, if the action had proceeded and refers to Kitchen, and then half way down says:

The need to conduct such an exercise, once negligence is established, where the factual outcome would have been uncertain, is soundly based in both principle and authority.

Mr Jackson –

Mr Rupert Jackson who was, I think, one of the authors of Jackson and Powell, who was appearing in the case –

who has great experience in these matters, told us, however, that he knew of no English case in which a Court had been willing to award damages on the basis of the potential settlement value of a claim which was shown to be bound to fail as a matter of law –

and your Honours will see that there set out.  Your Honours, that, in our submission, is an appropriate distinction to be drawn.

Your Honours, could I move then to just say something about our learned friend’s application for the Court to reconsider Giannarelli v Wraith.  Your Honours, we have dealt with this in our submissions and reply.  May I just say a couple of things about it.  The first is that if one applies the various tests usually applied by the Court in relation to reopening previous decisions such as those set out in John v The Commissioner of Taxation and elsewhere applied, there is really no basis at all for reopening.  Giannarelli v Wraith has been around for quite some time.  There are not cases that raise any serious doubts about its operation.  The cases that there have been show that there are significant reasons for maintaining it and nothing shown to indicate what has changed or why it is wrong in any respect.  No doubt, of course, as could be the case at the time of Giannarelli v Wraith, it is possible to say, “Well, there could be a different rule”.  Well, of course, your Honours, there could be a different rule, but that mere fact should not be sufficient, in our submission, to the Court to change the position.

Your Honours, the distinction proposed between criminal and civil does have a number of difficulties.  They have been largely adverted to by what your Honours have said.  But what happens, for example, in the case of an appeal, is a counsel preparing for or settling grounds of appeal for a criminal appeal in a different position from someone who is doing the same in relation to a civil appeal?  What happens if there are cases that come here, parallel civil cases being on the one hand a constitutional case, on the other hand a criminal appeal.  Your Honours will have seen that occur in Leith v The Commonwealth on the one hand and the Reg v Leith, cases that were heard together.

Your Honours, the next thing, of course, is that if one looks at Giannarelli v Wraith, one sees that it was a case of omission, omission to advert to a particular matter.  Your Honours will see that at page 554 and page 560 in the reasons for judgment of Chief Justice Mason.

GLEESON CJ:   The distinction between act and omission, where the complaint is that an argument was presented in a certain way, becomes fine to the point of disappearance.

MR JACKSON:   Indeed, your Honour, and what I was going to say was this, your Honours.  If one looks at the practicality of the matter, the failure to advert to something is, one would think, the most usual instance where negligence might be alleged in this kind of context.  Your Honours, one does need to bear in mind that not every litigant approaches these matters with absolute rationality, and one does have a situation where the issues, the question of what witnesses are called, what course the case is to take, and these matters are ones where there has to be an exercise of judgment.  Very frequently disappointed litigants say, “Why did we not call so‑and‑so, why did you not do this or why did you not do that?”, and it is an area ‑ ‑ ‑

KIRBY J:   That could be a reason for setting a high standard but not for withdrawing the liability altogether.  I mean, we do see a lot of very incompetent work and it may be the result of the growth of the profession and different standards and so on.  Other professions are made accountable in law.  Why should the law be in this special place, except for historical reasons?

MR JACKSON:   Your Honour, without going over it now, could I invite your Honours to take into account the reasons expressed in Giannarelli v Wraith - varying degrees of emphasis.  Nothing has changed in that regard, in our submission, and, your Honour ‑ ‑ ‑

KIRBY J:   Is it true that in Canada there is no such immunity?

MR JACKSON:   Yes, your Honour, it is.  I think the reference that has been given by our learned friends.  I think we refer to it also.

GLEESON CJ:   Do witnesses have an immunity in Canada?

MR JACKSON:   I do not know the answer to that, your Honour.

GUMMOW J:   Well, they never had a separate Bar.

MR JACKSON:   No.

GLEESON CJ:   Do the judges have an immunity in Canada?

MR JACKSON:   Your Honour, I assume they do, I really do not know the answer to that.

GLEESON CJ:   The public policy of that remains evident to them.

MR JACKSON:   Your Honour, could I just say also that the matters referred to in McFarlane by Lord Justice Brooke, to which I just referred, are matters of some importance.  Could I then come to the question of the Fair Trading Act, and so on, claims.  The position which obtained was, if one goes first of all to volume 2, your Honours will see that at page 222 in the notice of appeal by our learned friends to the Full Court, that in grounds 17 and 19 there are references to the immunity and the section 42, 52 and 42 again.  Now, that is in the notice of appeal.

When the matter came to the Full Court – and your Honours should have the two documents I am about to refer to – one is an extract from the submissions of the first appellant before the Full Court.  I wanted to refer at the bottom of the page numbered 5 and the top of page 6.           Your Honours will see that there is a reference to section 42, a breach of fiduciary duty.  Your Honours will see in the third, fourth and fifth lines on page 6 a reference to the claims Mr Webster and Mr Simos.

When the matter came on for oral argument, the transcript - and your Honour should have the page numbered P96.  My learned friend referred at about line 19 to the outline of argument to the foot of page 5, where he started to read what I have just been referring to.  Then if one goes to about line 32, he says:

Can I tell the court that no reliance is placed in this appeal on section 42 of the Fair Trading Act.

“Cause of action”, that should read, I think your Honours:

no reliance is placed is based upon the breach of fiduciary duty.

Now your Honours, it is true to say that section 52 is not referred to specifically, but it was not referred to in the written submissions.  There is nothing else said about section 52 separately from what appears here in the whole course of the case.

GLEESON CJ:   That is consistent with the fact that the subject is not even mentioned, I think, anywhere in the reasons for judgment of the Full Court.  I am right in thinking, am I not, that if you read the judgment of the Full Court from beginning to end, you would not even know that there had been a claim under the Trade Practices Act or the Fair Trading Act?

MR JACKSON:   That is so, your Honour.  Could I just say in relation to it, I was not in the appeal but the understanding of those who were is that what was said at P96 was the end of all the claims, other than the contract tort against the solicitors, tort against us.  That would mean, of course, if that is correct, that the issue of immunity in relation to negligence would need to be dealt with if the Court were not to decide in our favour on the question of negligence.

GLEESON CJ:   Yes, we follow that.  You do not have to elaborate that.  We understand that.

MR JACKSON:   Yes.  Could I just say that we would ask that the issue of negligence and immunity be dealt with.  I appreciate that it is a matter for ‑ ‑ ‑

GLEESON CJ:   Yes, we got that point from Mr Macfarlan, too.

MR JACKSON:   Yes.  Your Honour, it has a number of repercussions, for the client and for other persons, of course.  But, it also means that the decision on immunity would, if it were not dealt with by the Court, itself stand as an authority of some importance and significance because of the status of the Full Court - the Federal Court.  I will deal now with ‑ ‑ ‑

GLEESON CJ:   How long do you have to ‑ ‑ ‑

MR JACKSON:   I will be five minutes, your Honour.

GLEESON CJ:   Yes.

MR JACKSON:   I am sorry, I had not appreciated the time.  I will be five minutes or fewer.  My learned friend referred to two aspects of Mr Simos’ evidence.  One is in volume 7 at page 1714.  What your Honours will appreciate was that the particular passage at 1714 occurs when he was addressing Mr Justice Cripps on the second occasion and that was after the decision in the Court of Appeal.  That that is so appears at line 30 on that page. 

The second thing, your Honours, concerns the observation made by Mr Simos in the course of the argument in the Court of Appeal.  That is at volume 14 at page 3600 and your Honours will appreciate that the course being taken by Mr Simos was that he was endeavouring to support the award of special value that had been made by Mr Justice Cripps and, your Honours, the ‑ ‑ ‑

GLEESON CJ:   We understand that what there appears is advocacy, not evidence.

MR JACKSON:   Yes, and indeed, your Honour, he said, your Honours will see in volume 5 at page 1267 that he said it was something he did not agree with but, as a matter of advocacy, it was one of those occasions when you had to argue something that you did not believe in and, your Honours, a degree of applied sycophancy is not absent sometimes from advocacy.

CALLINAN J:   I do not know about that.

MR JACKSON:   No.  I said yesterday, your Honours, I would give your Honours a document which set out the references containing Mr Webster’s role.  Your Honours should have that document.  Finally, your Honours, in relation to the question of costs, in our submission, it would be perfectly appropriate for the Court to deal with that issue.  It is one, of course, that was not dealt with by the Full Court ‑ ‑ ‑

GLEESON CJ:   We have not seen some of the documents that Justice Branson saw, have we?

MR JACKSON:   No, your Honour, but in the end, and this is an issue in relation to which we set out in paragraph  38 of our submissions in reply, it is very difficult to see that there is any basis upon which the discretion could be – what is the basis for interfering with the discretion.  Now, your Honours, if our learned friends want to put something to the Court, we are perfectly happy to have it put in writing and we would reply to it.

CALLINAN J:   Mr Jackson, could I just get one matter clarified?  I see to the Full Federal Court there is an appeal by Mr Yates personally in respect of the Knight Properties‑type order for costs that was made against him.

MR JACKSON:   Yes.

CALLINAN J:   He also appealed against the indemnity costs order, the basis of the order.  I have not immediately been able to pick up whether there was any appeal by the Yates Corporation against the order for indemnity costs.  Perhaps you and Mr Quick can – I am sure you can agree upon that - but if that is so, it would seem then that the only possible outstanding matter of costs arguably not dealt with by the Full Federal Court, or certainly not dealt with, is the matter of the order against Mr Yates personally, and whether that order should have been for indemnity costs.

MR JACKSON:   Yes, your Honour.  May we check that and give your Honours a piece of paper which sets ‑ ‑ ‑

CALLINAN J:   Discuss it with Mr Quick.

MR JACKSON:   Your Honour, those are our submissions.

GLEESON CJ:   When you and Mr Quick let us have a document one way or the other about the matter that has just been raised by Justice Callinan, would you also in that document deal with whether Mr Quick now accepts what you assert in relation to withdrawal of reliance on the Trade Practices Act and the Fair Trading Act, in the document that you submit to us.

MR JACKSON:   Yes, your Honour.

GLEESON CJ:   Thank you.  We will reserve our decision in this matter.

AT 4.31 PM THE MATTER WAS ADJOURNED